Running head: STRATEGIC PLAN 1 Strategic Plan Gracelino Dias STR/581 2/26/2015 Joseph Maksin STRATEGIC PLAN 2 Strategic Plan Table of Content Executive Summary---------------------------------------------------------------------3 Toyota’s Background-------------------------------------------------------------------4 Vision Statement------------------------------------------------------------------------5 Mission Statement----------------------------------------------------------------------5 Core Values-----------------------------------------------------------------------------5 Environmental----------------------------------------------------------------------6-10 Short and Long Term Strategies------------------------------------------------10-12 Implementation Plan-------------------------------------------------------------12-15 Risk Management and Contingency Plan-------------------------------------15-16 Conclusion----------------------------------------------------------------------------16 STRATEGIC PLAN 3 Executive Summary The day-to-day business of an organization is no longer considered private. What is done in the dark will eventually be brought to the light. The speed of the internet ensures that the wrong doings of companies and individuals are publicized out loud. Companies have found the importance in having a mission and vision statement about their organization. These statements outline the ethics of the company to the outside world they intend to do business with. Companies realize the importance of leadership in developing a strategic plan is being on the same page for protecting the company, the stakeholders, and the reputation of the company. An ethical company cannot afford to have loose cultural ground. One bad apple literally can spoil the whole bunch when it comes to bad press for a business. Company stakeholders are expecting transparency in business. It is no longer just about the bottom line but how the bottom line was achieved. Therefore, in this section the main focus is on a strategic plan for Toyota Motor Corporation. The strategic plan outline the steps proceeded by the organization in order to achieve a sustainable competitive advantage. STRATEGIC PLAN 4 Toyota’s Background Toyota started in 1937, growing out of Toyoda Automatic Loom Works, headed by Sakichi Toyoda. Toyota Motor Company was founded by Kiichiro Toyoda, Sakichi's son. Due to the fact that “Toyoda” had a meaning in Japanese, it was decided, after a large contest, that the company name would be changed to Toyota, which held no meaning in Japanese. In 1950 the company experienced its one and only strike. This strike proved to be a major turning point in the history of Toyota as Toyota’s labor policies and management style emerged from this stoppage. Both sides were firmly committed to establish the principles of mutual trust amongst its members, a corporate philosophy that still guides Toyota’s growth today. Due to the lack of resources in post war Japan, a production system that concentrated on improving efficiency and eliminating waste emerged. Taiichi Ohno, the systems founder, based TPS on the principles of continuous improvement, and “Just-in-time” manufacturing. Lean production, as it later became known is a major factor in the reduction of inventories and defects in the plants of Toyota and its suppliers, and it underpins all the operations across the World. Toyota launched its first car in 1947 and production of vehicles outside Japan began in 1959. The first expansion overseas for Toyota was in a small plant in Brazil. Toyota claims to believe in locating its operations locally to provide customers with the products they need where they need them. Nevertheless, in addition to their manufacturing facilities, Toyota has design and R&D facilities located throughout the world, servicing the three major car markets of Japan, North America and Europe. Today, Toyota’s major international sales regions are as follows: 32% of sales occurring within the United States, 25% transpiring within Japan, 14% ensuing geographically about Europe, and 11% taking place throughout Asia. The TMC currently boasts over 18% of STRATEGIC PLAN 5 American landscape for automobiles sold with respect to market share. Moreover, the TMC is strategically positioned in over 180 and countries worldwide. Toyota’s vision Toyota vision is to be the most respected and successful enterprise, delight customers with a wide range of products and solutions in the automobile industry with the best people and best technology. Toyota’s mission Mission of Toyota is to provide safe & sound journey. Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world. Toyota’s Four Core Values Customer first Respect for people International focus Continuous improvement and innovation STRATEGIC PLAN 6 Environmental Scan In today’s competitive market the organizations main goal is to achieve the most customers not only domestically but also globally. Achieving this objective require organizations to look for a sustainable competitive advantages over others competitors. In order to achieve this accomplishment organization need to know they position, the market they are competing in as well as other external forces that impact the way they do business. In this section, the main discussion will be on environmental scan which is composed of internal and external environmental analysis of Toyota Motors Corporation (TMC). Internal Analysis The internal environment of the organization is the basic element of the TMC. The TMC construction and society like human relation, procedure and polices, staff experience and skills are the vital components of the internal structure. For instance, Toyota has strong supplier relationships, well-organized distribution system, and well experienced inventory specialists. Toyota has outstanding manufacturing system, outstanding material, and control system which makes sure that mechanized levels are