Introduction
This assay type assignment is analysing the firm Toyota which is part of the automobile industry. Where the Toyota is number one car Producer Company in Japan and it is well reputed brand in the global automobile industry. This assignment is discussing business strategies of the Toyota which company used to become well reputed brand in the automobile industry and it also discussing the Yips strategy driver as and how Toyota is using them. For internal analyse of the Toyota the SWOT analysis, adding value mission ,vision statements and Toyota planning about the environment are also parts of the assignment. At the end the assignment is focusing on the conclusion.
(Strategy,) (Bob De Wit, Ron Meyer) Publisher Thomson Learning 2004 3rd) pp2
Toyota started in 1933 as a division of Toyoda Automatic loom works devoted to the production of automobile under the direction of the founder’s son Kilchiro Toyoda. The first vehicles were the A1 passenger car and the G1 in 1935. Toyota Motor co was established as an independent and separate company in 1937. The Toyota is global organisation includes more than 500,000 employees.
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Toyota Motor Corporation is Japan’s number one car maker. The Toyota has international presence in over 170 countries worldwide. It manufactures cars, pickups, minivans, and SUVs includes models such as Camry, Corolla, Land cruiser, luxury Lexus line and full sized pickups trucks. It has huge financial strength, and sale turnover. The Toyota is second largest car manufacturer in the world after Ford and GM.
www.Toyota.com
According to Wickham (2000), Strategy is the outline or plan that put together a sequence of organisation’s major goals, policies and action into a whole project. A well prepare strategy helps to gather and assign an organisation’s resources into a unique a viable posture based on its relative internal competencies and shortcomings, anticipated changes in the environment and contingent moves by intelligent opponents. Businesses are grouped into divisions which are corporate strategy, business units’ strategy and product strategy. Corporate strategy expresses organisation’s strategy, and is the general direction and overall goals of the organisation (Wickham, 2000). Corporate strategy is concerned with the owners’ expectations such as the shareholders and the stock market. It takes form in a clear or understood statement of ‘mission’ that reproduces such expectations. It is important to be clear about corporate strategy because it is a foundation of other strategic decisions (Johnson et.al., 2005). Business strategy refers to the individual businesses’ activities of the organisation, and it concern with the organisation’s investment, which it helps to bring suitable profits for an organisation. Product strategy refers the strategies used for development of the products. Corporate strategy is concerned with the allocation of organisation’s resources (Wickham, 2000). One of the important definitions of the strategy is this.
“Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations”.
( Jhonson and Scholes)
Overall purpose of all companies operating in world market is gain as much profit as possible and maintain its market position, and defeat rivals operating in the same industry. In another word, every business has target, and to achieve that target they must provide strategy. As Jhonson and Scholes states, strategy is designed to meet the needs of markets and fulfil stakeholder expectation. As the word strategy drives from the ancient Athenian position of strategies. “Strategos” was a compound of “stratus”, which meant army. In the army different unit of the men work together. So in the strategy it is concerned with how different group are linked and how these groups plan of action designed to achieve the particular goals.
Strategy of the company is “More Upstream, Profitable Downstream.” Toyota gives focus on delivery and growth, leveraging it a strong portfolio.
Design School of Strategy states that “Economic strategy will be seen as the match between qualifications and opportunity that positions on firm in its environment ( Christensen, Andrews, Bower, Hamermesh, and Porter in the Harvard policy textbook,1982:164 as cited in Mintzberg,1998)
The DESIGN SCHOOL says that company must represent adaptive response to environment. In Shell`s shape we see that company with its “More upstream and profitable downstream” strategy aims to confront the recession and maintain its growth and market position.
BASIC DESIGN SCHOOL MODEL
INTERNAL APPARAISAL
EXTERNAL APPRAISAL
Threats and opportunities in the environment
Strengths and weaknesses of organization
Strategy of the Company
Distinctive Competence
Key Success
Assessment of Toyota Strengths and Weakness in the light of Opportunities and Threats in its environment helps to determine the strategy through company will grow.
SWOT analysis of Toyota
STRENGHT:
) Toyota is a global organisation with a strong international position in 170 countries.
) The Toyota has strong financial strength.
) It has strong brand image based on quality.
) It has excellent market penetration in key markets (US, China, EMEA)
Weakness of the Toyota
) The Toyota is a Japanese car manufacturer seen as a foreign importer.
