Free Business Dissertations - Introduction As The Biggest Auto Manufacturer In Japan And The Second
Introduction
As the biggest auto manufacturer in Japan and the second biggest car maker in the world Toyota exploited numerous strategies in order to maintain organisational growth over the long term. McCraw (1997) argues that in the 1990s Japanese automotive makers were hit by a double blow but Toyota successfully retained profitability in response to the changing external environment car makers faced. Therefore examining Toyota in relation to the external driving forces and the internal competitive capabilities which shaped the company’s success is a useful exercise in understanding the overall dynamics of the industry. Japanese national culture is a model for Toyota’s organisational structures and behaviour reflected in the emphasis on team working and commitment to total quality management. However due to raid technological development and globalisation in the auto industry Toyota was forced into adapting its strategies to different marketplaces as well as altering its management style. For example in Toyota UK the organisational structure corresponds to the traditional Toyota system which encourages team working and the sharing of information and knowledge between teams and team members. Even in the UK though the fact that Toyota dealt with trade unions, a significant departure from traditional Japanese organisational behaviour represented innovative adaptations on the part of the company to operating in the UK.
PESTEL and SWOT analysis
Johnson and Scholes (2002) argue external elements of relevance to an organisation can be assessed by means of a PESTEL framework which comprises an analysis of Political, Economic, Social, Technological, Environmental and Legal factors. Firstly the Japanese government supported the automotive industry in terms of tax and infrastructures in order to create national competitive advantages in the global market. Such support reflected concerns that big business such as car makers like Toyota was pivotal to the creation of wealth, (McCraw, 1997). However poor economic performance in Japan and a weak yen in the capital market generated threats to Toyota’s operations (Flath, 2000). This threat resulted in adoption of a continuous cost-effective strategy by Toyota in response. In addition there has been a trend of an increased proportion of older people demographically in developed countries such as Japan, US and the UK. This phenomenon affected Toyota in both positive and negative ways due to the changing characteristics and preferences of targeted customers. For example the demand for family cars increased. It is also vital to be aware of both the legal requirement for cars to be environmental friendly and customers’ increasing environmental consciousness which saw continued growth in demand for smaller more economical cars particularly in European markets.
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