Toyota

Essay assignment question

It is sometime suggested that CSR activities are increasing strategic in that it affects that core business of the firm and its growth, profitability and survival?

Drawing on an example of a corporation/company (National/ International), discuss this in the context of business strategies, in particular on the issues of competitive advantage and firm performance. Introduction In this essay, we will discuss why organizations began CSR and how it is or can be or why should it be implemented.

CSR usually get started off either as an integral part of the business strategy or corporate identity, or it can be used as a defensive policy, with the latter being used more often by companies targeted by activists. Rationale for CSR implementation is based on either a moral, a rational, or an economic argument (Werther & Chandler, 2006). Campbell (2007) which is a representative of a group of studies that create testable propositions related to the conditions under which organizations will move toward CSR.

Studies show that corporations’ level of social responsibility as being influenced by factors such as financial conditions of the firm, health of the economy, and well-enforced state regulations. Reason why companies take on CSR is also being discussed in the literature in terms of the specific initiatives under which CSR may fall. Ways of describing these rationales varies, from the more skeptical view of cause-related marketing to a more generous attribution of genuine socially responsible business practices (Kotler & Lee, 2005).

To ascertain how CSR is implemented in organizations, some researchers uses a developmental framework to show change in awareness, strategy, and action over time, and posits stages of CSR from elementary to transforming (e. g. , Mirvis & Googins, 2006). Jackson and Nelson (2004) take more of a how-to approach, offering a principle-based framework for mastering what they call the “new rules of the game. ” Examples of principles include harnessing innovation for the public good, putting people at the center, and spreading economic opportunity where in this essay will discuss on how Toyota Motor Corporation applies this.

CSR of Toyota motor corporation

Many companies have established their corporate identities using branding through CSR, which has eventually becoming a focal point of their success and competitive advantage (Werther & Chandler, 2006). Toyota Motor Corporation recognizes corporate social responsibilities and emphasis on safety, the environment and education to offer to people the tools needed to make a difference to help and protect the environment. The company operates under the guidance of a global earth charter that promotes environmental responsibility throughout the organization worldwide.

Toyota becomes the leader in leading the industry to lower emissions and improving fuel economy vehicles. Not only did Toyota create the world’s first mass-production gas/electric hybrid car, they are also working ahead in the development of future fuel cell vehicles. (Toyota. com 2011) Toyota Motor Corporation’s commitment to preserving the environment doesn’t stop at just their vehicles. Two of their manufacturing plants have been designated as zero landfill producing operations. Green” complex in California has one of the largest commercial solar panel systems in North America which conserves more than 11 Million gallons of drinking water annually through special pipelines that supply recycled water for cooling and landscaping. (Toyota. com 2011) In addition, contributing to their dedication in environmental preservation, Toyota has also developed strong partnerships with organizations such as The National Arbor Day Foundation and The National Environmental Education.

Training foundation

The corporation partners with organizations, schools, universities and other businesses to support programs that help make the world a better place. Toyota Motor Corporation has a variety of national programs like Toyota Driving Expectations Safety Program, Toyota Youth For Understanding Summer Exchange Scholarship Program, Toyota International Teacher Program, National Center for Family Literacy, Toyota Community Scholars, United States Hipic Chamber of Commerce Internship Program and others.

Strategic Models of CSR Strategic planning as opposed to operational planning concerns the general long-term planning of a Toyota Corporation with the aim to gain economic advantages in the competitive market place. Operational planning in contrast incorporates concrete short- or medium-term activities in line with the strategic goals of the company (Wohe 1993: 141).

A strategic plan usually consists of an analysis of the firm and its environment, the development of strategic goals and alternative strategies, the assessment, evaluation and selection of strategic alternatives, and the implementation, evaluation and control of the strategies (Grant 2005, Hopfenbeck 1997: 40) in which Toyota Corporation did when they came up with their CSR It has been demonstrated by Porter and Kramer that a strategic approach to CSR can incorporate competitive advantages for Toyota Corporation but even more importantly, it allows for an integrated and effective implementation of CS.

Following this argumentation, an inclusive strategic model of CSR was developed combining central ideas of CSR theory with the classical model of strategic planning using narrow view and boarder view. Narrow view On the contrary, supporters of narrow view in CSR claim that Toyota corporations have just one objective- make money. They believe that caring for the environmental, society and other problems are the responsibilities of government and non-profit making organizations sponsored by governments.

A bright supporter of the narrow view is as mention in Milton Friedman theory that those who claims that diverting corporations from the chase of profit makes our economic system less effective.

Friedman states: “The stockholders or the customers or the employees could separately spend their own money on the particular action if they wished to do so. The executive is exercising a distinct “social responsibility,” rather than serving as an agent of the stockholders or the customers or the employees, only if he spends the money in a different way than they would have spent it” ( M.Friedman 1970). Another defender of narrow view in corporate social responsibility is famous economist Adam Smith, whose “invisible hand” argument states that if every member of society in a free market economy strives to promote his own economic interests they are led to promote the general good. This may be a good argument in other eras of economics, but using this argument to justify for support of the narrow view will reasonably arise criticisms. The hand-of-government argument of the narrow view states that businesses should have no social role other than making oney. According to inept-custodian argument business executives lack   moral and social expertise, and can only make economic decisions. To ask executives to take charge of non-economic responsibilities is equal to putting social welfare in the hands of inept custodians. Broader view Supporter of broader view believe that Toyota Corporation have other obligations apart from pursuing profit because of their great social and economic power, Toyota corporations must carry social responsibility towards society and wider community.

Businesses cannot make decisions which are made solely with economic point of view, because Toyota Corporation are interrelated with the whole social system. Business activities have deep implications for society. As a result, society expects Toyota Corporation to pursue other responsibilities as well. A social contract between society and business represents a unstated understanding within society about the proper goals and responsibilities of business. This social contract is an on-going process of negotiation and change.

Conclusion

This is the basic reason why the doctrine of “social responsibility” involves the acceptance of the socialist view that political mechanisms, not market mechanisms, are the appropriate way to determine the allocation of scarce resources to alternative uses. The New York Times Magazine (1970) To illustrate, it may well be in the long run interest for Toyota Corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government.

