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Prestige Co.
An Inside Look of Automotive Industry

Prepared by:
Cicillia Anggara
Amanda Aprilia
Peter Labib
Jin Yong Park
Loide Siahaan
Andry Soenario
Prepared For:
Professor Robert Callahan
Management 380
Date:
July 22nd, 2007

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Table of Contents
Page 3

Memorandum

Page 4

Executive Summary

Page 5

Introduction

Page 6

GM Management Structure & Management Cultures

Page 7

Communication Methods & Work Place Safety

Page 9

Looking at the Community as a Whole

Page 9

Training, Education & Environment

Page 10

Advanced Technology

Page 11-13

GM SWOT Analysis

Page 13.

Toyota: Company Management & Strategies for

Employee Motivation

Page 15.

Analysis of Toyotas Customer

Page 16..

Toyotas Competitiveness & Community

Page 16..

Workplace Environment

Page 17-18.

Toyota SWOT Analysis

Page 19..

Recommendations for the Entire Automobile

Industry

Page 20.

Integrity

Page 21-22.

Motivation & Pull Strategy, Target Marketing

Page 22-23.

Supply Chain Management & Leadership

Page 23.

Workplace Recommendations

Page 24.

Competitive Advantages

Page 25.

Managing Relationships throughout the Company

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MEMORANDUM
TO:

Robert E. Callahan, VP of Human Resources

From:

Analysis Group at Prestige Auto Company

Date:

July 22, 2007

Subject:

RECOMMENDATION REPORT

Enclosed we have included a report regarding strategies for creating a new management
structure, which you requested that we complete by the end of July. This report is an
analysis of how management at Prestige Auto Company can successfully structure the
company in order to become very profitable and competitive in this already very
competitive industry. We approached this analysis by comprehensively analyzing Toyota
and GM as our two focal points, and as leaders in the automotive industry, and then
applying what we learned to our situation at Prestige. We feel that our analysis will serve
Prestige well as it could be applied to any automobile manufacturer that is seeking to
grow and learn from the mistakes of other companies.
In order to attempt to restructure these institutions, we have done research regarding the
strengths and weaknesses of Toyota and GM. As a result, we have found many positive
and negative characteristics and practices that these companies possess which we can
learn from; and from which we can subsequently apply the lessons learned into making
Prestige a very successful competitor within this industry. As part of this analysis, we are
including a new mission and vision statement that will help our organization to stay on
the right path throughout our growth and building process. There are other key
requirements in addition to those already stated, which are essential to ensuring success
in the areas of management, training and advancement, employee protocol and other
competitive strategies that will ensure our organization will be competing at maximum
capability in this industry. We emphasize team work as one of our key solutions to
solving problems. Lastly, we have come up with a communication system, as well as
leadership and motivation practices that will work well when implemented by
management at Prestige.

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Executive Summary
Having taken into consideration Toyotas and GMs relative situations within the
automotive industry, we incorporated the findings of our research into a cohesive strategy
within our proposal. We have come up with new recommendations for a new structure to
increase our organizations chances of striving in the industry.
Our new mission statement: To provide the most reliable and innovative products by
implementing a superior supply chain that fosters communication, while taking care of
daily business operations.
Our vision: Be innovative and passionate in management, in order to create a better
society through continuous improvement, driven by integrity and teamwork.
To achieve the following, we need to successfully:
1. Develop a positive culture that every employee can understand and agree to.
2. Create an effective and long-lasting supply chain relationship by empowering
everyone within the supply chain.
3. Promote diversity throughout the organization.
4. Motivate through internal and external relationship management
5. Develop an imperfectly imitable competitive advantage that clearly differentiates
our company in the industry.
6. Match production with demand through the Pull System
The result of this project is a system that can help improve our company, through the
empowerment of employees, making them aware of the new proposal and encouraging
their support, their hard work, and the ultimate achievement of our goal.

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Introduction
The automobile has enabled people to travel and transport goods farther and faster, and
has opened wider market areas for business and commerce. The auto industry has also
reduced the overall cost of transportation by using methods such as mass production,
mass marketing and globalization of production.
In the past few years automobile companies have demanded more efficient management
that can serve to increase their annual sales. However, these companies have not found
the most effective management strategies that attract customers to buy. Therefore, our
group is using the information that we have compiled from General Motor and Toyota to
create new and different styles of management for all segments of the automobile
industry.
As result of easier and faster transportation, globalization that was previously unimagined
has now occurred, a consequent result of the easy and convenient transportation that
automobiles provide. This mobility allows remote populations to interact with one
another, which increases commerce. The transportation of goods to consumers and
consumers to goods has become an industry in itself. Unfortunately, the automobile has
also brought related problems along with these amazing efficiencies, such as air
pollution, the emission of greenhouse gases that contribute to global warming, congested
traffic, and driving related fatalities. Nevertheless, the automobile industry continues to
be an important source of employment and transportation for millions of people
worldwide.
The goal of this report is to develop new management recommendations for the
automobile industry in order to help these organizations improve their current
management practices. We firmly believe that our recommendations apply to the entire
automobile industry and if used will help bolster the performance of any company in the
industry.

GM: Management Structure & Culture

Control Method

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General Motors (GM) has created a Public Policy Committee (PPC) to reply to rapidly
changing demands of society in terms of corporate responsibility, automotive safety,
energy and environment, diversity, healthcare, research and development, and trade. The
mission of PPC is to forecast external trends and changes, to support positive cultural
objectives, and to execute and ensure an environment conducive to changing public
policy. The PPC consists of four departments such as: Environment and Energy,
Corporate Responsibility and Diversity, Government Relations, and Economics, with
each department being responsible for several issues.
In addition, GM controls their employees and suppliers with a code of conduct called
Winning with Integrity. GMs Winning with Integrity helps GM employees make
ethical decisions when faced with difficult situations. For example, these guidelines
introduce create an environment that is conducive to fair treatment and equal employment
opportunities. These guidelines are instrumental in teaching employees how to deal with
suppliers and the government. In short, these practices operate as the cornerstone for how
employees are to conduct themselves in the work environment at GM.
Management Culture
Changing management culture is difficult for GM because of how large GM is and how
many brands are contained within GM. Thus, it takes time and efforts to institute change
for this company. In addition, changing company culture in a big organization such as
GM is always a painful process. GM attempts to deal with this situation by emphasizing
four specific cultural priorities: act as one company, stretch, have a sense of urgency, and
remain product and service focused.
The first step in analyzing GMs culture is looking at their past. In the past decades, GM
had solid market shares and was financial thriving in North America because of fewer
competitions in the market. This business atmosphere led to a company culture of
arrogance, in which GM largely ignored what their customers really wanted, and had an
attitude of building most cars to the minimum qualifiers of customers, because they
would buy them anyway. As fierce international competition came in from Japan, Korea,
and Europe, GM was stuck dealing with trying to sell a less attractive and reliable
product than their competitors sold, GM has been slow to change their company culture
and this has resulted in year after year loss of market share, as the imports are perceived
to be better products by many customers. GM, while slow, has begun to adapt to these
customer demands by putting out more attractive and reliable vehicles. Despite the
turnaround, many customers still perceive that GM produces an inferior product
compared to the imported cars.
Furthermore, GM has had a company culture consisting of bullying suppliers that still
exists today. GM has a long history of spinning off parts of the company that are not
profitable, such is the case with Delphi. GM spun off their parts division which is now
called Delphi with little available cash leading to Delphi quickly going bankrupt. Another
goal of spinning off Delphi was to demand lower costs of obtaining parts. These lower
costs could only mean less profitability for Delphi. Moreover, in investigating GMs
relationship with employees, GM made 10,000 temporary layoffs in 2004 closing their

