Case study—Toyota-internal environment Essay Example

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Саsе Study—Тоyоtа-Intеrnаl Еnvirоnmеnt

Toyota Resources

Organizational resources are defined as the assets both tangible and intangible that allow for increased organizational performance and market success. In this case, the organizational resources can be classified as either tangible or intangible. On one hand, tangible resources are the physical resources such as infrastructure and production equipments. On the other hand, intangible resources are the organizational key resource services such as human resource. The Toyota Company has a range of resources both tangible and intangible. On one hand, the organization has strength in its increased sustainable production and distribution system that allows for the production of ‘green cars’. These brands such as the hybrid brand are environmental friendly as they have reduced carbon emission and are efficient in fuel consumption. Consequently, this has allowed the organisation develop its current intangible asset on a strong brand reputation (Karjalainen, 2007). Moreover, the company has established and developed a strong human resource base that provides customer care services and the competitive after sales services in the selected Toyota dealership outlets across the globe. In addition, the organisation despite the argument developed by Schermerhorn (2010) that evidenced that in the financial years 2009-2010, the company recalled 9 million vehicles, experiences an increased financial performance as evidenced by its increasing profitability rates as well as growth rates expansion over the last five years as evidenced in the graphs below.

case study--Toyota-internal environmentck Fig1.0 Toyota Stocks Performance graph

case study--Toyota-internal environment 1

Fig 2.0 Toyota Income Statement between March 2011 and March 2013

case study--Toyota-internal environment 2

Fig 3.0 Toyota Company Gross Profit Scale

Core Competency

An organizational core competency represents an organizations market advantage over its competitors. Liker and Hoseus (2008) stated that the organization has established itself as highly innovative in its products designs as well as the production process. In this regard, the organization is registered as among the first organizations in the automotive industry to have implemented total quality management systems and the Kaizen production techniques. The adoption of these approaches enabled the organization increase operational efficiency as well as product quality. Consequently, it supplied the market with quality products at reduced prices allowing for its increased expansion. Thus, this has enabled Toyota retain its tag and market competitiveness as a manufacturer of innovative and quality products.

Toyota Capabilities

Organisational capabilities are defined by the presence of expansion potential both in the present and in the future. A market changes evaluation reveals an increased opportunity for the exploitation of the organizations potential and capabilities as well as presenting new avenues through which the organization can increase its market core competencies as well as financial gains. Currently, as already established, the company has a brand reputation valued at $30 billion and has overall sales in excess of 1 million hybrid vehicles in 2012 (Ireland, Hoskisson & Hitt, 2008). Moreover, the increasing fuel prices would enhance increasing such sales volumes and revenues. This forms its first capability potential in the future. This is presented by the presence of an increased fuel rates changes in the market. Increased fuel prices in the market imply that the market will seek out for cars with fuel consumption efficiency. Therefore, this implies that Toyota will increase its Hybrid models sales considerably increasing its financial gains.

The second organisational capability is increasing market competitiveness through increased adoption of the sustainable production approach In this case, customers are increasingly shifting into products with minimal harm to the environment. Consequently, this shift is bound to increase the organization’s core competency in green cars production as it is currently ranked among the sustainable production conformant organizations in the industry (Manna, Marco, Khalil & Meier, 2011). Increased sales of the hybrid models and the subsequent brand reputation increase will enhance increased organizational profitability in the long-run.

Objectives and Goals

The global economy is significantly evolving with changing market needs and structures. In this case, the Toyota Company has developed objectives and strategies to allow for strategic performance and improvements. One among them is off shoring services to reduce on eminent losses.The organization faces the risk of reducing profits. A majority of the organizational earnings emanate from foreign markets that the trade with foreign currencies latter exchanged for the Japanese Yen. Therefore, as evidence by an economic analysis by Carbaugh (2009), the Japanese Yen is appreciating. An appreciating Japanese Yen implies reduced profits for the organization in the future. Consequently, this is bound to reduce the organizational capability to increased capital and revenues access for expansion and investments. Therefore, the organisation seeks to diversify its operations in the market to mitigate against the appreciating Yen.

The organisation has developed an objective towards sustainable production to allow for increased conformance to emission regulations. Despite the increased opportunities presented by the global market changes, the organization faces a series of threats for the same changes. On one hand, the organization faces increased emission regulations. The United Nations through its environmental agency as well as the Japanese government has instituted increased regulations against carbon emissions both at production and upon utilization of the manufactured vehicles. In this case, the changes imply that the organization has to acquire increased efficient production equipments as well as manufacture increasingly efficient engines that clean up the emissions to reduce carbon emission amounts (Yi, Pai & Liu, 2011). As such, this requires increased investments that subsequently reduce on the overall organizational profitability and return to shareholders. Therefore, the organisation seeks to develop proactive measures to ensure profit margins stability in the long run to enhance shareholders value creation (Brown, 2010)..