That may make it easier to attract desirable employees, it may reduce the wage bill or lessen losses from pilferage and sabotage or have other worthwhile effects. Or it may be that, given the laws about the deductibility of corporate charitable contributions, the stockholders can contribute more to charities they favor by having the corporation make the gift than by doing it themselves, since they can in that way contribute an amount that would otherwise have been paid as corporate taxes.

The New York Times Magazine (1970) .There are many different views regarding corporate social responsibility. Some people defend “broader view” saying that corporations should contribute back to society from their profits they make by selling their products and services to the members of that society. Others defend “narrow view” justifying they stand by claiming that executives are not moral agents and it would be a mistake to include to the scope of their responsibilities to care about nature, wider community and society in general.

My personal view is that profit maximization should not be the only objective of any business corporations. Every company uses resources to manufacture its products or bring its services. These resources include land, human resources, and other resources from nature including gas, water, oil, etc. The fees the companies pay for these resources when obtaining them are insignificant if one compares them with the huge amount of profits companies make when manufacturing products using these resources.

Corporations must, therefore, contribute part of their earnings to society and environment as a way of paying back, even if they have paid when obtaining resources. Thus, I agree to “broader view” in Corporate Social Responsibility and Toyota Motor Corporation is justly and generously contributing to environment and the society and considered a model corporation fulfilling its corporate responsibilities.

References

1. Alessia D’Amato, 2009. Corporate Social Responsibility and Sustainable Business: A Guide to Leadership Tasks and Functions. Edition.
2. Center for Creative Leadership. Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32, 946–967.
3. Grant, Robert M. (2005): Contemporary Strategic Analysis, 5. ed. Malden, Oxford, Carlton Hopfenbeck, Waldemar (1997): Allgemeine Betriebswirtschafts- und Managementlehre: Das Unternehmen im Spannungsfeld z Jackson, I. A. , & Nelson, J. (2004). Profits with principles: Seven strategies for delivering value with values. New York: Doubleday.
4. Kotler, P. , & Lee, N. (2005). Corporate social responsibility: Doing the most good for your company and your cause. Hoboken, NJ: John Wiley & Sons. Mirvis, P. , & Googins, B. K. (2006). Stages of corporate citizenship: A developmental framework [Monograph]. Chestnut Hill, MA: The Boston College Center for Corporate Citizenship. The New York Times Magazine, September 13, 1970. Copyright @ 1970 by The New York Times Company. Werther, W. B. , Jr. , & Chandler, D. A. (2006). Strategic corporate social responsibility. New York: Sage Publications.

INTRODUCTION

Global marketing is the act of marketing products or services across national, political or cultural boundaries in a bid to maximize sales, diversify, achieve economies of scale, and explore new territories (Keller, 2003). Marketing on a global scale has been born primarily due to globalization and international expansion. Multinational companies need to expand beyond their home markets, and this involves investing in new territories, often with differing cultures and socio-cultural norms. Hofstede (2011) notes that the most significant hurdle in global marketing has been over the past decade with an increasing number of multinational corporations seeking to gain substantial market share in China, and other developing countries (such as Brazil, India and Russia), as these countries have relatively low market penetration, high demand, but very different cultures to western countries.

According to Schneider and Barsoux (1997), cultures around the world are increasingly converging, and these have resulted in the ability of multinationals to leverage their international reputation and successfully sell one product across multiple regions. Murphy and Lacziniak (2006) have also stated that the influence of technology, economic, socio-cultural and political forces makes it easier to create a marketing strategy with a mix suitable for a variety of regions and catering for different cultures. However, in as much as converging cultures may have unified demand, this does not necessarily translate to similar consumer perception or expectations across all markets. Culture affects consumer behavior by influencing consumption decisions, hence creating desires and driving the consumer to select products or brands that fulfill specific needs. As a result, organizations need to understand how cultural norms may affect their marketing strategies within respective regions in order to create a marketing strategy that can successfully penetrate new market environments (Usunier et al, 2005). This paper focuses on the global marketing efforts of Toyota Motors, and how various cultural dimensions may have an affect on its marketing activities in international markets.

Cultural Analysis

Toyota is the third largest automobile manufacturing company in the world, employs over 300,000 staff, and operates globally (Whoriskey, 2012). Its extensive global operations make the company an ideal case study for cultural analysis.

Scholars have conducted extensive research on cultural dimensions across different regions, and the most notable of these are of Hofstede (2011), who developed a model hierarchy of the world based on an analysis of IBM managers in several countries. His model identified four main components that define cultural dimensions and these are: power distance, uncertainty avoidance, masculinity / femininity, and individualism / collectivism. According to Hofstede (2011), several regions differ in their cultural dimensions, and these could have a significant impact on the marketing activities of international firms such as Toyota operating extensively within different cultural regions.

Power Distance

High power distance cultures are usually characterized by authoritarian societies and work environments, in which subordinates are highly dependent on their bosses in decision-making and welfare. Such societies are highly authoritative and are usually characterized by high amounts of income and gender inequality (Mooji and Hofstede, 2010). Hofstede (2011) found power distance to be high in Latin American and Arab countries, and much lower in Europe and the US. According to Hocklin (1998), high power distance cultures are usually characterized by chauffeur driven cars, while Dash et al (2009) found that countries with low power distance usually expect highly responsive and quality service; while those high on power distance attach a greater importance to tangible service attributes.

These attributes relevant to the automobile industry could be prestige, reliability, exclusivity, luxury, type and cost. Therefore an emphasis of branding, in such a way that it communicates to the buyer that it would improve their prestige, reputation, and it is exclusive, would be effective in high power distance cultures. However, in low power distance cultures, an emphasis on service delivery such as roadside assistance, extended warranties, reliability and servicing could be equally effective.

Power distance is also prevalent in youth consumption. In the US, a low power distance economy, about 49% of 17-year olds had driver’s licenses in 2008 (Neff, 2010). This translates to the fact that more young people are able to buy cars. However, when compared to a high power distance country like China, much less numbers of youth are able to afford automobiles, due to the high-income disparity between the rich youths and the rest of the population (Lee, 2010).

