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For any company to prosper and maximize profits, it must have the capacity to adapt to the dynamism in the market. Such an adaptation would necessitate devising of a strategic plan so as to guide the operations of the organization. Strategic planning refers to the process, through which an enterprise defines its plan of actions with regard to investing in order to facilitate decision making and allocate resources accordingly. This is especially noteworthy in situations, where the market is experiencing an economic meltdown. The manner of adaptation determines the future of an enterprise as it has the possibility of improving performance as well as maximizing profitability. Strategic planning incorporates a sequence of operational or short-term plans, which are a series of steps that require development of objectives on a yearly basis. Operational planning facilitates annual resource allocation in a way that prioritizes the mission and vision of the organization as well as the short term goals to be pursued during the year. For a strategic plan to be effective, the management ought to incorporate the views of every stakeholder, and determine whether the enterprise has the adequate resources and capability to influence growth oriented design of investment (Freyssenet, 1998).
During the strategic adaptation and alignment, a company envisions the future. It achieves this by analyzing potential obstacles so as to set up mechanisms that can facilitate the attainment of the intended goals. A strategic plan serves as a basis for investment as well as for every day’s decision making. Planed investment stimulates and accelerates adaptation besides helping a firm examine its recent trends. During the examination, various aspects are analyzed, including market segmentation and prevailing economic outlook. Beneficial and achievable investment strategies are laid by emphasizing strengths, scaling down the weaknesses, exploiting the available opportunities, and fending off internal and external threats. This paper evaluates the organization and operational adaptation of Toyota Motor Company to the changing markets.
Influence of the Recent Economic Treads
Toyota Motor Company has been among the most respected corporations since the evolution of the automobile industry began in the early twentieth century. Over the years, the company has undergone three main revolutions: it evolved from a craft based enterprise to an organization that was capable of undertaking mass assembly of motor vehicles. The third revolution facilitated the customization of productions through divisional organization as well as vertical integration in line with the goal of achieving mass production. In fact, Toyota Motor Company was known for its vertical integration and flexible specialization. These strategies were undertaken with the perspective of producing merchandize that customers were willing to purchase, a scenario that was commonly referred to as Toyotism (Fumio, 2006).
By 2008, the year that the global market began experiencing the impacts of the recent economic crisis; Toyota Motor Company was in its fourth revolution, the green revolution. The revolution was focused on automobile sustainability, and as such, it incorporated strategies of ensuring fuel efficiency, low emissions, utilization of renewable energy, and recycling of the motor vehicle scrap. The company has remained focused on attaining sustainability, a move that is aimed at countering the rising commodity and fuel prices, environmental pollution, external supply dependence as well as global warming. Additionally, the management of Toyota Motor Company wishes to facilitate conformity with enhanced environmental regulations that has been set by governments of its biggest international markets. Moreover, stakeholders are aware of the pressure that environmental groups and consumers are placing on automobile companies, especially in Europe.
Strategies, used to facilitate adaptation to the changing markets
Despite the economic difficulties, Toyota Motor Company has been keen on improving its sales and employment trajectories in a profound manner. It has, consequently, been able to withstand difficult situations that have afflicted several other companies around the world. For instance, while production and sales in most automobile companies declined in 2009, Toyota managed to turn its prospects by the end of the year. Nevertheless, several observers have been skeptical of the automobile industry, arguing that the crises, afflicting the sector, are not merely structural but also a retrogressing business cycle (Freyssenet, 1998). As such, they criticize the automobile corporations that respond to the economic crises through the traditional managerial strategies such as temporary downsizing, retraining, cost reduction, and consolidation. They, however, prompt the companies to enhance innovation, a move that would maximize utility of the available resources. In fact, governments have been supporting automobile industries to achieve their innovative strategies through the provision of stimuli packages. These packages include cash for clunkers as well as tax reduction on clean and small cars. Toyota Motor Company has aligned itself in a manner that enables it to take maximum advantage of these kinds of provisions (Rasiah, 2004).