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plant, without providing employees adequate notice that could have helped them find a
new job in the interim time before they would be rehired. As a result, GM employees
look at their jobs as largely expendable, and this has lead to lower GM brand loyalty.
Also, negotiations with GM always seem to have one goal: less benefits and workforce
cuts. GM must deal with these negative cultures in order to get back their good reputation
that leads to increased productivity.
Communication methods
GM has struggled to implement good communication methods in the past. An example
of this is a major strike in 1998, which lasted 54 days and caused a loss of $2.6 billon as
well as 2 % market share, due to a breakdown in communication. This is why GM
reorganized internal communications, calling the new system Internal Communication
Improvement Process, (ICIP) as a new way of communicating internally. The process
was implemented by CEO Rick Wagoner in order to build stronger relationships among
leaders, managers and employees. Therefore, GM hired communication professionals
called Business Communication Integrators (BCIs), which were journalists with media
backgrounds recruited to fix GMs central communication departments. BCIs are located
in local facilities, and work to update information with GM headquarters, and find
possible improvements through education, information sharing and feedback.
Specifically, BCIs teach and help employees understand how the communication process
works. They also work with the local management, not only sharing useful information
but also giving some feedback. Once the facility successfully implements its
recommendations, the BCIs move to different facilities. The purpose of establishing the
new internal communication method has a list of five core aspects:
1. Business Updates: BCIs deliver key business issues to local employees, local
management, and local plant levels to develop core local goals consistent with
GM headquarters. BCIs build trust between employees and top managers by
sharing and communicating local management problems.
2. Newsletters: BCIs establish newsletters aimed towards fixing plant issues, and
providing employees a better understanding of the competitive realities.
3. Diagonal slice meeting: BCIs have monthly face-to-face meetings from the top to
the bottom of the management lines, which represent each facilitys concerns, and
allow everyone to voice their concerns regardless of their positions and names. In
addition, they sometimes change their roles to better understand each other.
4. Supervisor support: BCIs have regular meetings with local supervisors to support
communication roles and to soften the relationship between employees and
supervisors. BCIs teach how local supervisors treat their employees based on rolemodeling elements.
5. Feedback: BCIs collect new ideas and concerns from local plant employees.

Workplace Safety

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An atmosphere that inspires employees to do their best, empowers decision-making,
rewards accomplishment, embraces challenges and embodies high expectations is the key
in creating a competitive, profitable and satisfying workplace. No matter how much an
organization redesigns, reconfigures, or reorganizes for efficiency and productivity, highperforming people ultimately drive successful business results. GM has embraced four
priorities to create a unique performance culture:

Focus on the customer

Act as one company
Embrace stretch target
Moves with a sense of urgency

There are some challenges that GM is facing currently. Competitive industry pressures,
rising health care costs and company responsibility to shareholders are key challengers
for GM. In order to meet these challenges, GM requires the best people and the best
company culture. GM needs to manage its culture, facilitate quick change, and think
strategically.
GM has the objective to be committed to developing and deploying employees skills,
talents, and potential effectively, improving the diversity of the workforce, influencing
and shaping GMs performance to drive business outcomes and giving employees
unmatched career opportunities. Thus, GM can see a distinct link between their
investment in human performance and their market performance and financial results.
Employees usually perform best when their personal safety needs are met. GM is wellknown as one of the safest U.S. companies by Occupational Hazards magazines. GM
pays a lot of attention to the customers safety issues. An example of this is the fact that
GM will provide prove standard StabiliTrack on all cars and trucks by 2010. StabiliTrack
requires vehicles to have antilock brakes and traction control, and rolling out ESC
requires a major change to the chassis.
GM is committed to perpetually improving the crashworthiness and crash avoidance of
its vehicles, and GM assists programs targeted at encouraging safer motor vehicles use,
especially child passenger safety programs, driving education efforts, and anti drunkdriving measures.
One of the things that could follow StabiliTrak relatively quickly is a technology known
as panic brake assist. Everything is in place with GMs StabiliTrak systems to enable the
activation of panic brake assist. GM will roll that out on all StabiliTrak-equipped vehicles
in coming years. There are other safety technologies that ESC systems can enable, but
when it comes to protection in a crash or near crash, the most effective technology
remains the safety belt.

Community

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Facing competition in the automobile industry, GM has tried to build a better community,
so that GM will once again become a trusted company. In many of the challenges
surrounding corporate responsibility are opportunities:
Opportunities to drive values into GMs business
Opportunities to reach new customers
Opportunities to create greater efficiencies and better manage social risks
GM has also emphasized the importance of living core values and promoting GMs
corporate reputation. The company is trying to make an impact in areas where business
and societal need meet together through focused connected actions. GM has been
measuring its performance and creating an open dialogue with global stakeholders.
There are some ways to evaluate citizenship. One way is through GM Foundation and
GM Corporate contributions; GM and the GM Foundation contributed more than $68
million to charitable causes through cash contributions, in-kind donations and
participation in charity events. Another measure of GMs performance is the 9 million
parents and caregivers that have attended the companys SafeKids Buckle Up events.
GM is now working hard to build innovative solutions to the challenges of community
involvement and corporate responsibility every day because GM wants to be the kind of
company customers trust.
Training and Education (Guidelines and Rules)
GM trains and educates their employees to ensure that they know what to do and not to do in
any kind of situation. GM highly ensures that the employees are well adapted in any kinds of
situation so that the customers will still receive the best service. The guideline called
Winning with Integrity is the fundamental base of GMs commitment to those values,
beginning with the core value of integrity. The guideline also tells us what GM values the
most in how it deals with their employees, suppliers, and customers. When employees
face difficult situations, the guidelines instruct employees that it is better for them to
discuss the problems with the leadership or legal staff, before dealing with the issue. This
is to avoid further complication in solving the problems.
With well-organized training guidelines, GM employees are able to perform their jobs in the
most ethical manner possible. GM is committed to educational enthusiasm that will help
them find the most suitable and workable situations to future challenges, featuring:
1.
2.
3.
4.