Individualism / Collectivism

As the title suggest, collectivism suggests a collectivist society in which a greater emphasis is placed on family values, community and team in the work place (Mooij and Hofstede, 2010), as opposed to individualism whereby it is mostly about an individual’s accomplishment and self-actualization. Dash et al (2009) found that consumers high on individualism expect lower empathy and assurance, while Murphy and Lacziniak (2006) noted that consumers high on individualism are more focused on personal preferences than family or team preferences. Regarding Toyota’s products, cultures with high individualism may see higher sales in two door sports cars and luxury vehicles, as opposed to collectivist cultures where sedans and family cars could sell higher. Furthermore, with respect to advertising and marketing, Mooij and Hofstede (2010 advocate denoting a brand in a more collective light within collectivist cultures. So for a car manufacturer like Toyota, branding efforts could center on family road trips or team based activities; or a happy couple driving their brand new jeep with a baby in the back. However, for an individualistic culture, it may focus more on a sense of self-achievement or fulfillment.

Uncertainty Avoidance

This refers to the extent to which people feel threatened by unknown situations (Hoecklin 1998). Cultures that are strong in uncertainty avoidance are aggressive, active, compulsive and intolerant while those weak in uncertainty avoidance are less aggressive; more relaxed, contemplative and relatively tolerant (Hoecklin 1998). Markets with high uncertainty avoidance are also characterized by much lower consumer credit (Mooij and Hofstede, 2010), as consumers usually desist from financial items such as consumer loans, credit cards, mortgages or car loans. This may likely lead to a lower amount of cars being sold.

Mooij and Hofstede (2010) also notes that innovativeness and a wish for change are low in high uncertainty regions, so the emphasis would center on more of the same. The same trusted brands, driving standards, and an emphasis on Toyota’s core values could be marketed. While marketing to cultures with high uncertainty avoidance, Toyota could also emphasize on the safety of its motor vehicles, the value of its brand, and its reputation; as these would most likely promote the sense of a predictability and safety.

Masculinity / Feminity

According to Mooij and Hofstede (2010, “an important value of masculine cultures is achievement, and when combined with individualism, success can be shown”. Hofstede (2011) labeled those cultures that strive to differentiate the roles of men and women as masculine cultures while those that permitted more overlapping social roles for the sexes as feminine cultures. Japan ranks high among the more masculine countries while Netherlands ranks lows The UK and US, on the other hand, rank in the middle of this dimension though slightly more towards masculine cultures (Assael 1998).

Toyota promotes its luxury brands (Lexus) as a status symbol, while some of its other brands are off-road, strong, high capacity vehicles. With these, they have gained substantial market share in the US. Societies placing high value on feminism are less assertive, and focus more on quality of life, interpersonal relationships and a concern for the weak (Aaker & Alexander 1993). These societies tend to be less extravagant in consumption and their purchase decisions, are more modest, and seek low-end products.

Toyota Cultural Marketing

Based on the cultural dimensions analyzed, Power Distance seems to have the most significant impact on marketing, especially in high power distance cultures. This chapter would give recommendations on how Toyota could adjust its marketing mix to account for a culture with high power distance[1].

Firstly, Toyota should focus on differentiating the market into the upper 20% and the masses. The upper 20% would be targeted for their affinity for luxury goods, and their spending power. They would be capable of purchasing luxury cars and jeeps, which would appeal to their status within the society.
An emphasis should be placed on marketing service attributes such as prestige in owning the vehicle, it’s luxury, reliability and it’s status-enhancing power. Individuals should want to own new Toyota’s because it makes them feel better than their peers, and like they have achieved something.
In such a high power distance culture, it is likely that the youth population and the lesser earning individuals may not be able to afford luxury vehicles. However, the vehicles sold to them, no matter how cheap or small, should be packaged in such a way that it enhances their social standing, and offers a sense of achievement even in the smallest sense.

Conclusion

The analysis within this report has shown that cultural attributes within a region do have an impact on global marketing. Dimensions such as power distance, uncertainty avoidance and individualism affect consumer behavior due to its impact on culture. As a result, different marketing messages and tactics are likely to appeal to different audiences based on their cultural values. It is therefore in the best interest of multinational companies to ensure they understand their target markets, and develop appropriate methods of marketing their products in the most appealing way.

REFERENCES

Aaker D and Alexander, L.B. (1993) Brand Equity & Advertising’ Advertising’s role in building strong brands, Lawrence Erlbaum Associates, London.

Aaker, A. D. (1991) Managing Brand Equity, Capitalizing on the Value of a Brand Name, The Free Press, New York.

Assael, H., (1998) Consumer Behaviour and Marketing Action. 6th edition, International Thomson Publishing.

Dash, S., Bruning, E., and Acharya, M. (2009) The effect of power distance and individualism on service quality expectations in banking: A two-country individual- and national-cultural comparison”, International Journal of Bank Marketing, Vol. 27 (5), pp.336 – 358

Harner, S. (2011) Japan’s Automakers Face New Challenges (1): Toyota in China, www.forbes.com, [accessed: 12/03/2012]

Hoecklin, L., 1998. Managing Cultural Differences, Addison Wesley, ISBN 0-201-42770-2

Hofstede, G., 2011. “Geert Hofstede Cultural Dimensions”, {Viewed on 15th March 2012} from http://www.geerthofstede.com/

Keller, K.L., 2003. Strategic Brand Management: Building, Measuring and Managing Brand Equity, 2nd Ed, Prentice hall, New Jersey.

Lee, K. (2010) Debunking Myths About China’s Youth Culture, www.forbes.com, [accessed: 12/03/2012]

Mooij, M, and Hofstede, G. (2010) The Hofstede model – Applications to global branding and advertising strategy and research, International Journal of Advertising, Vol. 29(1), pp85 – 110

Murphy,P.E. & G. R. Lacziniak, 2006. Marketing Ethics, Pearson Prentice Hall

Neff, J. (2010) Is digital revolution driving decline in US car culture, www.adage.com, accessed: 12/03/2012

Schneider, S. C, & J.L Barsoux, 1997. Managing across cultures, 2nd Edn, Prentice Hall

Usunier, Jean-Claude & J. Lee, 2005. Marketing Across Cultures, 5th Edn, FT Prentice Hall, ISBN: 0273685295

Whoriskey, P, (2012) GM once again leads the world in auto sales, www.washingtonpost.com, accessed: 12/03/2012

Zhang, Y., Winterich, K. P., and Mittal, V. (2010) Power Distance Belief and Impulsive Buying, Journal of Marketing Research, Vol. 47 (5)

References

Aaker, A. D., 1991. Managing Brand Equity, Capitalizing on the Value of a Brand Name, The Free Press, New York.

