Corporate History and Background 3
Corporate Business Strategy 4
Corporate Structure 4
Corporate Stakeholders 6
Corporate Identity, Image, and Reputation 6
Internal Communication Strategies 7
Corporate Social Responsibilities Strategies 8
Corporate Advertising Strategies 9
Media Relations Strategies 10
Investor Relations Strategies 11
Government Relations Strategies 11
Crisis Communication Strategies 12
Recommendations 13
References 14
Corporate History and Background
The history of Toyota can be dated back to 1924 when the Toyoda Model G Automatic Loom was invented by Sakichi Toyoda. In 1933, Sakichi Toyoda’s son Kiichiro Toyoda started the production of Toyota automobiles and this venture was established as a division of Toyoda Automatic Loom Works. The founder Kiichiro Toyoda visited Europe and U.S in 1929 to know more about automobile manufacturing and spent a fair amount of time in the research of gasoline-powered engines in 1930. Toyoda’s efforts to manufacture automobiles were well supported by the Japanese government, which was badly in need of domestic vehicles due to war with China. The year 1934 was a milestone in the corporate history of Toyota as the company developed its first ‘Type A Engine’ that was used in the Model A1 passenger car and the G1 truck (‘75 Years of Toyota’). The organization began to sell its small-sized vehicles under the name ‘Toyopet’ in September 1947. In response to the high import tariffs levied on certain vehicles by the U.S government, Toyota started building manufacturing plants in U.S in the early 1980s. The year 1982 witnessed the merger of Toyota Motor Company and Toyota Motor Sales to form the Toyota Motor Corporation. In 1984, the company formed a joint venture with General Motors known as the New United Motor Manufacturing, Inc and launched its luxury division Lexus in 1989 (‘Toyota: The rise of global corporation’). In 1990s, the organization strengthened its presence across Europe by setting up Toyota Motor Europe Marketing and Engineering. The degree of competitive rivalry increased with the turn of the 21st century because more automobile manufacturers expanded their operations worldwide gaining motivation from the concept of internationalization. A number of recent massive product recalls (in 2009, 2012 & 2014) have adversely impacted the business of Toyota.
Corporate Business Strategy
Toyota’s Global vision says that “Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people. Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile. We will meet our challenging goals by engaging the talent and passion of people, who believe there is always a better way” (Toyota Global Vision). In addition to this comprehensive global vision statement, the company has set separate mission and vision statements for different countries in which it has a presence. For instance, in United States, Toyota’s mission is “to attract and attain customers with high-valued products and services and the most satisfying ownership experience in America” (Toyota: mission). The firm’s vision statement for the U.S says that “we deliver outstanding automotive products and services to our customers, and enrich our community, partners and environment” (Christopher, 2012, p.57).The four core values of the company are ‘customer first, respect for people, international focus, and continuous improvement and innovation’ (Toyota: The Company). The company has revised its goals and objectives from time to time so as to meet ever changing needs of the automobile sector efficiently. Recently, the company revised its objectives in 23rd June 2009 and currently the company has 19 objectives, which are listed in official Toyota Global Website (Toyota: Business Objectives).The main goal of the Toyota is to remain competitive in the automobile industry through producing high-quality cars powered by green-energy technologies.
Corporate Structure
Interestingly, Toyota wants to maintain its global organizational hierarchy in spite of its major reorganization process in 2013. However, it is important to note that the firm’s current corporate structure offers higher decision making power to regional heads and business unit heads. In short, following the reorganization process taken place in 2013, the company’s decision making processes became less centralized. Despite these changes, Toyota’s all business unit heads are still required to report to its global headquarters in Japan. The Toyota’s organizational chart is illustrated in Fig.1
Corporate Stakeholders
Toyota has a wide range of corporate stakeholder groups including shareholders, suppliers, customers, employees, host communities, governments, and many other parties. Undoubtedly, shareholders are the major stakeholders of Toyota as they help the company finance its operations and to raise funds in times of contingencies. The company has a huge and potential group of shareholders who stand by the company even in times of severe market downturns because Toyota is the world’s leading automobile manufacturer with a successful corporate history of over 80 years. This potential group of shareholders assists the company to meet its working capital needs efficiently and effectively. In addition, the strength of potential shareholders worldwide is beneficial for the company to increase the number of its subsidiaries and hence to strengthen its global presence. In addition, the company has numerous potential suppliers that are capable of meeting the material needs of Toyota uninterruptedly, benefiting the company to ensure smooth flow of its supply chain operations. Similarly, the company has the strength of an insanely loyal customer base that is eagerly waiting for Toyota’s new vehicle launches. Market surveys indicate that Toyota has a huge number of brand-conscious customers who would like to use Toyota cars only. In addition, the company maintains a potential workforce of over 346,000 people worldwide that strives to enhance the productivity of the organization. Finally, most of the national governments try to keep in good relationship with Toyota considering the firm’s massive potential to support domestic production and to improve unemployment rate.