Enlightenment: Help them develop an awareness of questionable situations.

Knowledge: Reinforce with solid concepts and real-world applications.
Attitudes: Help them personalize their relationship with the global environment.
Action: Help them learn how to make a difference.

Environment

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GMs environment entails safety, technology, natural resources and energy. GM plant
facilities and vehicles have an impact on the environment, as they produce emissions and
green house gases. GM tries to improve environmental impact by using innovative
technologies and GM environment principles called the Coalition for Environmentally
Responsible Economics (CERES). GM is the automotive business leader for
environmental protection, being the only company instituting CERES principles of all the
Fortune 50 manufacturing companies. As a result, GM requires all 119 manufacturing
facilities and their suppliers to conform to an environmental management system.
According to environmental policy, GM seeks to find continual improvement and
prevention of pollution, complying with local environmental regulations and
requirements. For example, GM keeps improving internal combustion engines in terms of
fuel economy and performance. Therefore, GM now produces more fuel efficient cars
that get 30 mpg than any other company. In addition, GM has developed its patented Oil
Lift System (GMOLS) which tells when the drivers more accurately when they need to
change their engine oils. Lastly, they are developing hydrogen fuel cells which produce
electricity from hydrogen and oxygen, a more detailed description of hydrogen fuel-cells
ensues below.
Remaining Competitive in the Environment
According to turnaround plans, GM is trying to cut costs, and improve quality of their
vehicles, by reducing retiree health-care liability and providing more products on all
vehicle segments. For example, GM focuses on highly profitable segments such as luxury
SUVs and compact cars. Lastly, GM will change the dealer-channel strategy
implementing more GMs subdivision brands selling at one spot.
Advanced technology:
GM is using advanced technology to make vehicles with improved fuel economy and
lower emissions than typical internal combustion vehicles. Hybrid vehicles are a key
piece of GM's strategy to increase vehicle fuel economy and reduced emissions. GMs
ultimate vision, however, is to lead the industry with hydrogen fuel cell vehicles
because (1) they are inherently much more efficient than all other propulsion systems, (2)
they emit only water vapor, and (3) they provide a unique opportunity to reinvent the
automobile around both customer excitement and societal goals.
In order to reach the goal of cleaner and more fuel efficient vehicles, GM is taking a few
specific steps. The company has announced that it has moved over 500 engineers from
development duties over to groups focused on the production of fuel-cell-powered
vehicles.
According to GM, more than 400 of its fuel cell engineers will now report to its Power
train Group to begin production engineering of fuel cell systems. A further 100 fuel cell
experts are being moved to a separate group focused on integrating fuel cells into future
models.

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While GM has already committed itself to putting 100 fuel-cell-powered Chevy
Equinoxes on the road this year as part of its Project Driveway Program, the sheer
number of engineers that it is reallocating suggests that the company has its sights set on
a much bigger deployment of hydrogen fuel cell cars in the foreseeable futurei. The
company also has is working on a concept electric car which is called the Chevy Volt.
Furthermore, GM features a new innovative product called Experience On Star. On
Star Corporation is a wholly-owned subsidiary of General Motors which provides
subscription-based communications, monitoring and tracking services throughout the
United States and Canada. On Star services are only available currently on vehicles
manufactured by General Motors, with a small select number of other car manufacturers
obtaining a license from GM to put the technology on their premium vehicles, having to
pay GM to do so. Experience On Star is a service rich with features, which provides
services such as turn-by-turn navigation, monthly vehicle diagnostic checks, automatic
notification of airbag deployment, remote door unlock, and hands-free calling, among
other features.
GM SWOT Analysis
Strengths One of GMs most important strengths is its robust revenue growth in Asia
Pacific For example, GM just recently announced that its sales and market share in Asia
Pacific both reached new highs in 2006. GM sold 1,254,615 vehicles in Asia Pacific,
which was an increase of 17.9 percent over 2005. This marks the second consecutive year
that regional sales topped 1 million units. GM's market share in Asia Pacific is now an
estimated 6.4 percent, up from 5.8 percent at the end of the previous year. GM sales
figures are quite good, particularly in China and South Korea. In China, GM and its
Shanghai GM and SAIC-GM-Wuling joint ventures sold 876,747 vehicles, which
represented an increase of 31.8 percent over 2005. Shanghai GM sales rose 27.0 percent
on a year-to-year basis of 413,367 units. SAIC-GM-Wuling, GM's mini-vehicle joint
venture, registered sales growth of 36.5 percent to 460,155 vehicles. China remained
GM's second-largest global market in 2006, following the United States. GM Daewoo
sales likewise remained strong in 2006. Its sales in Korea rose 19.2 percent on an annual
basis to 128,332 units. The Tosca sedan and Winstorm SUV accounted for more than 36
percent of domestic sales. Exports of complete vehicles and knockdown (KD) kits from
Korea jumped 33.1 percent to 1,397,487 units. This was a GM record.ii
Besides growing market share in Asia, strength of GM is its strong brand portfolio,
particularly in the SUV market with the ever popular Chevy Tahoe, GMC Yukon, GMC
Suburban and Cadillac Escalade, as well as smaller SUVs like the Chevy Equinox. GM
has a particularly strong hold of the large SUV market with the Chevy Tahoe and GMC
Suburban consistently outselling the Ford Explorer and Ford Expedition, as well as the
foreign competition likely the Toyota Sequoia. At the high end, GMs Cadillac Escalade
continues to sell well, and outsell the Lincoln Navigator, Lexus SUV offerings, and the
like, as it has a strong following from high-profile celebrities, and is featured in many rap
videos. Furthermore, GM has listened to feedback from many celebrities regarding the
Escalade and improved it, putting chrome detailing all over the body, based on their
recommendations. This has led to an increased market share for the Escalade in the large
luxury SUV segment. GM strength is the continuing improvement in reliability of its

