Application of Theoretical Models and Concepts to a Practical Industry Situation - Essay Example

?A Management-Style Report That Shows the Application of Theoretical Models and Concepts to a Practical Organisational and/or Industry Situation Table of Contents 1.0.Introduction 3 2.0.Toyota’s Current Strategic Position 4 2.1.Toyota’s Environment 4 2.2.Industry Life Cycle 5 2.3.Degree of Turbulence 6 2.4.General Environmental Analysis 6 3.0.Toyota’s Resources and Capabilities 7 4.0.Key Strategic Issues Presented in the Case Study and their Impact on the Success of Organisational Strategy of the Case Study Organisation over the Long Run 11 5.0.The Way These Issues Need to be Addressed Giving Considerations for Rationale, Impact, Timescale and Ownership within the Organisation 14 6.0.Conclusion 16 7.0.References 17 1.0. Introduction Strategic management with the purpose of developing proper strategies is quite important for organisations as it is quiet likely to facilitate the attainment of growth along with competitive advantages. Thus, developing effective strategies would augment the likelihood of attaining success by the organisation at large. Strategy has been stated to be a guide or idea which provides consistency to the resolutions made collectively by the organisation. Strategic management refers to the process of efficiently and innovatively employing the resources of production such as manpower, machinery and materials in an organisational process. This effective and effectual engagement of resources would enable the organisation to develop effectual strategies which would facilitate the company to earn profits along with competency. Stating precisely, strategies are developed to enable the organisation to survive in the future (Scribner, 2011). From a broad perspective, strategic management is considered to be a process which entails five different aspects. Firstly it involves the need of recognising the requirements of an organisation that is necessary to be achieved. With this purpose, the objectives of the organisation are taken into concern and then the identified requirements are associated with the objectives. Secondly, an analysis is conducted of the internal as well as the external business environment so as to obtain an understanding of the factors which can be either termed as positive or negative. Thirdly, a strategy is being developed based on the evaluation and recognition of the problems. The strategy is designed according to the priority of the issues. Fourthly, the strategy is planned to be put into practice by gathering the needed resources as well as commitments required to proceed with the strategies with the purpose of attaining the desired outcomes. Last but not the least is the stage of screening or monitoring those strategies. Monitoring the strategies also helps in understanding their effectiveness and making any needed alterations (Grant, 2005; Scribner, 2011). The aim of the paper is to assess the present strategic position of Toyota along with ascertaining its resources and capabilities which helps the company to attain competitive advantage over its competitors and ensure its existence in the industry. However, certain strategic issues of the company would also be assessed which could have an adverse affect on the success of Toyota in the long run and certain recommendations would be made in that context. 2.0. Toyota’s Current Strategic Position 2.1. Toyota’s Environment Strategy refers to the process of harmonising an organisation’s competencies and resources with the prospects that are observed to take place in the external surroundings. Toyota is a Japanese car manufacturing company and mainly caters to the market of Japan. However, in the period of 1980 and 1990, Toyota planned to invade the car market of North America. It was successful in capturing the North American market along with entering the Western European market as well which was followed with the intention to be a global leader. Soon Toyota was seen to capture the U.S. market in-spite of the presence of strong players like DaimlerChrysler, General Motors (GM), and Ford. The key to this immense success of the company was the superior quality of the manufactured cars accompanied with lesser manufacturing expenses in comparison to its competitors (Lynch, 2007). The strategic problem faced by Toyota initially was of being a small company in comparison to its strong competitors. It soon identified that it could only sustain in such a competitive environment by discovering a fresh and flexible technique of production which would prove to be advantageous for smaller companies like Toyota. This identified problem made the company develop a fresh and efficient system of production which facilitated it in attaining accumulated competences related to production along with minimum production volumes (Lynch, 2007). 2.2. Industry Life Cycle The life cycle analysis of the automotive industry proves that it is in a mature stage and thus the companies operating in this industry needs to constantly innovate their products. The life cycle analysis also proves that it would be a difficult task for new companies to penetrate the market or the industry. Although Toyota believes in innovation but the analysis reveals that the company needs to keep on innovating its products or vehicles in order to stay put in the market and to considerably capture the market (Horneee & Et. Al., 2009). 