Toyota’s Corporate Strategy

Since the inception of the company, Toyota has continued to improve in most aspects of its operations. These aspects include operating a profitable business model and maintaining quality standard of the products being manufactured. Having an efficient corporate strategy and management team has been vital to the company’s recommendable performance. Its brand has grown to lead the Asian market that was heavily dominated by Nissan and Honda a few years ago. On the global scene, Toyota has surpassed other automobile manufacturers in Europe and United States. To many the company’s market structure is not clear. This is because the organization is performing exceptionally well both in the local and international markets. In developing countries, Toyota tries to coin a differentiation strategy that is not common with other competitors in the industry. This has contributed significantly to its success in these areas. Most of the organization’s success has come about as a result of its business model and strategic positioning. Without these two tools, the company would not be where it is at the moment (Marksberry, 2013).

Toyota’s strategic position is to maintain the leadership role in the automotive industry as it grows and enhances profitability and favorable shareholder returns. The company strives to achieve this success through global operations and manufacturing of products that reflect the organization’s technological levels. In order to achieve this, the organization is ready to improve its technology level, marketing aspects, supply capability, quality control, personal development and stepping up as cost leaders. The company has been out and about on environmental issues through the initiation of producing hybrid cars.  This is favorable strategy since environmental awareness is developing on the minds of consumers recently. Toyota is working to develop an agile corporate structure to help survive in the contracting automotive industry caused by downturn in the economy all over the world. This will help in reducing inefficiency and developing flexible reactions to short-term changes in demand. The prospect will mean the organization is willing to undertake some reform so as to achieve its objectives.

Toyota’s business model on the other hand has several facets. Among them is that Toyota does its manufacturing in both the local and international markets. Initially, the company used to manufacture its vehicles in Japan only, and then export them to the desired countries. This aspect has changed completely since the company now boosts of having manufacturing and assembling plants in more than 20 countries. Establishing international manufacturing plants has been prompted by the favorable operational environment the organization has been experiencing. There was need of expanding in these countries to help cater for the growing demand. Failure to meet orders on time is usually termed as a business failure. The strategy has helped in locking consumers hence providing a stiff competition to other industry players (Hill & Jones 2013).

The company’s business model also involves having Just In Time production strategy. The company manufactures its products as the order come in. The strategy has been favorable to the organization since it reduces holding cost significantly. Initially, there was some laxity from the organization as they developed the technology. The level of technology during that period caused numerous delays. With advancement in technology, the delivery aspect has changed significantly. It has become possible for the organization to manufacture a vehicle in less than 5 days.

The model also involves investment in technology and innovation. Toyota usually spends a lot in research and studies before any decisions are made. A team of experts has been deployed   to take the organization in every step of this process. This helps in ensuring that everything produced is of high quality and meets the needs of the consumers. Every product coming from the organization must showcase aspects of social responsibility for it to be embraced. This was the aspect that resulted to the development of the hybrid vehicle (Liker & Meier, 2006). It goes quite well with the consumers that are in need of preserving the environment around them.

Toyota is currently devising and implementing numerous strategies to help in its operation. Most of these strategies have been effective and are helping the organization in achieving its operational goals. However, based on the nature of the market some of them are bound to change. The changes might work for the organization while other will not. For this reason the management needs to make informed decisions before the changes are made. Some of the changes might not also fail the compatibility test with the business model and future strategic position aspirations.

Among the strategic changes that might take place is usage of the just in time system. Currently, the strategy works as a competitive advantage to the organization. However, it has also come to be weakness to the organization at some point. Its weakness was vivid during the financial crisis that hit the world economy. The sales income reduced during this time due to lack of inventory and high costs of materials from the suppliers. It the company had sufficient inventory, some of its factories that were closed could not have been affected. During this period, factories based in China were more affected by the situation. Changing the just in time strategy should be done. This is because there other impediments that lay ahead as the company continuous to use this strategy. Just n Time production system requires that all the stakeholders to the process work effectively and efficiently.  Laxity from any of the parties would result to complete failure. The inter-reliance created means that there is no supplier given room for messing up. If the supply does not deliver in time, operations would be derailed. On other occasions, if suppliers were to deliver inferior materials, the production process stops temporarily until the problem is solved them (May, 2007). Based on these aspects, if the Just in Time strategy is changed the organization might stand to benefit in some way. This will not have an effect on the business model since it will change the production system being used. However, it might not have any effect on the strategic position since it is not reducing any value to the organization.

