Toyota

The Three Stages of Strategic Management

Question:

Discuss about the Strategic Management and Managerial Skills of Toyota.

Strategic management and plays crucial role in the development of any business organization. In this competitive era, where all the business organization is incorporating best practices to battle against the rival companies and earn the desired target in the society, strategic management and  works as strength of the business organization that enhances the competitive advantage of the companies (Hill, Jones, & Schilling, 2014). Toyota Motor Corporation is one of the renowned automotive manufacturer that has put a strong impact on the on the car industry by its innovative practices. The journey of Toyota has been started in 1937. The organization covers a huge market share. Toyota has brought revolution in the motor vehicle industry by introducing hybrid electric vehicles. As per the report, Toyota earns 28.40 trillion revenue per year by providing its service worldwide. The organization has not only set an example in front of the world by its profit margin, but it has become a pioneer in terms of strategic management and (Chiarini & Vagnoni, 2015). The organization has adopted a unique style of leadership that has led the organization to achieve the desired position in the local as well as global automotive industry. This innovative management style of Toyota leaders has distinguished it from the other business organization. Toyota is considered as one of the pioneer of strategic management. The leaders of Toyota has left no stone unturned to maintain healthy environment within the organization. They pay close attention to their relation with the stakeholders (toyota-global.com, 2017).

The following article has concentrated on the strategic management and managerial skills of Toyota. It has enlightened all the practices of Toyota management that influences the growth of the organization. The objective of the article is to provide a vivid picture of the organizational structure of Toyota.

Strategic management is considered as one of the key success factors of the business organization. It has been argued that it consists of three major stages that plays crucial role in the growth of any business organization, such as- strategy formulation, strategy implementation and strategy evaluation (Rothaermel, 2015).

Strategy formulation is considered as the primary stage of strategic management. In this stage, the management team of the business organization forms suitable strategies for the organization. This stage plays crucial role in the development of the organization. Leaders need to consider all the aspects of the business organization while constructing the organizational strategies (Harrison & John, 2013). Otherwise, it may lead the organization towards the wrong direction. Before making any strategy, it is important to analyse the situation of the organization and conduct market research. It will be beneficial to construct a suitable set of norms for the organization that can support organizational growth.

Key Principles of Strategic Management

The second stage of the strategic management is to implement the formulated strategies within the organizational structure. While implementing strategies, the management of the business organization needs to make sure that all organizational members are aware of the newly constructed strategies and they are willing to adopt these strategies. In order to achieve the goal, the organizational management needs to maintain healthy and interactive relation with all the internal and external stakeholders. They need to provide a transparent idea about the organizational strategy and the objective of the management to incorporate such strategies. It will be helpful for the members to adopt these strategies (Morden, 2016).

The last and final stage of the strategic management is to evaluate the consequence to implement these strategies. This stage plays crucial role in the development of the organization as it helps the organizational management to identify the loopholes in the strategy and responsible areas of the management where they need to put more efforts to strengthen their organizational structure. It helps the organizational management to monitor the development of the organization. Management must scrutinize the profit margin, sales rate and market demand of the organization to evaluate the impact of the strategy (Chen, Delmas, & Lieberman, 2015).

These three key stages lead any business organization to make a strong remark in the industry. Management department of any organization are mainly responsible to perform this role. The success of the business organization is highly relied on the efficiency of the managerial department of the company (Frynas & Mellahi, 2015). The competitive nature of the market has been drastically increased since past few years due to arrival of many rival companies. It has become difficult for any business organization to survive in this competitive era. Hence, it is mandatory for the managerial department of the business organization to perform their role in an appropriate manner to stimulate the function of the organization. They need to pay close attention to the requirement of the organization while making the organizational strategy. Strategic management focuses on the holistic growth of the organization (Hubbard, Rice, & Galvin, 2014). Thus, it is important for the leaders of business companies to concentrate on the overall organizational structure instead of a specific section. They need to perform versatile role to support the growth of the organization. It has been argued that strategic management is the set of initiative that has been mainly taken by the management of the organization on the behalf of the authority and it provides right direction to the organization (Kotler, Berger, & Bickhoff, 2016). Thus, it can be stated that success of strategic management is highly dependent on the effectiveness and strengths of the higher management of the business organization.

