Toyota Motor Corporation Strategy Individual Report

Strategy Assignment

MMN221701

CWK2: Individual Report

A Case Study of TOYOTA

(2689)

Contents

Executive Summary        3

Introduction        4

Conceptual Framework        5

The McKinsey’s 7S Model of Toyota        6

Hard Elements        6

Strategy        6

Structure        7

Systems        8

Soft Elements        8

Skills        8

Staff        8

Style        9

Shared Value        10

Porter’s Five Forces Analysis of Toyota        10

Threat of New Entrants (Weak)        10

Bargaining Power of Suppliers (Weak)        10

Bargaining Power of the Customers (Strong)        11

Threat of Substitutes (Moderate)        11

Rivalry among Existing Competitors (Strong)        11

SWOT Analysis of Toyota        12

Strengths (Internal Strategic Factors)        12

Weakness (Internal Strategic Factors)        12

Opportunities (External Strategic Factors)        13

Threats (External Strategic Factors)        13

Conclusion        14

Recommendation        14

References        16

Executive Summary

This report examines the strategic position of Toyota Motor Corporation by conducting SWOT, Porter’s Five Forces, and The McKinsey’s 7S analysis of the company. The independent variables in the report include Toyota’s organisation design, its internal environment, as well as its external environment.  On the other hand, the dependent variables are the company’s market position, market share, competitive advantage, customer loyalty, and brand image. The McKinsey’s 7S analysis is used to analyse Toyota’s organizational design and effectiveness. The analysis finds that Toyota has strong organizational design with proper alignment McKinsey’s 7s elements. Porter’s Five Forces is performed to establish an insight regarding the functioning of the company in the automobile industry. The Porter’s Five Forces finds that Toyota has been able to exploit opportunities and address the industrial threat it may be facing. Based on the external and internal analysis of the company, SWOT analysis is conducted to determine the threats, opportunities, and weaknesses that Toyota has to address using its strengths. The report recommends that Toyota should maximize its competitive advantage to maintain or improve its brand image as well as market position. Additionally, it should strengthen its position in the developing countries.

Introduction

The Toyota group was founded in 1926 and comprises of 13 major companies that use the Toyota brand name. The automobile department, which is currently known as the Toyota Motor Corporation (TMC) was created as a separate company in 1937 by Kiichiro Toyoda. The Toyota Motor Corporation manufactures both commercial and luxury vehicles and engines. Moreover, the company provides leasing, banking as well as financing services (Thomson 2017, n. p). The company produces automobiles under 5 brands including Lexus, Toyota, Hino, and Scion. Also, the TMC owns several subsidiaries such as the Toyota Kirloskar Motor Private Limited situated in India. The TMC has 52 manufacturing companies located overseas in 27 countries (Statista 2018, n. p). The vehicles produced by Toyota are sold internationally in more than 160 countries. The TMC has been a very successful company and it is presently one of the leading companies in the automobile industry (Thomson 2017, n. p). This paper provides a strategy analysis of the TMC to determine how choices, decisions, and strategies have contributed to the current market position of Toyota.

Conceptual Framework                                                            

Independent Variables                             Dependent Variables                                                  [pic 1][pic 2]

             [pic 3][pic 4][pic 5][pic 6][pic 7][pic 8][pic 9][pic 10][pic 11][pic 12][pic 13][pic 14][pic 15][pic 16]

Source: (Author 2018)

The McKinsey’s 7S Model of Toyota

Hard Elements

Strategy

Toyota uses a generic strategy based on the production of low cost and differentiated products to gain as well as maintain competitive edge in the industry (Benders and Morita 2004, P. 441). Toyota has vehicles for ever type of customer ranging from four wheel drive trucks, all-terrain vehicles such as the SUVs to eco-friendly cars such as Prius. Additionally, the company has cars for virtually all price segments form low price point vehicles like corolla to luxury cars such as Lexus (Gregory 2018, n. p). In other words, the company has cars for everyone. Toyota differentiates its vehicles based on quality and innovative designs leading to the creation of a strong brand image. Moreover, technology has also been a differentiating factor for the company especially through the production of environmentally friendly hybrid cars.

[pic 17]     

The Generic Strategy for Toyota

Source: (Gregory 2018, n. p)

Structure

Toyota changed its organization structure in 2013 from the centralized global hierarchy to a divisional structure made of global hierarchy, geographic, and product-based divisions (Gregory 2018, n. p). The global hierarchy has allowed for the decentralization of the decision-making power by including the business unit and regional heads in the process. Toyota has eight regional divisions including the Middle East, Latin America, Africa, Caribbean, China, Asia, Oceania, Japan, Europe, and North America (Gregory 2018, n. p). Additionally, the company has four product-based divisions including Toyota No. 1 for operations in Europe, North America, and Japan; Toyota No. 2 for worldwide operation, Lexus International, and the Unit Centre for transmission, engine, and other related operations.