Running head: STRATEGIC PLAN
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Strategic Plan
Gracelino Dias
STR/581
2/26/2015
Joseph Maksin
STRATEGIC PLAN
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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
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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.
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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
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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
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Customer first
Respect for people
International focus
Continuous improvement and innovation
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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.
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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
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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.
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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
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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
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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
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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
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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.
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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
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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
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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.
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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.