) The Toyota Production capacity is low as compare the compotators.
Opportunities
) The Toyota has the opportunities if it innovate new things.
) To expand more aggressively into new segments of the market
) Toyota produces the cars which are more fuel efficient.
) Continue global expansion.
Threats
) The saturation and increased competitions intense marketing increasing competitive pressure.
) Shifting in the exchange rate affecting profits and cost of raw materials.
) Changing in the usage.
) Rising oil prices (fuel cost)
(www.businessteacher.org.uk/business_resources/swot_anaylsis_database_toyota_swot_analysis.)
PLANING SHCOOL of strategy states that “Strategy is to be guided by a cadre of highly educated planners, part of specialized strategic planning department with direct access to the chief executive “Motto of this school is “Predict and Prepare” (Mintzberg, 1998)
Planning and predicting is of the core parts of building strategy.
According to POSITIONING SCHOOL of strategy a firm which occupies defence position enjoys higher profits than others. Position of the company in world economic is desirable for any industry. Full filling world`s increasing demand for usage of the vehicles.
GovernmentGlobal Business Strategy drivers
Cost
Technology
Global
Strategy drivers
Market
The global strategy drivers are very important for all kind of national and the international businesses. The Toyota is an international company which is focused on this entire global strategy driver. The costs are big issue for the Toyota and in 2008 the Toyota reduced the corporate overhead. The company is trying reducing the production cost by using the sources efficiently. According to the company management this is key part of our response to the turbulent economic environment. The Toyota has very big market because its work around the world and it has different types of the models. The Toyota successfully entered market and penetrated them with both manufacturing and sales subsidies. Toyota gained first mover advantages by presences in globally strategic markets (Asia, Europe, US) first, Whereas its nearest rivals ( Ford, GM ) gained footholds in only 2 of ( US and Europe).
The technology is playing very important role in Toyota business. The research collaborations provide access to the leading minds at the forefront of science and technology, particularly in areas that are relatively new to the design, fuel consumption friendly environment, for example electric cars, and hybrid. The Toyota has major technology programmes each of which has expenditure that generally runs into tens of millions of dollars. Where the Toyota is working with different countries for government policies are very important for the company policies about trade, policies about the raw material and pr
Mission statement and value of Toyota
The first choice for the entire customer is looking to materials handling solutions and to be widely recognised for our innovative products and services as well as company respect for society. The Toyota build trust and confidence with customers by delivering outstanding quality products and services which add real values to their business.
The company respect the expectations and ambitions of employees, stakeholders and suppliers through a never ending search and improvement.
Toyota values
The Toyota core values express the beliefs and values shared by the Toyota group. All Toyota team members at every level are expected to use these values in their daily work and relation with other. Toyota maintains a long term vision and strives to meet all challenges with the courage and creativity needed to realise that vision. The continuous improvement adds the value for the company as well..
www.toyota.com
Toyota about environment
Toyota production system
The Toyota production system (TPS) empowers team members to optimise quality by constantly improving process and eliminating unnecessary waste in natural , human and corporate resources. The company methods enable business to achieve sustained gains in productivity while satisfying customer expectations for quality and prompt delivery.
Toyota production system is based on three main things (1) Jidoka (2) JIT (3) Training programme scheme
Jidoka
The built in quality is the essence of the Jidoka. It is the beginning of the positive evolution. And it guarantee maximum product quality at all time.
JIT( just in time)
The Toyota production system is fulfils customer needs efficiently and promptly by linking all production activity to real marketplace demand. The TPS start with customer orders and culminates in the timely delivery of finished products. It relies on a finally tuned assembly sequence that uses only the required quantities of items exactly when they are needed. We call this just in time production.
According to the Toyota adoptability of the JIT is an Integral part of the success.
Training programme
The company programme teaches employees how to identify and eliminate any human financial or time expenditure that does not produce a gain for customer or for the employees themselves. The Toyota way of working aims to deliver employees fulfilment while producing the best possible products.
