TOYOTA’S BUSINESS ENVIRONMENT

TOYOTA’S BUSINESS ENVIRONMENT

SWOT ANALYSIS

 Company’s description

            Toyota company is a manufacturing industry whose headquarters is based in Japan. It also has other branches in different locations all over the world, including North America, UK, and other regions as well. It specializes in various types of business, including automobile business, finance as well as different kinds of companies. The segment of the automobile is focused on design, manufacture, as well as the sale of trucks, sports utility vehicles, 2box, minivans, sedans, and other cars as well. The segment of finance is related to vehicle leasing and finance business. The company also carries out business in information communication.

Task Environment

The task environment of an organization can be defined as the collection of different entities beyond the internal limits of an organization, which determines how the organization executes its operations. The various objects that make up the task environment include the company’s customers, the competitors, suppliers, as well as the labor market. For the Toyota Company, the task environment can be considered to be the most dynamic of all situations.

OPPORTUNITIES AND THREATS

Customers

To begin with, Toyota’s company has a broad scope of clients located not only in Japan but also in North America and other different countries as well (McMillan, 2019)? The fact that many people globally prefer cars manufactured by Toyota can be attributed to a variety of factors. These include the fact that the cars are considerably cheap when compared to other models and the fact that the company also has a keen emphasis on ensuring quality production. Besides, the company is globally known for its innovation in coming up with new designs of cars. These factors have enabled Toyota to attract a massive number of customers who will ensure the generation of revenues through sales. A considerable amount of customers is one of the strengths of Toyota Company, which boasts as the second-largest company for the manufacturing of cars.

Competitors

In spite of global popularity, Toyota’s task environment is also comprised of companies such as Ford Motor Company, General Motors, Hyundai, and Nissan. These companies are some of the key competitors of Toyota in terms of market share in the automotive industry. General Motors and Ford, for instance, are known to be among the most popular companies in terms of market share (“Competitors of Toyota,” 2018). To keep up with the competition from the companies above, Toyota has engaged in various activities, with the most significant of them being mergers and acquisitions. The recent alliance with Subaru, for instance, is one way through which the company can keep up with the competition (TOYOTA MOTOR CORPORATION., 2019).

Suppliers

Toyota Company is the second-largest manufacturer of cars in the world. The company produces sold more the 6 million vehicles as of July of 2019. A diverse supply chain supports its business operations. To sustain its operations, Toyota relies significantly on external suppliers. In Japan alone, it is estimated that over 200 companies are involved in supplying products to the company. Some of the products provided include Nitrous, tires, and screens. Notable suppliers include Bridgestone Americas, Cypress, Tesla Motors, and Samsung Electronics. According to data retrieved from the headquarters, the 200 suppliers add up to approximately 2 billion units. Out of these units, around 150000 of them are supplied monthly. The expense of these suppliers is approximated to be 300 million dollars per month. It is also notable that the company spends approximately 32 billion dollars annually on supplier materials and parts, as well as goods and services in the American market. The company ensures a steady supply of these resources through contracting long-term suppliers as well as local level suppliers.

Labor market

Similarly, the labor market for the company has various sources. Due to its multinational nature, the company has employees from the different companies in which it operates. Different regions tend to have different employees serving different sources. For instance, while in Japan, employees work on production, sales, and administrative duties, in countries like the United States, most employees work on the production. The headquarters of Toyota is located in Japan with other branches located in North America as well as other regions in the world. All these regions provide the labor market for the company, with the majority of them located in Japan and North America.

STRENGTH

Internal Environment.

The internal environment of the company has undergone considerable change in the recent past. Before 2013, the company had embraced a hierarchical organization structure that implied that every decision in the organization had to be approved by the headquarters in Japan. This approach had significant implications in instances where quick decisions in business units in other parts of the world, such as North America, had to be done. However, in the present age, the company reshuffled its organizational culture, therefore, allowing some decisions to be made at the geographical business unit level (“Toyota’s Organizational Structure: An Analysis,” 2018).