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vehicles. GM and other domestic car makers have considerably improved in reliability
over the past few years. One example of this is the GMC brand, which has been rated
very highly for reliability by both JD Powers and Consumer Reports. iii, iv
Weaknesses The first GM weakness worth mentioning is GMs poor performance in
North America. GM has consistently lost market share, GM at its high point had a 60%
market share, and in 1991 it had a 35% market share. Fifteen years later its market share
has dropped to just 24.7% with Forbes predicting that its continual drop in market share
will not level off until it continues market share reaches 20%. Another large weakness of
GM is its post retirement health care liabilities. While domestic automakers are all
hurting in this category, of all automakers GM is hurting the worst. GM is currently
providing healthcare to three retired employees for everyone one employee it has
working. The estimated cost of this healthcare is over $100 billion, translating to a $1650
cost of healthcare per each car manufactured.
This leads into the next GM weakness, which is weak profitability. Because GM has
such a large healthcare liability, its costs of manufacturing cars are considerably high, and
this, among other factors, cuts into the profitability of GMs car sales. Another GM
weakness is the fact that GM cars, while having made significant reliability
improvements, are still less reliable than many Japanese imports. This can be seen as
measured by consumer reports, where the vast majority of reliability awards that the
magazine issues for any given year go to the Japanese vehicles. Small cars and minivans
are a particular place where GM has had spotty reliability. This is not the case for many
Japanese imports such as Toyota, which have highly reliable vehicles in every category.
Another weakness of GM is that the U.S. Market perceives that GMs product portfolio is
plain and largely unattractive. GM has many cars and even car segments like Pontiac and
Buick that do not appeal to a wide segment of the American population. Pontiac and
Buick cars have not sold well for a number of years, because of basic-looking exteriors of
most models and cheap interiors filled with hard plastics and unattractive features that are
an evident by-product of GMs cost cutting strategy. GM is working hard to address this
problem with its product renaissance plan, part of its four-point turnaround strategy
issued last year.
The next two weaknesses tie into each other; they are a negative company culture and a
lack of worker loyalty to the brand. GMs company culture has long been one of
aggressiveness. GM has been aggressive and demanding with its main supplier Delphi,
causing threats of frequent boycotts at Delphi. This sort of company culture is not seen in
more successful car manufacturers like Toyota. Moreover, this type of company culture
lends to a lack of worker loyalty to the company. Workers are frequently laid off every
few years without any forewarning, have their benefits decreased, and are spun off to
different companies when GM feels that the company could make a financial gain by this
strategy. This sort of company culture leads to the worker belief that the company sees
each worker as expendable and individually unimportant to the success of the whole
organization. This, in turn, can lead to a decreased work ethic, which causes decreased
production and more defects in cars.v

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Opportunities GM has many opportunities for growth. One of its strongest
opportunities is in increasing market share in Asia. Sales are going strong in this
region as mentioned above. This is the reason why GM needs to further capitalize on
this region, as this region has the fastest growing demand for vehicle purchases in the
global automobile market. Perhaps GMs biggest opportunity is represented in its
North American turnaround plan. The plan has four main points: health-care cost
reductions, product renaissance, sales and marketing improvements, and a decrease
in workers and production capacity.
Introduction of new attractive vehicles has begun in GM, representing yet another one of
its opportunities. New, more attractive models have begun to come out this year and in
the next model year, including: Saturn Aura, Chevy Tahoe, GMC Yukon, and Cadillac
Escalade hybrids. They are forecast to sell well, and have won design and consumer
reports awards. Saturn is a GM bright spot as this GM brand has moved away from
cheap plastic body paneling and unattractive cheap looking cars, to a whole new lineup of
vehicles that are more attractive and have already started to sell better than previous
Saturn models. This represents a big turnaround for GM as Saturn is forecast to be
profitable in 2007, the first time since Saturns inception in 1991.
Lastly, but still of tremendous importance is the GM opportunity to roll out fully electric
and hydrogen cars before Japanese competitors. If GM is able to rollout these types of
vehicles before competition does so, than GM should profit handsomely for its endeavors
in this area. A discussion of this topic is discussed more in detail in the advanced
technology segment.
Threats There are several threats to GMs success in the competitive auto market. One
of these is the fact that prices of raw materials are rising rapidly. As these prices
continue to go up, costs will go up to, further eroding GMs already weak
profitability. Another big problem is with Delphi, GMs main supplier. The company
is bankrupt, and there are threats of strikes going on. This instability may threaten
GMs ability to get the parts the company needs in a timely fashion.
In addition, large problem with GM is that there is low capital spending. As cash flow is
decreasing rapidly (another big problem), and GM does not have a high level of
profitability, there is less cash to invest in spending on new cars and projects for the
future. Part of GMs remedy to all these problems is the current restructuring plan
that the company is doing, highlighted above. The problem with this plan is that it
will cost billions of dollars, is too costly, and will further erode the limited amount of
cash on hand that the company possesses. Part of GMs cost cutting strategy is to
make compromises with the United Auto Workers (UAW) union. The problem with
using this as part of their strategy is that the UAW has already conceded on a lot of
benefits in the recent past and may not be willing to budge any further.
Another threat that GM faces is the threat of the Japanese rolling out hydrogen and/or
electric cars before they are able to. Rolling out new technology before foreign
competition would be a good showing for GM and might bring back some market share.
If the Japanese roll out these types of vehicles first, then GM market share might erode
further.

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Toyota: Management Structure & Culture

Company Management
Toyotas management is second to none in the automotive industry. Some companies
have even tried in vain to duplicate Toyotas imperfectly imitable resource for its
competitive advantage. As overall management is the crux to the successful management
of any company, and effective (not efficient) management is evident in Toyota and its
companies across the world, learning from them will benefit us in the long run. The core
of Toyotas management system: include, empower, and relationships. Some say that
these three elements are not difficult to achieve. However, how many CEOs of companies
have said this, but failed to implement them? Almost every one of them! They do not
have the willingness to share information as Toyota does.
Supply Chain Relations
Respect, trust, and commitment are the three factors that Toyota emphasizes in building
and keeping any kind of relationship. Toyota has managed to instill these into their supply
chain, from one generation to the next, internally and externally. Each of the senior staff
has the initiative (Toyotas language for required to) to pass on what they perceive of
the company, and their norms.
Empowerment for Supply Chain
As perceived views and norms are passed down, empowerment becomes automatic. Not
only do they not have to research on the company culture just for the job, Toyota matches
the skills and cultures of each supply chain to their own, empowering them for more
effective partnerships. For example: Toyota trains each supplier what to expect from
Toyotas management to avoid possible miscommunications, Toyota then gives them the
resources to satisfy those expectations, and finally working together becomes fun and
easy.
Diverse Bodies of Supply Chain
The term supply chain not only includes external partners, but also it includes internal
work partners. Diverse work teams provide multiple views of one problem, making it
more efficiently and effective solved.

