The Current Position and Future Potential of GM and Toyota - Essay Example

Contemporary Issues in Management - The Current Position and Future Potential of GM and Toyota - Date Total Number of Words: 1,729 Introduction For many years, General Motors has been considered as one of the top three biggest automobile companies aside from Ford and Chrysler. (CBC News, 2009) Even though General Motors was able to sell more vehicles as compared to Toyota in 2007, Toyota managed to manufacture as much as 9,237,780 vehicles as compared to General Motors with 8,282,803 vehicles at the end of year 2008 (OICA, 2009). For this reason, Toyota was able to reach more sales as compared to General Motors during the first quarter of 2008 (Bunkley, 2008; U.S. News and World Report, 2008). A comprehensive review on Toyota and General Motor’s past corporate strategies will also be provided in this study. Considering the current market position of Toyota and General Motors within the global automobile industry, this study will seek to identify the current position and future potential development using relevant and contemporary models and concepts such as the importance of Argyris single and double loop learning theory, Peter Senge’s five principles for creating effective learning organization, the ten specific roles that effective managers should perform as suggested by Henry Mintzberg, and the importance of being able to adopt with strategic flexibility by strengthening the organizational culture that promotes diversity among others. Given the current global economic situation, the current business strategies used by both companies will be compared and contrast. In line with this, some of the highly recommended ways on how these business organizations will be able to develop their core competencies in order to cope with the global crisis will be tackled in details. Comparison between Toyota and General Motor’s Past and Current Corporate Strategies, Current Position and Future Potential Development Past and Current Business Strategies of Toyota and General Motors As part of the past and current business strategy of Toyota, the company implemented the use of its official website which allows its customers to provide their positive and negative feedbacks which the company uses to further enhance the services they render to its existing customer base (Toyota, 2009c). In line with this, Toyota’s business managers could anytime publish news and information with regards to the progress of the Toyota Formula 1 team (Toyota, 2009a). Toyota managers also use the website as an advertisement for possible road-show events or on-line booking for a free test drives in order to receive a one-on-one feedback from its potential customers (Toyota, 2009b). By simply providing the customers with a feedback portion on the website, the top corporate managers as well as the engineers and technicians could roughly gauge the potential success of the business plan. In the process, Toyota team could make use of the negative feedbacks in brainstorming for a new strategy to improve either the car engine technology or the internal and external design of the vehicle prior to the launching date for the latest car model. It is also possible for potential customers to share their personal experiences with the use of other brands. Base on Argyris single and double loop learning theory, the feedback that the company receives straight from its valued customers enabled the company to immediately response to the specific needs and wants of its valued customers. Basically, the information the company receive enable Toyota management to be able to develop action strategy that could save them from losing customers due to automobile technical or services related problems (Anderson, 1997). In line with learning from information taken from the customers, Toyota has been practicing organization learning as proposed by Senge such that employees should be encouraged to develop their knowledge and skills from their personal experiences, e think of new ways on how they could serve better quality products and services to its customers, promote the importance of group creativity, and give emphasis to the importance of building a shared organizational vision (Jones & George, 2003, p. 165). Upon analyzing the case of Toyota, identifying the possible feedback loops could enable the company’s managers to act on potential technical or business problems that may arise from each of the vehicle model the company will launch to the public. As a result, the business managers could immediately develop and implement a contingency plan in order to minimize or lessen the business opportunity loss due to possible internal or mechanical problems. In the process of implementing a contingency plan, the company could sacrifice a short-term effect of business loss rather than the long-term profitability of the business. Similar to General Motors, the company also utilizes the use of its official website which allows the company to receive comments and opinions from its valued customers aside from allowing its potential customers to choose the type of vehicle available in each of the local dealers (General Motors, 2009a). Although both automobile companies are using almost the same business strategies, it remains a fact that the high union wages and generous employee benefits packages is causing General Motors a serious harm in terms of being able to maintain its number one position in the global automobile markets. Because of the high labour expenses, General Motors fail to compete with the Japanese automobile companies that are able to develop competitive vehicles at a relatively low price (CBC News, 2009). In order to enable General Motors to successfully compete in the global markets, the company should be able to find new ways on how they can effectively