International
Business
Introduction
The
industrial outlook for global corporations highly depends on the operations
strategy employed by the organization to help it respond to a variety of cases.
These corporations highly depend on innovative strategies in order to sustain
their operations. However, a lapse in operational management may in one-way
dent the image of the corporation in terms of products manufactured by the
company.
The
report highlights the operational management strategy that has been in long
been employed to Toyota Corporation, which has seen the company maneuver the
challenges and difficulties in the global automotive industry. It also
highlights the industry and company outlook in regards to its competitors,
mainly highlighting Ford, Nissan, and General Motors as the major competitors.
The
objective of the report is to highlight the operational management strategy
that is employed in the organization to cultivate the culture of product
innovation, which has also enabled the company to remain at the top of the
automotive industry, as well as mitigate the challenges that large corporations
face in their production systems. On the other hand, it will also highlight the
market outlook in terms of competition, and the tenets of operations management
that resulted to a positive outlook among its competitors.
The
report consists of various segments highlighting the trends in the automotive
industry, with these being global outlook, company analysis, the main
discussion, and recommendation. The global outlook consists of the competitor
location, product ranges and state of the global industry, while the company
analysis highlights the company analysis through an analytical framework, while
the discussion high
lights
the challenges and possible solutions to the challenges facing the company,
while the conclusion and recommendation gives a summary and the possible course
of action that can be undertaken.
Global
Industry Outlook
The
global automotive industry is far much predicted to hit higher sales with an
increase in production in major automobile production countries such as China
and India. It is estimated that close to 100 million vehicles will be
manufactured by the year 2017, giving a glimpse of hope to the major automobile
producers. Despite the soaring market, a country like China is expected to
maintain stable car prices in order to achieve a positive growth trend of about
8% in the year 2015, while the United States automotive market is expected to
grow by 3% this year, with the major automobile manufacturers gearing to sell
more than 15 million units.
The
other major automobile production countries such as Spain, United Kingdom,
Germany, France and parts of Europe that constitute the automobile global
market are expected to rip big due to the changing demands in the consumer
segments, innovation and an expanded regulatory requirement (“2015 Auto
Industry Trends,” n.d.), with some of the major competitors in the global
market including Ford, Nissan and General Motors competing for the market.
Ford
Henry
Ford (“Ford Motor Company Timeline, n.d) founded Ford, an American automobile
company in 1903. It is the world’s fifth carmaker company, based in Detroit and
occupies about 16% of market share as at 2015. The company manufacturers a
range of ford products consisting of vehicles, vans, and trucks with some being
SUV and Lincoln ford model car types. The company offers various car and truck
models of global appeal, which suits the global car industry. Apart from the
vehicle models, the company also offers a range of services such as vehicle
service and repair, vehicle security, provision of accessories and fleet
accident management.
Nissan
Nissan,
a shortened name for the Nissan Motor Company, is an automobile manufacturing
company based in Yokohama Japan. Founded in 1933, about 81 years ago, the
company is the sixth largest automobile manufacturer in the globe, with the
Renault group forming part of the company. The company’s global market share as
at 2015 stood at about 8% compared to the other automobile manufacturing
companies.
Nissan
motor company manufacturer’s cars of various ranges and models with some being
the Frontier, Titan, Murano, Quest and SUVs, being the product ranges. These
car models have a global appeal, with many of them being sold in many different
countries, hence constituting the market share of the company. Apart from the
manufacturing business, the company also offers a range of services such as
providing parts and car accessories to its customers as well as support and assistance
including fleet maintenance services such as roadside assistance programs.
General
Motors
The
company is the largest automobile manufacturer and market leader in the
automobile industry. Founded in 1908 in Michigan, the company has over 107
years in existence and automobile sales with a substantial number of cars
driven in the United States alone consisting of General Motors product ranges.
It is the national leader of automobiles in the US market, with various vehicle
models being manufactured including cars, busses, trucks, and vans. The company
also boasts of other product and service ranges, with products being
manufactured consisting of engines, industrial and marine equipment, while on
the other hand, the company also has a wider range of services such as
locomotive management and maintenance as well as leasing. General Motors
occupies about 18% of the world’s total market share in the automotive industry
(“Market Share by Manufacturer,”2015).
Company Analysis
Toyota
Motor Company, operational management strategy, evolved from various components
in its quest to be a global market leader. The company implemented various
strategic tenets, which have enabled it to remain at the top in the automobile
segment globally.
Strengths
Toyota
Motor Corporation relies in its manufacturing and production system that has
undergone various improvements and changes in order to instill a culture of innovation,
which enhances product quality. This has been enabled by its vast Toyota
production system that has changed the manufacturing process to reduce defects
while at the same time to improve product quality.
The
Toyota Production System works to minimize defects, which may occur in the
assembly line due to avoidable production procedures. The system works in a way
that the manufacturing lines are used to trace for defects along the
manufacturing chain. On the other hand, the system also monitors each stage of
production to ensure that there are no mistakes and wastes are reduced as much
as possible. The system in place delivers various benefits to the company,
hence the strength being used as an operational management strategy, in order
to sustain its operations. It improves and sustains product quality by removing
defects, lowers production costs as well as ensures that product delivers are
on time. On the other hand, the production system also ensures that the
company’s products are safer, hence contributing to its leadership position.
