Toyota Case Study Porters Strategy model

Toyota way depicts low cost leadership model as per Porters strategy model. The low cost strategy was evident in cost cutting through eliminating excess interruption, misalignment and overall operational redundancies. Reducing the components in cars, procurement costs, installation time- all contributed to lean manu acturing strategy o Toyota or over a decade. The low cost leadership o Toyota in the world saw its vehicles capture the highest mar!et share overcoming then mar!et leader "eneral #otors by units o vehicles sold. The lean manu acturing strategy o Toyota was use ul in increasing production levels o Toyota. The low cost manu acturing did not compromise on Toyota core values li!e amily owned business values, customer satis action, service and importantly sa ety. Thus in a way, Toyota though low cost model, ocused on its di erentiation o sa ety, engineering superiority and overall values or customer service. $t was evident in increase in %rand satis action, not mainly due to mar!eting campaign but its reduced levels o customer complaints in late &''(s. Thus although low cost strategy was adopted by Toyota, it also bordered upon uni)ueness building through sa ety, engineering prowess and customer values. Toyota was originated in *apan and later on moved its product mar!et in di erent parts o world. Thus Toyota had low competitive scope earlier than later. The company evolved its business rom low competitive to high competitive scope in terms o its manu acturing plants, mar!eting divisions, countries it could cater to- li!e $ndia, China, South +merican countries. $t expanded its supplier base rom *apanese to global in order to acilitate rising production demand in proportion with its rising global mar!et share. The customers, sta and other sta!eholders including the governments o various countries, consumer orums etc also had risen hand in hand. +s per Porters competitive orces are concerned, Toyota aced problems rom the threat o buyers. The +merican mar!et was dominated or ,( years by "eneral #otors. The customers o vehicles were airly con ident o other vehicles manu acturers although they had history o even worse call bac!s in history. %ut the Toyota recall cases were seen particularly in di erent light as media such as consumer orums once loyal to it completely reversed the opinion o company. #aybe the breach o high amount o trust on Toyotas sa ety and )uality, which were companys highest brand value, rendered such extreme reactions. $t also aced threat rom suppliers as the !eiretsu model o supply chain was no longer use ul as Toyota has manu acturing in di erent parts o world.

-S #odel
-S model consists o strategy, structure, systems, sta ing, s!ills, style, shared values. &. Strategy. The sustainable competitive advantage o Toyota has been lean manu acturing and business techni)ue called !eiretsu. $t helped Toyota in bringing in low cost in production and greater control over suppliers, distributors and overall sta!eholder management. Toyota strategy was to be global leader in vehicle mar!et with dominant mar!et shares in whole world including %ra/il and $ndonesia. Sa ety, )uality and volume order was given !ey importance. 0. Structure. Toyota had global presence with manu acturing and mar!eting units in the 1S+, China, 2urope and South +merica. 2mployees base in 1S counted to ,((( employees. 3ac! o separate unit manager with more decision power created delay in customer complaints. $t had automobile as well as non-automobile business. 4. Systems. $ts manu acturing was distributed in many parts o world but the core engineering unction was in *apan. Thus centrali/ation o power in terms o monetary decisions and research development were dependant on *apan. Thus power o strategic decision ma!ing was centrali/ed in *apan. 5. Sta ing. Toyota sta ing especially its chairmen- non amily members created a lot o controversy. The chairmen being non- amily members o Toyota amily were alleged to thin! short term or monetary bene its but were not concerned or conscious o companys long term goal o customer centric, sa e cars production. 6. S!ills. Toyotas lean manu acturing and !eiretsu have been !ey technological distinctiveness or more than 6 decades. The cost cutting and sa e and customer centric production o cars was toyotas strength. The s!ills which Toyota sta lac! is being assertive to spea! out their opposite thoughts in meetings. This is important so that each person contributes to meetings not only in submissive way but in productive way.TPS and 7ust in time were two ma7or techni)ues used. 8. Style. 9ecision ma!ing by Toyota is collaborative. The top-down decision ma!ing is not clear in Toyota. :nce top management ma!es the strategic decision, it is the responsibility o each and every wor!er to come with his own role to ul ill greater goal o company. The supervisor ills only place o mentor or acilitator. This entails more creativity and entrepreneurial behavior in wor!ers. %ut on other hand it may delay the process o developing standard operating practice and thus more pressure on wor!er to per orm.

-. Shared values. Shared values o Toyota li!e customer centric company, low manu acturing cost were well !nown amongst its employees. The new initiatives li!e global presence excess ocus on cost cutting and ambitious strategy to become global mar!et leader blurred the most important value o customer centricity, sel critical culture. Customer complaint redress activity was not given importance, thus resulting in escalation o recall issue among its most loyal consumer blog writers.

%alanced Scorecard +pproach

"one are those days o assessing per ormance based on inancials and return on investments. %usinesses have become more holistic in their approach. 2ach o the actors necessary or the business to grow have become inter dependent and rein orcing each other. %alanced score card approach ocuses on various parts o organi/ation rather than ocusing on a single aspect. ;our categories considered to be e ective have been considered by balanced score card approach considering ;inancial per ormance, customer service, internal business process and propensity or learning and growth . &. ;inancial 2 ectiveness Procurement cost reduced by 5( percent, installation time reduced by -6 percent. Total cost reduction o <0.0bn . This is achieved with construction o cost competitiveness programs and value innovation strategy. 0. Customers 2 ectiveness Toyota has been customer centric rom its inception. $t ollows sa ety, )uality and volume order. Toyota is amous or =uality promise and lived up )uiet o ten. $mplementation o customer irst management committee that had the tas! to coordinate engineering, production, sales and service issues related to )uality. :pen to eedbac!s orm customers, dealers and act upon them. 4. $nternal %usiness Process 2 ectiveness Toyota production system and 7ust in time were improved with respect to cost cutting, reduction in auto component parts. 9ecentrali/ation o decision ma!ing rom *apan to its manu acturing units. Customer redresser system and communication between di erent Toyota acilities could be improved.

5. 3earning and "rowth 2 ectiveness ;ocus on continuous improvement especially given plummeting margins. Re- ocus on long term philosophy o Sel critical culture which was the principal behind the Toyota way. Tac!ling combination o structural, cultural and strategic challenges