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Toyota Motor Corporation Strategy

For a company to be successful in all its operations, it’s important to consider the strategic formulation to be adopted in all its operations which constitutes to the strategic management practices of the company. This process of strategic management is well formulated and carried out in three phases; diagnosis, formulation and implementation. For an organization to achieve its objectives, the process of strategic management is paramount in order to re-evaluate and shape the company’s direction oriented to achievement of future oriented strategies considering the company’s capabilities, strengths, weaknesses, constraints and the environment under which the business is carried out (Porter 1980).

Diagnosis level includes analyzing the company’s surrounding and the factors contributing to the business environment under which its operations are felt including external factors of threats and available opportunities. Secondly, the internal analysis of the organization’s operations is vital to identify and realize the mission, the set strategic objectives, laid down strategies, strengths and weaknesses of the business. This enables the organization to be in apposition of re-evaluation and orient their operations in the path to achieve the strategic objectives. Lastly, diagnosis involves identification of major important and critical issues which includes strengths, weaknesses, opportunities and threats facing and inherent in the organization.

The second phase in strategic management procedures is the formulation stage which is concerned with production of well set recommendations, which are well documented and supported by justification. This stage involves proper and well thought modification and alteration of the current organizational mission and objectives to achieve higher levels of growth in an organization. Among other activities in this level is the achievement and practice of comparative advantages which should be sustainable (Porter 1985).

Lastly the implementation stage is concerned with the practice of the necessary recommendation in the attainment of the strategic objectives, vision and mission of the organization. The main objective of this stage is aimed at solving and rectifying any problem within the company, be as practical as possible within the implementation situation, be acceptable by all the concerned stakeholders, must be cost effective and oriented towards achieving the organizational goals and objectives.  

Toyota Corporate Level Strategy

In strategic formulation of any company, there are usually three basic levels or aspects which should be adhered to in ensuring that the strategic objective is achieved. The first aspect is the corporate level strategy. In this level, the corporation is greatly concerned with the totality scope and direction of the organization. The growth aspect of the organization is vital and guides which objectives need to be alerted to achieve the desired objective. Corporate level strategy therefore includes consideration of three components which are not only crucial but also important in the achievement of corporate goals. First the directional and growth strategy should be enhanced, second portfolio strategy if paramount in achievement of corporate level strategy and lastly the parenting strategy which involves allocation of resources and achievement of balance between all the portfolios in the organization. Corporate level strategy forms the overall and the grand foundation of the organization in achievement of the organizational structures and objectives. For the achievement of this strategy, four kinds of initiatives should be instituted to ensure its efficiency and effectiveness (Williams 2002).  

First, steps and procedures need to be initiated in the company to ensure that the necessary moves taken by the corporation to boost its combined strategy is vital. In all the fields the company has engaged to, a close scrutiny of the business need to be undertaken to ensure exploitation of all the opportunities, reduction of threats, improvement of strengths and evasion of possible weaknesses.  Secondly, the necessary moves should be adopted to position the business in the market diversification field to safeguard against any loss of clientele base. Thirdly, all measures should be instigated to ensure that the company exploits fully the comparative advantage that is available in the market. Necessary steps should also be taken to ensure that this approach is maintained to facilitate the growth strategy within the market area size of the company. Lastly, priorities should be established in the investment plan of a business and most of resources should be devoted to the most profitable ventures of the business.

In this consideration, Toyota’s corporate level strategy was implemented with the company designing new vehicles that were affordable in less developed economies (Bernard 2009).

The company recognized the need to utilize the untapped potential in developing countries which was not explored by other players in the market. Therefore, as a part of the level strategy, the company recognized the need to design different models of vehicles that were less fuel consuming, relatively cheap in acquisition to enlarge its market area size. Although this strategy never worked in the short run as expected, the long run prospects on the impacts of this strategy in the company’s profitability margin is very promising. The models of vehicles developed by the company were suitable to fit within the budgets of less developed countries which have realized an increase in the overall company’s turnover over the last decade. In order to be in a notch higher, the methods the company has used for marketing, branding and advertisement have also been changed to reflect the best corporate in the automobile market (Jones 2009).

Toyota business level strategy

Business level strategy of any corporation involves the use of coordinated and integrated action plans and commitments that are aimed at gaining a competitive advantage over the rivals through proper utilization of competencies found in specific competencies in specific brand and product market. The fundamental competencies are the capabilities and resources that are identified by a firm as a major component to enhance the competitive advantage of a company over its competitors. Business level strategy in Toyota is aimed at providing value and satisfaction to customers while providing the company with an advantageous platform to gain competitive advantage throughout the market. For a company to employ any strategy in the market, there are some fundamental components and constraints that are of essence to be considered for a successful implementation. In case of Toyota Corporation, the type of vehicles to be offered to various customers and their clusters is of essence to achieve the desired results exploiting competitive advantage (Michael, Duane & Robert 2009).

Value chain also comes in very strongly as a factor of consideration when or the company to identify ways of assembling an automobile using which combination of resources and the location to undertake all these activities to reduce on cost. The distribution channels forms another core consideration in this strategy. The corporations’ methods of distribution of vehicles after manufacture are vital. Toyota’s business level strategy also puts into consideration the nature of consumer market in terms of demographic, psychological, perceptual, geographical and socioeconomic factors. These factors are considered vital by the company when they value the business market aspects of customer size segment, the end use of vehicles, product segment and the common buying factors.  For a firm to achieve the competitive advantage which is a foundational base for business level strategy, the firm needs to create the difference in all aspects in the market with its rivals to gain a large market share. Being different is a key to success and achievement of business level strategy (Harrison 1999).

