Toyota Motor Corporation: Business Strategy

Topic: Strategic Management
Words: 2768 Pages: 10

Introduction and Strategic Direction

Toyota Motor Corporation (TMC) is today one of the most successful automobile companies in Japan and across the globe. This corporation began in 1937 in Japan when Kiichiro Toyoda chose to disassociate with his father’s company by the name Toyota Industries (Li, 2018). This move led to a new branch that focused mainly only smaller automobiles. After the end of the Second World War, the enabling environment allowed this company to acquire new technologies and ideas that led to one of the widely studied production systems. The emerging consumer economy in the postwar era made it possible for more people to purchase automobiles than ever before. These forces played a significant role towards pushing the company forward. Today, TMV remains successful since it produces and markets over 10 million different car bands annually (Soliman, 2020). To achieve these outcomes, the able leadership at TCM puts into consideration different aspects within the fields of business management, logistics, and research and development (R&D).

The concept of leadership has helped this organization come this far. Li (2018) indicates that its past managers and executive officers (EOs) have been focusing on servant leadership as the best approach to deliver timely results. This model has been leading to a powerful culture whereby followers receive incentives and guidelines to complete their tasks more efficiently. Those in higher positions realize that they have reduced influence on the workers. The employees are motivated and guided depending on the outlined organizational projects. This form of management has made it easier for most of the individuals to remain involved and consider additional ways to add value to the company’s strategy. The managerial framework does not provide for a single leader or chief executive officer (CEO). However, the organization has a chairman who is in charge of the board. The current occupant of that office is Takeshi Uchiyamada (Soliman, 2020). The company also has a president who oversees a wide range of operations at the company. This position is current under the leadership of Akio Toyoda. Through direct influence and delegation, these professionals have helped the company continue to achieve its objectives.

In terms of personal background, Akio Toyoda, the president of TMC, is the grandchild of the company’s founder. This trend in leadership reveals that a culture exists whereby individuals follow established guidelines. He joined the board in 2005 and became the executive vice president five years later (Ledbetter, 2018). He continues to promote sports cars at the company and offers effective guidance to promote performance. His leadership focuses on the best approaches to reduce emissions while meeting the demands of all key partners.

Since 2000, TMC has implemented a unique strategic vision that is in tandem with the anticipated business goals and the realities in the external and internal business environments. The company’s website reveals that Toyota is keen to lead the future of human mobility. It intends to do so by empowering lives while providing the best solutions to their logistical aims (Hibino et al., 2018). To deliver this vision, all workers and leaders remain committed to the continuous provision of quality. R&D remains the driving force behind this goal and allows partners to push for environmental sustainability. The idea of exceeding expiations drives such a vision (Hibino et al., 2018). In the recent past, TMC is pursuing corporate strategy through the inclusion of all leaders who provide timely instructions to the relevant departments. The established units play significant roles towards executing projects and delivering the much needed final products.

Corporate governance organizational chart 
Fig. 1: Corporate governance organizational chart 

Corporate governance at Toyota has become a stakeholder affair whereby all key partners are involved to identify the best way forward. These partners meet frequently with the board of directors to make decisions and guide operating officers to pursue the intended goals (see Fig. 1). Sustainability and disclosure sessions are held while involving internal and external auditors. This framework allows TMC to pursue sustainable growth and engage in values with long-term outcomes. It establishes the best relationships with key stakeholders, such as employees, suppliers, customers, partners, and local communities (Ledbetter, 2018). The company is always engaging in additional studies and investigations to identify emerging opportunities for improving the efficiency and practicality of its corporate governance strategy. With these insights, TMC’s mission is to continue attracting more customers through the use of high-quality services and products while promoting the best experience (Toyota, n.d.). The vision revolves around promoting the best business practices that can eventually make it the most respectable and admirable car manufacturers in the world.

The Forces Framework for Strategy

Various frameworks can help analysts study the forces affecting TMC and present evidence-based approaches for implementing change. This company’s top leadership rely on emerging forces in the market to make timely decisions and consider the most appropriate business strategy to pursue. When done correctly, the organization is able to examine issues shaping its financial framework (Soliman, 2020). The involvement of key partners and experts makes it possible to implement the best initiatives and drive performance (Li, 2018). A detailed application of the five forces model can help shed more light on the generic competitive strategy TMC puts in place.

 Diagrammatic illustration of Porter’s five forces framework
Fig. 2: Diagrammatic illustration of Porter’s five forces framework

Through the continued application of the five forces framework, TMC’s managers are usually able to learn more about the market and the possibility of recording increased outcomes. The model influences the company’s strategy against the existing competitors while focusing on alternative solutions to the recorded problems. The first force acting on the company is threat of new products from startups. This company has advanced technologies that support the delivery of admirable cars. Internationally, TMC enjoys a market share of around 8.9 percent (Itsuki, 2021). The industry is also seeing the emergence of electric cars from different companies. Emerging players would need huge finances to breakeven and launch their vehicles successfully in the market. These attributes show conclusively that the intensity of this threat remains low or moderate.