Aaker D & L.B. Alexander, 1993. Brand Equity & Advertising’ Advertising’s role in building strong brands. Lawrence Erlbaum Associates, London.

Assael, H., 1998. Consumer Behaviour and Marketing Action. 6th edition, International Thomson Publishing.

Hoecklin, L., 1998. Managing Cultural Differences, Addison Wesley, ISBN 0-201-42770-2

Howard, J.A., & J.N. Sheth, 1969. “The theory of buyer behavior”.

Hofstede, G., 2011. “Geert Hofstede Cultural Dimensions”, {Viewed on 15th March 2012} from http://www.geerthofstede.com/

Keller, K.L., 2003. Strategic Brand Management: Building, Measuring and Managing Brand Equity, 2nd Ed, Prentice hall, New Jersey.

Murphy,P.E. & G. R. Lacziniak, 2006. Marketing Ethics, Pearson Prentice Hall

Schneider, S. C, & J.L Barsoux, 1997. Managing across cultures, 2nd Edn, Prentice Hall

Usunier, Jean-Claude & J. Lee, 2005. Marketing Across Cultures, 5th Edn, FT Prentice Hall, ISBN: 0273685295

[1] Toyota is in virtually all developed, developing and under developed market so it was near impossible to find a new market where they could take an existing product. The best thing was to come up with a hypothetical new market and give recommendations.

Indus

Motor Company (IMC) is a joint venture between the House of Habib , Toyota Motor Corporation Japan (TMC) , and Toyota Tsusho Corporation Japan (TTC) for assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01, 1990. IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd. vehicles in Pakistan through its dealership network. The company was incorporated in Pakistan as a public limited company in December 1989 and started commercial production in May 1993.

The shares of company are quoted on the stock exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation have 25 % stake in the company equity. The majority shareholder is the House of Habib. IMC’s production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres. Indus Motor Company’s plant is the only manufacturing site in the world where both Toyota and Daihatsu brands are being manufactured. Heavy investment was made to build its production facilities based on state of art technologies.

To ensure highest level of productivity world-renowned Toyota Production Systems are implemented. IMC’s Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux Single Cabin 4×2 and 4 versions of Daihatsu Cuore. We also have a wide range of imported vehicles.

Vision And Mission:

“IMC’s Vision is to be the most respected and successful enterprise, delighting customers with a wide range of products and solutions in the automobile industry with the best people and the best technology”.

1. The most respected.
2. The most successful.
3. Delighting customers.
4. Wide range of products.
5. The best people.
6. The best technology.

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.

• Management Team: Ali S. Habib (Chairman) K Hyodo (Vice Chairman) Parvez Ghias (Chief Executive Officer)
• Information Technology: Mr. Adnan Qazi (Chief Information Officer)
• Finance: Muhammad Faisal (Chief Financial Officer) Mustafa Hasan Lakhani (Company Secretary)
• Human Resource: Mr. Salim Azhar(Director)
• Logistics, Administration, Commercial: Mr. Salim Azhar (Director) Manufacturing: Mr. Y. Tsubaki (Director) Sales &Amp; Marketing: Mr. Raza Ansari (Director)
• Internal Audit: Mr. Ahson Tariq (Chief Of Internal Audit)
• Collaboration Equity : Toyota Motor Corporation | Toyota Tsusho Corporation | House Of Habib|Business  | Toyota Group Technology Kd Parts| Materials, Parts,Logistics Support | Technology Kd Parts| Hilux Frame,Deck|

Indus Motors Co.

The value chain is a systematic approach to examining the development of competitive advantage.

It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a series of activities that create and build value. They conclude in the total value delivered by an organization. The ‘margin’ depicted in the diagram is the same as added alue. The organization is split into ‘primary activities’ and ‘support activities. ‘ Primary Activities: Inbound Logistics: Here goods are received from a company’s suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organization. Toyota motors purchase their raw material from all around the world. In order to maximize their availability of raw material Toyota motors maintain good relationship with their suppliers. Toyota use JIT (Just In Time) approach for handling of raw material.

Toyota Genuine oil is classified by quality using the Amarican Petroleum institute classification, ILSAC standerd and ASEA standerds, and by viscosity using the SAE classification Operations: This is where goods are manufactured or assembled. Individual operations could include organizing the parts to make new cars ;amp; the final tune for a new car’s engine. Toyota motors are known for their reliability which comes from efficient operations. Outbound Logistics: The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer.

Toyota motors manage their own Show rooms in different countries. Toyota motors make their product easily assessable. Area number of dealers Sindh 8 Punjab 12 Baluchistan 1 Islamabad (capital) 2 Azad Kashmir 1 Marketing and Sales:

In true customer orientated fashion, at this stage the Toyota motors prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix. and 40% market share of this company and advertising budget 30%. and no sales promotion. and this company maintain market leadership. Service: This includes all areas of service such as final checking, after-sales service, complaints handling, training and so on. Toyota value their customers. And warranty-1 year/2000 miles.

Support Activities Procurement: This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. Toyota motors will be responsible for outsourcing (components or operations that would normally be done in-house are done by other organizations), and e-Purchasing (using IT and web-based technologies to achieve procurement aims). Technology Development: Technology is an important source of competitive advantage.

Companies need to innovate to reduce costs and to protect and sustain competitive advantage. Toyota motors implemented production technology, Internet marketing activities, bend manufacturing, Customer Relationship Management (CRM), and many other technological developments Human Resource Management (HRM): Employees are an expensive and vital resource. Toyota motors manage recruitment and selection, training and development, and rewards and salary. Toyota motors consider their employees as Human Capital.