Other
than that, the company has acquired much global reputation due to innovation
and quality, with innovation being defined as the latest management concept or
production techniques due to technological breakthrough (Charantimath, 2006).
These two factors have largely been attributed to the company’s research
initiatives aimed at finding modern methods of manufacturing. This has
contributed immensely to quality products, making the company achieve much in
cross-border sales and a global outlook in the automobile industry.
The
company has also outweighed its rivals in product delivery times. The company’s
production system enables the company to deliver vehicles in the least possible
time hence reducing the time the company spends in product delivery during
manufacturing until the product is delivered to the consumer. This acts to
boost customer retention hence benefiting the company at large. The company is
best known for manufacturing durable vehicles that are reliable and has value
for money for most consumers.
Weakness
However,
in a large corporation such as Toyota, there are instances where the products
may not fully comply with stipulated procedures. This may be due to engineering
lapses leading to poor product quality (Bommel, 2010), especially when defects
are not discovered. Defects henceforth have led to the massive recalls of
Toyota products leading to poor corporate image as a result of the recalls,
which have mostly hit the country in the current times.
The
global massive recalls that occurred across the globe dented the corporation’s
image as the company struggled with a series of recalls mostly attributed to
the break system. On the other hand, the company also suffered from recalls due
to steering problems hence negatively influencing of the sales of the
automobiles. These were attributed to poor manufacturing procedures that
resulted to the lapse.
Opportunities
Toyota
Motor Corporation sees a lot in terms of opportunities especially when they are
able to impact positively on the organizational performances. The company sees
growth due to opportunities in green manufactured vehicles, an increase in the
price of fuel, dynamic needs of consumers and well as acquisitions that help
the company grow its market share. The company’s strategy towards developing green
vehicles or hybrid models manufactured by the company greatly increases its
market share since more customers are sensitive to fuel-efficient car models,
which have lower levels of carbon emission.
On
the other hand, the increase in oil prices greatly benefits the company, since
the company can increase its sales due to a shift in the demand and purchase of
hybrid car models manufactured by the company. The company has also increased
research and innovation so as to design quality cars that can respond to the
shifting needs of customers towards the use of more customer friendly vehicles.
The company has continued to rely on research and innovation to produce
products that are customer tailored in order to suit varied customer
perspectives.
Threats
Threats
are unfavorable situations within an organizations environment (Rao et al,
2008).
These
unfavorable environments hinder the full operations of the organization. This
may be due to unseen factors that may affect the operational strategy of organizations,
hence hindering the firm from fully operating. Toyota Motor Corporation also
experiences major threats in the global automobile industry, from rival companies,
which have continued to be a threat to the company.
This
is due to the stiff market the company operates in, where other rivals are
involved in stiff market campaigns aimed at wooing customers hence eating the
company’s market share. The company also continues to face more threats as a
result of the impact brought about by high foreign exchange conversion rates.
The global trade relies on the US currency, which at times appreciates due to
changes in the global oil supply. This interferes with the financial standing
of the company, especially in instances where the company has experienced a
drop in sales. On the other hand, the company also suffers from unstable
monetary conditions, especially when there is an economic slowdown, such as the
great economic recession of 2008, which emanated from the United States
economy, spreading to other nations (Stewart, 2012).
The
various factors of strengths, weaknesses, opportunities, and threats affect the
overall operational strategy employed by organizations such as Toyota
Corporation. These factors are internally bred or motivated and affect the
performance of the company giving a rival firm an upper hand over the
company.
The
internal factors may contribute to a reduction in the market share since the
company’s financial capability cannot support the operations of the company. This
is due to weakness or an opportunity that a rival firm has taken advantage.
Case
analysis and discussion
Toyota
Corporation as an organization has employed strategies aimed at mitigating the
undesirable effects, due to changes in the economy, operations, and internal
factors. These strategies are aimed at enabling the company to stay afloat, as
well as overcome the operational hurdles. Operations management as a field is
employed in the organizations fundamental areas of production, personnel, and
supply chain to enhance efficiency and product quality. These facets have been
used at Toyota Corporation to reduce defects and operational lapses that hinder
or interfere with the production processes of an organization.
Findings
Toyota
Corporation faces a myriad of challenges, especially in the production system
within its assembly line. This is classified as a challenge due to its
magnitude, as it affects the final product quality while on the other hand has
a negative impact on the company’s performance. On the other hand, it is also
classified as a problem since it is wide scale and involves many consumers upon
its occurrence. For instance, the break and steering problem is classified as a
challenge since it has a bigger magnitude, in that its occurrence affects the
global consumers of the product.
This
problem is global hence need to be managed in the best possible way. The break
and steering systems can be machine automated in order to ascertain the quality
of the final output. This is because of the materials used to develop the
sections. Metals can erode leading to tear and wear in the critical components of
hydraulic system of the steering system. An automated checkup system can be
used to monitor the production system for possible lapses, which can occur in
the steering system.