Just-In-Time Strategy
Probably the most-emphasized part of Toyota is its management system in most scholarly
journals, it prevents waste and accumulation of defects, making mistakes surface easily.
Order of raw materials occurs according to demand, keep inventory in storage low to

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avoid rising expenses, and matching the slowest part of the production process to
demand. These are the basic parts of Toyota Production System.
Toyotas management rules to include participation of the supply chain in every level of
decision-making, and quality is ensured at every level for effective, productive output.
Employee Motivation, Reward, and Miscellaneous
To motivate employees to work, managers let employees know how the companys
success links to their individual work. Toyota understands that motivation has to be kept
up on a day-to-day basisor even shift-to-shift basis.
It accomplishes this by the following:
1. Employee Empowerment
Empowerment here means giving employees a sense of responsibility over what each
person does; in other words, let each employee be their own boss, Empower them to
make important decisions, trust them to do so, and leave them alone. Toyota does this by
ensuring that each employee thoroughly checks their work, offering advice only when
needed by employees, and instilling that norm within the workplace.
2. Feedback from Supply Chain
Feedback is the easiest way to improve vehicle production; without someone else telling
Toyota what they did wrong, how does Toyota take corrective actions? As another way to
empower employees, feedback is reinforced positively. Toyotas workforce supplies a
system of feedback in each work level; from CEOs to suppliers, from dealers to
customers, each feedback is customized according to what each individual has or has not
done well.
3. Technology
A new automated robot may discourage old-timers (who do things manually) from
working. Toyota has prevented this occurrence, so employees are more motivated and
satisfied, leading to low employee turnover rate. Positive word-of-mouth ensues, and so
Toyota flourishes.
Toyotas Customer
Every year, Toyota Motor Sales distinguishes its best dealerships with the Presidents
Award. Its the highest honor a dealership can receive from Toyota Company, and is
only given to those dealerships that have confirmed a promise to continuing the highest
customer satisfaction. For Toyota and its dealerships, customer satisfaction is not only at
the time of purchase, but as long as they own their vehicle including service and
maintenance. Toyota wants to satisfy its customers not only with the best quality of
automobile but also with the best service.
Toyota has also been able to build relationships with its customers by showing its concern
with environmental issues. The company pays attention and takes care of its waste,
ensuring a better environment for all of us. It also offers environment friendly vehicles
that are fuel efficient and reliable. Toyota shows that it cares not just for people but also

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the environment and thats one way to get to its customers hearts. The U.S.
Environmental Protection Agency on October 5 recognized three of Toyota's U.S. vehicle
assembly plants with an Energy Star Plant Award for their commitment and leadership in
protecting our environment through energy efficiency.
Automobiles of the future must increase both environmental and safety performance,
while significantly increasing driving performance. By using the Toyota Hybrid System
(THS), however, the Prius is able to achieve high levels of both environmental
performance and power.
Toyotas Competitiveness
To meet a globally varied market and competitive challenge Toyota has developed an
equally diverse and global strategic response. One is the use of IT to enhance Toyotas
lean production and lean design strategy. The Toyotas lean production is a production
system that will carry an individualized product instantly on order but maintain no
transitional inventories. The concepts include: Identify and deliver value to the customer,
eliminate anything that does not add value, organize production, perfect the product and
create reliable product, distributing information and decision making, and deliver on
order a product meeting customer requirements with nothing in inventory. The principles
of lean production enabled Toyota to deliver on order, minimize inventory, maximize the
use of multi-skilled employees, flatten the management structure, and meeting point
resources where they were needed. By doing this, Toyota can compete well against
almost all the automobile manufacturers around the world. In addition, Toyota is the role
model for the other automobile companies in the production system.
Community
Toyota, as a global company, is very aware of the well-being of the community. Toyota
believes in helping people to improve their quality of life in society. Toyota shows its
concern toward the community in a variety of aspects, for example: Education,
environment, art and culture. As far as education goes, Toyota helps many high school
students with scholarships. This scholarship is reserved for the students who have an
outstanding academic record. Not only that, the students must have good leadership skills
and participate actively in the community. In addition, Toyota supports many programs
that promote a healthier and greener environment. Toyota is the leading manufacturer of
hybrid vehicles in the United States. Moreover, it also develops solar panel systems that
help conserve approximately 11 million gallons of drinking water annually through
special pipelines that supply recycled water for cooling and landscaping.

Workplace Environment
Toyota, a world-class automaker, puts huge emphasis in creating a safe and enjoyable
workplace environment for all of its employees. First and foremost, Toyota wants to build
labor-management relations that are based on mutual trust and respect. Furthermore,
Toyota has worked to strengthen its labor-management relations through active dialogue.

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In order to achieve those goals, personnel management is organized following four basic
principles. The principles are: Creating a workplace environment where employees can
work with their trust in the company, creating a mechanism for promoting constant and
voluntary initiatives in continuous improvements, fully committed and thorough human
resources development, and promoting teamwork aimed at pursuit of individual roles and
optimization of the entire team.
Secondly, Toyota adopts the habit of stable employment. That gives Toyota an
incentive to avoid layoff and termination of workers which result in low employee
turnover. Toyotas management system is based mainly on bringing out the maximum
potential of each employee. In addition, Toyota always prefers to take a medium to long
term management perspective because they believe that it is the good recipe for
continuing success in the industry.
Furthermore, creating a safe working environment is also within Toyotas radar. From top
to bottom level management, they prioritize safety for employees. Toyota minimized the
accident level within the company by implementing policy that orders employees to be
extra careful when handling equipment. The policy helps reduce the risk of accidents
associated with work or equipment. In terms of a healthy workplace, Toyota encourages
its employees to go for physicals. On the other hand, managers and supervisors also have
to undergo active listening courses that are effective in preventing mental problems.
Through these activities, Toyota aims to create a workplace with better communication in
the future.
Lastly, Toyota strongly supports the issue of diversity in the workplace. Major factors like
globalization have helped women and other minorities to gain equal employment status.
Women have started to hold higher management positions, and they are treated similarly
to their male colleagues. Toyota even makes an extra effort in hiring people around the
world with various abilities and values. Those people bring something different to the
table and that will only benefit Toyotas future. In addition, Toyota practices a policy of
not discriminating against the disabled. Instead, they are given equal employment
opportunities. As of March 2004, Toyota has employed about 800 disabled people at
various positions. Toyota believes in helping disabled people achieve autonomy within
the society.
With all of the above policies that Toyota has planned out, it manages to stay ahead of the
competition and remain one of the most recognized automobile brands in the world. Its
employees also are happy and motivated enough to work hard in order to help Toyota
grow even bigger in the future.

