Running head: STRATEGIC PLAN 1

Strategic Plan

Gracelino Dias

STR/581

2/26/2015

Joseph Maksin

STRATEGIC PLAN 2

Strategic Plan

Table of Content

Executive Summary---------------------------------------------------------------------3

Toyota’s Background-------------------------------------------------------------------4

Vision Statement------------------------------------------------------------------------5

Mission Statement----------------------------------------------------------------------5

Core Values-----------------------------------------------------------------------------5

Environmental----------------------------------------------------------------------6-10

Short and Long Term Strategies------------------------------------------------10-12

Implementation Plan-------------------------------------------------------------12-15

Risk Management and Contingency Plan-------------------------------------15-16

Conclusion----------------------------------------------------------------------------16

Executive Summary

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The day-to-day business of an organization is no longer considered private. What is done in the

dark will eventually be brought to the light. The speed of the internet ensures that the wrong

doings of companies and individuals are publicized out loud. Companies have found the

importance in having a mission and vision statement about their organization. These statements

outline the ethics of the company to the outside world they intend to do business with.

Companies realize the importance of leadership in developing a strategic plan is being on the

same page for protecting the company, the stakeholders, and the reputation of the company. An

ethical company cannot afford to have loose cultural ground. One bad apple literally can spoil

the whole bunch when it comes to bad press for a business.

Company stakeholders are expecting transparency in business. It is no longer just about the

bottom line but how the bottom line was achieved. Therefore, in this section the main focus is

on a strategic plan for Toyota Motor Corporation. The strategic plan outline the steps proceeded

by the organization in order to achieve a sustainable competitive advantage.

Toyota’s Background

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Toyota started in 1937, growing out of Toyoda Automatic Loom Works, headed by Sakichi

Toyoda. Toyota Motor Company was founded by Kiichiro Toyoda, Sakichi's son. Due to the

fact that “Toyoda” had a meaning in Japanese, it was decided, after a large contest, that the

company name would be changed to Toyota, which held no meaning in Japanese. In 1950 the

company experienced its one and only strike. This strike proved to be a major turning point in

the history of Toyota as Toyota’s labor policies and management style emerged from this

stoppage. Both sides were firmly committed to establish the principles of mutual trust amongst

its members, a corporate philosophy that still guides Toyota’s growth today. Due to the lack of

resources in post war Japan, a production system that concentrated on improving efficiency and

eliminating waste emerged. Taiichi Ohno, the systems founder, based TPS on the principles of

continuous improvement, and “Just-in-time” manufacturing. Lean production, as it later became

known is a major factor in the reduction of inventories and defects in the plants of Toyota and its

suppliers, and it underpins all the operations across the World. Toyota launched its first car in

1947 and production of vehicles outside Japan began in 1959. The first expansion overseas for

Toyota was in a small plant in Brazil. Toyota claims to believe in locating its operations locally

to provide customers with the products they need where they need them. Nevertheless, in

addition to their manufacturing facilities, Toyota has design and R&D facilities located

throughout the world, servicing the three major car markets of Japan, North America and

Europe. Today, Toyota’s major international sales regions are as follows: 32% of sales occurring

within the United States, 25% transpiring within Japan, 14% ensuing geographically about

Europe, and 11% taking place throughout Asia. The TMC currently boasts over 18% of

American landscape for automobiles sold with respect to market share. Moreover, the TMC is

strategically positioned in over 180 and countries worldwide.

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Toyota’s vision

Toyota vision is to be the most respected and successful enterprise, delight customers with a

wide range of products and solutions in the automobile industry with the best people and best

technology.

Toyota’s mission

Mission of Toyota is to provide safe & sound journey. Toyota is developing various new

technologies from the perspective of energy saving and diversifying energy sources.

Environment has been first and most important issue in priorities of Toyota and working toward

creating a prosperous society and clean world.

Toyota’s Four Core Values

Customer first Respect for people International focus Continuous improvement and innovation

Environmental Scan

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In today’s competitive market the organizations main goal is to achieve the most customers not

only domestically but also globally. Achieving this objective require organizations to look for a

sustainable competitive advantages over others competitors. In order to achieve this

accomplishment organization need to know they position, the market they are competing in as

well as other external forces that impact the way they do business. In this section, the main

discussion will be on environmental scan which is composed of internal and external

environmental analysis of Toyota Motors Corporation (TMC).