Employees

To ensure success in the operation of an organization, the company needs to employ people who have specialized skills or knowledge. It is essential in providing high productivity. The specific skills required are production skills, sales and marketing skills, and others. Production skills mainly require body strength, and this can be acquired from healthy people. People involved in transactions need to have the necessary knowledge in sales and marketing. During the year ending December 31, December 31, 2019, Toyota Company employed 370,870 people. These high numbers of employees are a result of the significant nature of the company, which is said to be the second-largest manufacturer of cars. This corporation is behind the manufacture of some of the bestselling models of vehicles, such as Camry or Corolla. As of March 2019, in that particular, fiscal year, the company collected a general revenue and sales of approximately thirty trillion Japanese yen. More than 50% of Toyota cars are sold in North America and Japan alone. This excellent performance is attributed to the excellent work done by their employees. They produce high-quality products that are relatively affordable, thus attracting a considerable number of consumers who, in turn, ensure that the sales are high and, consequently, high revenue generated by the company. Since 2012, the company has employed more than 300000 people yearly up to date. It has played a significant role in raising the standards of living for the people, thus ensuring the well-being and welfare of the citizen in Japan, North America, and other countries as well.

 Culture

The working culture in the company also varies significantly depending on the location of the workstation. Toyota workshops located in the Asian continent are known to have working cultures that differ considerably from those in regions such as Europe and America. Nevertheless, the different task forces share the same common agenda of the company. It implies that the task forces place significant emphasis on aspects such as quality products and services as well as embracing teamwork (“Toyota’s Organizational Structure: An Analysis,” 2018). Every person’s personality is influenced by surroundings such as region, religion, nature. This influence is what is known as culture. Generally, people are affected by a culture so that they end up behaving in a particular manner. Therefore, it enables people to interact in a certain way that fits their way of life. There must be an understanding between the two parties involved to make sure that the given culture works. In Toyota Company, there were changes to the culture organization after 2013 when there was the implementation of reorganization. Before this implementation, Toyota Company’s culture mainly emphasized the sense of secrecy and hierarchy. This culture mostly implied that the major decisions were to be made from the management in Japan, which was the headquarters. It is essential to consider the fact that the internal environment of the organization has played a crucial role in ensuring that Toyota remains competitive in the automotive industry. Following the reorganization of the organization structure, the company has witnessed tremendous growth that has seen it rise to be the second higher selling company in the automobile industry (Ito, 2019). After the implementation in 2013, the culture in Toyota company mainly insisted on secrecy, quality, learning to facilitate continuous improvement and teamwork.

Management

Akio Toyoda, the president, heads Toyota. Other heads include vice president, general manager, and other departmental managers. An individual must have proper managerial skills for him or her to be useful as a manager of an organization. It is crucial because it will allow the manager and the management as a whole to accomplish the objectives and goals of the organization. Through working with people in the organization and the resources, the manager can help the organization to complete the purposes of the organization. To become a good manager, one must be able to adapt to changes within the environment and be flexible enough to any arising issues in the operation of the organization. A proper management system must be able to carry out the four principles of management, that is, planning, leading, organizing, and controlling. These four essential principles are vital to the operation of the Toyota Company. Planning involves putting down given steps and plans which ought to be accomplished at the end of the day. Leading, on the other hand, consists in directing the employees on what should be done and carrying out necessary follow-ups to ensure proper work has been done. Organizing is when people are allocated tasks and duties and given the tools needed to accomplish the tasks. Lastly, controlling involves the supervisory work to ensure a proper job is done. Toyota management is based on “Meikiki,” that is, philosophy. The company applies a management system that is based on people. In their establishment, the company insists that production is not only dependent on machines but also on people. It is this principle in Toyota that gives people the power to stop the production process if they spot a problem. It is entirely different from the American culture, which is usually a top-down system.