WWW.toyota_forklifts.co.uk/En/company/TPS/Trainingscheeindex
M.PORTER`S GENERIC STRATEGY MODEL
Target Scope
Advantage
Low Cost
Product Uniqueness
Broad
(Industry Wide)
Cost Leadership
Strategy
Differentiation
Strategy
Narrow
(Market Segment)
Focus
Strategy
(low cost)
Focus
Strategy
(differentiation)
http://www.coursework4you.co.uk/generic.htm 22.17 Thursday 04/06/09)
Toyota Porter’s Generic Model
As Porter’s Generic Model is important for all kind of the business to improve the business performance similarly it is important for the Toyota to improve the business and compete automobile industry. From the Porter Generic model the Toyota is focused on differentiation strategy and in the same time cost leadership. One of the biggest priorities for these companies is to produce high quality products with lower prices and also cut the carbon emission. The Toyota is investing huge amount of the budget on the product quality and alternative products. The key to the success in the car market is new model which stimulate demand and loyalty to the Toyota brand. Toyota has reputation for producing cars which are greener, more fuel efficient and of good performance. Through the developments of hybrid fuels. The Toyota was the first car manufacturer to market hybrid (gas and electric) fuel with the launch of Prius model ahead of compotators.
www.Businessteacher.org.uk/business-resources/database/toyota_case_study.
PESTLE ANAYLSIS OF SHELL
PESTLE stands for Political, Economical, Social, Technology and environmental factors. It is important to be aware of these factors when doing product and business development, strategy planning. These factors also are beyond of control and influence of business.
In shape of Shell political factors can be driven as followings :
War and conflicts
Government policies
Terrorism
Political trends
The political factor has a high impact to the subject company because the state to which one of the branches of it is situated will be the determination as to whether the company will be able to survive the feats of the politics within. One of the main sources of oil for Shell is Middle East region and conflicts in that area can have direct or indirect influences to businesses. Mainly from security point of view.As government policy can be mentioned control over global warming emission. The warning from the CBI follows a series of announcements by major energy companies, including Shell, BP and Centrica, that they would axe or reconsider investment in “low carbon” energy such as wind and solar power and carbon capture for coal-fired power stations( Guardian, 2009)
Economical factors:
Home economy trends
General taxation issues
Market and product cycle
Economic downturn
Interest and exchange rate
Job growth/unemployment
The economy of a state will determine the stability of the success of the company. The economy will be the factor that will matter as to whether the subject company will be able to attract investors or stockholders. In addition, the security of the economy will also determine as to whether the economy will be able to attract consumers. Global crisis which whole the world faces now days is one of the major factors that influences to energy sector. Dramatic falls in oil prices has had huge impact on Shell`s return. For UK market one of the major problem was falling purchasing power of the British Sterling.
Social factors:
Consumer buying patterns
Ethnic/religious factors
Advertising and Publicity
Health
Living Standards
Occupations
Actually social factors shouldn`t be mentioned as much influenceble ,as Shell has few to do with such these factors. Shell produces energy which has consumer demand all the time.
TECHNOLOGICAL
Research Funding
Maturity of Technology
Information and communications
Intellectual property issues
Internet
Transportation
Software Changes
The technological aspect is important Shell because the changes of technology will determine on how the company will be able to progress its business conduct. Besides new technology must be applied in order to cut carbon emission. This is one the main concerns of Shell.
Looking through Shell`s annual report, and analysis of company`s plans and strategy indicated about positive outcome of business in the future.
BRITISH PETROLIUM (BP)
The history of the BP is full of discoveries. In 1908 first time they found the oil in the part of Persia after a long and difficult search. In the beginning to find the oil in Persia George Reynolds and his caravan of explorers had lived through seven years of harsh heat, gastric illness, and disappointments.
In the 1914 the Anglo Persian project was nearly bankrupt for second time in the short history. That time company had plenty of oil but was not ready to buy and no one was ready to sell it to. Where Britons were proud of their Navy and of Oil powered vessels were the latest innovation.
Winston Churchill who was a part of the British politics and during the company he argued in the parliament that British owned the Anglo Persia oil company and he said this could protect the British interest. After that resolution passed and the UK government became a major shareholder in the company. So the Churchill had ended Anglo Persia cash crisis.
British petroleum brand was originally created by a German as a way of marketing its products in the Britain. During the war Royal Navy complained that the oil from the Anglo Persia was causing engine problems in colder climates. After that Anglo Persia set up a laboratory in the London to face scientific challenges.
