STRATEGIC MANAGEMENT

Reflection on significance of core

competency management
Essay

Module leader:
Individual Assignment 2
[Pick the date]

Academic Year:
 Reflection on significance of core competency
management
Core competences describe the features within the service and products offered by
an organization differentiated from the other organizations offerings in the same
market (Barney and Hesterly, 2006). Successful business organizations design their
own capabilities, management strategies and resource management for the
purpose of differentiating themselves from the competing companies.

Toyota is a global car manufacturing company currently holding a great position in

the UK market. In the market of UK the company has divided its operation into two
organizational parts. The Toyota Manufacturing UK holds responsible for the
manufacturing of motorcars. On the other hand, the Toyota (GB) PLC is responsible
for the marketing, sales, after sale service and customer relationship management.
This two way functionality provides the organization with cost efficiency and better
quality management for the car brands produced and marketed by Toyota (Toyota
UK, 2017).

The company is enjoying strong competitive position in the car market of UK. The
strong brand image of Toyota can be considered as the most effective advantage
in the market. Consumer perception regarding the quality, functionality, personality
and safety of the Toyota brands is very positive towards the company. The
company has a very long historical goodwill as high quality motorcar designer. The
position of the company in customer mind helps the brands of Toyota in UK to gain
quick acceptance to the customers. Toyota also has the advantage of global
supply chain around the world. The production and distribution of Toyota cars in
different countries provides with cost effectiveness, high quality and security of
product sales. The company has developed an innovative corporate culture that
makes the employees creative and flexible to cope with new technology and market
situation (GUPTA, 2017).
Toyota has been one of the leading companies in the motorcar industry of UK by
following some strategic techniques and maintaining some innovative features in
corporate culture (Toyota UK, 2017). Among the core competencies adopted by
Toyota, five major strategies are described here.

The first strategy is called Kaizen method that suggests continuous improvement.
It is the key competitive advantage for the market leader manufacturers. Many
companies reject to adopt Kaizen approach. The reasons include high improvement
cost, information sharing is not always accepted by the managers,
acknowledgement of defects and it is an overarching philosophy. The problems
associated with Kaizen approach make it difficult for most of the companies to
maintain continuous development. That is the vital competitive advantage for
market leaders like Toyota (Batal, 2017).

Another core competency of Toyota Motorcar Company in UK is the training

programs provided by the company to the vendors and subcontractors. To keep up
JIT delivery system for customer satisfaction, the vendors of different accessories
and the subcontractors have to keep pace with the functions of the company to
make the company customer oriented and profitable. It is like the musicians in
program where everybody acting with a continuous same flow at the same time.
The organizational members, vendors and the subcontractors have to act
consistently to make the best use of system and time. That requires high level and
continuous training and Toyota provides the perfect training to its vendors and
subcontractors (Recruitment.toyotauk.com, 2017).

The third strategy is called suggestion system that applies the ideas of the
employees and workers in the organization to develop the total system of the
organizational environment. Toyota has developed a culture among the employees
that encourages the employees to provide ideas for developing everything within
the company like from the work arrangement in production floor to bar soap
selection in the rest room. Toyota has created all the employees as quality circles.
They are being paid for their suggestions ranging from $5 to $2000. This is very
effective for the company and its products because the employees know the quality
of their work best. The approach has been proved as very effective in improving the
organizational structure, quality of the products and customer satisfaction in the
market (Pangaribuan and Purwadi, 2013).

The fourth strategy is called Kanban strategy that applies perishability theory for
the products of Toyota. The strategy is still active in Toyota Corporation through a
computerized system. The system helps to manage the old products or the older
parts of particular products. As the steel and the tires perish with the pace of time,
the organization requires the older items to be sold earlier than the newer items.
So Toyota has developed and is practicing the system continuously in its
warehouses. The system tells the employees what products to be sold first. The
system is highly effective for reducing wastes and damage of stored products. It
also prevents the company from providing un usable products in the market that
help the company to maintain its goodwill regarding quality (Toyota UK, 2017).