The second force capable of acting on TMC’s business model is the threat alternative vehicles in the market. Within the past decade, the automobile sector is seeing an increase of electric cars and new work weeks arrangements. The demand for cars could reduce due to the increasing prices of oil and gas at the global market. In emerging markets, three wheeler vehicles, bicycles, and scooters are become common than ever before. Some companies have gone further to innovate and present application systems that are empowering more people to share their experiences without necessarily having to commute. Some of them include Zoom and Google (Li, 2018). Despite these developments, Itsuki (2021) still believes that the demand for vehicles remains relatively high in different parts of the world. The record sales recorded annually at TMC also indicate that it will be able to pursue its current goals in the future. The nature of these gradual chances and substitutes reveal that the overall threat of this force would remain moderate.

The third possible force capable of dictating this company’s future operations is the bargaining power of the global automobile customers. In the recent past, individuals have been keen to focus on electric and hybrid cars capable of helping reduce greenhouse gases emissions (GHEs). Customers have gone further to compel manufacturers to offer their vehicles at reduced prices while promoting notions of sustainability. However, the force customers could present would encounter additional challenges, such as the absence of cheaper cars (Itsuki, 2021). These insights encourage the leaders at the company to identify specific niches and offer vehicles that will meet the recorded needs. These insights reveal that the bargaining power of potential buyers remains moderate to high.

The bargaining power of suppliers forms the fourth critical force capable of influencing TMC’s performance. To achieve excellence, this corporation liaises with vendors capable of meeting specific standards. Such partners are necessary to ensure that the supply chain remains efficient. The company gets specific car components from some of the leading players in the industry, such as General Motors and Tesla. The companies also understand the issues involved in the industry (Ledbetter, 2018). Consequently, it becomes quite clear that the bargaining power of these suppliers would remain moderate.

Competitive rivalry is the fifth force that can help learn more about TMC’s business strategy. Within the past decade, electric cars, motorcycles, and bicycles have become more admirable that ever before. Customers are identifying with companies that are taking the issue of sustainability seriously. Competitors are relying on these emerging needs to launch superior products capable of empowering customers. For example, Tesla has presented powerful electric cars capable of attacking TMC’s business model. While Toyota has a number of attributes that make it competitive and successful, it would be agreeable that the threat of rivalry is high (Soliman, 2020). The totality of these forces help TCM shapes its financial framework and business goals. Every decision is intended to attack an existing problem, threat, or competing, thus making it possible for the company to continue pursuing its business goals.

Strengthening Competitive Position for Strategy

The forces experienced in the regional and global automotive industries have compelled TMC to implement different generic strategies. Itsuki (2021) observes that the nature of the recoded competition in the sector and the presence of unique forces dictate the initiatives TMC implements. To remain relevant and overcome the challenge of competition, TMC combines the low cost and differentiation generic strategies. These initiatives are designed in such a way that the company is able to attract more clients while meeting the demands of all partners. It also implements an integrated market scope intended to identify every potential customer who might purchase the company’s car brands. The cost generic approach is pursued in such a way that operational expenses are maintained as low as possible (Hibino et al., 2018). Broad differentiation strategy at TMC ensures that developed products are unique and capable of enhancing competitive advantage. The emerging strategy is strong and capable of ensuring that TMC is capable to identify emerging segments and market its brands successfully.

These insights help identify the offensive strategies that help deliver performance. To craft a powerful competitive advantage, TMC engages in powerful mechanisms to reduce operational costs. The organization applies a Just-In-Time (JIT) model for manufacturing. This has become the famous Toyota Production System (TPS). Through this approach, Toyota has found it easier to minimize operational wastes while increasing response time. The arising efficiency has made it possible for the organization to deliver positive results (Itsuki, 2021). The company’s R&D department engages in continuous innovation to produce high-quality vehicles depending on the identified markets or areas. This generic approach continues to make this organization profitable in its sector.

To maximize performance, TMC uses desirable intensive strategies to help improve growth. to penetrate different markets, TMC has developed a wide range of car brands capable of meeting the demands of customers based on their preferences. For example, it has sports utility vehicles (SUVs), sedans, luxury cars, sports cars, and trucks. This initiative makes it possible for the organization to maximize sales and subsequent sales volumes. The other attribute integrated within the growth strategy is the power of product development (Itsuki, 2021). This approach is founded on continuous innovation to identify and introduce additional features capable of meeting the demands of the targeted customers. The example of Toyota Prius shows how the company has taken the issue of sustainability seriously. The presentation of superior cars with unique features is the outcome of the product development strategy already in place.