Another strategy that has the potential of changing is the geographical position of the international manufacturing plants. It is noted that most of the manufacturing plants have been established in developed countries. This could be gauged on the levels of development that have been in these regions compared to the developing countries. They are the markets that would offer the necessary revenues for the company to make profits. However, the aspects have changed in recent times. Based on the economical conditions, most individuals in the regions have lost interests in vehicles and are concentrating on other primary needs. People are willing to save more compared to what they spend due to economic uncertainties (Hill & Jones, 2010). The markets have also been saturated and the demand is declining compared to how it was previously. As a result, Toyota should try and put some focus in developing countries like the ones in Africa. Most economies in the continent are at the take-off stage. This means that consumers are at the point of actualization. There is a breakaway from some interests and values. As a result many people would be willing to own their own vehicles. Despite this, developing countries are known for their exorbitant disparity in income distribution. However, this is not supposed to be a problem to Toyota. Overcoming this problem would be enabled by the company’s product line pricing strategy. This will mean that any willing buyer will afford the automobiles since their pocket size is catered for. It would be an opportunity for the organization to increase its profitability through increased sales. The strategy will not affect the organization’s business model in any way. There is a blueprint already established for operating on international markets. The strategic position will be upheld too.

Product line pricing strategy being utilized by the organization might change too based on the direction that the organization is heading. With time, Toyota might surpass other industry players by a significant margin. As a result of its brand recognition, the company might opt to go with the high end pricing strategy.  It is usually targeted for consumers that have the notion that high quality comes with premium prices. Being a market leader and having a proven track record Toyota has the ability of convincing consumers on this ideology. All together, the company might opt to go for the competition based pricing strategy. If it enjoys the largest market share compared to the others it only needs to maintain the competition as it is. This means that they will reduce the prices slightly to ensure they are below the competitors’ mark. Setting the lowest price in the market does not necessarily mean the price is low (Harrison, & John, 2010). Other companies might be too high hence making your seem low. Moreover, threat of new entrants is not likely in the industry. This is due to many barriers created high technological equipments, capital requirement and economies of scale. For effectiveness, this should not be done. The product line pricing strategy is the best for the organization in some years to come. Imposing other strategies might lock potential consumers. This means that the sales revenues will drop significantly. Sometimes it is advisable to generate minimum profit from a product but increase the sales level. In this event profits increases proportionately. Changing the pricing strategy would also affect the business model. This is because it would limit the number of economies to operate in. some economies that were generating huge revenues might reduce accordingly.

Another strategy that might change in Toyota is advertising. The company’s model advocates for technological advancement in most of its areas. The company is currently embracing both the digital and analogue advertising techniques. Most companies have come to embrace digital marketing based on the changes and advancements that are taking place. No one wants to b left as the others are moving forward towards attaining optimal production and sales level. Toyota might opt to concentrate more on digital technology based on its obsession of innovation and technology attributes.  Going with this strategy solely should not be done. It might result to some losses along the way. There are many people out there that are very receptive to change. Embracing new techniques takes time for them (May, 2007). Some just stick to their old ways of doing things no matter what. As a result, if Toyota was to go completely digital, it would lose these types of consumers.  To them it would not have created value in any way. Massive profits might be lost along the way. However, this does not affect the business model since it is in line With what it stipulates.

With time, Toyota might also think of changing its management structure. As it stands at the moment, the management team is very large. Many aspects would bring the need of reducing the management size. Reducing the size of the management would be a step in the right direction. A large management brings in a lot of bureaucracy since every one must execute his or her part. This makes the decision making process slow. The company might miss out on some viable opportunity due to the number of consultations that need to be done. The marketing wing would be more affected by this occurrence. This is because it needs to be more flexible with all the operations that need to be executed. Any reluctance would make the organization miss out on beneficial opportunities. Trimming the management size would help creating value under this perspective. This would not affect the business model and strategic position. This is because the policies and organizational values have not changed.



Harrison, J. S., & John, C. H., 2010. Foundations in strategic management (5th ed.). Mason, Ohio: South-Western Cengage Learning.

Hill, C. W., & Jones, G. R., 2010. Strategic management theory: an integrated approach (9th ed.). Mason, OH: South-Western/Cengage Learning.

Hill, C. W., & Jones, G. R., 2013. Strategic management: an integrated approach (10th ed.). Mason, OH: South-Western, Cengage Learning.

Liker, J. K., & Meier, D., 2006.The Toyota way fieldbook a practical guide for implementing Toyota’s 4Ps. New York: McGraw-Hill.

Marksberry, P., 2013. The modern theory of the Toyota production system: a systems inquiry of the world’s most emulated and profitable management system. Boca Raton, FL: Taylor & Francis.

May, M. E., 2007. The elegant solution: Toyota’s formula for mastering innovation. New York: Free Press