OPPORTUNITIES AND THREATS

General Environment

Technological advancement

The global environment is also another major determinant of how Toyota conducts its operations. To begin with, technological innovations are a crucial driver in the automobile industry, and therefore, every company aims at ensuring that it is at the top. Toyota invested significantly in autonomous cars in 2017 as a way of keeping up with the latest technology in the automobile industry. This investment was further reiterated in 2019 when the company invested in the newest NVIDIA technology to develop autonomous cars targeting the elderly and the disabled (“Toyota doubles down on Nvidia tech for self-driving cars,” 2019). This move is meant to ensure that the company maintains its competence at a time when companies such as Tesla are also developing autonomous cars. In 2019 as well, the company also invested $100 million on the same concept of creating autonomous vehicles. These types of vehicles are, however, surrounded by uncertainty since previous tests gave revealed that accidents resulting from such vehicles are quite fatal. However, such accidents rarely occur, and their occurrence can be attributed to exposure to unknown stimuli.

Political & legal

Though controversial, political factors in different parts also influence the company significantly. For instance, the political instability, and subsequently, the war witnessed in countries such as Libya, Chad and other countries in the Middle East have been beneficial to Toyota in the sense that their trucks have been significantly bought in such areas. These trucks are subsequently used for combat purposes in such regions (“‘ Toyota War’ is a thing that happened,” 2017). The company has, however, managed to stay clear of political crossroads and has therefore been able to conduct operations under different political landscapes.

Natural

Legal policies, especially those touching on environmental conservation, also affect the overall production of cars. With more emphasis being placed on environmental protection, the company has resorted to designing hybrid vehicles that use both fossil fuel and green energy (Ito, 2019). The primary reason behind this hybrid production is to cut down on the consumption of fossil fuel whose use is attributed to climate degradation. In some countries, Toyota cars are also expected to have engines of particular specifications to ensure that they do not consume a lot of petrol. Such regulations tend to minimize the sales of the companies in such regions.

Sociocultural

The company has been able to ensure a high level of diversity in terms of recruitment of employees. The constitution of the organization involves both whites and blacks. The issue of gender inequality has been addressed by ensuring that women also have equal chances as men. It is imperative to ensure that despite the race, gender, and even social background, everyone is offered the same opportunity, thus facilitating equality.

International

Toyota is a huge company that operates globally; that is, it sells its products all over the world. It implies that the company is affected by international business environments. These global factors may include tariffs imposed on imported products or even exports, which in turn affect the prices of commodities. Generally, these global economic factors also affect the growth of the company either positively or negatively.

Conclusion

When analyzing the entire environmental structure of the Toyota Company, it is evident that the success of the company is a result of the coordination from the different ecological entities. For instance, having a stable supply base, coupled with the existence of a well-qualified labor source and up-to-date technological innovations have played a significant role in the growth of the company.

References

Competitors of Toyota. (2018, July 31 July July 31 31). Retrieved from             https://notesmatic.com/2018/07/competitors-of-toyota/

Ito, H. (2019). Analyzing Toyota City’s Eco-policy Through Strategic Marketing Tools. Asian       Social Science, 15(4), 23. doi:10.5539/ass.v15n4p23

McMillan, C. (2019). Organizational Identity, Corporate Strategy, and Habits of Attention: A       Case Study of Toyota. Strategic Management – a Dynamic View.    doi:10.5772/intechopen.81117

Toyota doubles down on Nvidia tech for self-driving cars. (2019, March 18 March March 18 18). Retrieved from             https://techcrunch.com/2019/03/18/toyota-doubles-down-on-nvidia-tech-for-self-driving-  cars/?

TOYOTA MOTOR CORPORATION. (2019, September 27 September September 27 27). Toyota and Subaru Agree on New                       Business and Capital Alliance. Retrieved from                                                          : //global. Toyota/en/newsroom/corporate/29916271.html

The ‘Toyota War’ is a thing that happened. (2017, August 4 August August 4 4). Retrieved from             https://www.carsguide.com.au/oversteer/the-toyota-war-is-a-thing-that-happened-58048

Toyota’s Organizational Structure: An Analysis. (2018, September 8 September 8 September 8). Retrieved from             http://panmore.com/toyota-organizational-structure-analysis

Who are Toyota’s (TM), leading suppliers? (2015, June 1 June 1 June 1). Retrieved from             https://www.investopedia.com/ask/answers/060115/who-are-toyotas-tyo-main-       suppliers.asp