highly trusted and admire by the customers to meet their requirement and demand by supplying the parts proceeding to the assembly. In a competitive market it is important that TMC recognizes what it does the best to use it to gain a sustainable competitive advantage. A SWOT analysis would be a good approach for TMC to position itself in a competitive market. STRATEGIC PLAN 7 Toyota Motors Corporation SWOT analysis Strength Having a high research and development activities with a global position in 170 countries, Toyota tends to be a global player. Since 2009 the global share of Toyota raised to 8% and it show a good financial strength and support for the organization to grow. Performance of cars and new eco friendly advance manufacturing has given a better image to Toyota at international level. Toyota has excellent penetration in influential industry of the world like US, China. Delivering of lean manufacturing has maximized the profits like total quality management and just in time manufacturing has highly raised the profits margin for the company. Due to presence of numerous suppliers, manufacturing costs are low and available globally. The workforce performance is outstanding due to the regular extensive training programs. Weakness As a foreign importer Japanese car manufacturing has poor profitability off financial service segment. For the employees post retirement benefits add more expense on the company. There is an oversupply condition in the market of cars so the manufacturing companies have to design model and to make sure that the customers wants them. As Toyota products are mostly marketed in US and Japan therefore the fluctuating economical and political conditions of the countries affect the business. So the company is entering into new markets because of these reasons. The car market is also being reduced due to the fluctuation in exchange rate. For the operation efficiency the company has to continuously produce cars. There is an expensive fixed cost and huge investment in car plants and cost of training and retaining employees. The competitors of Toyota takes the full advantage of global efficiency gain through their strategically locations of STRATEGIC PLAN 8 manufacturing worldwide. Sometimes the dealers deviate from the principles and actions of Toyota which result in complaints from customers. Opportunities Due to the continue rise in gas prices the hybrid cars of Toyota are preferred more now days and the new technology of the company keeps on innovating new techniques of fuel efficiency cars. Other automobile manufactures pay lot of attention in this expertise and at good price Toyota can sell its technology. Toyota also targets the youth market with special model for them like Aygo which is convertible and loved by the new generations. Opportunities in Asian market are growing because of demand of hybrid vehicles. Marketplaces like China and India where the reputation demand for the vehicles is increasing. Threats Due to the present meltdown in the economic condition around the world and global automotive market competition is the main threats for the company. For the car manufacturers recalling their products is an embarrassment and problem for the company. Due to the faulty front suspension system Toyota in 2005 has to recall for repair of 880,000 SUV’s and pickup trucks. There is a tremendous competition in the car manufacturing and the competition is keeping increasing There is a considerable threat for Toyota because of the economic factors. Profit and raw material cost are keeping on affecting due to the exchange rate fluctuation. Due to the decline of large families demand for SUVs is also declining. As Toyota has become the number one automobile manufacturing company but still it faces threat from companies like Honda. The company has to fight against the threat of rising steel cost and other raw materials which has lead to cutting on manufacturing cost and production without compromising the quality of products. STRATEGIC PLAN 9 External analysis The organization external environment influences all the trade actions of the company. The firm’s external environment is influenced by factors such as political, economical, social, and technological. Political The political environment considerably affects the decision of marketing and the development of new products. The terms of government makes no company or organization untouchable and is an important component of general environment. The government legislative laws tries to protect companies from each other, creating more competition while providing customers values. The government laws will also prevent risky business practices which will protect the population from pollution and global warming. Economic With economical crisis in 2009 Toyota the world largest automakers announced its $4.9 billion in operation loss. In the past Toyota has never announced of such annual loss. The company has planned earlier to cut executives pay and to dismiss the bonuses. A program has been developed for the assembly workers who want to leave voluntary and voluntary buyouts to North America plant workers. Social Globally Toyota is the most trusted brand in automobile manufacturing. The vehicles of Toyota are considered as status symbols. By participating in the economic and social development Toyota respect the society and conduct of every country. As a superior corporate member of the STRATEGIC PLAN 10 world Toyota performs open and fair corporate actions in order to honor the laws of country. Toyota is extensively preferred by the general society. The gratitude towards stakeholder is never forgotten by Toyota. The corporation wishes that the workers of the corporation are well conscious of the traffic laws and have safe and pleasant lives. Technological The vital force that shape and nurture the future is technological environment. A lot has been delivered on technological advance and producing high