Toyota's Strategic Management Practices

As opined by Michael Porter, the managerial department needs to focus on three basic principles, such as- creating unique and innovative strategies, managing the quality of the organizational strategy and fit in the market trend by managing the organizational activity (Stead & Stead, 2013). These are the key words of success in recent time for any business organization. It is important for the business organization to adopt unique strategies that can distinguish it from the rival companies and helpful to survive in the competition. Thus, managerial department must be aware of these factors while making any strategy to carry out any business venture. As claimed by Porter, business organizations must manage their activities to fit in the market trend. The scenario of the market is transforming day by day. Thus, it is important for the business organizations to design their structure as per the market structure. Otherwise, it may face deadly consequence in coming future (Peppers & Rogers, 2016).

According to reports, strategic management involves the analysis of the external and internal environment (Jenkins & Williamson, 2015). Both environment plays key role in the success of the organization. It is management’s responsibility to gather all the relevant information about the external and internal environment of the organization while making the organizational strategy. Otherwise, the organization may face various issues in near future. There are various tools that are used by the organizational management to evaluate the internal and external analysis. It is highly beneficial for the organization to earn the desired position in the industry. Otherwise, the high competitive nature of the market may challenge the existence of the business organization and it may fails to achieve the desired position in the industry (Tallman & Koza, 2016).

In this scenario, it can be stated that Toyota management has tried to follow all the aspects of strategic management in an appropriate manner. The organization is run by a team of skilled and experienced leaders that preserve quality experience in the respective field. They plays key role in the development of Toyota. They have a clear idea about the organizational objective and they design the organizational structure accordingly. Being a largest producer of the automobile, Toyota has set an expectation level among its consumers. It is important for the management of Toyota to meet the expectation level of the loyal consumers to earn the long-term organizational goal by incorporating efficient strategies. Managerial department stay close to the requirement and preference of the target market and they ensure that the organization and its members are performing in an appropriate manner by adopting the strategies formulated by them. The organizational management always try to incorporate some unique strategies within the organizational rulebook that will be helpful to beat the rival business organizations (Smith, 2014). There are some key features of Toyota that reflects the effectiveness of strategic management of the organization, such as-

Toyota management always maintains a strong supply chain management. They maintain an interactive relation with all the members of the supply chain. Being a renowned global automobile company, Toyota needs to maintain a huge supply chain, as the management is aware of the fact that it is impossible to provide quality service to the large number of consumers without strong and effective supply chain management. They stay close to their raw material suppliers and distributors and provide them a transparent idea about the requirement and demand of the consumers (Kaynak, Mockler, & Dologite, 2014).

It is often evident that the management of Toyota takes some innovative initiatives that lead the organization to the next level of success. In 197, Toyota was the first automobile company that has started manufacturing small and fuel-efficient cars which has drawn the attention of the large number of target consumers. As the price of the fuel has been fuelled since past few years, such cars have become the desired cars for the buyers. In recent time, the organization has started producing electric cars that will be beneficial to fight against the global warming and other forms of environmental pollution (Ruff, 2015).

The management always maintains healthy environment within the organization. Toyota always maintains a culture and values within the organization. The values and ethics of Toyota are considered as the main resource of the organization that stimulates the growth of the organization. The organizational management of Toyota follows some key principles to run the organization, such as- unique, teamwork, respect. Toyota authority maintains healthy and peaceful environment within the organization to ensure a bright future. Internal stakeholders of the organization are considered as one of the weapon of the organization. Toyota management tries to maintain healthy relation with them to support the growth of their performance, as they are aware of the fact that efficient performance of the employees can brighten up the brand image of the organization (Pisano, 2016).

There are some policies that are followed by the higher management of Toyota, such as- management must take decision on the basis of the long-term goal of the organization, problems must be highlighted by the members of the organization and must be resolved on the priority basis, innovative and trustworthy technologies must be adopted by the organization that will support the growth of employee’s performance, management must focus on all the aspects of the organization while making any decision and must consider the organizational goal, workers must be able to take up new challenges, as it will be helpful for their performance development (Percy & Elliott, 2016).

Toyota is known for its lean management where employees are influenced and motivated to bring changes in the system of the organization. They take active part in the organizational decision-making process and they are being empowered to lead the organization to the leading position (Melander, et al., 2016).

