Strategic Management

Industry: Automobile Industry

Company: Toyota Kirloskar India Pvt Ltd

Submitted by

K.Akhil Kumar Reddy

Section:C

161415
Introduction

Toyota Motor Corporation is a Japanese multinational automotive manufacturer headquartered

in Toyota, Aichi, Japan. In 2017, Toyota's corporate structure consisted of 364,445 employees
worldwide and as of October 2016, was the fifth-largest company in the world by revenue. As of
2016, Toyota is the world's largest automotive manufacturer. Toyota was the world's first
automobile manufacturer to produce more than 10 million vehicles per year which it has done
since 2012, when it also reported the production of its 200-millionth vehicle. As of July 2014,
Toyota was the largest listed company in Japan by market capitalization and by revenue.

Toyota is the world's market leader in sales of hybrid electric vehicles, and one of the largest
companies to encourage the mass-market adoption of hybrid vehicles across the globe. Its Prius
family is the world's top selling hybrid nameplate with over 6 million units sold worldwide as of
January 2017.

The company was founded by Kiichiro Toyoda in 1937, as a spinoff from his
father's company Toyota Industries to create automobiles. Three years earlier, in 1934, while still
a department of Toyota Industries, it created its first product, the Type “A engine” and its first
passenger car in 1936, the Toyota AA. Toyota Motor Corporation produces vehicles under five
brands, including the Toyota brand, Hino, Lexus, Ranz, and Daihatsu. India (Toyota Kirloskar),
one in the Czech Republic, along with several "nonautomotive" companies. TMC is part of
the Toyota Group, one of the largest conglomerates in Japan.

The 1970s were the golden period of rapid development of the Toyota Motor Corporation from
1972 to 1976 was only four years due, the company produced 10 million cars, annual car reach
over 200 million. The 1980s, Toyota Motor Corporation's production and sales are still straight
up to the early 1990s, annual output of the car has exceeded 4 million to close to 5 million,
beating the Ford Motor Company vehicle production ranked second in the world. Toyota Motor
Corporation, the 1960s and 1970s Japan's self-growth period, after the 1980s, and began it fully
into the world of international strategy. It worked in the United States, Britain and Southeast
Asia to establish wholly-owned or joint ventures, and automotive research and development.
center jointly built by the local implementation of the internationalization strategy of the local
research and development of design and production.
Company strategy

Toyota Motor Corporation’s generic strategy supports the company’s global growth. Founded in
1937, the firm is now a global force in the automobile industry. This success is based on the
effective implementation of Toyota’s generic strategy and intensive growth strategies. This
generic strategy represents the overall approach Toyota uses to compete in the global market. On
the other hand, the intensive growth strategies define the types of actions that Toyota uses to
ensure continued growth. The company’s continued innovation and success is an indication of
the fulfillment of these strategies.

Toyota is effective in the simultaneous implementation of its generic strategy and intensive
growth strategies. Toyota’s generic strategy determines the company’s overall approach in the
global automotive industry. The intensive growth strategies are applied to ensure Toyota’s
continued growth in markets worldwide.

Toyota’s Generic Strategy

Toyota Motor Corporation generic strategy is a combination of the “cost leadership generic
strategy” and the “broad differentiation generic strategy”. Cost leadership entails minimizing
cost of operations and selling prices. On the other hand, the broad differentiation generic strategy
requires developing business and product uniqueness to ensure Toyota’s competitive advantage.
The combination of these generic strategies supports Toyota’s global reach in all market
segments.

A strategic goal corresponding to Toyota’s generic strategy is to minimize production costs to

attain cost leadership. The company does so through the “Just-in-time (JIT) manufacturing”
method, which is also known as the “Toyota Production System (TPS)”. This method addresses
Toyota’s generic strategy by minimizing waste, inventory cost, and response time. As a result,
the firm achieves maximum business efficiency. On the other hand, Toyota has the strategic goal
of innovation to address the broad differentiation component of its generic strategy. Innovation
leads to unique and attractive products for all market segments.
Intensive Growth Strategies

Market Penetration.
Toyota’s main intensive growth strategy is market penetration. This intensive strategy supports
business growth by reaching and attracting more customers in the firm’s current markets. To
fulfill this intensive growth strategy, Toyota ensures that it offers products for every market
segment.
For example:- Toyota has sedans, SUVs, luxury vehicles, and other product lines for every type
of customer. This intensive growth strategy supports the cost leadership component of Toyota’s
generic strategy by enabling the company to maximize sales volume, which ensures profits
despite relatively low selling prices.

Product Development.
Toyota uses product development as its secondary intensive growth strategy. This intensive
strategy supports Toyota’s growth by attracting customers to new products. The company uses
this intensive growth strategy in the form of rapid innovation. The company is known for its
innovation processes.
For example:- Toyota Prius, this intensive growth strategy empowers the firm to attract
customers concerned about the environment. This intensive growth strategy supports Toyota’s
broad differentiation generic strategy by using innovative products that are attractive on the basis
of uniqueness or advanced features.

Market Development.
Toyota already has a global presence. As such, market development is just a supporting intensive
growth strategy for the business. In this intensive strategy, Toyota grows by entering new
markets or selling to new market segments. However, the company already has presence in most
markets around the world. Also, the firm already sells its products to every market segment. This
intensive growth strategy supports Toyota’s cost leadership generic strategy by maximizing the
company’s global market presence.
Strategy Execution

Toyota's success that simply deploying lean tools is helping them to acheive rewards similar to
those enjoyed by the Japanese automotive giant. Not so many firms already have discovered.
Some also have suggested that Toyota's accomplishments in the automotive sector derive
primarily from a lack of the legacy costs that dog U.S. competitors General Motors, Ford and
Chrysler, and that there's nothing fundamentally better about the way Toyota makes cars it's
merely the extra health care, environmental and labor expenses that are slowing down the Detroit
Three.

