International Businesses Across Borders: The Case Of Toyota Company And Their Entry Strategies In Thailand

Discuss about the  international businesses across borders, taking the case of Toyota Company into consideration. 

Cross border businesses can be referred to as the form of importing and exporting goods or services in the neighboring countries, in order to benefit their businesses or communities. However, starting up a business in the overseas countries presents several taxation, regulatory and legal challenges and thus, having a local help is necessary for the success of the business venture. As per the economic conditions, Thailand’s strong population forms quite a healthy base of customers. In addition to this, strong exports, steady growth, skilled as well as cost effective workforce and abundant natural resources help in attracting the foreign investors as well as enable them in developing and prospering their industries in the markets of Thailand (Binder 2016).

The purpose of the report is to gain an understanding regarding the international businesses across borders, taking the case of Toyota Company into consideration. According to Deresky (2017), starting up a business in Thailand takes around one month in average, along with some procedures required for registration. Companies are required to register their names, deposit a significant amount to the bank, acquire a corporate seal and then, complete some steps required for the registration of the company as legal entity. In addition to this, the company needs to go through several procedures that involve obtaining the construction permits, inspection, approvals and others. The report will highlight the case of Toyota Company and its entry strategies in the markets of Thailand. 

Founded in the year 1937, Toyota Motor Corporation engages into the manufacturing and sales of motor vehicles as well as its parts. The company is headquartered in Japan and conducts its businesses all across the world. Toyota sells its vehicles in over 170 countries as well as regions. It conducts its operations by maintaining the following segments of financial services, automotive operations and other. The section of automotive operations mainly designs, assembles, manufactures as well as sells passenger cars, trucks, minivans and related parts of vehicles and accessories. On the other hand, the segment of financial services mainly offer lease financing to the dealers as well as customers of Toyota vehicle (Toyota-global.com 2018).

The other segments mainly deal with the manufacture, sale and designing of telecommunications, housing and related businesses. However, the company’s current situation is a bit critical as they are not entering another phase of expansion. Around 300,000 employees of the company are working all across the world and giving their best in order to bring safety, peace and happiness to the customer communities (Toyota-global.com 2018). The company is working together in order to achieve these goals and with the support from the employees, the company has managed to win the hearts of its target customers.

Organizational Design Structure and Control Issues

Toyota Company’s success both in the markets of Japan and on the international platform is due to their desire to make the products as well as services with premium quality. Toyota Motor Corporation is the multinational company, which produces cars, buses, robots and trucks. It is the largest manufacturers of cars in the Asia and the second largest producers. This part of the assignment discusses about the international competitive strategies undertaken by the company in order to enter the markets of Thailand (Verhezen et al. 2016). The company has adopted certain strategies in order to achieve success and develop their businesses on the international platform.

Firstly, the product strategy adopted by the company is based on premium quality and innovative technology. The company is also focusing on further international market research activities, creativity and hard work for achieving success. Secondly, the company is the world leader of research and development in the advanced automotive technologies. It has developed intelligent responses to several challenges of automobile industry in modern day and at the same time, assuming responsibilities for the future generations. Thirdly, the company has adopted a different strategy for the problem of pollutant emissions. The company is committed to design less polluting vehicles by developing the hybrid systems as the basic factor of manufacturing neat technology cars (Lasserre 2017).

The organizational design structure of Toyota Motor Corporation is entirely based on the company’s varied business operations all across the world. Toyota organizational structure is being divided into four different levels;

1. Chairman
2. President
3. Executive Vice President and
4. Senior Managing Directors.

Toyota Company is headed by their Chairman and the President of the company directly reports to the Chairman. The President has direct authority over their Executive Vice President and each of them has variety of responsibilities within the company. The Executive Vice President has authority over Senior Managing Directors and these managers directly report the company’s happenings to the Executive Vice Presidents (Daft 2015). 

However, the company is currently facing some control issues as it saw around nine million vehicles getting recalled due to their vehicles experiencing unintended acceleration. The reason for this mishap was because the customers were getting faulty car parts. The major problem that gave rise to this issue as the managers were unaware of fast technologies like tools, equipments, operating method and others, which are designed to make the task more effective. Only 60% of the cars were being tested for safety as well as quality and the others remained unchecked. The organizational managers were not reporting this issue to their higher management and took direct control over it, which degraded the situation further (Colombo, Rossi-Lamastra and Matassini 2016). The company admitted their mistake later on and terminated the managers who were at fault.

Entry Strategies

The company is planning to enter the markets of Thailand for expanding their business. Conducting their business in the Thailand market will prove to be beneficial for them, as the country has strong economic conditions. In addition to this, the country has experienced a rapid growth in the Gross Domestic Product over the past years. The company has adopted certain entry strategies, which are being discussed in this part of the report. Toyota Corporation established their export headquarters to penetrate into the markets of Toyota (Hill, Jones and Schilling 2014). This helped them in increasing their distributors in the market of Thailand. In addition to this, the company also adopted the strategy of producing their products at the home country and shipping the surplus amount to the new country, which is one of the easiest modes of entering the foreign markets (Shenkar, Luo and Chi 2014).