Porter`s five forces
The industry analysis begins with the general examination of the forces influencing the organisation. The objective of which is to develop the competitive advantage of the organisation to enable it to defeat its rival companies. Most the company use the porter five forces to analysis.
Threat of new entrantsPoter`s five forces
Bargaining power of suppliers
Bargaining power of buyers
Rivalry among existing firms
Threat of substitute products or services
(Corporate strategy, Richard Lynch, Prentice Hall, 2006 4th 94’5, 16
It must be analysed how these forces affects the overall business of the BP. As the BP is working in six continents and BP suppliers make the effect on the BP through the price of oil and by decreasing the production oil and gas. As the company is working with all of the suppliers to reduce rates in response to rapidly deflating input prices. Now BP is a big multinational company with good brand so the new entrance in Oil industry cannot make big trouble for the BP. As economics slow down is going on all over the world and it is really effected on the oil industry similarly it is making impact on the BP because the through this recession the buying power of the people decreasing. The fourth force threat of the substitute is not much affected on the BP business because whatever substitutes are of the energy BP uses them and BP spends a big part of their budget on R& D.
GovernmentStrategy drivers
Cost
Technology
Global
Strategy drivers
Market
The global strategy drivers are very important for all kind of national and the international businesses. The Toyota is an international company which is focused on this entire global strategy driver. The costs are big issue for the Toyota and in 2008 the Toyota reduced the corporate overhead. The company is trying reducing the production cost by using the sources efficiently. According to the company management this is key part of our response to the turbulent economic environment. The Toyota has very big market because its work around the world and it has different types of the models.
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The technology is playing very important role in Toyota business. The research collaborations provide access to the leading minds at the forefront of science and technology, particularly in areas that are relatively new to the design, fuel consumption friendly environment, for example electric cars, and hybrid. The Toyota has major technology programmes each of which has expenditure that generally runs into tens of millions of dollars. Where the Toyota is working with different countries for government policies are very important for the company policies about trade, policies about the raw material and productions and selling policies about taxes, policies about environment issues etc.
DESIGN SCHOOL MODEL
Internal appraisal
Of BP
External appraisal
Of BP
Threats and opportunities
Of BP
Strengths and weakness
Of BP
BP strategies
Key success factors of
BP
Distinctive competences
Of BP
STRATEGY OF BP
The PB has different strategies for the different tasks.
The BP strategy is to create the value for the shareholder by producing energy in a way that is affordable secure and doesn`t damage the environment. To produce more and more energy they will use the latest technology and the company will invest in research and development. The production is expected to continue to grow in 2009 and company`s portfolio has the potential to grow at an annual average rate of 1-2% over the next five year.
The company will participate across the hydrocarbon value chain to explore for; develop and produce more fossil fuel resources that the world needs. Efficiently manufacture process and deliver well and more advance products. Be a material contributor to the transition to a low carbon future.
The company expect exploration and production E&P to be the core elements of the growth. For that company have to invest more. The company expect to make investment across the full life cycle of our asset with an increased emphasis on technology as a source of productivity, access and competitive advantage. The company expect to strengthen our position further by security new access and achieving exploration success. http://www.bp.com/sectiongenericarticle.do?categoryId=9027969&contentId=7050936
Swot analysis of the BP
Strengths of the BP
Strong brand name
Big market share
Huge capacity of storage and production of oil.
Man power
Heavy use of the technology
Good cash inflows
The BP has a very strong brand name. The BP brand appears on the productions platforms, refineries, ships and corporate offices the world over as well as solar products, winds farms and at the retail service stations. The BP has very big market to sell their products all over the world. The company has more than enough well potential to reach full capacity of 280 thousand barrel of oil equivalent per day. The company has already achieved 260 thousand barrels of oil equivalent per day. The Thunder Horse the second largest producing field on North America which great strength of the company. The use of the technology is strength of the company and company is investing good amount of the budget on this. Company plans spending $500 million in different projects.
Weakness of the BP
Oil prices
Strong competitors
Environmental issues
Production of the oil
The company has some weakness as energy prices which fluctuate with time and in the oil industry there are very strong competitor and these competitors are the BP weakness. As the company is producing the oil in the different countries so many time company faces the trouble to carry on the projects.
Threats of BP
Economics crisis
New entrances
Strong competitors
Security issues, as the world is facing economic crisis which is big threat for BP because through this company return is decreasing demand is decreasing. Security of the source is the threat for the company in the different countries. Where BP is strong company so the new are not big threats for the company but strong competitors is big threat for the BP.