In reality, Toyota's success derives largely from its planning and execution system, says lean
consultant and author Pascal Dennis, a former manager at Toyota Motor Manufacturing Canada.
Called Hoshin kanri or Hoshin planning the management system helps Toyota remain
competitive year after year by keeping the entire organization's eyes and actions focused on
achieving the same goals. It's not just an automotive solution either as other manufacturers also
are reaping the benefits of hoshin planning.

Hoshin planning?

The Japanese word "hoshin kanri" has been interpreted in several different ways. Among the
more frequent translations are "strategy deployment" or "policy deployment." Broadly speaking,
strategy deployment aims to formulate clear corporate objectives and goals, disseminating and
aligning those objectives throughout all levels of the organization, and then creating plans of
action to achieve those objectives. It all about focus, separating the trivial problems from the
really important ones, and how they relate to the organization's strategy. Hoshin kanri is
fundamental to Toyota's success is currently an instructor at the Lean Enterprise Institute.
Toyota's ability to grasp the situation, identify two or three obstacles, develop meaningful plans
to address those obstacles, and deploy them is outstanding.
Porter’s Five Forces

 Competitive Rivalry or Competition with Toyota

Toyota deals with the strong force of competition. This component of the Five Forces analysis
determines how firms affect each other. In Toyota’s case, the following external factors are the
main contributors to the strong force of competitive rivalry in the industry environment:

 High aggressiveness of firms.

 High variety and differentiation of firms.
 Low number of large firms.

 Bargaining Power of Toyota’s Customers

Toyota’s customers directly affect the business through revenues. This component of the Five
Forces analysis shows the influence of buyers on business. In Toyota’s case, the following
external factors are the main contributors to the strong force or bargaining power of buyers in the
automotive industry environment:

 Low switching costs.

 High quality of information.
 Moderate substitute availability.

 Bargaining Power of Toyota’s Suppliers

Toyota’s suppliers aim to influence the firm to improve their businesses. This component of the
Five Forces analysis reflects the interactions between firms and their suppliers. In Toyota’s case,
the following external factors in the automobile industry environment contribute to the weak
force or bargaining power of suppliers

 Moderate population of suppliers.

 High overall supply
 Low forward integration of suppliers.
  Threat of Substitutes or Substitution
Substitutes affect Toyota’s business by competing with the company’s products. This component
of the Five Forces analysis determines the impact of substitute products. In Toyota’s case, the
following external factors in the automotive industry environment are the main contributors to
the moderate force or threat of substitution:

 Low switching costs

 Moderate availability of substitutes
 Low convenience in using substitutes

 Threat of New Entrants or New Entry

New entrants are potential competitors that threaten Toyota’s business. This component of the
Five Forces analysis shows the potential impact of new entry. In Toyota’s case, the following
external factors in the automotive industry environment contribute to the weak force or threat of
new entrants:

 High capital costs

 High cost of brand development
 High supply chain costs
Current Action Plan

Toyota has an action plan of zero CO2 emissions by 2050 by launching the hybrid vehicles and
electric vehicles. Toyota motors has formulated the Sixth Environmental Action Plan, a five-year
action plan from FY2017 to FY2021 (from April 1, 2016 to March 31, 2021). Placing great
emphasis on the basic policies, company will work on the Sixth Environmental Action Plan in
co-operation with the Toyota Industries Group companies to promote four pillars stated in the
"Global Environmental Commitment".

 Establish a low-carbon emission society:-

1. Develop products and technologies with the highest level of environmental performance
2. Develop production engineering technologies with lower CO2emissions and utilize clean
energy

 Establish a recycling-based society:-

1. Promote measures against resource depletion by recycling waste

2. Prepare and promote countermeasures against water depletion after determining water
usage and wastewater amount

 Reduce environmental risks, and establish a society in harmony with nature:-

1. Minimize usage of substances of concern

2. promote biodiversity conservation activities across the entire Group

 Promote the environmental management:-

1. Build a global environmental management system and promote related activities

2. Extend the scope of Toyota Industries’ enlightenment activities to consolidated
subsidiaries in and outside Japan.
 Future Related Actions

 A four-wheel model representing the TOYOTA Concept-i series, using artificial intelligence,
and as a partner that understands people, this vehicle aims to become a "beloved car" of a new
era.
 It combines technology that understands people ("LEARN") with automated driving and agent
technology, and provides drivers with safety and peace of mind ("PROTECT"), and new Fun to
Drive experiences ("INSPIRE") to enrich the enjoyment of moving.
 A cabin with a forward projecting futuristic silhouette and an advanced HMI2, as well as
interactions with the Agent, achieves a new user experience.
 Toyota plans to conduct road tests of vehicles equipped with some of the concept car's functions
in Japan by around 2020.
 A small mobility vehicle that emphasizes universality based on the concept of "user-friendly city
mobility."
 Use with sharing services is also envisioned. By sharing with more people, universal mobility is
made easier to use.
Recommendations
 They usually discuss about product design, marketing strategy, product line up etc. The
decisions which came out through the meeting were put in the companies intra web, and
will be discussed among the other executives in the upcoming meetings.

 The informal style of communication among the company is through company magazines
and the web portal named as message from president, in companies official web site.

 Website also uploads the recent interviews of CEO and videos of Akio presenting
Toyotas global vision.

 Managing information in Toyota is most important because it has gone through various
crisis during the past three years and also introducing many programs for its new goal
achievements.

 Toyota should ensure its global communication by appearing its CEO in different
interviews and by giving articles on magazines.

 How power is used in the organization and how it is shared; describe the internal politics.