Internal Analysis

The internal environment of the organization is the basic element of the TMC. The TMC

construction and society like human relation, procedure and polices, staff experience and skills

are the vital components of the internal structure. For instance, Toyota has strong supplier

relationships, well-organized distribution system, and well experienced inventory specialists.

Toyota has outstanding manufacturing system, outstanding material, and control system which

makes sure that mechanized levels are highly trusted and admire by the customers to meet their

requirement and demand by supplying the parts proceeding to the assembly. In a competitive

market it is important that TMC recognizes what it does the best to use it to gain a sustainable

competitive advantage. A SWOT analysis would be a good approach for TMC to position itself

in a competitive market.

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Toyota Motors Corporation SWOT analysisStrength

Having a high research and development activities with a global position in 170 countries,

Toyota tends to be a global player. Since 2009 the global share of Toyota raised to 8% and it

show a good financial strength and support for the organization to grow. Performance of cars and

new eco friendly advance manufacturing has given a better image to Toyota at international

level. Toyota has excellent penetration in influential industry of the world like US, China.

Delivering of lean manufacturing has maximized the profits like total quality management and

just in time manufacturing has highly raised the profits margin for the company. Due to presence

of numerous suppliers, manufacturing costs are low and available globally. The workforce

performance is outstanding due to the regular extensive training programs.

Weakness

As a foreign importer Japanese car manufacturing has poor profitability off financial service

segment. For the employees post retirement benefits add more expense on the company. There is

an oversupply condition in the market of cars so the manufacturing companies have to design

model and to make sure that the customers wants them. As Toyota products are mostly marketed

in US and Japan therefore the fluctuating economical and political conditions of the countries

affect the business. So the company is entering into new markets because of these reasons. The

car market is also being reduced due to the fluctuation in exchange rate. For the operation

efficiency the company has to continuously produce cars. There is an expensive fixed cost and

huge investment in car plants and cost of training and retaining employees. The competitors of

Toyota takes the full advantage of global efficiency gain through their strategically locations of

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manufacturing worldwide. Sometimes the dealers deviate from the principles and actions of

Toyota which result in complaints from customers.

Opportunities

Due to the continue rise in gas prices the hybrid cars of Toyota are preferred more now days and

the new technology of the company keeps on innovating new techniques of fuel efficiency cars.

Other automobile manufactures pay lot of attention in this expertise and at good price Toyota can

sell its technology. Toyota also targets the youth market with special model for them like Aygo

which is convertible and loved by the new generations. Opportunities in Asian market are

growing because of demand of hybrid vehicles. Marketplaces like China and India where the

reputation demand for the vehicles is increasing.

Threats

Due to the present meltdown in the economic condition around the world and global automotive

market competition is the main threats for the company. For the car manufacturers recalling their

products is an embarrassment and problem for the company. Due to the faulty front suspension

system Toyota in 2005 has to recall for repair of 880,000 SUV’s and pickup trucks. There is a

tremendous competition in the car manufacturing and the competition is keeping increasing

There is a considerable threat for Toyota because of the economic factors. Profit and raw

material cost are keeping on affecting due to the exchange rate fluctuation. Due to the decline of

large families demand for SUVs is also declining. As Toyota has become the number one

automobile manufacturing company but still it faces threat from companies like Honda. The

company has to fight against the threat of rising steel cost and other raw materials which has lead

to cutting on manufacturing cost and production without compromising the quality of products.

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External analysis

The organization external environment influences all the trade actions of the company. The

firm’s external environment is influenced by factors such as political, economical, social, and

technological.

Political

The political environment considerably affects the decision of marketing and the development of

new products. The terms of government makes no company or organization untouchable and is

an important component of general environment. The government legislative laws tries to protect

companies from each other, creating more competition while providing customers values. The

government laws will also prevent risky business practices which will protect the population

from pollution and global warming.

Economic

With economical crisis in 2009 Toyota the world largest automakers announced its $4.9 billion

in operation loss. In the past Toyota has never announced of such annual loss. The company has

planned earlier to cut executives pay and to dismiss the bonuses. A program has been developed

for the assembly workers who want to leave voluntary and voluntary buyouts to North America

plant workers.

Social

Globally Toyota is the most trusted brand in automobile manufacturing. The vehicles of Toyota

are considered as status symbols. By participating in the economic and social development

Toyota respect the society and conduct of every country. As a superior corporate member of the

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world Toyota performs open and fair corporate actions in order to honor the laws of country.

Toyota is extensively preferred by the general society. The gratitude towards stakeholder is never

forgotten by Toyota. The corporation wishes that the workers of the corporation are well

conscious of the traffic laws and have safe and pleasant lives.