2.3. Degree of Turbulence The ‘degree of turbulence’ refers to the level of instability and the unpredictability in the market position as well as in the conditions of the business. The ‘degree of turbulence’ for Toyota or rather the automotive industry can be observed as leisurely. Lower ‘degree of turbulence’ implies steadiness in the forecasts of the main variables and the environments are assessed to be more predictable. Therefore, the low turbulence implies that Toyota would be able to find solutions to its issues with the assistance of analytical approaches. But the lesser ‘degree of turbulence’ also implies that the company benefits from just limited prospects in the market (Bradley & Et. Al., 2005; BCG, 2011). 2.4. General Environmental Analysis Toyota is stated to be the leading car manufacturer with a present global market share of 11 percent with annual production of 8557351 units and annual sales of 8418000 units (Toyota, 2010). The net income of the company in 2011 was 408183 million yen and rose up by 94.9 percent from last year. The sales of the company in different regions are as follows. Regions Average Sales per Year North America 32% Latin America 4% Europe 14% Africa 4% Middle East 7% Asia 11% Oceania 3% Japan 25% Source: (Toyota, 2011) 3.0. Toyota’s Resources and Capabilities It is important to evaluate the resources of a particular firm for the reason of discovering and recognising those particular resources which facilitate a firm to contend and continue to exist in the highly competitive market (Analoui & Karami, 2003). The evaluation of Toyota’s resources as well as capabilities can be performed effectively with the help of the below mentioned steps. Prior or Acquired Resources Toyota had focused on enhancing their system of production in order to compete with its strong and big competitors existing in the global market. The company planned an efficient system of manufacturing which had flexible production techniques such as Kaizen and Kanban. The company also acquired and attained innovations in their way of marketing. The company had also adopted the Just-In-Time (JIT) way for replacing their stocks making the entire process highly time-efficient (Takoev, 2006). Imitability The production methods of the company focused on quality which was quite challenging to be imitated by its competitors. However, the JIT system has been stated to be quite easy to replicate but the European and the American companies were observed to be less inclined towards adapting it and putting it into practice (Takoev, 2006). Durability Toyota significantly emphasises on the quality attributes in their process of production. The systems of production adopted by the company ensure quality of the company’s products. Therefore, their products as well as process of production can be referred as quite durable (Takoev, 2006). Appropriability The company plans their products according to the specifications of the market that they are catering to. Therefore, the company ends up designing cars for various markets according to its requirements which makes them quite admired in those prospective regions and customer groups (Takoev, 2006). Sustainability Toyota’s efficient production system which facilitates in developing quality products with comparatively low costs and engaging the recent technologies concerning lesser carbon emissions makes the products manufactured by Toyota quite sustainable. Thus, it can be stated that the competent system of production ensures the sustainability of the company (Takoev, 2006). Truly Competitive The company’s resources are truly competitive as they assist the company in attaining the competitive edge over its competitors. The company’s resources related to production, intends to manufacture products that give good competition to the products of its rivals in the industry. (Takoev, 2006). Innovative Capability The company is known to produce cars with reasonably low costs. The application of the Kaizen system in its process of production ensures that the products are improved at every stage of the production procedure. This improvement helps the company in making frequent innovations. The low expenses related to production also facilitate the company to invest funds in their Research and Development process for the reason of structuring innovative products (Takoev, 2006). The above mentioned resources of the company including their effectual and competent system of production, cost-effective production process, potential of manufacturing fresh products, entailing latest and advanced technologies in their production system along with an effectual supply chain management, financial stability and global distribution, altogether act as Toyota’s competitive capabilities. These resources and the capabilities facilitate the company to attain competitive advantages over its global competitors. Therefore, the manufacturing competence and its effective supply chain management are considered as a few of the competitive advantages gained by Toyota (Takoev, 2006). 