cut down the operational costs since this particular business strategy will enable the General Motors to capture a huge portion of the market that are price-sensitive (Jones & George, 2003, p. 114). Considering the ten specific roles that effective managers should perform as suggested by Henry Mintzberg, the CEO of automobile companies should always be an action drive person. Immediately acting on a particular business issue would enable the company to have a better competitive advantage as compared to its competitors (Mintzberg, 2009, 1973). One of the best steps that Toyota made was the fact that the company decided to establish an automobile plant wherein the cost of labour is cheap. Toyota manufactured as much as 690,000 cars in China. (BBC News, 2009) For this reason, the company was able to save money operational costs which enable them to sell the cars at a much lower price as compared to other Japanese made cars like Honda, etc. Even though General Motors also established a plant in China (General Motors China, 2009), the company is still selling their vehicles at a premium price. Since many people around the world are trying to maximize the value of their money, most of the Asian and foreign automobile consumers prefer buying Toyota made cars as compared to cars made by the General Motors. Current Position and Future Developments of Toyota and General Motors Because of the slow economic growth in the U.S. market, Toyota plans to cut down its 2008 global sales goal by 3.6 pct or 9.5 million vehicles in the U.S. (Reuters, 2008). In line with this, the company decided to lower down its global sales target by 700,000 vehicles in 2009 (USA Today, 2008). For future developments, Akio Toyoda – the president of Toyota announced the company’s plan to upgrade Toyota’s current car models into something more promising. As a way to keep Toyota competitive in the global markets, the company is going to introduce the next generation 2010 Toyota Prius which has a bigger gas engine combined with a larger body and a car the uses superior lithium-ion batteries throughout the Japanese market in 2011 among others (Toyoland, 2009). Similar to Toyota, General Motors is also adopting a more conservative business measures by restructuring the business to ensure the business’ long-term viability (General Motors, 2009b). In 2009, the company assumes a total of 10.5 and 57.5 million vehicles in the U.S. and global markets respectively (Reuters, 2009a). Similar to the future development plans of Toyota, General Motors is also planning to introduce a new model of its existing car models as a way of capturing a bigger global market shares (Gold, 2009). Recommended Ways on Toyota and General Motors could Develop their Core Competencies Needed to Cope with the Global Crisis In line with keeping a business practice of Toyota competitive in the global market, Toyota should continuously promote and take advantage of using the single and double loop learning feedback to increase the success of the business. In line with this matter, Toyota management should establish a small group that will closely monitor the feedback of its customers. Likewise, it is important for automobile companies to be able to adopt with strategic flexibility by strengthening the organizational culture that promotes diversity among others. In line with this, the CEO and general manager of Toyota and General Motors should consider the financial ability of its target consumers to pay the price of their manufactured vehicle. Since not all people are capable of paying a large sum of money for SUV and other expensive cars, the top management of General Motors should consider designing more average level cars that could compete with cars made by Toyota. As a result, it is expected that General Motors would eventually be able to grab a portion of Toyota’s current market shares. Conclusion Toyota Corporation and General Motors should establish a strong feedback loops to avoid a possible long-term business loss. Considering that Toyota managers have their own managerial tasks to perform, it is necessary for the company to establish a small group that will closely monitor the customers’ feedback on a regular basis. In the process of establishing a small customer service group, the company could establish a better relationship with its existing customers. Suggested by Henry Mintzberg, the ten specific roles of effective managers which include being a good figurehead, a leader, liaison, ability to monitor the business activities and market condition, ability to disseminate information, entrepreneurial skills, negotiation skills, and the managers’ ability to allocate resources contribute a lot to the success of Toyota. In line with this, the ability of Toyota’s top management to hear out the specific needs and wants of its existing and target customers made the company able to persuade more people around the world to purchase Toyota-made cars. Even though General Motors has been putting a lot of effort to lower down its total operational costs; the inability of the company to capture the price-sensitive market made the company lose some of its market shares to Toyota. *** End *** References Anderson, L. (1997). Retrieved September 7, 2009, from Argyris and Schons theory on congruence and learning : http://www.scu.edu.au/schools/gcm/ar/arp/argyris.html#a_arg_loops BBC News. (2009, April 24). Retrieved September 7, 2009, from Toyota recalls 690,000 China cars : http://news.bbc.co.uk/2/hi/business/8217522.stm Bunkley, N. (2008, April 24). The New York Times. Retrieved September 7, 2009, from G.M. Says Toyota Has Lead in Global Sales Race: http://www.nytimes.com/2008/04/24/business/worldbusiness/24auto.html?_r=4&ref=business&oref=slogin&oref=slogin&oref=slogin CBC News. (2009, May 8). 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