The mission and objectives of the Toyota motor is the driving force behind the HRM strategy. Toyota motors uses following techniques to retain their employees:

1. Employment
2. Selection
3. Training and development
4. Compensation
5. Maintenance

Firm Infrastructure: This activity includes and is driven by corporate or strategic planning. Toyota motors implemented Management Information System (MIS), and other mechanisms for planning and control in different departments.

Suggestions and Recommendations

• Toyota motors should use Value Coalitions for better use of their under utilized recourses.
• Toyota develops synergies among their recourses.

Toyota should use design to maximize the performance of their operations. Using the value chain approach, processes that provide direct value to the customer are modeled first. Imitative processes that support the value chain processes are modeled.

• Reduction in advance amount
• Delivery time to minimize
• Less costly vehicle with name of Toyota
• No delivery charge viewer
• No price change for undelivered vehicle
• Promotion should be started
• Test drive facilities at all deale

The objective is to determine the proper combination of a limited number of attributes which influences consumer’s mind the most and affects the buying behavior. Conjoint Analysis is done by showing the respondents a controlled set of potential products and analyze how the consumers made their preferences or how they rank the different attributes and then marketing researchers may be able to determine the values of each attributes. The values can be used by the company to develop new products, Improve old ones and generate revenue.

In his study, he stated that Filipino Passenger car owners consider attributes when deciding upon a passenger car. According to him, Flossing put more importance on price than on any other attribute. In his journal, Doctor Marvin Cruz considered interaction effect as a predictive technique in marketing research. An interaction effect is a respondent’s choice between two or more attributes in which interactions influence respondent’s choices. In his Journal, he discussed about two automobile passenger car namely: Toyota 1. 3- liter Bios and Honda 1 . 3-liter City. He cited that some consumer s may prefer to buy Toyota 1 . -liter Bios for no more than PH 539,000. 00 but some respondents may prefer to buy the Honda 1 . -liter City at a higher price than PHI,OHO. O because they view It as a more prestigious car than Toyota. The choices according to Doctor Cruz, Is Influenced by Interaction between two attributes namely price and brand. Not all attributes were considered In his study because of technical restrictions In the statistical methods used. Therefore, the study chose to determine qualitatively the attributes that may be considered important by the consumers. Data were collected from a sample of 300 randomly selected respondents.

The first 100 respondents were college students (18-24 y/o) from Atone De Dave University, UP Mindanao, University of Mindanao, Holy Cross of Dave College and Berkshire College. The next 100 respondents consisted of junior professionals (25-39 y/o) while the last remaining 100 respondents were senior professionals (40-64 y/o). In his Findings, Doctor Cruz concluded that all six attributes namely brand, price, style, feature and financing scheme contribute to the total worth or utility assigned by the mall groups of respondents. He also concluded that price significantly affects the total worth of the passenger car.

The total worth or utility of either brand (Toyota/ and) decreases as price increases. The 3 main segments ( college students. Junior 1. 3- liter Bios and Honda 1 . 3-liter City. And Lastly, that Toyota is the more preferred brand of both senior professionals and Junior professionals. On the other hand, Honda is the more preferred brand of the college students. Additional findings: There are six consumer segments that prefer Toyota than Honda while there are only three consumer segments that prefer Honda. In terms of size Toyota is preferred by around 63% of all respondents while Honda is preferred by 37% of all respondents.

In terms of sex, grouping and age, Toyota is more preferred by male college students from the University of Mindanao who are about 20 y/o, male Junior professionals around 32 y/o , male senior professionals who are about 45 y/o, male senior professionals around 46 y/o and female Junior professionals who are about 31 y/o. On the other hand Honda, is more preferred by female Junior professionals who are about 31 years old, female college students who are about 20 years old and female senior professionals who are about 43 y/o.

Thru the finding and conclusions of the study it is safe to say that consumers vary according to their value, preferences and range of other characteristics (Elli, Kettle and Sahara Moorish 1992). Not only do consumer exhibit differences from each other, but this also illustrates that if a specific marketing decision may suit a consumer it may not work out for the other. Consumer preferences are based mainly on their belief about how objects perform on their key attributes. Consumer also choose product attributes base don which would give then the best value and benefit sought.

Consumer’s preferences may also vary because of their particular experience ND the way they gather and process information. Consumers also consider price as a sacrifice. The Utilities assigned to a passenger car diminishes as price increases. Consumer are price-sensitive buyers which means they are divided by two kinds consumers who are willing to pay for the brand they like and consumer’s that will not sacrifice price for the brand they like. Dave Consumers, based on the study, are those consumers who are not willing to pay price premium for a brand they like.

Given this findings, good pricing can play a big role in maximizing number of consumers to pay for the brand they like. Honda and Toyota may have to check their pricing strategy to be able to understand the price sensitivity of their consumers and the possible trade -offs consumers are willing to make between price and product characteristics. The study also showed that passenger cars may be produced with different features that will suit each market segments (students, Junior professional and senior professionals ).

Doctor Crud’s recommendation is that using segmenting strategy for a car dealership in Dave City treat the different segments of consumers as different in their preferences for new 1 . -liter car passenger cars. He also cited that each of the brand Toyota and Honda should study further the market segment in which they cannot penetrate well and also monitor possible changes or shifts in the preferences of the penetrated market. First of all, since price is an issue raised in this Journal, I would like to raise the difference between Quality and Value(Price).

Quality and Value(Price) are attributes the company. Quality creates value for the product in the eyes of the consumers. Surprisingly, consumers are the ones who defines the value of a product as a reference by analyzing the performance of the product relative to its cost. The company now will be the one to ensure the quality of the product that will provide the consumer the performance it is looking for. Quality is important but consumers purchase a product not because it has quality but they will not buy it in the absence of quality.

My first concern for this Journal is Doctor Marvin Cruz failed to raise that quality is still an attribute that is very much considered by Filipinos/ Davison especially Private buyers. A great number of consumer in the Dave City market if to from experience, searches the web, asks friends, acquaintances and relatives which brand is more durable and which brand has a higher quality. If quality was included in the survey questionnaires I think results will be different.

Another thing to be considered which is a very integral part in choosing a car is the safety, Doctor Cruz failed to address the issue of safety in his Journal, low price without safety of the passengers inside the car is useless. For one, According to the Wall Street Journal, Toyota has an issue of recalling 6. 39 million vehicles from across the globe. Toyota found defects with seat rails, cables connected to air bags, engine starters, steering column brackets and windshield-wiper motors.