4.0. Key Strategic Issues Presented in the Case Study and their Impact on the Success of Organisational Strategy of the Case Study Organisation over the Long Run Toyota has taken the initiative in producing cars since 1930 which is impressively continued in this era. The company initially did not aim at producing in huge quantities. It was considered to be a small company back then. One of the major problems faced by the company initially was that it had to compete with large players or competitors, in-spite of being a small manufacturer. The company soon identified the need of discovering fresh and flexible methods of production that was feasible and applicable for small manufacturers. This gave birth to its new system of production which was considered to be quite efficient. It also facilitated producing in mass involving lesser quantities of inputs. After much research and experimentation, the systems of Kaizen and Kanban were developed by the chief engineer of the company. These systems of production proved to be quite efficient and effectual for manufacturing cars. The company also introduced innovative operations in its system of producing trucks and cars. The fresh innovations were made with the purpose of attaining few of the goals set by the company. They were to bring down the costs related to production, to enhance the quality of their products and to manage the process of manufacturing more firmly which would assist in decreasing the amount of resources required and enabling the company to be more receptive to the requirements of the market. It is worth mentioning that the attainment of these goals had a positive impact on the company (Lynch, 2007). The involvement of the Kaizen process in its way of production helped the company to drive enhancement initiatives on the products in every stage of the manufacturing process. This process made certain the quality of the products. The management of the workforce was also done in an efficient way by the company. The workers involved with the manufacturing process were permitted to operate quite a number of machines which made them familiar with the operations of various kinds of machineries. The company encouraged the workforce to work in groups which facilitated in offering help and support in an effective manner within the work culture. In other words, it can be stated that the workforce of the company was quite flexible and competent with regard to their enthusiasm to operate different kinds of machines. The company shared and maintained a close association with few of its suppliers who were well reputed in the industry. This close association facilitated the company to jointly work with the suppliers for the reason of bringing down the expenses and enhancing the quality of the constituents purchased from them (Lynch, 2007). The company adopted the system of JIT which helped it to restore the stocks without much wastage of time. All these mentioned factors and steps undertaken by the company proved to be quite helpful as it facilitated the overall enhancement in the efficiency of the production process. The company started innovating fresh products and develop the old products with the application of latest and advanced technologies which helped in attracting the valuable customers to a large extent. Furthermore, carrying out their manufacturing process at comparatively low costs allowed the company to invest funds in their Research and Development which ensured constant innovation in its product line (Lynch, 2007). The company also identified the need to develop and manufacture cars according to the requirement of the various markets where it had its presence. This made the company quite popular in the different targeted markets. Its low cost of production helped the company to offer the cars at comparatively low prices from that of its rivals. Therefore, the company’s production methods or strategies, low costs of production, competent supply chain management, innovative ways of marketing, and appealingly designed fresh models of cars with eco-friendly technologies can be considered as a few major strategic issues which helped the company to attain success in the long-term (Takoev, 2006). However, Toyota did not consider acquiring companies outside its own market, even though, the other competitors including General Motors and Ford, were already pursuing this strategy. The company was successful in bringing down its manufacturing costs but it lacked in incorporating this efficiency in other aspects of its value chain. The company witnessed constant problems with few of its suppliers of marketing and selling as well as raw materials. These problems in the value chain of the company directly affected the production system and also made it tough for the company to meet up to the global demand. This also resulted in a dip in the demand for its product in Japan during 1990s. Toyota needs to reconsider this issue as it could have an impact on the accomplishments of the company in the long run. Apart from this issue, the company faced problems in its exports due to the increase in the currency value of Japanese Yen (Lynch, 2007). 5.0. The Way These Issues Need to be Addressed Giving Considerations for Rationale, Impact, Timescale and Ownership within the Organisation Toyota needs to find a solution to the issues that it is presently facing. It also needs to convert and leverage its capabilities into continued competitive advantages which would help the company to remain ahead in the competitive era. Identifying the factors which could be developed as a competitive advantage has become immensely important for organisations as it helps in structuring strategies. Competitive advantage could be developed with the help of the resources acquired by the company. These resources refer to the entire assets, the processes adopted by a company, information, capabilities, company’s traits, knowledge and other such relevant factors. It is worth mentioning that these features are effectively managed by