Strategic management is an essential factor that determines the future of any company. Toyota must possess strategic business planning for gaining significant profits. This report is based on the strategic management policy of a company and the importance of the business canvas model along with the core business beliefs.
Toyota Company is a Japanese based company, and the head quarter is located in Aichi, Japan. Strategic management of Toyota is considered as the expert of consultant and advising on a particular subject. The report which is based on competitive analysis looks about the weakness and the strength of Toyota company key competitors. An expert usually prefers the consulting report for the client of the company, which does not have knowledge or time for the necessary research and writes a report. A strategic consultant is known as one of the most lucrative and competitive for the company—it advice the company on making the decision on high levels. The consultant uses a deep knowledge of the industry so that the consultant can provide the best knowledge. The main motive of writing the report is to show the strategic planning to the members of the Toyota Company and to discuss all the motives and issues within the company. To address the methods and to analyze the problems and aims of the company.
The strategic direction in the past is quality management system. This includes the need for company, alignment, understanding and the strategic direction of the company. The strategic direction of the Toyota Company had the requirement of relation to understanding the context of the organization (Ansoff et al., 2018). It ensured the quality objective and the quality policy which was compatible with the strategic direction. It used to verify the quality policy support and confirmed the management review check where the quality management system is in alignment. One factor which was used before five years was the quality objective because the quality objective indicates to the target statement, which is used for continual improvement. This will also have a plan to achieve them. They are designed in such a way that it is compatible with improvements to achieve the vision of the overall industry. Here is an example of how it works: if the company helps the manufacturer of the widget, the mechanical measurement equipment improves the widget with calibration service, and quality objective will decrease the errors within the customer equipment from six per cent to four per cent. This plan will make this quality objective happen by reducing the calibration errors within the customer. So by doing this, the work towards the quality objective will also be the strategic direction by helping the manufacturer of the widget company with the service of calibration.
The way in which the strategic direction has developed within the past five years is they included the actions and plans which needs to be placed in work according to the future and vision of the organization. Strategic direction leaders started to take actions to achieve goals within a leadership organization strategy (Schilling and Shankar, 2019). Strategic leaders started to take the long and broad approach to solve the problems and involved the objective analysis in making the decision by planning and thinking ahead. The strategic approach leaders have become more important in terms of effectiveness and perception. This became important as communication and more important in tactical behaviours. Now, this does not mean the tactical behaviours are not important, but there is no differentiation on effective leaders. This means that strategic leaders can think in multiple time frames. They think by identifying what they want to accomplish which can happen now, within six months, a year or more to reach there. This is also considered as thinking systemically. On various segments of the organization, identifying the impact of their decision which includes departments, customers, suppliers etc. those leaders are considered as the effective leaders who have scored well in those skills (Wheelen et al., 2017). The individual is also more likely to be seen as the future potential of the organization.
After the five years of study, it was also investigated that highly desired leadership produced a maximum number of senior executives with development setting goals for the respective organization. When it was asked to choose the leadership behaviour within the organization, executives chose 97% strategic of the time. Both high priority leaders and the extensive research result, plan on the practice of leadership reinforce the importance of constructing the mindset and skill in the endeavour of leadership development. Within five years, the strategic developer has created the management approach to set a regular time aside; they encouraged strategic planning. They made it as a regular part of the job because the strategic approach always takes time. They provided the information to leaders on industry, market, competitors and new technology .When the high-level strategic developer suggests the course of action, then everyone can ask about the underlying strategic goal about what the action serves and the impact of the action within the external and internal shareholders. Whenever these questions are asked, it will help to develop strategic leaders to go a long way.