quality products. In research and development Toyota invested $9.8 billion by 2009. The first hybrid car Prius and it revolutionized the market because of the winning of twelve engine of the year award. Approach of green friendly has been adopted by Toyota in a consistence of seven years. In 2007 Toyota Company struck by the financial crisis which severe affect on company’s growth and sales. To motivate employees a number of incentives programs were developed to stimulated production but the result was negligible. Toyota corolla model which is available in the market for 17 years has attracted lot of consumers as the car features has been outstanding because of gas price and low maintenance cost. Model diversifications and availability of several colors has endorsed customers to implement greater options and threats have been sustained. Short and Long Term Strategies In today’s business world many choices and decisions are made within an organization from strategic choice and evaluation for organizations to gain a sustainable competitive advantage. This process can fit and grow the organization or sink an organization depending on the situation and the business cycle that the organization is in at the time. Strategic decisions made by any STRATEGIC PLAN 11 company no matter the industry are very important and companies must continue to stay focus on the evaluation aspect as well. Top management must be able to analyze the trends within the organization so they can set up goals to grow the market. When it comes to the success of Toyota they must be able to focus on value product diversification, finance business, information technology development and development of environmental technology. Product Diversification Toyota traditionally has regarded customers principally as buyers of automobiles and of a very limited range of closely related products, such as financing and replacement parts. Now, Toyota is deepening its relationships with automobile customers through new products and services, such as innovative packages that combine financing and insurance. And it is diversifying into markets where it develops customer relationships through products unrelated-or indirectly related-to automobiles, such as cellular telephones and credit cards. Finance Business Much of the increased value that Toyota plans to cultivate downstream in its value chains is in financial services. As Toyota expands its activity in the financial sector, it needs to manage risk systematically and manage operations efficiently. Therefore Toyota placed all the financial services operations under a newly-established financial management company in July 2000. Information Technology Development Toyota intends to get onto the cyberspace map through multimedia ventures supporting valueadded functions in automobiles, such as navigation. Toyota’s GAZOO website, which began as an automobile information service, is being developed into a provider of diverse services. Its STRATEGIC PLAN 12 most developed functions provide price estimates and brochureware for Toyota vehicles and the nearest located dealers, and it also hosts a growing array of virtual shops for Internet shopping, including access to music downloading sites. Toyota is the second-largest shareholder of KDDI Corporation (with 13% of shares), formed in 2000 through the merger of Toyota’s IDO subsidiary and KDD corporation. KDDI Corporation is a leading provider of international and cellular telephone services in Japan’s highly competitive telecommunications industry. Development of Environmental Technology Creating automobiles with low environmental impact is no longer "just an option" for Toyota - it has become a crucial part of corporate strategy. The development of technology to reduce environmental impact enables Toyota to sit in the driving seat setting new global standards, so gaining competitive advantage in exploiting them. The “Prius” hybrid vehicle was launched to critical acclaim and much positive PR. In addition, leading Toyota’s sales growth in Japan is its small car, the “Vitz,” and its derivative models, which are very popular for their high fuel efficiency. Implementation plan Toyota has been always seeking different methods that will help the company regain more market share. When it comes to the implementation process for Toyota, the main focus is how to diversify the products, regain customer loyalty and continue to be the leader in the automobile industry. Top management must understand detailed listing of activities, expected difficulties, and proper scheduling for the company to achieve the objectives of the strategic plans put into STRATEGIC PLAN 13 place. In order for Toyota to be successful with the implementation process, the company plan must address the following areas: short-term objectives, outsource nonessential functions and be able to design an effective reward system within the company. The objective of the company is to expand sales to customers that don’t own Toyota cars and also to become the leader in the automobile market. The strategy of the company is to be able to expand the company’s distribution network and be able to reach out more customers. Functional Tactics Functional Tactics are defined as detailed statement that will be used by the company to achieve short-term objectives and help the company develop a sustainable competitive advantage. When Toyota uses functional tactics, top management must be fully involved so the implemented process can be put into place properly. When dealing with the functional areas operations, human resources, marketing and finance will have to be included so that change must occur on all facets of the business. The Research & Development department is a major part of the success of the business for increasing sales. The R&D will figure out how to utilize some of the new technology to enhance current product offerings. The department will help bring out features that are