Value Chain Analysis

On evaluating the Toyota Company internal analysis, this report adopts the value chain analysis. In this case, the report focus on the primary activities namely the inbound logistics, process, outbound logistics, sales and marketing, and services (Schmitz, 2005). In this case, the report reviews the organizational resources, capabilities, and strategies in regard to their application in the diverse chains.

Inbound Logistics

The Toyota Company has efficient inbound logistics systems. In this case, the systems incorporate the processes of acquiring inputs form the suppliers and methods of receiving and storing the inputs awaiting production. Majorly, the organization acquires a majority of its raw materials from the Japanese market. Consequently, the organization has initiated a supply chain management system through which it has established working partnerships with the Japanese market. Consequently, this has considerably enabled the organization applies its Just in time production strategy. In this regard, through the established partnerships, the organization has reduced on its stocking costs and is strategically moving towards a stock less strategy implementation through the JIT practice application (Towill, 2010).

Toyota core organizational responsibilities are in the manufacturing vehicles both commercial and private. With the increased market competition, the organization has established increased market competitiveness through the adoption of total quality management systems. In this case, the organization has increasingly invested in its human resource expertise through employee development programs as well as production equipments. Moreover, David (2006) in a study on the organizational applied strategies established that the organization applies the Jidoka strategy. This is one among the many strategies applied under the Toyota production system. Through this system, product defects are detected at respective stages. As such, a defective product on one stage cannot pass onto the next stage prior to the defect correction. Consequently this has considerably reduced the organizational recall rates on produced vehicles over the last two years. Therefore, this presents the organization with the ability to build and develop its brand reputation as well as earning increased revenues.

Outbound Logistics

The outbound logistics incorporate the storing and distribution of manufactured products in the market. In this case, Toyota adopts two diverse distribution methods. On one hand, the organization uses the direct distribution channels (Koren, 2005). In this case, the organization has opened up the Toyota outlets in the majority of its markets. As such, the organization reaches out to its customer base directly. On the other hand, the organization has established franchisee enterprises. In this case, through a loyalty fee payment, the organization utilizes their business models and distribution channels to reach out to its competitors. Consequently, as Cortez and Penacerrada (2010) argue, this has offered the organization increased distributions reach as well as market competitiveness in the industry.

Marketing and Sales

An organizational marketing and sales network determines the overall organizational spread in the industry. In this case, Sadler and Craig (2003) state that a marketing network allows organizations to spread and enhance their overall influence in the market. As such, the Toyota Company is aware of this competitive edge and utilizes its indirect distribution channel and the show room as well as trade exhibitions to market its products. In this case, the Toyota Company has been a frequent participator and facilitator of trade exhibition especially in Japan to showcase and display its various developed design models that are in excess of 92 models (Diehlmann & Häcker, 2013). On the other hand, in its selling strategy, the organization uses the low pricing model in its analysis. As such, the organization, through its low production processes, has increasingly offered quality standard products at reduced prices. Consequently, this has offered the organization increased market competitiveness by ousting competitors such as Honda and Nissan who charge considerably higher prices on their products.


The service activities represent the last activities under the primary value chain analysis. Customer care services quality enhances and facilitates organizational success in the market. In this case, quality services in the market represent increased market efficiency and increased success chances. A review of the Toyota Company services reveals that the organization has considerably increased customer services (Ichijo & Kohlbacher, 2008). As such, the organization has increased after sales services such as repairs and spare parts provision to its customers. In this case, the services are offered through the numerous available Toyota outlets across the market.


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Carbaugh, R. J. (2009). International economics. Mason, Ohio: South-Western Cengage Learning.

Cortez, M. A. A., & Penacerrada, N. T. (2010). Is It Beneficial To Incur Environmental Cost? A Case Study of Toyota Motors Corporation, Japan. Journal of International Business Research, 9, 113-140.

David, O. W. (2006). Toyota-style management drives Virginia mason. Physician Executive, 32(1), 12-7.

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Yi, P., Pai, C., & Liu, J. (2011). Isolation and characterization of a bacillus licheniformis strain capable of degrading zearalenone. World Journal of Microbiology and Biotechnology, 27(5), 1035-1043.