Moreover, Thailand is highly associated with the import of gross products from several parts of the world. Therefore, directly exporting the surplus products will not be a problem for the Toyota Company. The strategy of entering the new market would be perfect for the company as it will be able to hire distributors or agents who can take care of the export business (Nagle, Hogan and Zale 2016). In addition to this, the company can also go for licensing strategy of entering the markets of Thailand. In simpler terms, it refers to the contractual arrangement and the firm provides their proprietary assets to the foreign company, by exchanging royalty fees. Furthermore, it will assist the company in diminishing the risks and cut the investment amounts required for sharing the proprietary secrets (Adeola, Boso and Adeniji 2018).

The operations management of the Toyota Motor Corporation covers several decisions in order to create efficiency and effectiveness within the organization. The company uses a wide variety of strategies for their operations management, regional automotive and integrating local market conditions. The company has also successfully emphasized upon their productivity in all segments of operations management. The company addresses the area of strategic decision through the advancement of technology and quality. Moreover, the company uses research and development investments in order to ensure advanced features in their products. Toyota also ensures dealership personnel needs for designing the after sales services as well (Pack et al. 2016). Moreover, in order to maximize the quality of the company’s products, Toyota uses its production system quality as one of the major key factors. 

Operational Control

For the strategic decision areas of operations management, the company uses the technique of lean manufacturing. It also emphasizes upon the waste minimization strategy in order to maximize the process efficiency as well as capacity utilization. Therefore, Toyota Corporation supports their business efficiency as well as cost effectiveness in the overall procedure as well as capacity designing. In addition to this, the company uses local location, global and regional strategies as well. For instance; the company has its manufacturing plants in Thailand, China and the United States and dealership in almost all the markets (Huang and Kolmanovsky 2017). Thus, the company addresses their strategic decision of the areas of operations by a mixed set of operational strategies.

The human resource management’s priorities in the foreign subsidiaries have taken much attention, due to globalization. Companies are now expanding their businesses on the international countries. Thus, the need for human resource managers in the foreign companies is immensely important for the success of the businesses. A blend of the practices is being adopted by the Toyota Corporation, ranging from emulating the practices of the home country and adapting the ones of the host country. The human resource practices adopted by the Toyota Corporation in this advanced economy are managing the wellbeing of the workers (Brewster, Chung and Sparrow 2016).

Furthermore, the human resource managers of the Toyota Company recruits and selects workers from all across the world, based on their talents and skills. The firm use aptitude tests, panel interviews, competency-based interviews, application forms and others for hiring the most deserving candidate. In addition to this, proper training as well as development strategies is being utilized in order to train the newly hired candidates. Moreover, orientation programs are also being organized for educating the candidates regarding the company’s overview, objectives, aims and mission. The human resource managers for the overseas company also look after the performance appraisal system, reward and recognition systems, management promotions, compensation and benefits, organizational communication, flexible working and other factors as well (Vance and Paik 2014).

Toyota is well known for maintaining the high quality standards for decades, but it may face certain issues for management while expanding its business to the markets of Thailand. It can prove to be a threat for the future of the Toyota Company. If the company neglects their best laid principles of quality checks, it can face negativity within the organizational management. Moreover, the ambition of the company has led to the increase in their capacity around fifty percent within five years (Punnett 2015). Therefore, for keeping up with this growth rate, the company should outsource some parts from the countries at Eastern Europe as well.

Taking the opportunities of management into consideration, it can be said that Thailand has several benefits attested to the specific factor. The company will be able to provide its management with immense number of opportunities if it expands its business into the markets of Thailand. The first and foremost thing is there is no discrimination as there are several ethnic groups in the country. Discrimination affects the economic growth in a negative manner (Bamberger, Meshoulam and Biron 2014). Therefore, it can be said that the management will get several opportunities and this, in turn will help the business grow. 

From the study above, it can be recommended that the Toyota Corporation can undertake certain strategies for the improvement of their management. Organizational effectiveness and efficiency relates to the success of the business. However, a professional should focus on their quality services. The key to organizational success is the effective utilization of the right strategies as well as tools for accomplishing a specific goal. In addition to this, Toyota Company should make proper utilization of their international human resource management. As the company is going to expand its business in the markets of Thailand, it is important for the managers to gain an understanding of the political and economical factors which affects the country.

In addition to this, after analyzing the socio-economic conditions of Thailand, the human resource managers should set up their organizational strategies, management structure and compensation and benefits structure for the betterment of the employees. Moreover, the human resource professionals of the company play a major role in recruiting the new employees and thus, it impacts the goals of the company. Furthermore, organizational leadership needs active measures of work with various groups as well as individuals. The organizational leaders need to gain an understanding of the competencies as well as in-competencies of various professionals before making the action plans. This will assist in improving the effectiveness of the Toyota Company to a greater extent.

Conclusion

To conclude, the report discusses about the business expansion procedures undertaken by the Toyota Corporation. The company has chosen the country Thailand for expanding their businesses and succeeding on the long run. The report gives a brief overview of the company and its current operating position. The Toyota Company was established in the year 1937 and now, it operates all across the world with over 330,000 employees. In addition to this, the report discusses in detail the company’s international competitive strategies and how it will manage to compete with the existing competitors of Thailand. Moreover, the existing organizational structure of the company comprise of several levels of management. The Chairman of the company supervises over the President, who monitors and controls the company’s executive vice president. Furthermore, the report highlights the operational control, entry level strategies and management of the human resources of the company, across borders. Last but not the least; the company has faced certain issues regarding the management strategies. Recommendations have been given for the improvement in the strategies of management of Toyota Motor Corporation.   

References

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