Technological

The vital force that shape and nurture the future is technological environment. A lot has been

delivered on technological advance and producing high quality products. In research and

development Toyota invested $9.8 billion by 2009. The first hybrid car Prius and it

revolutionized the market because of the winning of twelve engine of the year award. Approach

of green friendly has been adopted by Toyota in a consistence of seven years. In 2007 Toyota

Company struck by the financial crisis which severe affect on company’s growth and sales. To

motivate employees a number of incentives programs were developed to stimulated production

but the result was negligible. Toyota corolla model which is available in the market for 17 years

has attracted lot of consumers as the car features has been outstanding because of gas price and

low maintenance cost. Model diversifications and availability of several colors has endorsed

customers to implement greater options and threats have been sustained.

Short and Long Term Strategies

In today’s business world many choices and decisions are made within an organization from

strategic choice and evaluation for organizations to gain a sustainable competitive advantage.

This process can fit and grow the organization or sink an organization depending on the situation

and the business cycle that the organization is in at the time. Strategic decisions made by any

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company no matter the industry are very important and companies must continue to stay focus

on the evaluation aspect as well. Top management must be able to analyze the trends within the

organization so they can set up goals to grow the market. When it comes to the success of Toyota

they must be able to focus on value product diversification, finance business, information

technology development and development of environmental technology.

Product Diversification

Toyota traditionally has regarded customers principally as buyers of automobiles and of a very

limited range of closely related products, such as financing and replacement parts. Now, Toyota

is deepening its relationships with automobile customers through new products and services,

such as innovative packages that combine financing and insurance. And it is diversifying into

markets where it develops customer relationships through products unrelated-or indirectly

related-to automobiles, such as cellular telephones and credit cards.

Finance Business

Much of the increased value that Toyota plans to cultivate downstream in its value chains is in

financial services. As Toyota expands its activity in the financial sector, it needs to manage risk

systematically and manage operations efficiently. Therefore Toyota placed all the financial

services operations under a newly-established financial management company in July 2000.

Information Technology Development

Toyota intends to get onto the cyberspace map through multimedia ventures supporting value-

added functions in automobiles, such as navigation. Toyota’s GAZOO website, which began as

an automobile information service, is being developed into a provider of diverse services. Its

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most developed functions provide price estimates and brochureware for Toyota vehicles and the

nearest located dealers, and it also hosts a growing array of virtual shops for Internet shopping,

including access to music downloading sites. Toyota is the second-largest shareholder of KDDI

Corporation (with 13% of shares), formed in 2000 through the merger of Toyota’s IDO

subsidiary and KDD corporation. KDDI Corporation is a leading provider of international and

cellular telephone services in Japan’s highly competitive telecommunications industry.

Development of Environmental Technology

Creating automobiles with low environmental impact is no longer "just an option" for Toyota - it

has become a crucial part of corporate strategy. The development of technology to reduce

environmental impact enables Toyota to sit in the driving seat setting new global standards, so

gaining competitive advantage in exploiting them. The “Prius” hybrid vehicle was launched to

critical acclaim and much positive PR. In addition, leading Toyota’s sales growth in Japan is its

small car, the “Vitz,” and its derivative models, which are very popular for their high fuel

efficiency.

Implementation plan

Toyota has been always seeking different methods that will help the company regain more

market share. When it comes to the implementation process for Toyota, the main focus is how to

diversify the products, regain customer loyalty and continue to be the leader in the automobile

industry. Top management must understand detailed listing of activities, expected difficulties,

and proper scheduling for the company to achieve the objectives of the strategic plans put into

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place. In order for Toyota to be successful with the implementation process, the company plan

must address the following areas: short-term objectives, outsource nonessential functions and be

able to design an effective reward system within the company. The objective of the company is

to expand sales to customers that don’t own Toyota cars and also to become the leader in the

automobile market. The strategy of the company is to be able to expand the company’s

distribution network and be able to reach out more customers.

Functional Tactics

Functional Tactics are defined as detailed statement that will be used by the company to achieve

short-term objectives and help the company develop a sustainable competitive advantage. When

Toyota uses functional tactics, top management must be fully involved so the implemented

process can be put into place properly. When dealing with the functional areas operations, human

resources, marketing and finance will have to be included so that change must occur on all facets

of the business. The Research & Development department is a major part of the success of the

business for increasing sales. The R&D will figure out how to utilize some of the new

technology to enhance current product offerings. The department will help bring out features that

are most important to customers who will use the onsite purchasing option. The Research and

Development Department must work together with marketing to identify how to retain current

customers while being able to attract new customers. The Finance Department is responsible for

making sure the projected actual costs don’t exceed the company resources and all the loans if

necessary is done in accordance the organizational required return.