The fifth key strategy that is being followed by the Toyota motorcar company can
be described as customer survey. Customer survey is being largely used by many
developed companies in the modern world to understand the requirements of the
customers. Customers are the key stakeholders of a company. The demand trend
of the customers changes with the change of time. To be successful in the market,
a company must track the needs and wants of the customers. Toyota has
developed customer database and tracking system that allows the company to
understand the demand fluctuation prior to other companies in the market. That
system helps the company to develop new models, designs and continuous
technological innovation. This practice helps to provide the best product with best
price option (Saruta, 2006).

However Toyota has made some bad decisions in the past few years. The most
critical bad decision was the entrance into F1 race. The company spent more than
eight years in this competition without any remarkable success in hand. The critical
factors were driver selection, faulty car design in the early stage, regulations from
the company culture regarding driver setting and missing opportunities in 2009
(News.bbc.co.uk, 2017). However, Toyota was successful in creating some
developed racing car models. The most perfectly developed model was launched in
2009 and in that year the drivers of Toyota could position second and third in F1
championship. The racing car development session of Toyota took 8 years and it
brought some achievement in different competitions. However, the success was
very little comparing the monetary and time investment on the process. In 2014,
the company decided to extend production by lessening quality control that resulted
in recall of 6.5m cars for faulty design in some brands like Yaris, Corolla, Urban
Cruiser and Scion xD. The problem was found in 10,263 UK-registered vehicles
marketed between January 2005 and August 2010. The major problems were
regarding safety of the seats, airbags, window switches and steering wheels. The
reputation was harmed badly after too much safety problems in some car designs
and caused 720m fine after investigation on the safety statements made by the
company (Pangaribuan and Purwadi, 2013). However, the mass production reduced
cost and prices of those brands. The reduced cost and attractive models helped the
company to capture many customers in UK. The price helped the company to
compete in the motorcar market. The customers have high quality perception for
the cars offered by Toyota. They accepted the low cost cars with high pleasure
assuming that they are getting high quality cars in lowest possible price (Saruta,
2006).

Another noteworthy company in the UK motorcar market is the Nissan Motor

Manufacturing (UK) Ltd which started business in UK in 1984 and now is one of the
market leaders in UK motorcar market. The company mainly markets city cars,
crossovers, 4x4, sports cars, commercial cars and EV cars with aftersales service,
warranty, maintenance, motability and roadside assistance service for the
customers. The company can be distinguished by its corporate culture, environment
and innovative technology (Nissan, 2017).

Nissan is one of the most competitive brands in the motorcar market of UK. The
company has developed some competitive advantages in the motorcar market by
applying some innovative strategies and merging with other market leaders
(Jurevicius, 2017). The key competencies of Nissan motorcar manufacturing UK Ltd
are described here.

The most noteworthy successful decision made by the company is the alliance with
Renault Company. The Renault Company has a very good reputation in the car
market that will be helpful for the Nissan company to develop new car models. The
alliance has reduced cost of both companies and has increased efficiency of
producing motorcars in UK market. Many investors have become interested to
invest in the Renault-Nissan company. Nissan has experienced high growth in
product sales after the alliance in the market. The alliance is helping the companies
to share resources to develop innovative ideas and to develop employee efficiency
through information sharing (Stephens Scown, 2017).

The second most important strategy adopted by Nissan is the creation of research
and development team that is responsible for technological innovation and product
development. Continuous research on the effectiveness of the electric cars has
resulted in high quality and attractive electric cars in the market. Nissan has been
proved as the most successful marketer in the electric motorcar industry of UK in
2016. It has developed a wide variety of designs and functionality in the electric car
market (Thompson, Strickland and Gamble, 2008).

Strong brand presence in the automotive car market in Uk is another reason for the
success of Nissan. The company is trying to maintain and develop an impenetrable
position in the customers mind. The strong brand position comes from the quality
products and continuous design development of the cars. Recently the company has
launched Qashqai SUV cars in UK market that has become one of the most
profitable projects in the history of Nissan (News.bbc.co.uk, 2017).

