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Strategic Management Of Toyota Motors

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Discuss about the Strategic Management Of Toyota Motors.



Strategic Management is the ongoing planning, analysing, monitoring and assessment of the strategies that are necessary for a business to meet the objectives at the end. In general perspective, strategic management has two main approaches, industrial organisation approach and another one is the sociological approach. The organisational approach is based on economic theories like a competitive rivalry, economies scale and resource allocation. On the other side, the sociological approach is about human interaction. In addition, as stated by Kramar (2014), the linear strategy focuses mainly on achieving the goals is the ultimate result of the strategic management. In linear strategy, organizational leaders take the strategy to deal with rivals in the market. Moreover, in the adaptive strategy of strategic management is about the meeting the gap between external market risks and opportunities. In interpretive strategy, the most stress is given to the managers of the organisation and they assist to face the changes in the industry. On the contrary, the shortcomings of strategic management are that it could be complex, difficult and time-consuming to implement. Strategic management needs skilful planning in order to avoid the pitfalls.

In this report, Toyota Motors organisation has been chosen in order to show the approaches to strategic management. This report aims to contrast and compare the three different approaches to strategic management, stakeholder approach, dynamic capabilities and sustainable approach.

Different approaches to strategic management

Strategic management is the concept that can promote the approach to systematic strategy in formulating business. This approach must follow the mission, vision and purposes of the organisation. As stated by Weiss (2014), strategic planning is the organisation process that defines the organisational strategy, decision-making, allocation of resources and direction of the organisation.


Stakeholder Approach: System theory

In system theory, organisations are explained as the open system and it has the longer network. The organisation is more than only self-standing entities. It is needed to identify the stakeholders of the organisation and interconnect them. System theory tells that issues can be resolved with the help of all members or network (Hill et al. 2014). System theory provides stress to develop the network of the business through stakeholders. In this approach, stakeholders are important other than individual approach.

Stakeholder approach talks about single strategic framework and it is flexible enough to do with the environmental shift. The process of the framework is about the environmental shift and then formulating new strategic problem, after that development of new strategic framework is needed. Therefore, development of new strategic practices is needed with a new environmental shift. In actuality, a partner approach rejects the general concept of boosting a solitary target work as a valuable state of mind about administration technique. Partner administration is an endless undertaking of adjusting and incorporating various connections and numerous targets. Such an approach has suggestions for exploring in teach and also down to earth comes about for supervisors (Freeman and McVea 2015). The motivation behind a partner way to deal with the key administration is to effectively design another bearing for the firm. It expands on solid certainties and investigation, and in this manner is clear, however, it needs to go past such depiction to suggest a heading for the firm, given its partner condition.

Moreover, stakeholder approach can be described as strategic management process and it is not only strategic planning process. In case of strategic planning, it is solely responsible to develop the concept of future benefit of the organisation. Strategic management tries to make a plan for future direction of the organisation through discussing with stakeholders. As stated by Tantlo and Priem (2016), survival of the firm depends on objectives of the organisation that it strives to achieve. Management of the organisation needs to support the stakeholders who can affect the organisation. Understanding the stakeholder's relationship is a very important keyword in this respect as organisations aim to maximize the stakeholders' wealth (Weiss 2014). Stakeholders' theory is about the organisational management and the ethics that it follows. Some morals are there and the organisation has some values that it follows in managing the business. Management of an organisation can recommend the development of stakeholders with a traditional view of the organisation. There are various parties associated with this, employees, suppliers, customers, political groups, governmental bodies, trade association, financiers and trade unions. 

Corporate strategy of an organisation is based on the main competitive advantage of the organisation. Portfolio management is about the corporate strategy that enables the organisation to have diversification strategy. This diversification can be done in a new market as well and acquired firms can run autonomous way. Making of new relation is adding them as stakeholders of the organisation. Another corporate strategy can be restricting the organisation through portfolio management and corporate managers of an organisation can acquire the company as they can think of the unrealised potential.


Toyota’s stakeholders’ groups and its CSR initiatives

As Toyota is a global firm, Toyota’s CSR activities deal with stakeholders of the firm at various levels.





Toyota’s employees are significant as the employees aim to have job security, fair employment and career development. Toyota gives them right salaries and on-the-job training for the employees.



The interest of customers to have high-quality cars and automobile vehicles and them expert reasonable prices. Toyota expresses customers' CSR responsibility through rapid innovation implementing Toyota Production System (Quality, Efficiency and Innovation).



Investors of Toyota are main strength in global business. In the year 2000, production fell due to recession, however through taking the strategy of rapid expansion, it acquired market share again.