a company which would in return help the company to structure or build and apply plans with the intention of enhancing the company’s efficiency. In other words, the resources of a company are said to be its strengths which are used as their strategies to compete with its competitors (Lynch, 2007). Developing strategies for the company with the help of its resources is believed to add value to the company’s net worth. An organisation’s resources are clustered into three kinds which are physical resources, organisational resources and human resources. Physical resources refer to the technology that is employed in an organisation like the plant and equipment, availability of inputs of production and the geographic position of the organisation. The human resources refer to the experience, intelligence, insight, training, judgment and associations of the individual employees in that particular organisation. Similarly, the organisational resources entail a company’s official formation of reporting, managing and organising systems, official as well as unofficial system of planning along with the associations between the groups within the organisation and also between the organisation and environment (Barney, 1991). On the similar context, Toyota should focus on enhancing its capabilities to attain competitive advantages in its long run performance. It already has the advantage of its system of production which is considered to be quite efficient. However, the company needs to take into concern the problems faced in its value chain and find a solution to it. The problems in the value chain would create hindrances in the process of production and manufacturing which is already being encountered by the company. The demand for the products of the company is getting affected by these problems in relation to its value chain which has already resulted in decrease of demand in Japan. Thus, the company needs to take care of its value chain at the earliest so as to promote sufficient production and prevent its demand from declining. The company also needs to leverage its capabilities with the purpose of capturing a larger share in the market which can be performed by initiating joint ventures with other companies. This would facilitate the company to effectively compete with its rivals as well as add value to its brand. It is immensely important for the company to improve its activities in the value chain so as to boost its business (Lynch, 2007). The exports of the company from its home country Japan was affected due to the increase in the rate of Yen. Therefore, the company needed to work towards increasing the demand for its products in Japan as this would prove as profitable for the company. The responsibility to enhance the capabilities could be the only solution for the company in this concern. The managers, the employees and the other people associated with the production process including the suppliers and the distributors among others need to collectively take the responsibility of fining solution to the problems. 6.0. Conclusion From the above discussion and analysis of the case study, it can be inferred that Toyota has been already successful in capturing the market to an extent from its global competitors. Nevertheless, there are certain problems and issues faced by the company which could cause hindrances in the organisational progress. It is worth mentioning that the company has managed to compete with its large rivals with the help of its efficient production process as well as introducing efficient ways in its operations. The company has also managed to enhance its associations with few of its important suppliers with the reason of bringing down the costs of the acquired materials and ensuring their quality. But there still remain some issues in the value chain with few of its suppliers as well as the marketing and selling divisions. These problems need to be taken care of at the earliest so as to prevent the company from facing problems in its process of production. The company also needs to consider the point of initiating joint ventures with other companies to add value to its brand and products and also to accomplish competitive advantage in the long run (Lynch, 2007). 7.0. References Analoui, F. & Karami, A., 2003. Strategic Management in Small and Medium Enterprises. Cengage Learning EMEA. Barney, J., 1991. Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), pp. 99-120. BCG, 2011. People Advantage. Perspectives, pp. 1-4. Bradley, D. & Et. Al., 2005. Automotive Industry Analysis. Principles of Management for Engineers, pp. 1-31. Grant, R. M., 2005. Contemporary Strategy Analysis. Wiley-Blackwell. Horne, R. & Et. Al., 2009. Life Cycle Assessment: Principles, Practice and Prospects. Csiro Publishing. Lynch, R., 2007. Corporate Strategy, 4/E. Pearson Education, pp. 768-771. Scribner, S., 2011. Introduction to Strategic Management. Policy Toolkit for Strengthening Health Sector Reform. Takoev, O., 2006. The Expansion of Toyota Motor Company in the Russian Car Market. The Aarhus School of Business, pp. 1-151. Toyota, 2010. Annual Report 2010 Purpose, Perspective and Passion. Toyota Motor Corporation. [Online] Available at: http://www.toyota.de/Images/GB_2010_der_Toyota_Motor__17992_tcm281-1001152.pdf [Accessed December 13, 2011]. Toyota, 2011. Financial Summary. Toyota Motor Corporation. [Online] Available at: http://www.toyota-global.com/investors/financial_result/2011/pdf/q4/summary.pdf [Accessed December 13, 2011]. Read More