Toyota SWOT Analysis

Strengths One of the strengths that Toyota has is that they have high commitment and
truly believe in their company. Toyota is known to be one of many companies that are
committed to building a strong relationship with its employees. Everything is based on
trust and commitment. The company believes that it grows as the employees grow. One

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way to make this happen is by giving education as a motivation to its employees. It relies
on their employees therefore keeping them up to date of any changes in business,
technology, or other things.. In addition, Toyota is known to have a high diversity when it
comes to its employees; making it possible to have better solutions in problem solving.
These diversities also allow the company to provide more ideas when it comes to new
products or in making changes to its pervious products.
Secondly, Toyota is also known for its TPS (Toyota Production System) program. This
program keeps the company to stand strong when it comes to efficiency compare to its
competitors. After all these years, Toyota has done a really good job in eliminating waste
and time in making its products.
Moreover, the company has been doing well when it comes to building strong
relationships with its customers. The company is known to satisfy its customers.
Knowing the kind of demand that comes from the customers is another strength, which
the company holds. By having this information, the company is then able to create cars
that can satisfy its customers. In order to fulfill different demand, Toyotas solution is to
offer various choices of products. The company holds three brands of cars, all
manufactures by Toyota. These are Toyota itself, Scion and Lexus. All these brands are
targeted for different social classes, which makes it possible for the company to offer
great vehicles for all people. One thing thats known by many people is that no matter
how much money you spend on a Toyota, youll always get a great deal for our money.
Weaknesses Toyota is a wholly owned overseas firm. Its CEO lives in Japan, whos not
yet completely knowledgeable about global business. He might be great when it comes to
doing business in his own country, but hes not as handy when it comes to ethics,
marketing, management, etc abroad. The company could make greater profit if the CEO
learns more about how to work in the global economy. Hence, this comes to be one of the
weaknesses of the company, for Toyota is global.
In addition, even though Toyota has been really successful in the American
market, it is not successful in the European market. It cant seem to provide whats
demanded by the European market which seeks smaller cars and high performance
vehicles. Neither of which are Toyotas forte.
Threat
Honda is one of its biggest competitors. As for the American market, Honda
offers Acura for its high end customers to compete with Lexus. Moreover, soon Toyota
will also have to compete with China, which has announced that it will begin exporting
vehicles in 2010. Surely, China is known to be able to produce cheaper products. Hence,
this will come to a threat in price competition, which Toyota has to face in the near
future.
Another threat comes from the American car manufacturers. Most of these
manufacturers, such as GM, offer rebate, discount and no APR on finances. Money is not
the only matter that Toyota has to compete with these manufacturers. The people who
choose American manufacturer seems to value lifestyle and culture, and this is a difficult
threat thats not easy to overcome. Hence, Toyota still needs to come up with new
strategies to break through these threats.

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Opportunities The company seems to be doing well in adjusting and fulfilling customers
demand. Doing everything to take all the opportunities to increase sales and building
better relationship with the customers through its products. Toyota has been making
innovative and high tech cars for so many years, being the first from its competitors to
see this kind of market demand.
New Recommendations for Automotive Industry
In this section, we include new workplace techniques, as well as: Leadership,
community, motivation, communication, pull strategy, mission and vision, customers,
integrity, supply chain, and competitive advantages.
Mission: To provide the most reliable and innovative product by satisfying customers and
suppliers, while communicating daily business operations.
Vision: Possess innovate and passionate management to create a better society through
continuous improvement driven by integrity and teamwork.
Standard Company Culture
Through analysis of Toyota and GM, our analysis team realizes the importance of
building a good company culture for success in the automobile industry. From GM
management culture, our management team becomes aware of that having a good
relationship with suppliers is good for business. Therefore, our management team
suggests that companies in the automotive industry need to establish the right relationship
with suppliers through excellent communication.
Furthermore, product development in the automotive industry is a complex process that is
very time consuming, but product life cycles are growing shorter. It took about 60 months
to bring a vehicle to product 10 years ago whereas it can be done in less than 24 months
in today. As a result, companies in the automotive industry need to have a culture focused
on scheduling and timing; and possess good program management, which is responsible
for tracking, forecasting required resources and ensuring that tasks are accomplished on
time and on budget. This program management culture encourages people to request help
when they need it. In addition, using program management allows teams to determine the
impact of the adjustments they have made, on what other efficiencies could be achieved
and which tasks could run to minimize delays. Therefore, using program management
culture can lead to good decision making, by producing better products for customers
with minimal impact to the budget.
What kinds of effective communications can new automotive organizations have? In
answering this question, one of the most important things is to listen carefully to what
employees complain about in order to reduce resistances. Dealing with complaints
consists of collecting and sharing new ideas, and having regular face-to-face meetings to
support local managers in delivering more accurate information from bottom line
employees. Therefore, strengthened communication skills can lead to a culture of
continuous learning. This learning culture alone is not enough to make organizations able
to respond, adapt, and cope with the pressures of change, so organizations must go

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beyond adapting to challenges and solving problems to generating new ways of looking
at the world.
Integrity
We recommend specific guidelines for employee conduct as core values. Operating with
these specific guidelines means honest and accurate reporting both internally and
externally. As core values, our management suggestions are as follows: Customer
enthusiasm, integrity, teamwork, innovation, continuous improvement, and individual
respect and responsibility. These guidelines are in terms of personal, workplace,
marketplace, society, community, and environmental goals. These guidelines must be
followed by all employees of the company.
Through personal integrity, employees can make decisions by complying with roles and
policies. In a big company, peoples opinions may differ about the decisions of any given
policy but the guidelines are not optional. In addition, each worker needs to voice
concerns about workers who are not following the rules. Therefore, all workers
necessarily must speak with leadership or legal staffs whenever they are in questionable
situations. Lastly, when employees work, they take personal responsibility for performing
assignments consistent with policies and all relevant government regulations.
In the workplace, diversity is the key to success because a productive work environment
accepts and tolerates differences. Organizations within the automotive industry should be
committed to equal employment opportunity policies. In addition, productivity is directly
related to the health and safety of each employee. If people do not feel secure, their
productivity will not reflect their efforts because of the fact that safety and health are the
basic needs of human beings. For example, promptly voicing safety concerns to
supervisors helps reduce the occurrence of accidents.
In the marketplace, automotive organizations must make purchase decisions based on
suppliers price, quality, and service. In other words, purchase decisions should not be
influenced by illegal or improper considerations such as bribery, personal friendships and
gifts. As most suppliers spin out from car manufacturing companies, they have to make
sure that it is best to decline any gift, meal, or any cash from suppliers when making
purchase decisions. In addition, when automotive companies donate something valuable,
it needs to be carefully discussed with upper management about whether some items are
appropriate or not.
As unique characteristic in the automotive market, our management company
recommends looking at export and import controls. For example, U.S has some sanctions
against Iran, Cuba, Sudan, and Syria, and Libya, so the U.S refuses to do business with
those countries. In addition, as global society becomes more concerned about the
environment, our management company suggests that sound environmental practices be
an integral part of all business decisions that influence the firm. Environmental actions
include: Restoring, preserving, reducing waste and pollutants, and pursuing the
development of innovative technologies that minimize harmful emissions.

