Essay: Changing Business Environment For Toyota.

Briefing of the Company

Discuss about the Changing Business Environment for Toyota.

The following report is going to analyse the changing business environment in China. The report encompasses the business case study of Toyota.  Business environment constitutes of the technological factors, leadership factors, business strategies and the human resource factors. These are the internal business environments that provide the bbu8sinmess organisational success. On the other hand there are external factors of the business environments as well. The external business environment refers to the government policies that affect the business process of an organisation of a country. External business environment also comprises of the legal issues the economic condition of a country or a particular place that puts its impact upon the business organisations. According to the scholar, overall market and production procedure depends on how the organisations adopt the internal and external factors.

The chosen case study deals with the change of the business environment in order to bring change in the operations process. Since, no company can change the external business environment, the internal environments need to be focused and change should be brought in need (Prajogo, 2016).

The history of Toyota dates back to 1800s. Sakichi Toyoda, who belonged from a remote community outside Nagoya has laid the foundation stone on the company. He started by assisting his father in carpentry. He has special interest in making wooden spinning machines. The capacity of Sakichi Toyoda  could be seen since his young age. In the year, 1894, he manufactured manual looms that were cheaper than the looms that were available normally. The idea of innovation was also installed in Sakichi Toyoda. To ease the difficulty of  his mother and grandmother, he innovated the power-driven wooden looms. He further worked on the looms to give rise to more sophisticated looms. The innovation of Sakichi Toyoda is not only about developing new things but also save energy and wastage. He invented a mechanism that will stop a loom the moment a thread will be broken. Thus, Sakichi Toyoda was able to make his presence felt with the art of loom making. His son, Kiichiro Toyoda, further carried out the legacy of Sakichi Toyoda. The idea of Just-In-Time was the brainchild of Kiichiro Toyoda. The idea of Kiichiro Toyoda has  inspired many other automobile companies and one of them is Ford. The main idea of Kiichiro Toyoda was inspired by the retail market of the United States. The supermarkets of the United States replaced the products the moment the customers bought the products.

Production System

Toyota is one of the largest car manufacturing companies in the world. It does not only manufactures and designs the cars other vehicles for the middle class customers but also offers the customers luxurious vehicles with high price.  The production season of Toyota has been categorised into different segments:- the peak season of car production as well as the lean season of the car production. The production process depends on the market demand. However, analysis of proper market demand entails the requirement of the operations such as supply chain, production, design, marketing and sales.  Manufacturing and launching new brands needs the market zeal so as to create market opportunity to different market segment. The market segment has different phases according to the availability of cars and service feedback.

In most of the cases, Toyota has sought after the change in the business environment in order to improve the mode of business operations.  Toyota, the Japanese automobiles manufacturer has adopted different change strategies so as to confirm the adoption (Woo & Song, 2013)

Toyota has developed Toyota Production System after the World War II the effect of World War was quite severe in the production method and business policies of the organisation.  The company started with business inventory method and the flow of the business comprised of the entire invention of the cars and the model designing of the vehicles. China as a global market and global manufacturing nation has now emerged as one of the most important market and manufacturing sectors in the world.  After the industrial boom in the 90s and the early years of the 21^st century, china has been at the top rated list (Santoro, 2015).

Toyota has planned the manufacturing process in such a manner so that they can serve the customers when the need is high. They started manufacturing trucks after world war II as they were needed to build Japan. Initially, they faced issues due to the downturn of the economy but the company gradually gained momentum after the conditions got better. The company faced further issues as the economy was not stable. Due to inflation, the situation of Toyota worsened. They started various cost-cutting policies. The included voluntary cut in the pay for the managers and 10% cut in the pay for all the employees in the organization. In addition to this, they have asked 1600 workers to retire voluntary. The sudden cost cutting in the organization has started many issues among the employees and the company has witnessed public demonstration among workers.