In socioeconomic development Toyota provides massive importance to the community and among the stakeholders' community development is one of the main aims of Toyota. Toyota started educating the community, Meal per Hour initiatives and Food banks programmes for the community.



In achieving the environmental objectives, CSR strategies can be implemented. Sustainability and environment are the main goals for Toyota in CSR. Toyota took the initiative to produce hybrid cars and they supported Everglades National Park. Toyota created Toyota Green Programme support.



Bringing the most reliable news regarding car companies


Table: Stakeholders’ analysis of Toyota Motors

(Source: Dyer and Nobeoka 2013)

Dynamic capabilities

This concept of dynamic capabilities was coined by David Teece and this concept stated about organisational ability to build, integrate and re-establish the external and internal competencies to find out the reason behind changing the environment. Dynamic capabilities give stress on an ability to find out the adequate and timely look to external alteration and combination of various capabilities. 


Organisational theory

The organisation is same like system that is surrounded by this. As stated by Teece (2014), the concept of the clientele is introduced through organizational theory. This approach talks about the external environment and the process to overshadow them. Moreover, organizational theory explains and describes the existence behind the organisation or firm, however, it describes the fundamental importance of stakeholders of a firm.

Dynamic capabilities are similar to the operational capability of a firm that is related to the current operation of a firm. In a previous time, operational capabilities referred to the idea of organisational capacity to provide responses in operation and develop the resources within the organisation. As stated by Teece (2014), a firm’s dynamic capabilities can be used to have the short-term competitive advantage over the rivals of the organisation. As supported by this idea, De Brucker et al. (2013), opined that dynamic capabilities of an organisation can be equalised with a resource-based view of the organisation. Dynamic capabilities of the organisation are taken by the senior manager in order to adapt to discontinuous change. In order to manage the minimum capability, the organisation tries to ensure the competitive survival. In case new technologies come in the industry, manufacturing companies cannot change the manufacturing process in a short notice; however, they need to go through the whole routine once. Managers of that organisation have to make new routine or process in order to make right use of resources. The large organisations need to use the organisation's capability in reconfiguring the externally sourced competencies. Organisations like Apple, Google and IBM organisations use the new innovation of Crowdfunding leveraging the sources internal factors and external resources. Dynamic capabilities give the importance to a source of wealth creation and sustain the competitor's advantage.

Competitive forces:

It is the essence of competitive strategy of an organisation that and this can strongly influence the market. Michael Porter pioneered this idea in the year 1980 and he advocated the five forces in the industry that can significantly pose an impact on the organisation. Five industry forces are suppliers' power, buyer's power, rivalry, substitutes and threat of new entrants. In order to use the resources carefully, competitive forces must allow the organisations to take the dynamic capabilities.

Strategic conflict:

Strategic approach of an organisation can follow the Game theory in order get the idea of strategic interaction among the organisation rivals. This strategic conflict is about the process or strategies to influence the behaviour of the competing firms. An organisation can invest in capacity, marketing and R&D, in this regard, the organisation needs to be committed towards this. As stated by Schilike (2014), Game theory tool can predict the results of a group in taking or interacting of action.

Use of Resource-based Theory by Toyota

Resource-based theory can be defined economic tool to determine the strategic resources in order to gain the competitive advantage. As stated by Meixell and Luoma (2015), resource positioning is the concept of an organisation determines competitive advantage of the organisation and utilising the resources correctly determine the success. In case of Toyota, it is a global automobile organisation that has heterogeneous resources. Toyota’s resources include all the assets that can give capabilities, information, firm’s attributes and knowledge. These resources help Toyota to implement strategies.

Valuable: Resources of Toyota enable the firm to implement strategies to improve effectiveness and efficiency. The resources can be offices, market share, manufacturing process and technologies or human resources. Resources of an organisation can be tangible and intangible and these resources must give value creation.

Rare: Toyota uses just-in-time production technology, inventory and this company uses Lean methodology. Upscale quality and high-tech features are rare in the market. 

Inimitability: Toyota's manufacturing techniques cannot be recreated easily. Low-cost assembly resources and capability cannot be imitated easily. 

Organisation: Toyota has been using the manufacturing system since 1960 and it is perfect for the organisation.


Sustainable approach

Sustainable development concept has been in the industry since 1987. However, sustainable development of an organisation depends on triple bottom line concept. These three ideas are profit, people and planet. However, in recent times, the concept of climate change has posed a significant impact on all industries. In order to be a sustainable organisation, the organisation has to take measure of economic, social and environmental strategies in order to ensure long-term success. Triple bottom line concept was coined by famous John Elkington. 