Toyota has been incorporating strategic initiatives in an endeavor to improve competitiveness at home as well as abroad. One of the most notable initiatives is the planned transformation into an industry that can operate in the stiffening environmental regulations. The transformation will also facilitate fuel efficiency, a situation that will enable the company to meet emission standards. Governments facilitate such transformation through a number of actions. For instance, there are those that subsidize purchases of small and fuel-efficient cars, while others encourage investment in the appropriate infrastructure so as to achieve the green technology. Championing in green technology has made Toyota more popular than several automakers that observers accuse of leapfrogging into the green technology. In an endeavor to outsmart its competitors, Toyota has been implementing strategies that are in line with environmental regulations so as to reap the benefits of economic incentives that governments provide. As such, the management has facilitated affordability, market expansion, and vehicle distribution, a scenario that has attracted human resource and monetary capital (Fumio, 2006).
The management of Toyota Motor Company has been mobilizing stakeholders with a view of enhancing innovation and productivity. This has prompted suppliers to manufacture parts that facilitate the reduction in environmental degradation so as to minimize the impacts of global warming. Toyota has been keen to tapping market growth of vehicles in several markets around the world. The company’s efforts have, however, been facing stiff competition from other automobile manufacturers. Just before the global economic meltdown of 2008, the world’s vehicle production exceeded seventy million units annually. Vehicle ownership in the United States of America surpassed ninety percent, while Europe and Japan recorded ownership between 50 to 60 percent. However, the economic crises made the vehicle industry appear to be on its sunset stages due to its stagnating growth, market capitalization, and employment. Firms were, therefore, decapitated by the rising liability as consumers reduced spending. The situation was worsened by the increasing motor vehicle manufacturing in the emerging markets such as China, India, Brazil, and Russia. These markets, therefore, were able to deny Toyota and other global industries a portion of their markets (Fumio, 2006).
Toyota has responded to the economic crisis with a counter-cyclical strategic management, which includes cost-cutting and termination of contract employments. These strategies have enabled the company to focus on the domains, where performance is excellent, thereby, eliminating unnecessary spending. Toyota has also endeavored in the combination of electric engine with the combustion one. The company aimed at tapping on the popularity that hybrid electric automobile gained, following the escalation of fossil fuel prices between 2008 and 2010.
As much as the current economic crisis impacts on the consumer purchasing behaviors, there are those who consider cars, especially the expensive ones, to be status symbols. They, therefore, purchase automobiles to be an indicator of their economic capability. The quest for such social symbolism complicates the market for motor vehicles since prices and fuel consumption is not the only determinants of demand. Toyota Motor Company manufactures varied car models in an endeavor to cater for the diverse consumer demands. The economic crisis has necessitated the hiring of professionals who are proficient in monitoring changes in the market with the view of providing informed advance, regarding vehicle production.
The market for cars is defined by the prevailing cultural values in a society. Commercial societies attach the value to monetary possessions as well as other categories of wealth. These societies, therefore, treasure the possessions, which are acquired through wealth, including the latest car models and luxurious houses. In the recent times, luxury cars have been among the most idolized status symbols. Contrary to the clothing brands, expensive brands of cars are widely known, and; therefore, almost everyone in the society has the capacity to gauge the economic status of the owner. Additionally, an individual does not have to be an expert with technology to tell cars apart on the basis of their models. Cars, therefore, fit into the symbolic framework with ease as compared to other categories of luxury goods. Consumers of luxury cars dispose the vehicles at a high rate. This means that there will always be a market for luxury vehicles. Should Toyota, therefore, continue tapping the luxury market, the company can make a remarkable recovery from the effects of the global economic crisis (Fumio, 2006).
Such expensive commodities as cars symbolize affluence in circumstances, where they are out of reach for the people in low economic classes. They, therefore, serve to indicate that the owner can afford to pay for pricy goods. As the utility of status symbols is attached on their high prices, the increase in price does not diminish demand for commodities. Additionally, the society has come to attach masculinity, vitality, and power to car ownership. In this case, cars facilitate the creation of identities. This is especially so since, with the emergence of the material culture in the contemporary societies, people have begun to regard cars to be status symbols. Different societies regard the material culture and status symbols differently. The variation results from the difference in technological and economic development in the societies being considered. As such, appropriate market selection enables Toyota to remain vibrant despite the crisis in the market.
