Required: Answer the following questions analyzing the following aspects of the case studyi. What is the primary issue in the case?ii. How is the company doing strategically in terms of its existing strategy and business?iii. Discuss any two of the qualitative and quantitative theories and models you can use from the case study and outside the case study to gain competitive advantage in the global business environment. Brief Background of ToyotaSince establishment in 1933 as a division of Toyoda Automatic Loom Works, Toyota developedfrom plain field, through many legendary well-known creative managements including productionsetup time reduction, grouping the front workface into teams, decentralizing the responsibilities ofidentifying and fixing defective parts to the whole team during assembling, developing Kanbansystem on which the famous Just-In-Time inventory practice heavily relies, innovativelyorganizing suppliers by incorporating them into the enterprise value chain of Toyota with longterm relation development, building unique distribution and customer relation with focus onbuilding long term ties with customers and bring their feedback on quality, styling, prices and otherfeatures into Toyota's design and production process. By these distinct managements, Toyota hasachieved remarked advantages in production cost, product quality, wide range of models on alimited range of platforms.Though Toyota had disastrous experience when setting up an independent production subsidiaryin California with ambition to seize the small car market in USA, Toyota learned and improved alot in quality to suit the local conditions, in result made a triumphal turnaround in US market inlate 1960s. Moreover, the following oil price rise unexpectedly boosted the demand for Toyota'scars which are light and fuel saving. Since then, worldwide exporting business of Toyota had beena steady growth. In order to get around import barriers such as local content regulations and importquotas, Toyota established a 50/50 joint venture named New United Motor Manufacturing, Inc.(NUMMI) with General Motor in USA in 1983, and a wholly owned manufacturing facility in UKin 1989 and another in France in 1997, and a 50/50 joint venture with French automaker Peugeotin Czech Republic in 2002. Brave strides also have been happening in China, now the world'sfastest growing car market. Now Toyota has become the largest car manufacturer in the world,320,808 people employed worldwide in 2010, 52 production facilities in 26 countries except inJapan, 12 product design and research and development centers in 7 countries.IBS of ToyotaAny firm that aims to expand foreign market initially intends to gain benefits of economies of scaleand location and learning effect which could be realized by and boost product and servicestandardization. However, here unavoidably arise problems of localization due to demand forresponse by the firm to local conditions like customer taste and preference, local governmentregulations and cultural traits, etc. In the international business strategy matrix along twodimensions of pressure for cost reductions and pressure for local responsiveness, transnationalstrategy has the highest degrees along both dimensions.Among the four typical international business strategy postures, Toyota, like many othermultinational enterprises (MNEs), chooses transnational Strategy. How best to implement atransnational strategy is one of the most complex questions that large multinationals are grapplingwith today. The need to compete with international competitors like GM and Ford forced Toyota1to look for greater cost economies. However, variations in consumers taste and governmentregulations across countries mean that Toyota also has to be responsive to local demands.Therefore, Toyota confronts significant pressures for cost reductions and for local responsiveness.To reduce cost by standardizing, Toyota has been accelerating the process of moving toward fewervehicle platforms, with goal of building a wide range of models on a limited range of platformsthat share many common components parts or modules. The company is reportedly workingtoward a goal of having just 10 platforms, down from over 20 in 2000 (Hara 2004). To the almostfinished products with many common component parts, Toyota adds local product features,tailoring the finished product to local needs. Thus, Toyota is able to realize many of the benefitsof global manufacturing while reacting to pressures for local responsiveness by differentiating itsproduct among national markets.Entry to US MarketToyota's early way into market was quite struggling. In 1957, Toyota tried to enter the US market,by establishing a subsidiary in California. Later, it proven to be a nightmare; the Toyota carsperformed poorly in road tests on US highways. Obviously, Toyota people had not did enoughhomework on the basic local conditions in US market, simply how Americans used cars. Due tolack of local responsiveness, Toyota closed down its US subsidiary and withdrew from the market.Back home, the company started to study the feedback from American consumer surveys and USroad tests, redesigned several of its models accordingly, and reshaped its market reputationconsiderably in US market late 1960s, selling well with welcomed product characteristics andconsistently falling production cost and retail prices. Thanks to the oil price rise following theIsraeli/Arab conflict, US consumers shifted to small fuel-efficient cars in droves. Toyota wasamong the main beneficiaries. Though this desire for small fuel-efficient cars in US markethappened without Toyota's prediction, it conformed to the traditional demand for this nature dueto the lack of natural resource at home, in Japan. This could be viewed at kind of learning effectand knowledge transfer within global markets, that