Triple Bottom Line approach

Social: Organisations need to understand the social equity and organisations must give benefits to the employees of the organisations who are human capital. Business practices should incorporate the labour and community development. The well-being of the organisation depends on the social structure and stakeholders of the organisation must be benefitted through this.

Environmental: Sustainable natural practice is main concern for the organisations right now. The organisations are trying not to harm the nature in order to expand the business. In business practices, the ecology of an area must not be harmed. Organisations can follow non-renewable natural resources and reduce waste is very much important for an organisation (De Brucker et al. 2013).

Economic: Organisations must include economic value in strategic management as the cost of inputs must be low. The profit margin of the organisation needs to be high as sustainable framework clearly speaks about the economic benefit.

Toyota’s sustainable approach

Toyota Motor follows the Triple Bottom Line approach to the implementation of CSR technique. Since the beginning of the organisation, it follows the sustainable development through community involvement and innovative manufacturing process. Toyota focuses mainly giving the quality products to the customers and they care about the societal impact of the business. 

Toyota takes the CSR policies through contribution for the sustainable development. Corporate social responsibilities of the organisation are maintained by Toyota in each country. Management of the organisations maintains healthy relationship with communities and customers. In case of customers, the company gives the cars that are environment-friendly. Some of the cars produce less harmful gas and some cars hybrid. Customers' safety and car quality are the main concern. In case of the environment, Toyota wants to reduce environmental impacts such as biodiversity and climate change issues ( 2017). Toyota wants to establish and develop the technology where economy and environment can coexist. Toyota takes the philosophy of community engagement through customs, culture, laws and history.


Toyota is a global automotive firm and Toyota takes care of Stakeholders. Stakeholders' needs are important for the organisation. Toyota follows the interests of the stakeholders and their requirements give the organisation benefits of elicitation. Stakeholders' analysis is like stakeholders' involvement plan for Toyota as it gives benefits of making a corporate strategy for the organisation. In addition, dynamic capabilities of Toyota are rare for them as the organisation always strives for betterment. This strategic approach will give benefit Toyota to understand the importance of resources and integrating, reconfiguring the resources. Moreover, Toyota always wants to use new technologies that can use the resources perfectly. This strategic management practice can provide advantage of having the external competences in changing environment. In addition, the sustainable approach of Toyota is famous for engaging each of the stakeholders' in an effective manner and amalgamating triple bottom line approach with this. Toyota has the economic benefit through taking competitive pricing strategies that give them profit. In social aspect, employees and communities benefits are the main focus for the organisation. In case of the environment, Toyota's manufacturing process reduces the waste and Toyota's cars do not harm the environment if it's hybrid cars.

Implementing strategic management approach for Toyota may have some issues as Toyota already has stakeholder approach and sustainable approach within the organisation. Implementing resource-based view to Toyota can be beneficial as allocation of resources and capabilities can give them competitive advantage. However, it is not easy to imitate as resources cannot be purchased and transferred easily.



Bridoux, F. and Stoelhorst, J.W., 2014. Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives. Strategic Management Journal, 35(1), pp.107-125.

De Brucker, K., Macharis, C., and Verbeke, A. 2013. Multi-criteria analysis and the resolution of sustainable development dilemmas: A stakeholder management approach. European journal of operational research, 224(1), pp.122-131.

Dyer, J.H. and Nobeoka, K., 2013. Creating and managing a high-performance knowledge-sharing network: the Toyota case. Strategic management journal, pp.345-367.

Freeman, R. E., and McVea, J. A. 2015. A Stakeholder Approach to Strategic Management. Abingdon: Routledge.

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

Kramar, R. 2014. Beyond strategic human resource management: is sustainable human resource management the next approach?. The International Journal of Human Resource Management, 25(8), pp.1069-1089.

Meixell, M. J., and Luoma, P. 2015. Stakeholder pressure in sustainable supply chain management: a systematic review. International Journal of Physical Distribution & Logistics Management, 45(1/2), pp.69-89.

Schilke, O., 2014. On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism. Strategic Management Journal, 35(2), pp.179-203.

Tantalo, C. and Priem, R.L., 2016. Value creation through stakeholder synergy. Strategic Management Journal, 37(2), pp.314-329.

Teece, D. J. 2014. A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. Journal of International Business Studies, 45(1), pp.8-37.

Toyota Motor Corporation Global Website. 2017. Toyota Global Site | CSR Structure. Available at: [Accessed on 15 Sep. 2017].

Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. London: Berrett-Koehler Publishers. 


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