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Action Items

The purpose of the action plan is to able to pin point the customer desire and make the buying

profitable and practical. The customer is the main focus of the action plan and is the key to the

organization success. Companies must understand that the key of successful implementation is to

provide the staff with adequate resources and raw materials. The staff must also be empowered

to make key decisions on behalf the company, meanwhile the managers check and make sure

they stay within the blueprint. The Research and Development department must be divided

between two projects: development of technologically building new cars efficient applications

and developing new technology that will make a competitor against other technological

companies. Many of the efforts in the Marketing department will be determined by what is

needed to please the customers and being able to transfer the information to the management

team in the Research and Development department. This department will also be able to focus on

implementing a campaign to attract potential customers to the local dealer and website.

Milestones and a deadline

When Toyota Motors Company begins to focus on the milestones and deadlines of the

organization this process will happen simultaneously. The overall focus will be divided between

developments of the new product to introduce to current customers. The product development

phase is expected to happen within four to six months time frame. Once a prototype is produced,

the life cycle of the new product have to be reviewed by top management to determine if it will

bring a profit to the organization. When the process receives approvals from top management,

then it will be turned over to the Marketing department. The process of eco friendly cars will be

done in a particular phases over six month time period. During these 6 months the main objective

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will be to increase the car design, features. The second phase of the process from six to twelve

months will involve increasing the availability of entertainment products. The final process from

eight to twelve months will focus on being able to maintain new customers and continue

reaching potential customers.

Resource allocation

Resource allocation of any company comes on an as-needed basis. This is done to make sure that

employees are empowered and equipped with all the tools necessary to be successful. All

departments at Toyota will have access to materials, technological resources and manpower

needs in accordance with budget limits. The Marketing efforts of the company will be fully

funded to support print and ad campaigns as well as strategically placed banner ads on the

internet.

Risk Management & Contingency Plan

Risk Management is defined as the process the company identifies and prioritizes risks and

subsequently employs measures to lessen the probability of harmful events and maximize

opportunities. All companies no matter what the industry they are in, whether it’s a product or

service must have a Risk Management Plan. Risk Management is a one-time process that is

aimed at providing continuous improvement to the corporation as the marketplace changes.

The risk mitigation and contingency plan at Toyota is able to confront probable risks with the

hope of preventing issues before they occur. Toyota brand is basically the image and a set of

perception that constitute the organization. With the recalls events in the past, it dramatically

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impacts the organization in terms of its brand and the sales performance. Brand risk is difficult to

have power over but a quick response plan would simplify in case anything goes wrong. It is also

important to have full information about the suppliers. With the incident that happened in Japan

years ago where the company stopped its productions for months. The diversification of

suppliers globally will result in a quick response to crisis such as the tsunami in Japan.

Conclusion

Toyota plans to enhance its competitiveness in the global market through advanced technology,

and improvements in production efficiency and sales. In technological development, Toyota

aims to lead other automakers in the field of environmental technologies. These include targets

such as reduced emissions, improved fuel efficiency, and higher vehicle recoverability rate. To

meet these criteria, Toyota is investing to develop technology in hybrid electric vehicles, fuel cell

vehicles and other next-generation automobiles with the aim of commercializing them as quickly

as possible.

Toyota plans to continue promoting cost reduction efforts such as the common use of vehicle

platforms, reductions in component types and the streamlining of production lines. In order to

respond to the customer’s overall needs, which are bound to expand from automobiles to include

other related areas, Toyota intends to develop its business strategically by effectively allocating

management and other resources to its finance, information and communication businesses.

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References

FT.com: HIROSHI OKUDA: Toyota's man of vision, by Alexandra Harney

Japanauto.com: Hiroshi Okuda, Toyota Chairman, Elected to Lead Japan Automobile Manufacturers Association

http://www.toyota.com.au/toyota/company/vision-and-philosophy

PeopleSoft.com: ERP Implementation at Toyota

HBS Case 9-693-019: Toyota Motor Manufacturing, U.S.A., Inc. by Professor Kazuhiro Mishina and Kazunori Takeda, copyright © 1992 by the President and Fellows of Harvard College.