Opportunities for the BP
Applying to new advanced technology
Investing in developing countries
Store the more oil at the lower prices
Invest more on the R& D.
Even if PB is at a good position of market company still has the opportunities to improve it. According to Fergus Macleod, Head of investor relation the company can improve the efficiency through the well use of the technology, investing in the developing countries, by reducing the production cost and by investing more on the R&D.
http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/IC_bp_strategy_presentation_march_2009_script.pdf
Key factors of the success
There are three main factors of the BP success some are these.
Powerful partnerships grounded in mutual advantage.
Excellence in project delivery and the integration of technology.
A highly diverse energy portfolio pioneering energy efficiency and innovation.
http://www.bp.com/sectiongenericarticle.do?categoryId=9027969&contentId=7050936
Generic strategies were first presented in two books by Professor Michael Porter of the Harvard Business School (Porter, 1980, 1985). Porter (1980, 1985) suggested that some of the most basic choices faced by companies are essentially the scope of the markets that the company would serve and how the company would compete in the selected markets.
Competitive strategies focus on ways in which a company can achieve the most advantageous position that it possibly can in its industry (Pearson, 1999).
M.PORTER`S GENERIC STRATEGY MODEL
Target Scope
Advantage
Low Cost
Product Uniqueness
Broad
(Industry Wide)
Cost Leadership
Strategy
Differentiation
Strategy
Narrow
(Market Segment)
Focus
Strategy
(low cost)
Focus
Strategy
(differentiation)
http://www.coursework4you.co.uk/generic.htm 22.17 Thursday 04/06/09)
BP & Shell , Porter’s Generic Model
As Porter’s Generic Model is important for all kind of the business to improve the business performance similarly it is important for the Toyota to improve the business and to compete automobile industry. From the Porter Generic model the Toyota is focused on differentiation strategy and in the same time cost leadership. One of the biggest priorities for these companies is to produce high quality products with lower prices and also cut the carbon emission. Shell and BP is investing huge amount of the budget on the product quality and alternative products. The key to the success in the car market is new model which stimulate demand and loyalty to the Toyota brand. Toyota has reputation for producing cars which are greener, more fuel efficient and of good performance. Through the development of hybrid fuels. The Toyota was the first car manufacturer to market hybrid (gas and electric) fuel with the launch of Prius model ahead of compotators.
McKINSEY 7S MODEL
Let’s look at each of the elements specifically:
Strategy: the plan devised to maintain and build competitive advantage over the competition.
Structure: the way the organization is structured and who reports to whom.
Systems: the daily activities and procedures that staff members engage in to get the job done.
Shared Values: called “super ordinate goals” when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.
Style: the style of leadership adopted.
Staff: the employees and their general capabilities.
Skills: the actual skills and competencies of the employees working for the company.
(http://www.mindtools.com/pages/article/newSTR_91.htm 22;37 Thursday 04/06/09)
Analysis of Shell and BP clearly shows that both companies have got similarities in applying to McKinsey`s 7S model. Each of them has got strategy , through which they aim to achieve long-term investment goals and also confront world credit-crunch. Both companies well structured, and systems work with responsibility of staff to each other. Going through business principles of Shell and BP also clearly states their business values: honesty, integrity and respect for people.
SIMILARITIES AND DIFFERENCES OF SHELL AND BP
These two companies, are respectively second and third largest companies in the world operating in energy industry with very big financial portfolio. Both them possess strong brand name, big market share, huge capacity of storage and production of oil. Shell and BP are two rivals in the same industry and that`s why they create danger two each other . Purpose of both company is to make more profit in order to satisfy their shareholders and in both of them strategy is designed to confront current global economy crisis and to deal with falling prices and increasing expenses. But this challenge much more seen at Shell`s strategy which precisely describes ” More Upstream, Profitable Downstream “. In May, 2009, Shell also announced serious change in senior management structure, in their roles, responsibilities aimed at sharper focus on operating performance and technology.
Analysis of Shell`s and BP business strategy, also their SWOT and PEST analysis show that these two companies are very big , two strong competitors in petroleum industry of which they almost faces the same problems, strength ,opportunities and both intends for future successes and growth in energy business.
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