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Target Different Segments to Keep Customers in the Family
Every automobile company has its own strategy to keep its customers buying that brand
of automobile and building the company-customer relationship until they become loyal
customers. Targeting different customer segments to keep customers in the family is one
of the strategies that every automobile maker should use. For example, Toyota has the
sub brands Scion and Lexus, and GM has Cadillac and Chevy. This is one of the keys to
keeping consumers in family that is using different brands for different divisions. In this
way, a company can fulfill all customers needs. With Toyota, if consumers want a luxury
car, they can buy a Lexus; if they want an economical car, they can buy a Scion. Thus, the
percentage of Toyotas consumers turning to other brands is decreasing. The goal of using
different sub-brands for different segments is to satisfy as wide a variety of consumers as
possible.
Almost all automobile companies face an age issue: younger consumers are going
through a phase in which they reject their parents brand of car. Younger consumers seek
higher performance vehicles and cars that illustrate their lifestyle, while older drivers are
attracted to low-cost, roomy, and fuel-efficient cars. With these kinds of problems,
providing different classes of automobiles will spur customers and their families to
remain loyal to a brand.
Motivation
Motivation is one of the most important ways for a company to make sure its employees
work at maximal productivity with a high level of job satisfaction. Every company
employs a different strategy to motivate its employees. For example, GM has an
employee medical plan that covers everything including vision and dental care. In
addition, GM has approximately 14 paid holidays annually plus vacation time, beginning
at two weeks for employees who have spent one to three years with the company.
Moreover, if employees want to buy cars from GM, they receive a discount. This kind of
motivation may seem simple or standard, but it is extremely effective at encouraging
employees to work harder and do their best.
Toyota implements a different strategy in that it attempts to motivate not only employees
but also dealerships. This company rewards dealerships that build good relationships with
customers or that provide the best possible service. Toyota values customer satisfaction;
therefore, every dealership that treats its customers well will be rewarded.
Another motivation that will foster productivity and good customer service is a
scholarship program. Some automobile companies pay their employees college tuition so
they obtain a better education, which helps them in the workplace. This kind of
motivation benefits the company as well. With better-educated employees, the company
will have access to more creative ideas.
Automobile companies also can motivate their employees by giving them the freedom to
express their ideas. In this way, employees will be happier at work, and they will feel
they are part of the company. It does not matter what position an employee holds. With

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this kind of freedom, employees will feel invested in the company and will work hard to
make it a success.
Pull Strategy
The best management for automobile industry would be pull system as it avoids
overproduction. In a pull system, the consumer demands the product and pulls it
through the delivery channel. An example of this is the car manufacturing company
Toyota. So far, Toyota only produces cars when the customers order for the cars. This is
to avoid overproduction and also the dealers will save a lot of money in putting the cars
in the warehouse.
A pull system can be practiced in various situations and can be applied to the portion of
the supply chain where demand uncertainty is high, production and distribution are
demand driven, where there is no inventory, and there is a decrease in lead time.
In a pull-based supply chain, production and distribution are demand driven so that they
are coordinated with actual customer orders, rather than forecasted demand. The industry
is able to provide the down line customers in the production process with what they want,
when they want it, and in the amount they want. Material replenishment initiated by
consumption is the basic principle of just-in-time.
For the automobile industry, the pull strategy is highly recommended, as it would bring
more benefits to the industry. The automobile industry is able to increase the profits as
they are actually saving more money. It minimizes the work in process and warehousing
of inventory by stocking small amounts of each product and frequently restocking based
on what the customer actually takes away.
Empowering supply chain
One of the features of empowering the supply chain is inclusion. Empowering leaders
creates an atmosphere of inclusion across all levels in the company by making sure that
everyone has a voice and that their voice is listened to. This is because they understand
that they cannot become a successful company unless new ideas are allowed to penetrate
the decision-making processes.
In the automobile industry, empowering the supply chain is highly recommended as it
allows the industry to improve. The employees have to know the roles of other
employees. The key point is that people must receptive to input from different areas in
the company. The company may not realize how important empowering the supply chain
can be. It contributes a multitude of benefits to the company.
Leadership
Every company needs leadership in order to achieve company goals. Leadership is
needed in the automobile industry, as the leader will lead others to do the right things.
Trait theory is one way to describe who leaders are. It says that effective leaders possess a
similar set of traits or characteristics. Traits are relatively stable characteristics, such as