Toyota has adopted some innovative policies to maintain healthy relation with the employees. Being one of the leading business organization, Toyota possesses a large workforce with 25000 employees. Although, it is not possible for the employers to address each of their employees every time, they have made some innovative policies to provide support to their employees. Toyota always stands by the side of their employees when they require the support of their employers. They have included some flexible and transparent strategies that can be helpful for the employees. It helps the organization to retain their employee for a long period of time and it puts a great impact on the organizational performance. This is one of the major reasons for the success of the organization (Schmidt & Farkas, 2016).

As per the previous discussion, it can be stated that all the theoretical concepts discussed previously are incorporated in the organizational structure. These concepts have greatly influenced the managerial skills of the Toyota management. The management has followed three crucial stages of the strategic management. They often conduct market research and environmental analysis while constructing organizational strategy. It provides a vivid idea to them about the condition of the market and highlights the areas where they need to put extra effort to strengthen the organizational structure. By analysing the situation, management implement some innovative strategies that can influence organizational function, such as- lean management, electric cars and so on. While making these strategies the management always encourage their external and internal stakeholders to participate in the organizational decision making process. It motivates their stakeholders to adopt the organizational strategies and policies in an appropriate manner and work as a team to earn the desired position in the society. It is the primary reason for the success of Toyota. By such innovative and unique practices, the organization has secured the highest position in the automotive industry (Chowdhury, 2014).

Although, the management of Toyota has left no stone unturned to provide quality service to the consumers and enlighten the brand image of the organization, there are some loopholes in the organizational structure of Toyota that can be harmful for the reputation of the organization and may restrict the growth.

It has been evident in recent time, that the organization has faced various challenges due to the lack of efficiency of the crisis management team of the organization (Yan, Choi, Kim, & Yang, 2015). Being a leading name in the business world, Toyota needs to pay close attention to the performance of the crisis management team. It is the responsibility off the higher management of the Toyota to make sure that all the members of Crisis management is performing appropriately and providing adequate support to the organization. The crisis management team must be alert 24*7 to save the organization and its reputation from any kind of crisis. The organizational management must appoint some experienced and efficient members who can serve the organization with their quality performance. They must be aware of their role and responsibility towards the organization and they must be committed to their job. Otherwise, they will not be able to provide sufficient support to their organization.

In recent time, it has been evident, that the production of the car has faced several challenges in Toyota. The motor of Toyota has recently failed in the test, which leads the organization to face a massive crisis recently. Thus, the organization must recruit some experienced and skilled engineers who can boost up the manufacturing process of the organization. Engineers who preserve quality experience in the field can save the organization to face such disasters.

As per the report, in many cases the organizational management of Toyota refuses to take responsibility and blame their internal stakeholders (Lu, Au, Peng, & Xu, 2013). Such practices must be avoided. The organizational management must be aware of the fact that it is important to maintain the trust of the internal and external stakeholders. They must take the responsibility when required.

The organizational management of Toyota must invest heavily to rectify their loopholes on an immediate basis. Otherwise, it can be harmful for the growth of the organization. Problems need to be resolved as early as possible. They must appoint skilled employees and adopt efficient techniques to avoid any problems that will be harmful for the growth of the organization.

The organizational management need to maintain healthy relation with the suppliers. They must use modern communication tools to maintain regular interaction with the suppliers and distributors. It will be helpful for the organization to provide clear idea about the requirement and preference of the consumers. At the same time, it will help the organization to provide uninterrupted service to the consumers and survive in the competition.

Leaders of Toyota must be aware of their role and responsibility towards the organization. They must play their role in an appropriate manner. It is their responsibility to look after all the aspects of the organization and resolve all the issues that can destroy the reputation among the target market of Toyota. It is often evident that organization is facing several challenges due to the negligence of the leaders of the organization. Thus, leaders must be committed towards their role and responsibility and they must be aware of the organizational objective and vision mission while making any strategies for the growth of the organization.