The success of Toyota Motor Company is attributed to a sound adaptation strategy. Careful contriving has resulted into a great increase in profits as well as the customer base. The close association with the market has helped to modernize the customer oriented practices in the organization in a manner that assures strategic development. The core idea in adaptation has been to facilitate increment in the market share, irrespective of the economic meltdown. The company aims at wooing extra customers so as to cater for the reduction that has resulted from the economic meltdown. The corporation’s environmental management has been accredited as one that follows the international standards. The participation of field officials during the formulation and implementation of the strategic plan has made the company highly successful in its operations (Freyssenet & Boyer, 2002). Toyota Motor Company has been keen on inviting participants from all sectors of the economy so as to facilitate approval by the majority in the society. This enhances the viability of investment as the enterprise’s activities have the approval of the majority in the society.
Toyota Motor Company has been devising strategic plans with the aim of facilitating enhanced communication between the company and its clients. This process necessitates teamwork amongst the stakeholders so as not to disorient potential customers. Proper communication enables clients to opt for Toyota vehicles, especially at the time, when consumer purchasing power is declining. This is because, in most cases, customers make purchasing decisions, based on the information that is being channeled to them by the marketers.
Despite the increase in demand for luxury vehicles in the global market, market exploitation has been limited. Realizing this fact, Toyota has initiated research on luxury spending so as to realize the missed opportunities. In an endeavor to understand the luxury market, Toyota’s study examines variables that affect situational consumer behavior. Such studies are aimed at evaluating the consumer purchasing intentions in order to offer useful insights to the company. Toyota has been careful to incorporate personal values like ethnocentrism, conformity, materialism, vanity, and need during market studies. These values have been important in determining the performance of the company in the market. For instance, in some markets, consumer ethnocentrism discourages purchasing intentions towards goods that have foreign components (Freyssenet & Boyer, 2002).
Toyota’s communication with its consumers is based on statistics such as the anticipated demand during future trading periods as well as the scheduled manufacturing. In most cases, manufacturing is scheduled at the start of the trading period, a situation that facilitates the meeting of customer requirements, based on the latest standards in the industry. In addition, communication offers subsidiary information that includes the standards that can be enforced to guarantee safety as well as satisfaction of the customers. Such information helps in formulating Channels of Marketing. Channels of Marketing are those paths that are taken, while advertising items that are offered by the company and its subsidiaries (Freyssenet & Boyer, 2002). These channels vary, depending on the stakeholders’ views as well as the prevailing conditions in the market. Adaptation planning is, therefore, necessary because, in a business sense, effective planning helps the company to remain goal oriented.
Consumer Consideration Investment
Investment analysis at Toyota Motor Company is raising the awareness of the impact of ethical and social issues on the organization. In fact, the board of directors holds the opinion that, as a large investor, there is a need for the company to conduct its activities proactively and in a manner that addresses the social impacts of its investment. The board is explicitly taking into account the environmental, social, and ethical issues during adaptation analyses. Due to the economic crisis, consumers tend to perceive significant risks, while purchasing motor vehicles. As such, communication is the most powerful tool in developing consumer’s confidence in the merchandise. In the vehicle industry, no single marketing procedure can be successful without incorporating effective communication methods (Fumio, 2006). Toyota has utilized website advertising as an effective way of supplementing communication. The choice of having a website was made with appreciation that the Internet has become an indispensable source of information for customers. Realizing this fact, Toyota Motor Company has invested heavily in information technology so as to enable the marketing department to handle the increased consumer capacity.
In today’s business world, enterprises have rejuvenated their endeavors to consider strategic adaptation as the main avenue of retaining the consumer base. Until the mid-1980s, the procedure of business management focused primarily on scheduling and providing resource data to the management of computer and construction industries. Currently, however, advertising and retention strategies incorporate more than just a data schedule. Toyota has invested in new technologies so as to remain competitive in the current, radically changing market. As such, information technology projects have become an indispensable part of the company’s business life, as it would be difficult for the enterprise to manage its growth without enhancing its operations.
Strategic adaptation is a procedure that involves planning, monitoring, adjusting, and organizing. Statistics shows that an inadequate planning leads to an immense waste of resources, which, in effect, proves fatal to the organization. In that case, enterprises need to institute statistical controls in projects to facilitate comparison of the findings of research works by different outsourcing companies. This would help in solving most of the challenges that stakeholders experience during the analysis of records as well as in planning (Freyssenet, 1998).