Toyota realizing the importance of these factors designed special models and designs of vehicles that were compatible with certain environmental factors like the level of development and the land topography. They designed vehicles favorable with low developed economies and rough terrain to suit well in the market. It also carried out a differentiation strategy with low cost vehicles in the market to command a larger market share than its rivalries. This also involved the production of vehicles at the lowest relative price while at the same time making them attractive to the customers as compared to those of their rivalries. Therefore, three important characteristics of these vehicles enabled Toyota to achieve an integrated business level strategy; the company was able to offer vehicles across the world at the lowest competitive price in the market, its model of vehicles were acceptable by a majority of customers across the global market and finally it produced a relatively standardized goods and products which were attractive in the market. For business level strategy to be effective, certain cost fundamentals need to be considered (Toyota Motor Corporation, 2010).

There should be minimal costs associated with research and development, cost of sales and provision of services, the corporation’s facilities should be efficient in operation, the manufacturing facilities should be efficient, there should be a strong monitoring system of costs that are provided by other corporations and firms in the market and lastly the production process should be simplified to enhance efficiency and effectiveness. In view of these factors, Toyota has emerged as the market leader in the global automobile industry due to thorough exploitation and implementation of business level strategy (Porter 1985).

Business level strategy of Toyota Corporation has also been enhanced by the company’s consideration of major cost drives in the market. Economies of scale, the manufacturing and distribution locations, market integration, vertical and horizontal linkages, capacity utilization as well as the political and regulatory factors in the market were greatly emphasized by Toyota. In order to fully realize these benefits accrued from business level strategy, a combination of five forces are considered by Toyota Corporation in its implementation. The market competitive rivalry was greatly considered and the corporation avoided price wars with other players in the market and instead employed other options. Another force to be considered is from buyers’ perspective which is governed by the shift in demand hence the corporation responds by increase the market power. Thirdly, the suppliers of raw materials in the market are a vital consideration. This will increase the market power hence absorb cost increases leading to low cost production, manufacture and assembly of automobile products (McCall & Kaplan 1990).

The threat posed by new entrants in the market need to be dealt with by imposition of entry barriers either through large scale production and economies of scale. Lastly, the issue of substitutes has been addressed adequately by Toyota Corporation to remain as the leading competitor in the industry. For this business level strategy to be effective especially with Toyota, the value of vehicle produced should be appealing to customers. It should possess unique features and performances, put into consideration utilization of new advanced technologies, consider the quality of their products as well as employing a perfect distribution channels. Adequate market information and quality in the input process has been emphasized by Toyota Corporation to achieve its business level strategy (Toyota Motor Corporation, 2010).

Toyota operational strategy

An operational strategy is adopted to minimize the time, resources and manpower that is consumed in manufacturing processes of a company. Toyota adopted a lean manufacturing strategy which is geared and oriented towards the realization of the shortest possible cycle that is aimed at eliminating wastes. This is possible due to effective ways of eliminating wastes and increasing value addition of its products hence reducing incidental work within the corporation. The lean strategy is aimed at reducing the working time in manufacture of a product by half the time it normally consumes. This also reduces the resources used by half as compared to before lean operational strategy is employed. Therefore Toyota Corporation utilized half of human efforts, half of investment levels, half of the manufacturing space and half of the engineering expertise to complete the assembly of a vehicle by half its normal time. Therefore lean manufacturing is the exercise employed to avoid any wastage (Porter 1985).


Toyota Corporation as discussed above has employed several strategies that are geared towards production with economies of scale as well as cost reduction measures put in place. It is however noted that, if these strategies are thoroughly followed, the corporation will be the leading manufacturer of top quality motor vehicles in the world. The company should also employ other marketing strategies to complement the ones already in operation. In addition, the advertising aspect of the company has not been effective as expected; therefore, it’s advisable for the corporation to invest more in the advertisement aspect of the company. The threat of new entrants in the market has also been identified as one of the challenges facing the Toyota Corporation in the automobile industry. In view of these considerations, the company is highly encouraged to exploit the economies of scale to enjoy higher returns and deter the new entrants in the market. Therefore, Toyota Corporation should strive to be different to enjoy the competitive advantage in the market. It should deliberately choose to carry out and execute its activities different from other market players to provide a very unique product mix in the market of value to customers.

Toyota’s ability to create change

Toyota has been one of the profitable corporations in the international market. It operates on a personnel base of over 10,000 human forces across the world. It has also advanced in the use of technological innovations to advance its products. The corporation is also well placed as the international market leader in the automobile industry across the globe. Toyota also enjoys the international clientele loyalty which has witnessed its tremendous growth over the last one decade. These forms some of the most advantageous grounds under which Toyota corporation is well placed to effected a tremendous change in not only automobile industry but also in the social responsibility and community service across the world. The management team of the corporation enjoys respected and experienced technical managers who have the capacity to propel the corporation to an enormous change in the market. Their financial strength also offers then an opportunity to expand and engage in diversification strategies without much constraints unlike other corporations (Toyota Motor Corporation, 2010).

Toyota having a wide range of clients may explore other areas of product and service provisions apart from automobile industry. Due to the good public reputation the corporation has had over the last couple of decades, the corporation may decide to engage in provision of financial services as well as insurance services. In order to affirm its commitment in being the leading firm to provide products and services not only for financial gain, the corporation as part of their corporate social responsibility may decide to inaugurate a community centre to give back to the community clients worldwide.      

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