On
the other side, poor rubber products can be the cause of break failures,
especially when the rubber products corrode quickly without the knowledge of
the owner. This can be prevented by using quality rubber products, which have
been tested as a result of improved research. Product research can therefore be
used to reduce break problems, especially when the chemical composition of
rubber products cannot sustain the heating nature of metallic components. They
may reduce in size, hence sliding over metal surfaces providing poor grip.
Recommendations
Employing
proper design practices during manufacturing can be utilized in order to
visualize problems prior to their occurrence. The company may increase its use
of the Toyota production system to detect malfunctions, which may arise due to
a defective component within the steering and brake modules. This system is
automatically operated and scans for defects automatically, and triggers an
alert when a possible defect is detected during the automobile manufacturing
processes.
Improved
engineering practices can also be used to prevent possible mechanical flaws and
problems. An elaborate Just in Time system can be used to prevent errors
arising from materials being used in the manufacturing process. This is a
preventive strategy that can be employed to prevent the use of defective materials
from being used in the manufacturing and assembly lines (“Toyota
Production Systems,” n.d.).
Other
manufacturing standard practices could also be put into use in the company.
These could be the use of kanban and quality circles. The kanban system is a
system with controls that are used during a production process at Toyota
Corporation to control the required quantities in the production process
(Monden, 2012). Through the use of this management practice, defective or
materials with error are not passed to a subsequent level of production during
the assembly process. This increases sensitivity, as such can detect the
slightest defect or error within the steering or break system of the company’s
products.
On
the other hand, the use of quality circles can also be employed to reduce the
problems and challenges that occur as a result of mechanical problems in the
Toyota production system.
A quality circle is a management technique of
problem solving used by employees in their work (Rathakrishnan, 2010). This is
a solution that could be employed by the workers in order to identify, analyze,
and resolve mechanical and engineering problems that have a wider impact on the
organizational products. On the other hand, quality circles would be used to
solve critical issues related to work performance, which may have a direct
impact on the quality of the products. It is a management practice where
employees would be used to voluntary contributes to improving quality and work
performance in the organization.
These
approaches could be used to reduce defects and flaws in the steering and brake
systems of the company’s products. It is important that the company employ
these methods in order to reduce worldwide backlashes as a result of break and
steering glitches. The company should therefore incorporate the kanban method
and the use of quality circles in order to manage the production process, as
well as reduce the defects and flaws, which bring discontent among the
consumers.
On
the other hand, the company should employ operational strategies upon studying
various elements, which have direct or indirect impact on the performance of
the company. These strategies need to be used to counteract both internal and
external attributes, which may hinder a production process to proceed without
interruption in the organization.
The
organization should highly customize its products in order to remain at the
helm of the automobile industry. Product customization in terms of consumer
segments will add value to foreign markets since it will be able to customize
its products according to the needs and wants of the consumers abroad. In using
this approach, the organization will likely gain more in terms of operational
excellence. Achieving this will mean a lot, since it will be able to dominate
other markets which are lessely dominated by other vehicle giants such as
Honda, Nissan, Ford and General Motors.
Human
resource being an essential component in innovation. The company should
therefore invest in people management strategies such as off job training. This
could be done in partnerships, which lead in scientific research especially in
automobile technology. This would then turn underperformers to a high-level workforce,
which is able to detect the slightest errors in the manufacturing and assembly
lines within the company.
It
is essentially important that the management at Toyota implement the quality
circles and kaban in the production process to maintain and improve product
quality. The report strongly highlights the major issues, which have continued
to interfere with product quality of the company’s products, hence there should
be a need to re-strategize of all aspects of manufacturing, and assembly within
the vehicle manufacturing processes.
References
2015
Auto Industry Trends. (n.d.). Retrieved April 30, 2015, from http://www.strategyand.pwc.com/perspectives/2015-auto-trends
Bommel,
P. ., & PoEM. (2010). The practice of enterprise modeling: Third IFIP WG
8.1 Working Conference, PoEM 2010, Delft, The Netherlands, Novermber 9 – 10,
2010 ; proceedings. Berlin [u.a.: Springer.
Charantimath,
P. M. (2006). Total quality management. New Delhi: Pearson Education.
Ford
Motor Company Timeline. (n.d.). Retrieved April 30, 2015, from https://corporate.ford.com/company/history.html
In
Rathakrishnan, L. (2010). Innovation and competiveness of small and medium
enterprises. New Delhi: Kalpaz Publications.
Market
Share by Manufacturer | Edmunds.com. (2015, February 2). Retrieved April 30,
2015, from http://www.edmunds.com/industry-center/data/market-share-by-manufacturer.html
Monden,
Y. (1993). Toyota Production System: An Integrated Approach to Just-In-Time.
Boston, MA: Springer US.
Rao,
C. A., Rao, B. P., & Sivaramakrishna, K. (2008). Strategic management
and business policy: Texts and cases. New Delhi, India: Excel.s
Stewart,
J. (2012). The Toyota Kaizen continuum: A practical guide to implementing
lean. Boca Raton, FL: CRC Press.
Toyota
Production System. (n.d.). Retrieved April 30, 2015, from http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/
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