most important to customers who will use the onsite purchasing option. The Research and Development Department must work together with marketing to identify how to retain current customers while being able to attract new customers. The Finance Department is responsible for making sure the projected actual costs don’t exceed the company resources and all the loans if necessary is done in accordance the organizational required return. STRATEGIC PLAN 14 Action Items The purpose of the action plan is to able to pin point the customer desire and make the buying profitable and practical. The customer is the main focus of the action plan and is the key to the organization success. Companies must understand that the key of successful implementation is to provide the staff with adequate resources and raw materials. The staff must also be empowered to make key decisions on behalf the company, meanwhile the managers check and make sure they stay within the blueprint. The Research and Development department must be divided between two projects: development of technologically building new cars efficient applications and developing new technology that will make a competitor against other technological companies. Many of the efforts in the Marketing department will be determined by what is needed to please the customers and being able to transfer the information to the management team in the Research and Development department. This department will also be able to focus on implementing a campaign to attract potential customers to the local dealer and website. Milestones and a deadline When Toyota Motors Company begins to focus on the milestones and deadlines of the organization this process will happen simultaneously. The overall focus will be divided between developments of the new product to introduce to current customers. The product development phase is expected to happen within four to six months time frame. Once a prototype is produced, the life cycle of the new product have to be reviewed by top management to determine if it will bring a profit to the organization. When the process receives approvals from top management, then it will be turned over to the Marketing department. The process of eco friendly cars will be done in a particular phases over six month time period. During these 6 months the main objective STRATEGIC PLAN 15 will be to increase the car design, features. The second phase of the process from six to twelve months will involve increasing the availability of entertainment products. The final process from eight to twelve months will focus on being able to maintain new customers and continue reaching potential customers. Resource allocation Resource allocation of any company comes on an as-needed basis. This is done to make sure that employees are empowered and equipped with all the tools necessary to be successful. All departments at Toyota will have access to materials, technological resources and manpower needs in accordance with budget limits. The Marketing efforts of the company will be fully funded to support print and ad campaigns as well as strategically placed banner ads on the internet. Risk Management & Contingency Plan Risk Management is defined as the process the company identifies and prioritizes risks and subsequently employs measures to lessen the probability of harmful events and maximize opportunities. All companies no matter what the industry they are in, whether it’s a product or service must have a Risk Management Plan. Risk Management is a one-time process that is aimed at providing continuous improvement to the corporation as the marketplace changes. The risk mitigation and contingency plan at Toyota is able to confront probable risks with the hope of preventing issues before they occur. Toyota brand is basically the image and a set of perception that constitute the organization. With the recalls events in the past, it dramatically STRATEGIC PLAN 16 impacts the organization in terms of its brand and the sales performance. Brand risk is difficult to have power over but a quick response plan would simplify in case anything goes wrong. It is also important to have full information about the suppliers. With the incident that happened in Japan years ago where the company stopped its productions for months. The diversification of suppliers globally will result in a quick response to crisis such as the tsunami in Japan. Conclusion Toyota plans to enhance its competitiveness in the global market through advanced technology, and improvements in production efficiency and sales. In technological development, Toyota aims to lead other automakers in the field of environmental technologies. These include targets such as reduced emissions, improved fuel efficiency, and higher vehicle recoverability rate. To meet these criteria, Toyota is investing to develop technology in hybrid electric vehicles, fuel cell vehicles and other next-generation automobiles with the aim of commercializing them as quickly as possible. Toyota plans to continue promoting cost reduction efforts such as the common use of vehicle platforms, reductions in component types and the streamlining of production lines. In order to respond to the customer’s overall needs, which are bound to expand from automobiles to include other related areas, Toyota intends to develop its business strategically by effectively allocating management and other resources to its finance, information and communication businesses. STRATEGIC PLAN 17 References FT.com: HIROSHI OKUDA: Toyota's man of vision, by Alexandra Harney Japanauto.com: Hiroshi Okuda, Toyota Chairman, Elected to Lead Japan Automobile Manufacturers Association http://www.toyota.com.au/toyota/company/vision-and-philosophy PeopleSoft.com: ERP Implementation at Toyota HBS Case 9-693-019: Toyota Motor Manufacturing, U.S.A., Inc. by Professor Kazuhiro Mishina and Kazunori Takeda, copyright © 1992 by the President and Fellows of Harvard College.