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abilities, psychological motives, or consistent patterns of behavior. Leaders are different
from the rest because they have the traits that other do not have: Drive, the desire to lead,
honesty/integrity, self-confidence, emotional stability, cognitive ability, and knowledge of
the business. With all of these traits, leaders in the company will be able to drive the
people that they work with to be prepared for the any kind of situation. Leaders always
ensure that the company is doing the right thing. This means that they put high level of
effort to the work that they perform. They will always try to make improvements or
achieve success in what they are doing. Because of their initiative, they have strong
desires to promote change or solve problems.
Successful leaders also have a stronger desire to lead. They want to be in charge, and
think about ways to influence or convince others about what should or should not be
done. Honesty and integrity is also an important characteristic of leaders. Without
honesty, others will not trust leaders. Leaders may be honest and have good intentions,
but if they do not consistently deliver on what they promise, they will not be trusted.
Self-confident leaders are more decisive and assertive and are more likely to gain others
confidence. Moreover, self-confident leaders will admit mistakes because they view them
as learning opportunities rather than a refutation of their leadership capabilities. This also
means that leaders have emotional stability. Even when things go wrong, they remain
even-tempered and consistent in their outlook and in the way they treat others.
Leaders are also smart. Leaders typically have strong cognitive abilities. This does not
mean that leaders are geniuses, but it does mean that leaders have the capacity to analyze
large amounts of seemingly unrelated, complex information and see patterns,
opportunities, or threats where others might not see them. Leaders must have superior
technical knowledge about the businesses they run. Leaders who have a good knowledge
of the business understand the key technological decisions and concerns facing their
companies.
A good leader must be role models of the companys philosophy and way of doing
business. It is very critical for leaders in car industry to know good strategies for selling
cars. The leader not only is required to know basic information about the products, but
also detailed information about the products. In addition to that, the products must be
guaranteed to work properly without any major defects. Therefore, the customers will be
fully satisfied when they buy the products. The path to become a great leader is not easy.
There are a few steps that someone must under go before they become a great leader.
First, they must get a proper training and education about the car industry. Thus, a leader
must already posses the ability to deal with the all of the component of this industry,
including the customers, employees and suppliers. In the end, the leader must know how
to solve problems in real-life situations and understand how to work as group. Since most
problems are solved quicker and more efficiently with group decisions.
Work Place
Every company must possess these qualities in order to be successful. The qualities are
good teamwork within the company, diversity in the work force and employees

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compensations. The company must not think solely on profitability but they must also
care about the well being of the employees.
Firstly, teamwork is the best characteristic for harmony inside every company. Teamwork
will lead to effectiveness inside the companies. Teamwork is the best way to help the
employees solve problems. With teamwork, every members weaknesses will be
minimized, and their efforts and strengths will be maximized. Many companies believe
that teamwork can make work easier. Effective teamwork is exemplified by groups that
work together, this type of group can collect all the information and come together with
new solutions. Thus, this team has an intermediary goal towards getting good, sustainable
results. To have a good teamwork we must have the abilities to listen, question, persuade,
help, share, participate, and communicate.
Secondly, diversity in the workforce is a good thing in the company. Having employees
from different backgrounds and cultures will give companies a lot of benefit in term of a
variety of skills and knowledge. A diverse work place is a work place that respects and
includes differences and recognizes the unique contributions that of every individual. It is
very important to put diversity inside company cultures because it can help company to
know the necessity of the market. In the end, the purpose of diversity is to maximize
companys profits.
Thirdly, to create a harmonized environment inside the company, an organization must
also care about its employees well being. To do so, employees must be provided with
health care insurance, retirement fund such as 401k, and overtime compensation.
Having an imperfectly imitable competitive advantage
Just like Toyota is infamous for its reliability; our company also has to create an
imperfectly imitable competitive advantage to differentiate ourselves from our
competitors. Our competitive advantage should be large and attractive in the short run,
but also very significant to customers in the long run.
If our aim is to become the Starbucks of the automobile industry, providing our
customers with pre-, during, and post-sale services that support their judgment in
choosing our auto brand over the other. Learning from Toyota, we should integrate our
supply chain into management processes to accommodate the full understanding of our
goal. We want to let them know what is expected of them, supporting each other to
achieve what we want for our supply chain: reasonability, satisfaction, loyalty, and
support.
A way to achieve that is to improve technology: through intense research and
development, our company will be able to develop an engine that runs more smoothly,
and need less maintenance to accommodate tour customers hectic life; our company
needs to develop a braking system that reacts more quickly than the current system to
ensure child safety; and also help develop the currently-tested hydrogen fuel cells to
replace gasoline fuel and decreasing vehicle emissions of harmful gases. All these cannot
be achieved if we do not have a communication system that transports information as

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quickly and safely as neededwe should implement virtual teams to ensure that
processes are dealt with quickly.
All these will lead our company to communicate more efficiently throughout the supply
chain, creating a unified sense of direction to achieve the competitive advantage. In that,
reliability and affordability will be achieved.
Supply Chain Relationship
Relationships based on trust, commitment, and respect last a lot longer than those based
on immediate advantages. Each party is more willing to sacrifice for the other, creating a
mutual understanding and desire for other members of the supply chain to succeed,
supporting each other for the ultimate goal of the company. Like Toyota which constantly
is in communication with its supply chain, each member of the supply chain has no
trouble accommodating whatever Toyota needs to produce each car with minimal cost for
superior quality, serving its customers through its official dealers, and the adequate
availability of its spare parts.
Weeding out ineffective supply chain members, and maintaining and rewarding
supportive supply chain members are the keys to successful implanting good supply
chain relationship management. The best way to select supply chain members is to select
them as if you are buying a car for yourself: Look for members that are reliable,
committed to your convenience, and support what you need from them. Not forgetting
after buying your car, you have to maintain its performance; similarly, maintain the
relationship in the supply chain with respect and trust. In other words, treat them as an
extension of your own company.
By treating them as an extension of your company, a sense of ownership will follow. Like
a team member who cares very much about the result of a project, he/she will want to
contribute to the projecta very carefully thought contribution at that.
Successful relationships are not built overnight, it takes time to develop these
relationships; and when harvested correctly, the relationships can be sustained to achieve
a result that everyone desires.
Relationships throughout the company
While relationships are important within the supply chain, it is also as important within
the company itself. Without a good relationship in the company, the most important
factor for successeffective communicationscannot be achieved. In sync with the
importance of trust, commitment, and respect, relationships have to be instilled with these
factors to grow and sustain.
Many organization development books state that to be successful internally, each
organization must have good management. To achieve an effective management, each
employee needs to understand and agree to the processes of the organization. To do that,
relationships that emphasize trust, commitment, and respect must be nurtured. Setting an
example to avoid hypocrisy can also be implemented to support employees confidence in

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the company, boosting their positive outlook for themselves, the management system, and
the company.
Maintaining happy employees within the company can be achieved through effective
relationship management. Happy employees will be loyal, committed, and are more
willing to sacrifice for the organization. By creating positive relationships, workplace will
be a friendlier place to be in, where employees can concentrate on their work, instead of
complaining about what a company should provide them. Productivity and satisfaction
increases simultaneously, benefiting both the company and the workers.
With that said, how do we manage relationships within the company? The goal of this is
to balance the welfare of the employees and the processes of the organization.
Motivation, rewards, encouragement, punishment, and realization has to be balanced in
the relationship management to avoid misunderstandings, bribes, or any kind of
unwanted activities that may suggest discrimination. Fair and square is the ideal way to
maintain long-lasting relationships internally.
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