The environment of the Toyota Company is composed of all the external factor and also influence the operation and impact of the business in the company. To flow the business, the company must react and act to keep up the flow in the environment which is external. It can be divided into two factors: the macro-environment factor and the microenvironment factor. The macro-environment is comprised of general factors where the business has control over it. The company depends on its success on the ability of how it adapts—the microenvironment compromise of those factors which impact the company operation (Lasserre, 2017). To take into account, each type of environment influence and has the factor. For example, if a consumer wants to improve their health by walking or biking, then it will give an impact on the sale of gas (Hill, 2017). In the macro-environment, the economic factor includes the interest rates, taxes, government spending etc. the main thing is the way the company reacts, and this is a place where the creativity plays a vital role.
The company’s competitive advantage on direct competitors is a set of all the required qualities where the business gives leverage to their competition. It allows the business to offer service and product to their target market with a high value than the other competitors of the industry (Harrison and John, 2013). This boosts the business in the long term within the industry, and it drives a maximum number of sales as compared to the competitors. Competitive can come in different ways, ranging from intelligent distribution to expert branding.The more competitive business, it is more likely to maintain all the profit levels, and it will help to keep away the competitor, and the competitor cannot overtake them. To overtake the direct competitors, it is important to create a competitive advantage. For any successful business creating competition have to be the goal. Suppose the business can maintain and create a competitive business than it allows us to be a leader in the market (Morden, 2016). This will give the ultimate result of higher profit margins and more sales. So there is a various known strategy in business to create a competitive advantage and to overlap the direct competitors.
Industry scenario facing the company within the exciting market domains are integrity, borrowing the cash, increased competition and also the selection, loyalty of consumer and the marketing etc.
Integrity:this moral challenge has never faced by business that they are facing today in global business. Everyone is struggling to make quarterly earnings, too be more successful, to earn big, to maintain their job and to compete more efficiently. To omit information and the temptation to cut corners takes to get ahead every day. Many employees and the executives in business succumb, and the theme will be highly infectious, and people tart to lying a bit (Stead and Stead, 2013).
Cash borrowing and resource management: it is truer today that the financial statement looks nice with a healthy profit. It wants to be able to stay in business for so long if the receivable and the capital expenditure are draining the cash. Most of the time executives and the owners of small business fail on focusing the generation of cash flow. The business should adequately capitalize and shore up cash reserves in order to avoid this problem by meeting all the obligation that should be handled the emergencies and downturn that may arise. In times when cash is flowing slowly in business, the management of cash becomes even more important, and the creditors will be less lenient in time to pay (Frynas and Mellahi, 2015).
Increased selection and competition: it is not easy to start a business, but if anyone can buy a domain name and able to register a business online then it is said that the individual is into the business. However, it is a complicated matter to stay in business because business expertise is an expensive and time-consuming endeavour.
Marketing and customer loyalty: In the same line of increased selection and competitions, it is also the challenge in the market to retain the existing customer. May social sites and communication channels are making the business easy, so it means that the right channel of marketing is key for a business to get success in future.
The gradual deterioration is strategic drift in the Toyota Company’s competitive leads to the failure of a company in terms of acknowledging and responding to the business environment changes. The extent of a company's strategic drift can be categorized into four phases.
Phase 1 – Incremental Change:-
Incremental change occurs in a company before the occurrence of any significant changes in the economy, external environment or technology. A company can make incremental changes and stay in touch with the environment. A company must not panic during this phase because there is a marginal distance between the Toyota Company’s strategic action and external changes.
Phase 2 – Strategic Drift:-
This phase reflects the name of the phenomenon. Strategic drift happens in a company when there is a rapid rate of change in the company's external environment. Despite the fact that the company is continuing to make incremental changes, it is still not enough to keep up with the rapid rate of change in the environment. At this stage, the gradual effect of the company is quite insidious (Schilling and Shankar, 2019). The financial performance of the company declines, and it is recognized by senior leadership. The management blames the internal issues as the major cause of poor financial performance instead of the actual external issues. The slower the company will react, the larger will be the effect on customer demands, and ultimately it will be very difficult for the company to transform.
Phase 3 – Flux:-
In this phase, the company is no longer able to ignore the customer's demand and company's production. The company understands what is required to be changed, and they create a change management strategy. It is difficult for the existing management of the company to understand and agree on the exact changes that are required because they are unable to understand the root of the problem and the environment. The management cannot grasp the fact that what worked before won't be working anymore.