These defects are directly connected to the safety of the passengers inside the car. In March, Toyota agreed to pay a $1. 2 billion criminal penalty in a settlement with the U. S. Justice Department, after the company acknowledged having misled consumers about safety problems related to unintended acceleration of a number of its vehicles. Problems related to sudden acceleration resulted in the recall of millions of vehicles from 2009 through 2011.

However, it was on 2009 that Toyota started recalling its vehicles, noting that this journal is made on 2003 1 . 3-liter passenger cars. On the other hand Honda cars had some share of mishaps in its vehicles, according to Handsomeness. Com, transmission failure and premature brake wear among the top list when it comes to safety concerns. Lastly, in the Journal Doctor Cruz failed to raise the maintenance of both brands. The price may be cheap but you will be surprised at how much you have spent on the car’s maintenance.

I agree when Doctor Cruz raised the issue that ACH of the brands– Honda and Toyota should have a more thorough study in relation to the market segments in which they are not penetrating well, I think the reason why Honda has a much lower amount of respondents is the fact that Honda lacks marketing research and strategy. Toyota on the other hand has been in partnership with various Banks in providing in house financing for individuals and companies. Also, a reason why Toyota is winning in the market is its parts and accessories are easily accessible to Davison and is cheaper compare to Honda.

Many people confuse the Toyota Production System by thinking that it is just for the production floor. That notion is incorrect. In Toyota plants everyone is trained in the TPS. According to Seizo Okamoto, president of Toyota Manufacturing Indiana, Inc., ‘At Toyota, we believe that we create real value through production. The most important person is the production team member. But we have decided that other functions have to support production – I mean in administration, accounting, and engineering. Without fully understanding TPS, they can’t support effective production; they just create conflict.’ (Lindsay Chappell, 2005) So TPS can and should extend beyond the shop floor. But what about non-production facilities?

A good example of a service industry employing the TPS would be hospitals. The Allegheny General Hospital has trained their employees to let no problem go unsolved. By examining the way that intravenous lines are inserted they were able to reduce infections by 90% in just 90 days after instituting new procedures resulting in savings of $500,000. (Wysocki Jr., 2004) In analyzing the infections it was found that femoral intravenous lines had the highest rates of infection. The directive was made to use this site for intravenous lines only if there was no other alternative. The application of Root-Cause-Analysis is obvious. The monetary impact is quantifiable but the human factor is priceless.

Well known window and door maker Pella Corp. adopted the TPS many years ago. They recently “loaned” some of their employees to a local hospital. In a billing example a mapping process was done and it was found that billing insurers could be reduced from 14 to 11 days just by changing the process by which follow up calls were made to discharged patients. Everything can be mapped and questioned. How much inventory really needs to be in the pharmacy? (Wysocki Jr., 2004) The idea is to find the smoothest workflow. Mapping processes and ferreting out waste can reduce inventories, reduce waiting time, and prepare operating rooms faster with fewer errors. The customer (the patient) must always be the focus.

At a meal therapy program in Montana health care workers were frustrated because they only had 20 out of 45 minutes time to spend with patients administering care. Not only was this a human interest concern but the time lost in setting up for the next patient was non-billable time. By systematically studying the way time was used it was possible to reduce wasted time so that quality time could be dedicated to the patient.

The current state was mapped, root causes of problems identified and countermeasures enacted. In this example it was found that some steps of setting up were duplicated by technicians, therapists and other workers. It was also determined that “kits” could be pre-arranged to reduce some of the set-up time. The analysis was done on an “A3” report. (William Inman, 2006) An A3 report is a paper on which a full report is documented. On this one piece of paper must be the problem, the current situation, the root cause, alternative suggestions, recommended solution and cost benefit analysis. Why A3? This is the biggest size that can fit in a fax machine (11×17 inches). (Jeffrey Liker, 2004)

The service industry is actually looking to the manufacturing sector to gain insight into how the TPS can work for them. Hospitals have even used unlikely sources such as Ariens, a well known producer of lawnmowers and snow blowers, to model after. (Marybeth Matzek, 2006) An important difference in operating philosophy is how Toyota treats suppliers. A common practice of American based companies is to push cost cutting mandates to their suppliers.

At Toyota a collaborative approach is taken which they believe brings more value to the final customer than harassing the supplier just for cost savings. At Toyota it is believed that working with the supplier on methods to reduce defects and to find mutually beneficial strategies will ultimately strengthen both parties. To build this collaboration Toyota has even formed an on-site supplier park at its Texas facility capable of housing 21 various suppliers. (John Teresko, 2006)

Toyota Production System Summary

So why does the TPS system work for Toyota but not for everyone? The simplest explanation is that the TPS or similar system of continual improvement cannot be confused with the individual tools utilized and perhaps most important is that the culture of the entire company must make a permanent change. Lean or the TPS is easy to understand but it takes commitment starting with management. A master plan should be developed outlining training and the cultural change within the organization. Company goals have to be aligned with individual and team goals. A plan needs to be in place to address the fears of downsizing. (George Alukal, 2006) “Kaizen consciousness” must be on the mindset of all employees. (Making Things: The Essence and Evolution of the Toyota Production System, n.d.)

In a global economy some industries in America have reengineered themselves with specific players emerging stronger than ever before. There are examples found in the steel industry. Other industries have not managed to do so and have vanished from the manufacturing landscape of the United States. The textile industry is gone. The auto industry is currently being put to the test. (John Teresko, 2006) It seems that Toyota with their Toyota Production System will be one of the strong survivors. But true to the Toyota way “The biggest problem is thinking you are okay”. (Making Things: The Essence and Evolution of the Toyota Production System, n.d.)

What a Hybrid Is Any vehicle that combines two or more sources of power that can directly or indirectly provide propulsion is a hybrid. (How Hybrid Cars Work, n.d.) In today’s automobile society, the most typical hybrid in use is a gasoline-electric combination. A gas-powered vehicle has a fuel tank, which supplies gasoline to the engine, which turns the transmission that turns the wheels. An electric car, on the other hand, has a set of batteries that provide electricity to an electric motor that turns the transmission, which turn the wheels. The concept behind the hybrid is a compromise; it attempts to increase mileage and reduce emissions in a standard gasoline combustion engine, and make the battery of an electric car more practical while maintaining low emissions.