The organizational operations are well managed in Nissan Company to ensure high
quality of the products and cost effectiveness. The employees are very responsible
for their acts within the company. The company has developed employee and
customer oriented corporate culture because employees are the key performer of
an organization and customers are key stakeholders of an organization. Financial,
resource and human resource management of Nissan provides the company with
high competitive advantage in the market (Hoovers.com, 2017).

Another most successful and effective decision taken by Nissan is the Green
Program 2010. The campaign helped Nissan to create brand awareness and
customer acceptance. Many of the Nissan customers prefer Nissan for the
environmental responsiveness of the company. The campaign created a good look
and a favorable position in many of the customers mind (Nissan, 2017).

Recently the company has suffered from some bad decisions made by the
management of the company. The management body of the company decided to
produce massive amount of Qashqai SUV and Juke car brands that have resulted in
low quality and high amount of customer recall. The brands have faced a large
amount of customer complain in 2016 within few months of launch. The major
problems were in the airbag functioning, cracked radiator and transmission, CVT
problems, steering lock failure, fractured coil springs and starting malfunctioning.
The decision of making a large amount of those cars in low cost was one of the
worst decisions Nissan motor company has made in 2016. It created negative word
of mouth among the customers including news awareness in different channels and
newspapers against the brands and Nissan (News.bbc.co.uk, 2017). However, the
brands were profitable for the company as the design, promotional and
communication activities were attractive to the customers. The brands initially
received high demand in UK market and the Qashqai has become one of the most
profitable brands in the history of Nissan Motorcar UK Ltd. Another mistake the
company made was the decision to produce next generation Qashqai SUV cars in
Sunderland plant (Saeed, 2017). The Brexit may result in additional tariff to
transport the cars in different warehouses within UK and outside UK. The cars
produced inside UK will remain free from additional tariff cost if the Brexit happens.
The production process at Sunderland was somehow profitable as employees are
very much available in Sunderland and areas beside it. The company has a well
designed and high-tech plant with various facilities like assembling, washing,
painting and other facilities. So, it was easy, cost effective and efficient way to
produce cars in Sunderland. At the end of 2016, the Nissan Motorcar Ltd decided to
stop production in Sunderland plant (News.bbc.co.uk, 2017). However, there are
many employees working in the plant and the closing of that plant would be
dangerous for the companys economic condition and also for the employment
situation of UK and Europe as almost 8000 workers from UK are active in the plant.
Nissan motor company has made a decision regarding producing new car models in
UK in 2017. The Brexit may be a problem for the new investment in new models as
the currency rate may be affected by the Brexit. The economic condition of UK and
other countries of EU will be affected highly by the Brexit. The investments of other
countries inside UK and investments of UK in other countries may be harmed by
new government regulations regarding investment and tariffs. In that case, the
launching of new car models may face price fall, increased tariff cost and new
government regulations in motorcar industry. The failure in this investment may
cause a great damage for the economic condition of the company. Moreover, it may
take a long time to recover the lost investment. However, the new models may be
profitable in the sense that, customers in UK prefer the brands of innovative design
and functionality. They do not stick to a particular car model for long time. So, the
decision is effective and also necessary to retain customers and capture potential
customers.

Core competencies of a company depend mostly on the approaches applied by the

company and the objective of the company. Toyota Motorcar Company in UK has
developed a high competitive position in the market. The company aims for
providing quality cars at best price and they are successful to create that position in
the UK market. The Nissan motorcar manufacturing Ltd aims for the leading
position in environment friendly and luxurious car market. The company has
developed its own strategies to create that position. The company is also successful
in electric car market and also in luxurious car market. Both companies have
different strategies and competitive advantages in the car market of UK. They have
different positioning in the mind of the customers and they promote their brands
differently in the market. Toyota emphasizes on functionality along with price
leadership. Nissan emphasizes on luxurious design and self-actualization of the
customers. So, competitive advantage can be developed differently in the same
market.
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