Phase 4 – Transformational Change:-
This change can lead to a significant transformation in the company. These will result\in success or rapid failure. The company needs to have savvy and bold management possessing the foresight to actual positive directions (Rothaermel, 2016). If the company continues with the outdated strategy, then it might result in the eventual shutdown of the company.
The strategic drift has occurred with the actual failure of understanding the customer’s demand. The company has spent too much time on producing goods and services rather than thinking about the customer’s demand.
The vision statement refers to the organization’s aspirations of achieving what it aspires to become (Taiwo et al., 2016). The vision statement does not provide any specific targets.
The mission statement refers to the task that the company needs to do for achieving its vision. The company's mission and vision statement do not align with the marketplace. A company must select its marketplace that should be abundant in manpower and resources. The mission and vision statement provides the direction of every happening inside the company. They keep everyone focused on the organization's path and try to achieve its ultimate goal. They also define the core values of the company and the way all of its employees are expected to behave. These statements are not intended to restrict the initiatives or innovation but rather intend to guide behaviours and decisions required for achieving the common goals. The Toyota company is operating from an area where the cost of labour is quite high as well as the availability of resources are not sufficient. Their mission and vision statement are not performing on the expected level because their marketplace is not favourable.
This refers to the actual business potential to flourish all its capabilities, skills and resources for attaining competitive advantage as well as increase its value with time. The major component of the company is strategic capability which is making them financially viable. They are growing despite intense competition in the market. There are many groups of interested parties that attempt to track the strategic capabilities of the company. They are mainly the investors, who have put their money into the company's business with a hope of future growth and success. The employees of the company care about strategic capabilities as it helps them to identify the risks and threats of the business. The company's business leaders track the metric for both the company and its competitors for a better understanding of the markets in which they are operating. There are many elements contributing to the company's strategic capabilities. The assets are contributing heavily to the company's strategic capabilities. Other elements like organizational structures and human resources are contributing to the strategic capabilities as well. It is a very difficult process to access the company’s strategic capabilities. Pricing is an excellent strategic capability of the company. The company understands how to manipulate prices to attain maximum profits.
A business canvas model is a great tool that helps in understanding the business model in a structured manner. This model depicts the insights and the value propositions that are being served to the customers and clients.
The Toyota Company follows the business canvas model in the following ways:-
Company has some key partners that provide shipping services and fulfils the timely arrival process of the products. By selling through their platform the retail companies wants to make profit because of the company's market value (Christensen et al., 2015).
Company's key activities include the quick fulfilment process. On-time delivery and improvement in efficiency are some major key activities as well.
The Company’s resources are shipping services, fulfilment and warehouses and reliable servers.
Their value propositions are to provide a shopping platform that offers and delivers quickly.
They have the best-in-class fulfilment system that allows the customers to receive their orders in a quick time. They have an excellent mindset of "customer first" service regardless of the customer's segment.
They have a global distribution channel through various shipping partners and well-equipped fulfilment centres. They have an enormous online marketing and advertising platforms.
They have two customer segments, mainly business clients and retail clients. Business clients operate as retailers on online platforms. The retail client's purchases products from their online platform.
They have a cost-optimization strategy along with a well scaled and efficient centre for fulfilment. They have comparatively lower costs in managing the servers.
They possess a low margin revenue streams from the online retailer's sales and fulfilment.
As per the context, it states that the marketing is viewed as a global perspective by innovating and adapting the new strategies and enduring the relationship through relationship marketing and interactive marketing. As per the report, we understand that marketing should be viewed as the essential function of the organization. There is no doubt that marketing can implement the true spirit and content to enhance the business more. Though it is difficult for the organization to firm service and marketing, the organization should increase its potential and should retain their existing market. It is not easy to develop the strategic approach, but it always makes the difference in an exceptional and average strategic leader.
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