In most recent years there have been just two forms of gas-electric hybrids available: Parallel and Series. A parallel hybrid provides power to both the gas engine and electric motor with the capability of utilizing both sources simultaneously to turn the transmission. In a series hybrid, the gas engine turns a generator, which charges the batteries or powers the electric motor that drives the transmission. Thus, the gas engine never directly powers the vehicle. The main reason why hybrids are capable of high mileage per gallon averages is because of its partial use of an electric motor. (How Hybrid Cars Work, n.d.)

Toyota Lexus Woes: Unintended Acceleration

1.0 Background information

Toyota Motor Company is the world’s leading automobiles manufacturer. The company manufactures diverse kinds of vehicles which include subcompacts, luxury and sports vehicles, tucks, minivans, and buses. Basically, Toyota uses combustion and fusion engines as the main engine technology to run its vehicles. It boasts of a wide range of automobiles driven in all parts of the world, ranging from conventional cars to luxury brands. Precisely, some of its most popular models include the Camry, Corolla, Land Cruiser, Luxury Lexus line, and the Tundra trucks among many other models (Toyota in the World, 2010). Apart from manufacturing automobiles, Toyota also manufactures automobiles parts which it sales to its globally positioned dealers as part of its revenue maximization strategy (Brian, 2001; Morgan & Liker, 2006).

Toyota Lexus is the luxury vehicle division of Toyota Motor Corporation. Lexus that was first introduced in 1989 in the United States and now it is sold globally. It is by far the largest selling make of Toyota luxury cars. The origin of Lexus can be traced from a clandestine flagship sedan project that began in 1983 following the desire to develop a car module that would put Toyota in place of its own in the automobile industry. This ambitious idea developed into the original Lexus LS. In the ensuing years Lexus has continued to add more features to its cars making the brand more sophisticated and satisfying to the customers. Today, Lexus market has extended the boundaries of United States and Asia to other continents and since then Toyota has opened branches in other countries (Chester, 2004).

2.0 Statement of the problem

The Toyota Lexus hitches have been documented by a significant number of authors and automobile industry pundits alike. Shirouzu (2010) documents that since the problem was first detected some three ago over six million cars have been recalled all over the world. [See appendices 1for a structured graph] Kitamura (2010) confirms that Toyota Motor Corporation has received numerous claims and complaints over the last three to four years from its customers about its luxury Lexus brand. However, this Lexus problem seems to have started some time back. For instance, one Toyota customer, Peter Boddaert driving a black Lexus LS400 was taken by a fright when suddenly the car raced forward and rammed the back of a van as he was switching lanes. Apparently, this was the third time his car had accelerated without a warning, at a time the Lexus woes began gained substantial attention in the form of claims made to authorities (Kitamura, 2010). Based on such claims from customers, it has come to light that drivers experience unintended, unnecessary, and uncontrollable acceleration with their Lexus automobiles.

In reference to a survey carried out by the National Highway Traffic Safety Administration’s (NHTSA), Erin (2010) points out that the first case of the unintended acceleration in Lexus cars was first booked in 2004, with similar reports continuing to trickle in up to date. Acting in desperation, Toyota expressed speculation that this problem may have been caused by a foreign substance that may have gained entry into the engine during manufacturing of the valve springs. Such foreign bodies then would act as impediments to the efficient functioning of the springs by either weakening them or even causing them to break. This problem is made worse when the accelerator comes into conduct with the floor mats then it gets stuck under the rubber of these mats.

The bottom line of this technical hitch is that Lexus rivals in the luxury category of automobiles such as BMW and Mercedes-Benz have gained a great opportunity to strengthen their market grip. But the most agonizing thing is that the image of the top automobile manufacturer is blurring and sales are reducing and many customers are switching to other manufacturers where their safety will be guaranteed. From a slightly different perspective the Lexus hitches has threatened to split apart the precariously co-existing yet efficient Toyota management team, with Akio Toyoda, the grandson of the founder who also is the Toyota Motors Corporation President initiating a personal war of words with the Vice Chairman, Katsuaki Watanabe following claims that the non-family management team is not fully committed to fulfilling customer concerns but only bent to making huge profits at the expense of the far reaching quality and efficiency goals that forms parts of Toyota  mission and vision (Shirouzu, 2010, p. 1). Such wars are likely to exacerbate the Lexus hitches issue even further if not urgently and amicably solved.

3.0 General Aim of the Intended Research

To crack the technical puzzle surrounding the unintended acceleration in Toyota Lexus cars as well as to establish how such problem is linked to the simmering management squabbles, with the view of advancing a practically efficient solution(s) to the two established problems.

4.0 Scope of the Intended Research

The proposed research study will tackle the woes facing Toyota Motors Corporation with special attention given to the recent technical hitches engulfing its Lexus brand. Specifically, the study will narrow down on the recently established problem of unintended acceleration among the Lexus luxury cars. Significant attention will also be given to the management squabbles engulfing the company, which pits the non-family management team represented by Mr. Wanatabe, the current Vice Chairman and the Toyoda family represented by Mr. Akio, the current President.

5.0 Specific Objectives of the Study

To find out the problems facing Toyota Lexus now days and settle on the major problem.
To determine the causes of the identified problem.
To find out how Toyota Motor Corporation is handling the identified problem.
To find out whether the problem may have been a form of technical sabotage from a section of the technical management team.
To establish the customers’ reactions to the problem and how Toyota is handling the reactions
To establish some of the remedies that can help solve the problem.
To find out how Toyota rivals in the automobiles industry such as Ford, Volkswagen and others are faring on in the light of these woes.
6.0 Situation Analysis

Most Lexus drivers have claimed that Toyota has been underestimating this problem evidenced from repeated dismissing claims from drivers worried that something was wrong with their vehicles, even in the face of numerous acceleration complaints (Kageyama, 2010).