These measures have helped craft one of the best strategies that resonates with the trends recorded in the global market. The emerging evidence indicates the involved professionals and leaders apply resources whenever required (Hibino et al., 2018). The company identifies emerging technologies to deliver superior cars capable of address critical issues, such as fuel consumption rates, environmental conservation, and safety (Li, 2018). The nature of the existing elements have helped the company become a leading provider of high-quality and admirable cars capable of addressing the needs of the customers. The pricing strategy is also competitive and capable of attracting and increasing number of buyers.

Execution of Strategy

The past decade has been characterized by significant changes in business strategy and corporate governance. To achieve the intended goals, the company has put in place proper leadership strategies that resonate with the demands of all key stakeholders. The professionals occupying different positions possess the relevant competencies that have helped the organization achieve its goals. The use of a powerful change theory is a common practice at Toyota (Itsuki, 2021). The model is implemented depending on the level of resistance from stakeholders and the intended outcomes. The presence of effective leadership and the ability to communicate strategies in a timely manner have helped improve organizational performance.

Toyota has one of the best management processes designed to support the organization’s current and future performance. The president liaises with the board of governors to identify action plans and strategic approaches that can drive performance. The leaders have helped established a framework whereby all followers are keen to respect each other. Stakeholders help in the identification of the best processes that can deliver the intended results. The management is tasked with identifying the sources of problems that might affect future performance (Li, 2018). Those in leadership positions apply their skills to solve these issues while promoting organizational learning. All managerial aspects at this company are, therefore, founded on the notions of respect for all and continuous improvement.

To achieve the outlined results in a timely manner, this company has presented a number of regions and departments intended to complete specified roles. The HR department is required to liaise with other units to monitor staffing and address human-related challenges. The team is also keen to pursue the notions of succession planning and continuous talent management (Ledbetter, 2018). This strategy ensures that all promoted staffing changes are in tandem with the outlined organizational goals. Appointments are done depending on the skill sets of the identified or named candidates. These measures have helped maintain the highest level of efficiency at the company. The approach also increases chances of recording improved organizational performance.

The leadership has Toyota has helped develop a powerful culture that continues to make it admirable in the global aviation industry. Li (2018) indicates that the company defines such a strategy as the Toyota Way. To achieve desirable results, this culture is founded on a number of progressive principles. These include the notion of continuous improvement and the need for all workers to respect each other (Ledbetter, 2018). To ensure that the attributes remain a constant at this company, the leaders go further to promote additional strategies that have become synonymous with the company. These include teamwork and the desire to experience challenging work. The concept of Genchi Genbutsu also encouraged people to go and find for themselves the strong attributes associated with TMC’s culture.

Diagrammatic portrayal of the Toyota Way
Fig 3: Diagrammatic portrayal of the Toyota Way

The Toyota Way has emerged as the main internal operating system that dictates the performance and activities at this company. This framework synced with the production and management procedures already in place. This model has remained in place since the beginning of the new century. Under this operating strategy, the company provides the relevant resources while empowering workers to maximize their operations and strategies continuously. The foundational elements guiding this operating system include the notion of long-term thinking and the implementation of deniable cycles (ActioGlobal, 2022). The company empowers individuals to associate and promote teamwork. The involvement of all key stakeholders helps tackle emerging challenges while driving organizational learning. The system helps individuals improve their experiences and abilities continuously (Li, 2018). The inclusion of the notions of continuous improvement has helped promote this system while making innovation a continuous process. The combination of all these elements has led to a unique business model that considers emerging issues, stakeholders’ demands, and longevity.


The completed report has identified TMC as a leading corporation would success is founded on effective strategy. The business model is developed in accordance with the forces experiences in the global market. The company has combined cost and differentiation strategies to improve products continuously while identifying the changing expectations of its customers in different parts of the world. Through effective managerial processes, TMC has succeeded to develop a reliable organizational culture that creates room for an effective internal operating system. These attributes have been working synergistically to support the production of high-quality cars that meet the demands of the targeted global clients.


ActioGlobal. (2022). The Toyota Way: Principle 11. Web.

Hibino, S., Noguchi, K., & Plenert, G. (2018). Toyota’s global marketing strategy: Innovation through breakthrough thinking and kaizen. CRC Press.

Itsuki, H. (2021). Evaluation on changes of strategy and strategic direction in Toyota Motor Company, Japan. Journal of Strategic Management, 5(1), 20- 29. Web.

Ledbetter, P. (2018). The Toyota template: The plan for Just-in-time and culture change beyond lean tools. Productivity Press.

Li, Z. (2018). Business network positioning analysis of Toyota. American Journal of Industrial and Business Management, 8, 1693-1699.

Soliman, M. H. A. (2020). The Toyota Way to effective strategy deployment: How organizations can focus energy on key priorities through Hoshin Kanri to achieve the business goals. Journal of Operations and Strategic Planning, 3(2), 132-158.

Toyota. (n.d.). Governance. Web.

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