Conclusion:

As per the previous discussion, it can be stated that Toyota has set an example for other business organization by following the path of the strategic management. They follow all the relevant concept of the organizational strategic management. The managerial department of the organization maintains conduct various market researches to design their organizational structure. They analyse their external and internal environment to make sure that the strategies have been adopted by the management are suitable to support the growth of the organization. The leaders of Toyota follow the three crucial stages while constructing organizational strategy. Therefore, they follow the path of innovation while making any strategy. Such practices are considered as the key success factor of the organization. It has led the organization to adopt innovative initiatives, such as – lean management, innovation of modern and efficient products and so on. Due to such efficient managerial skills of the leaders, the organization has brought revolutionary changes in the world of automobile and successfully carried out many unique business ventures. Although, the organizational structure of Toyota has been designed in a unique manner, there are some loopholes that can be harmful for the reputation of the organization, such as- lack of sense of responsibility among the leaders, lack of efficiency among the crisis management team, lack of skilled and experienced engineers, lack of investment to rectify the mistakes and lack of efficiency among the employees and so on. These factors have become one of the major concerned of Toyota authority. Thus, the organizational management must consider the facts while designing their organizational structure in order to earn the desired position in the industry. In this competitive era, it is essential for the management of the organization to enhance its competitive advantage by adopting such practices. Otherwise, it will be difficult for them to survive

References:

Chen, C. M., Delmas, M. A., & Lieberman, M. B. (2015). Production frontier methodologies and efficiency as a performance measure in strategic management research. Strategic Management Journal, 36(1), 19-36.

Chiarini, A., & Vagnoni, E. (2015). World-class manufacturing by Fiat. Comparison with Toyota production system from a strategic management, management accounting, operations management and performance measurement dimension. International Journal of Production Research, 53(2), 590-606.

Chowdhury, S. D. (2014). Strategic roads that diverge or converge: GM and Toyota in the battle for the top. Business Horizons, 57(1), 127-136.

Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press, USA.

Harrison, J. S., & John, C. H. S. (2013). Foundations in strategic management. Cengage Learning.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Hubbard, G., Rice, J., & Galvin, P. (2014). Strategic management. Pearson Australia.

Jenkins, W., & Williamson, D. (2015). Strategic management and business analysis. Routledge.

Kaynak, E., Mockler, R., & Dologite, D. G. (2014). Multinational strategic management: an integrative entrepreneurial context-specific process. Routledge.

Kotler, P., Berger, R., & Bickhoff, N. (2016). The quintessence of strategic management: What you really need to know to survive in business. Springer.

Lu, Y., Au, K., Peng, M. W., & Xu, E. (2013). Strategic management in private and family businesses.

Melander, A., Melander, A., Löfving, M., Löfving, M., Andersson, D., Andersson, D., ... & Thulin, M. (2016). Introducing the Hoshin Kanri strategic management system in manufacturing SMEs. Management Decision, 54(10), 2507-2523.

Morden, T. (2016). Principles of strategic management. Routledge.

Peppers, D., & Rogers, M. (2016). Managing Customer Experience and Relationships: A Strategic Framework. John Wiley & Sons.

Percy, L., & Elliott, R. H. (2016). Strategic advertising management. Oxford University Press.

Pisano, G. P. (2016). Towards a Prescriptive Theory of Dynamic Capabilities: Connecting Strategic Choice, Learning, and Competition.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.

Ruff, F. (2015). The advanced role of corporate foresight in innovation and strategic management—Reflections on practical experiences from the automotive industry. Technological Forecasting and Social Change, 101, 37-48.

Schmidt, C. R., & Farkas, F. (2016). The Profitability Puzzle: Integrating Sales and Product Development Improves Management’s Ability to Control Future Profitability. STRATEGIC MANAGEMENT, 21(4), 3-11.

Smith, W. K. (2014). Dynamic decision making: A model of senior leaders managing strategic paradoxes. Academy of Management Journal, 57(6), 1592-1623.

Stead, J. G., & Stead, W. E. (2013). Sustainable strategic management. ME Sharpe.

Tallman, S., & Koza, M. P. (2016). Strategic Animation and Emergent Processes: Managing for Efficiency and Innovation in Globally Networked Organizations. In Perspectives on Headquarters-subsidiary Relationships in the Contemporary MNC (pp. 59-85). Emerald Group Publishing Limited.

toyota-global.com. (2017). toyota-global.com. Retrieved 21 August 2017, from https://www.toyota-global.com

Yan, T., Choi, T. Y., Kim, Y., & Yang, Y. (2015). A theory of the nexus supplier: A critical supplier from a network perspective. Journal of Supply Chain Management, 51(1), 52-66