In the process to rectify this problem Toyota has adopted several measures among them recalling some 8.5 million vehicles to address issues related to unintended acceleration, offering fixes to floor mats and gas pedals. Another measure has been the altering the design of the valve spring and making it thicker for new Lexus that are in the manufacturer line. For instance, in August 2008 Toyota changed that spring part, making it thicker, to prevent the problem (Associated Press, 2010).

On a recent investigation conducted by Toyota Motor Corporation on July 2010, it was found that about 2,000 cases of unintended acceleration found no problem with its electronic throttle system and that driver error was to blame in some cases. For instance, the company said that some drivers who said that their Lexus surged out of control might have pushed the accelerator when they meant to brake occasioning the “unintended acceleration” (Associated Press, 2010). Acting on those findings, Toyota concluded that “pedal misapplication” was the cause of unwanted speeding. This finding seems to have cleared some part of the big puzzle hence helping the company to concentrate on other areas of the mystery.

7.0 Proposed Data Resources

The proposed study will rely on both primary and secondary data sources to gather information that will advice its findings. The secondary data sources for this research will comprise of documentary sources like industrial journals and manuals with great emphasis given to journals in the automobile sector. Previous research studies on this particular Toyota problem will form the literature review. Newspaper articles on the Lexus problem and business magazines will form another secondary data resource. Other secondary sources will include safety research studies that are basically relied by attorneys and plaintiffs as a sources of evidential materials on safety matters in civil lawsuits, compiled the acceleration data using consumer complaints, media accounts; court documents will comprise the other secondary sources.

Primary data will mainly be obtained from questionnaires and interviews to Lexus car owners and dealers and if possible a few Toyota Motor Corporation top executives will also form part of the study demographic. The data from the proposed resources will then be interpreted and analyzed and later be used to draw conclusions and propose solutions to the problem.

8.0 Proposed Modeling and Conceptual Tools

The Lexus problem which has resulted to losses to Toyota Motor Corporation could have been easily controlled if the company had taken a considerable time to test its automobile prior to releasing it to the market. May (2006 p. 10) suggests that prior Lexus trial could have allowed time for repair and replacement of any defective part that may be causing the unwanted acceleration.

The step by the company to instruct owners to remove the driver’s floor mat since the accelerator pedal can get stuck by being trapped by the floor mat can’t be relied upon since the company isn’t fully convinced what the really problem is.

The company should recall all its cars that have this acceleration problem and those likely to redevelop such kind of a problem and start a new tested phase of manufacturing that is perfect so as to stand a better chance with the rivals. A close follow-up of its cars should be constant so that one problem like this unintended acceleration doesn’t affect so many customers at the same time.

10.0 Proposed Findings

Basing on the snap analysis of the few visited literature sources provisional findings can be provided. For instance, Mahler (2004 p. 12) justifies the move by Toyota to recall its faulty Lexus luxury range of automobiles as a great step towards rebuilding and restoring its reputation given the damage the acceleration hitches caused. Recalling all the faulty cars sends a clear message to its bulging global clientele that it is still capable of handling the situation, as opposed to a situation where it would have just advised customers with faulty cars to take them to designated garages.

Even so, this is just a short-term remedy to the critical “unsolicited acceleration” technical hitch. As such, the company needs to go some steps forward and establish the real cause of the problem so as to rekindle the dying confidence and trust from its global customers particularly those in the United States. Though Toyota has highly reliable team of engineers, who can crack the automatic acceleration puzzle, it will do no harm if the company approaches other industry players making almost similar model of cars with view learning how they have managed to handle similar problems if any. In fact, given the technical nature of the problem chances are that other automobile companies may have experienced similar problems at one time though in negligible levels.

The customer requirements should also come first. A thorough market research will enable production of an optimum product, that is, not too complicated for the customer but that which meets his prestige profile. Toyota Motor Corporation has been on the verge in boosting of its high degree of customer satisfaction but criticisms indicate that the top automobile manufacturer has been lagging in its response to quality lapses from its vehicles.

There is no doubt that at the moment Toyota needs a well crafted strategy that will help rekindle the lost customer confidence. This is a tricky situation the company has found itself in, as such it also needs to come up with both short and long-term solution to handle the situation. It would therefore be prudent for the company to consult or even engage capable personnel even if it will mean relinquishing some of the prominent portfolios held by the Toyoda family members who may be posing an impediment to strategy formulation and implementation.

References

Brian, L 2001, Lexus: The Challenge to Create the Finest Automobile, Dorchester, Veloce Publishing.

Chester, D 2004, Lexus: The Relentless Pursuit, Hoboken, Jon Wiley & Sons.

Erin, A  February 25, 2010 ‘Complaints on Toyota went for naught’, The Boston Globe, accessed on 17 July 2010, http://www.boston.com/business/articles/2010/02/25/a_lexus_owners_frustrating_journey_through_complaint_process.htm /

Kageyama Y, 2010 Toyota knew about Lexus problem 2 years ago, Associated Press, July 6 p. 1 accessed on 17th  July 2010, http://news.yahoo.com/business/

Kitamura M. 2010 ‘Toyota Received Complaints about Lexus Defect in 2007’ Bloomberg Business Week, July 06, p. 1 accessed on 17 July 2010, http://www.boston.com/toyota-received-complaints-about-lexus-defect-in-2007.html/

Mahler, J 2004, The Lexus Story: The Behind the Scenes Story of Automotive Luxury Brand in America, New York: Melcher Media.

May, M 2006, The Elegant Solution: Toyota’s Formula for Mastering Innovation. New York, Free Press.

Morgan, J ; Liker, K. 2006, The Toyota Product Development System: Integrating People, Process and Technology. New York, Productive Press.

Shirouzu, N April 13, 2010, ‘Inside Toyota, Executives Trade Blame over Debacle’, The Wall Street Journal. Accessed on 19 July 2010, from: http://online.wsj.com/article/SB10001424052702303395904575157452266613406.html/

The Toyota in the World 2010. Retrieved July 21, 2010, from: http://www2.toyota.co.jp/en/about_toyota/in_the_world/pdf2010/databook_en_2010.pdf/ / Toyota In The World 2010/

;

;

;

;

;

;

;

;

;

;

;

;

;

;

;

;

;

;

;

;

Appendices

Recalls Trends as at April, 2010.
Source: (Shirouzu, April 13, 2010, p. 2of 4).