Investment in technology has, however, been a costly endeavor as it has necessitated the installation of expensive hardware and software with extensive expertise. Stakeholders have, therefore, been required to undergo an intense training on the use of information technology. This is meant to avoid information system failures as such failures may result into catastrophic losses to the business enterprise. The loss would include the costs that had been employed during the installation as well as the time wasted. Researchers have suggested statistical methodologies that can facilitate the management of software projects (Dicken, 2007). As such, Toyota Motor Company has recognized the need to incorporate business intelligence software Systems so as to help in dealing with day-to-day challenges. Investing in the information system is aimed at helping Toyota to solve the persistent problems of recording and processing transactions.
The idea of investing in a business intelligent system was considered after the Board of Directors thought it would help to solve the challenges of processing and recording information. These records are, then, aimed at helping the company in planning for the future in line with its strategic goals. Fact based planning will help Toyota in maintaining a consistent track record, regarding the services it offers. The idea was encouraged by the realization that maintaining a proper record of the activities, taking place at the company is, at times, elusive. Therefore, under such circumstances, a business intelligence system has been identified as a viable option, an option that would facilitate market adaptation (Dicken, 2007).
The role of human resource management
The company’s investment necessitates cooperation and teamwork among its stakeholders. This cooperation has been a motivating drive, which has helped in stabilizing a work force, putting human resource into action, building friendly relationships, improving employees’ efficiency, and meeting the organizational investment goals. Cooperation has also resulted in motivation, and this has enabled the organization to utilize its human resource optimally. Additionally, motivation has helped in filling the gap between the willingness and abilities of an employee, which has led to the increased productivity at a reduced cost of operation. Employees and, indeed, all stakeholders of Toyota Motor Company are investment-oriented and work purposefully. The management has been encouraging simultaneous co-operation and co-ordination, and these initiatives better the working conditions at the organization (Dicken, 2007).
Toyota Motor Company’s organization structure is characterized by the activities that define the manner, in which strategic alignment is achieved. These activities include task allocation, supervision and coordination. The structuring of this organization is dependent on the modes of operation and their strategic adaptation to the prevailing market conditions. The structure, therefore, allows for the expressed allotment of responsibilities as per the processes and functions of entities like departments, branches and work groups. The organization structure provides the basis, on which standardized operating routines and procedures are accomplished (Dicken & Hess, 2008). Secondly, it ascertains the individuals who can participate in the organizational decision making strategies, and as such, determine the extent, to which the views of these individuals can influence the adaptation to the prevailing situations in the market.
Toyota Motor Industry is equipped with the state of art facilities. The facilities are meant to provide comfortable and exiting working conditions so as to increase productivity, which would, in effect, facilitate rapid expansion. This means that investing in the company would yield benefits in the long term. During hiring, the company seeks for enthusiastic, motivated, and goal oriented individuals. Best performers are gloomed to become future leaders of the organization. Given a chance, I would, therefore, invest in the company since it has the capacity to adapt to the prevailing conditions in the market. For instance, the company emphasizes on the effectiveness of interpersonal skills amongst various categories of stakeholders. It focuses on improving productivity through the reduction of absenteeism and employees’ turnover. In an endeavor to achieve this, the organization concentrates on practices that enhance the employees’ job satisfaction (Busser, 2008).
Upon successful completion of a team assignment, the management rewards every member so as to reduce discontent. This helps in building the team spirit as well as in renewing enthusiasm amongst employees. The management utilizes the benefits of such initiatives as arranged meetings in enhancing team effort. Arranged meetings make the employees realize that the management’s support for them is secure. Moreover, it is during these instances that the management enhances knowledge of its employees, a situation that reduces instances of latent hostility between the leadership and subordinates. Reduced hostility enables everyone to feel free to air his/her views at meetings. For effective performance, Toyota Motor Company emphasizes on building teams that entails healthy, encouraging and competitive work environments (Freyssenet & Boyer, 2002). Such environments make the employees feel appreciated and know that their competition is not against each other. Recognizing everyone’s effort heightens comfort and compels stakeholders to work towards the realization of the common goal. For this reason, Toyota Motor Company presents an investment opportunity that can withstand challenges in the market, thereby, securing the investors contributions.