Change Environment Factors in China

The business of Toyota has evolved a great deal mainly because of its intelligent production system.  They produce a number of similar vehicles in the same assembly lin. It not only helps them to satisfy the customers but also helps them to keep lead times short and keep the production flexible. Thus, if they keep the production in the same assembly line, they are able to adhere to the needs and wants of the customers and change things easily. The production cost will also be lowered as there would not be much change in the operations. They have thought of lowering the waste. They aim at mass production so that the amount of waste for each unit will be lowered. The total production system adopted by Toyota has stopped the notion that if a machine is not working then it is not making money.

Another motto of Toyota is to be the best. When they are building the total production system, they have thought of giving the best to the customer and appointed the best workers. They are not falling behind as far as the innovation is concerned. They ask their employees to solve the problems themselves so that they will be able to solve more difficult issues themselves. The employees of Toyota are involved in engineering, sales and service, maintain human resource and do accounting so that they are able to satisfy the customers.

The change in the business environment has recently been recognised in the beginning of the twenty first century. Since most of the internal environment factors are highly cognitive and controllable, the organisations in the Chinese industries of different aspect have been trying hard to bring the required change while creating the space for the operations. New research from China European International Business School exposes that most of the foreign companies established in China have been adapting new business environments in the internal operations.  As per the annual business survey in China by CEIBS, Chinese business environment has been highly impacted by more than 440 foreign companies (Lu et al., 2014).

One of the notable changes in the Chinese business environment has been the hike of labour cost.  Though the country enjoyed excessive cheap labour over the years, the growing cost of labour has affected the entire process of production in manufacturing industries and service in the tertiary sector. Inspite of the recent slump, UBS has forecast that Chinese economy would grow by a striking 7.8 % in 2016. Being the economic giant in the world business, China has adopted several changes in the form of the economy and inter- organisational performances.  The economic realities adapted by the Chinese industrialists have been highly effective in the business process strategic planning.

Challenges of Changing Business Environment

Though the changes have been welcomed by the Chinese businessmen as wel as the industrialists in different levels, there are few challenges that need to be faced and resolved during the business process. Rise in the labour cost has initially caused effective change in the production. So far the automobiles and vehicle manufacturing is concerned, the changing business economy and labour market has restricted free flow production in the Chinese industry. After the global economic crisis in 2008-2009, China has developed its own economic system in order to ease the business circumstances. This has led the country to the growth of 7% increase in its economy. The advanced market oriented economy by the government of China has facilitated millions of worker thus encouraging the involvement of competent employees. It has also geared up the entire process of production.  After 2009, the companies have exploited the abundance of the labours and it has also accelerated the agility of production and market performance. After 2007, Chinese the Chinese GDP grew up to 6%.  This has been the proof of the positive business change in Chinese market.

The change accounted in the business of the Chinese market has also caused the business level growth that has been positive in the recent years. On the other hand the process of the Chinese market and manufacturing industry have been adapting the newest changed thus reflecting their mode of performance the companies want to practice. The case study has been helpful in the total business management.

Conclusion:

Change in the business management has been helpful in understanding two of the greater aspects- the financial change management and human resource development management. Both of these business tasks have been highly affected by the change in the external environment in the country. 

Reference:

Lu, J., Lu, C., Yu, C. S., & Yao, J. E. (2014). Exploring factors associated with wireless internet via mobile technology acceptance in Mainland China. Communications of the IIMA, 3(1), 9.

Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics, 171, 241-249.

Santoro, M. A. (2015). China 2020: How western business can—and should—influence social and political change in the coming decade. Cornell University Press.

The Business Environment of China: Challenges of an Emerging Economic Superpower. (2017). Stanford Graduate School of Business. Retrieved 1 May 2017, from https://www.gsb.stanford.edu/faculty-research/case-studies/business-environment-china-challenges-emerging-economic-superpower

Woo, W. T., & Song, L. (2013). China's dilemma: economic growth, the environment and climate change (p. 428). ANU Press.