is, transfer of cumulative knowledge achievedat Japanese operation to US market.However, market changes. In early 1980s, import quotas imposed by United Stated over Toyotastagnated export growth substantially. To cope with this problem, Toyota's first overseasoperation, NUMMI, was born. This step could be taken as a strategic entry of Toyota in US marketfurther. In this deal, Toyota designed the product and designed, equipped, and operated the plant,while GM's role was marketing and distributing the plant's output. By this, Toyota obtained achance to see whether it could build quality cars in the US using American workers and Americansuppliers, to experience dealing with an American union. All this knowledge later proved to beinvaluable. Meanwhile, the joint venture reduced the risk of jumping into a yet unknown marketby decreasing the investment scale and borrowing knowledge from GM. Encouraged by its successat NUMMI and already having obtained knowledge of marketing, sales, service, etc in US market,O Toyota established its first wholly owned product facility in US in 1986, followed by plants inCalifornia, Indiana, Texas and Ontario, Canada.Americanization as A Way of LocalizationAn important trend in Toyota management deserving high priority notice is steady and firmAmericanization. The company now sells more cars and trucks in North America than it does inJapan, and over 60% of Toyota's global profits come from North America due to the richer marketmix of sport-utility vehicles and trucks. In adaption to this geographic sales shift, Americanizationhas been increasingly evident in Toyota. First, American designers have influence much more thanbefore since they successfully convinced their Japanese managers to produce a V8 pickup truckand redesign the hybrid car, Prius, for the American market; the two marques later turned out tobe big success in US and global markets. On the personnel front, more Americans (or Japanesewho have spent time in the U.S.) are climbing the corporate ladder. And new ideas about designs,marketing, and innovation have has permeated the upper levels of the company and are seepingdown to everyone else. This is a good example of global strategy adaption to changing market mix.Looking back to Toyota's NUMMI with GM, though significant knowledge and experience aboutlocal conditions like marketing, unions were achieved, Toyota paid extremely high price for thesebenefits. In return for the benefits Toyota gained, GM had an opportunity to observe in full detailthe Japanese approach to manufacturing which is part of the core competencies of Toyota,including Kanban system, JIT inventory organization and relationship development with suppliers.Once commanded by competitors, these competencies will become backfiring weapons in enemy'shands; the productivity and quality gap between Toyota and its global competitors has narrowed.GM and Ford have both made significant strides in improving their quality and productivity inrecent years. It is recommendable that Toyota be more careful of cooperating with competitors.The benefits initially thought to be gained via that cooperation might be obtainable via other ways,e.g. in the case of NUMMI, Toyota would have setup wholly owned facility for production hiringsenior veteran from the Big Three to help deal with local unions, while opening joint venture withlocal big professional auto dealers for marketing and sales. For long term, this is conservative, butless risky.The 2009-2010 Toyota's recall crisis has been attracting worldwide eyeballs. Though peoplebelieve it is partly due to political pressure, it does reflect some unnegligible quality problems.According to news reports, the recall crisis partly lies in Toyota's radical ambition over cost cutsand growth. In line with Toyota's companywide obsession with continuing to lower cost, anambitious initiative known as "Construction of Cost Competitiveness for the 21st Century", orCCC21 was launched in 2000. That project has a goal of slashing component part costs by 30%on all new models (Toyota 2002). To go further, at a 2006 investor conference in London,eliminating vehicle parts and pushing suppliers to adopt lighter and cheaper materials wasdiscussed as way of exceeding the cost reduction results achieved in CCC21. On 24 Feb, 2010, at3a hearing in the US House of Representatives, Akio Toyoda, the President and CEO of Toyota,acknowledged their growth pace has been too quick, priorities became confused for Toyota(Ohnsman, et al, 2010). Seemingly, it is not too late for Toyota to improve quality and restoreimage in markets. But it is good example for every automaker to learn that going forward isfavorable only at right pace. To cut cost must be accompanied by strict quality control system toprevent quality being compromised.:O

Background of the Study: The late 2000's and early 2010's presented hurdles for the Japanese…

Required: Answer the following questions analyzing the following aspects of the case study i. What is the primary issue in the case? ii. How is the company doing strategically in terms of its existing strategy and business? iii. Discuss any two of the qualitative and quantitative theories and models you can use from the case study and outside the case study to gain competitive advantage in the global business environment.

Required: Answer the following questions analyzing the following aspects of the case study i. What is the primary issue in the case? ii. How is the company doing strategically in terms of its existing strategy and business? iii. Discuss any two of the qualitative and quantitative theories and models you can use from the case study and outside the case study to gain competitive advantage in the global business environment.

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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