Corporate Identity, Image, and Reputation
Being the part of the Toyota Group, the Toyota Motor Corporation is one of the largest companies in the world in terms of production, revenues, and market capitalization. In 2012, Toyota was ranked the largest automobile manufacturing company ahead of General Motors and Volkswagen Group. Hence, the company has a well-established corporate identity that makes Toyota brands recognizable across the globe. Toyota manufactures and markets vehicles under five major brands such as Toyota, Hino, Lexus, Ranz, and Daihatsu. All these five brands are popular and well-recognized worldwide. With qualities like reliability and safety integrated into its brands, Toyota has been a globally-leading auto manufacturer with best public image. Toyota is recognized to be a high-quality automobile manufacturer that is appealable to different classes of people in terms of affordability. This is the reason why Toyota always appear somewhere at the top of all consumer perception surveys. With the massive investments in green and safe technologies, Toyota management is always committed to protect environment and to improve the safety of people. Hence, Toyota enjoys good corporate reputation traditionally. However, some major product recalls in 2009, 2012 and 2014 have questioned the quality and safety of Toyota vehicles and these incidents significantly impacted the firm’s corporate reputation. The frequent product recalls caused the company to lose consumer trust in the brand to some extent.
Internal Communication Strategies
Identifying the significance of effective employee communication, the Toyota management has developed comprehensive internal communication channels to facilitate upward and downward flow of communication within the organization. The company promotes face to face meeting, newsletters, notice boards, memos, email, telephone, text messages, and instant messaging to communicate with employees and to foster inter-employees/inter-departmental communication. The Toyota management strongly believes that establishment of these internal communication channels can facilitate better manager-employee communication, which in turn would contribute to enhanced workforce performance and productivity. Organizational analysts indicate that Toyota invests in the development of unique modes of communication and this impeccable internal communication approach has benefited the company to be competitive throughout its corporate history. It seems that the unique internal communication strategies also aided the company to improve the quality of its cars constantly. Toyota’s successful use of manufacturing concepts such as lean manufacturing and just in time production could be attributed to comprehensive internal communication channels established in its organizational environment. The firm’s internal communication strategies focus specifically on crisis management and therefore the company could deal successfully with its three major product recalls in the recent past. One of the significant features of Toyota’s internal communication channels is that they ensure greater involvement of both higher level and lower level employees, leading to the generation of innovative ideas, products, and services.
Corporate Social Responsibilities Strategies
It is identified that the Toyota gives specific emphasis to corporate social responsibility activities as a way to demonstrate its commitment to environment and people. The company has been taking efforts to protect environment and to promote social welfare while at the same time enhancing sales and profitability. Since its establishment, the organization has been striving to contribute significantly to the achievement of sustainable development through the manufacture of innovative and quality products. The company is well aware of the fact that its operations will have more adverse impacts on the society and environment as the business grows, and therefore, the Toyota management listens carefully to its customers and the local community to minimize negative impacts of its operations. The Guiding Principles at Toyota, adopted in 1992 and revised in 1997, interprets the CSR policy of the organization. The company is committed to achieve harmonious and sustainable development of the region in which it has a business presence; and this is the key concept of Toyota’s CSR strategy (Toyota: CSR Policy). The Toyota management always tries to ensure that its operations are in well compliance with local, national, and international laws and regulation and that it conducts business with utmost honesty and integrity (Toyota: CSR Policy). The firm’s top management is of the belief the objective of sustainable development could be achieved only if there is active involvement of key stakeholders such customers, business partners, employees, and shareholders (Toyota: CSR Policy). Toyota aims to be a socially responsible company that is trusted and supported by the society. For this, the company makes sure that its employees completely understand the firm’s CSR policy and effectively acts on the policy.
Corporate Advertising Strategies
In line with the trend in the global automobile industry, Toyota has increased its market budget notably since the global financial crisis 2008-09. However, it is important to see that Toyota does not have a single marketing strategy as the company adopts different marketing strategies in accordance with the requirements of different geographic locations. It is identified that the company mainly practices the differentiation strategy with intent to differentiate its products from those of competitors and to attract customers. When it comes to advertising, it seems that print and media advertising is a major promotion technique being used by the Toyota management. The company makes effective use of advertising channels such as newspaper ads, billboards, posters, and TV and radio ads to influence its target audience. Statistical data indicate that Toyota spent $US 2.09 billion on advertising in United States alone in 2014 and the lion’s part of this amount, $US 959 million, was invested in the production and broadcast of TV ads (Dudovskiy, 2016). The company’s viral marketing strategy has greatly helped the company to create brand awareness and to enhance the sale of its specific products (Business Insider). To illustrate, Toyota’s viral marketing campaigns like ‘Jungle Wakudoki’ and ‘Beach Wakudoki’ notably benefited the organization to gain wider market coverage (Business Insider). Finally, the company employs the infinite scope of social networking websites such as Facebook, Twitter, and You Tube for advertising its automobiles.
Media Relations Strategies
While analyzing the media relations strategies of Toyota, it seems that the company is yet to develop a strong media relations policy. As discussed already, the three major product recalls in the recent past have horribly affected Toyota’s brand reputation and the company is yet to recover from this crisis due to its poor media relations. Though the company has taken a series of measures to assure its product quality and safety following those automobile recalls, the Toyota management failed to communicate these efforts to its customers and the general public. According to a panel of four experts set up by Toyota to comment on its quality assurance framework, effective internal and external communication is a great way to address customer concerns when there are serious quality issues (Press Trust of India). The report indicated that maintaining better relationship with the mass media can benefit the company to respond to quality issues effectively and to limit the damage of its corporate reputation (Press Trust of India).
Investor Relations Strategies
Realizing the inevitable importance of investors in its business, the Toyota management has developed comprehensive investor relations strategies that would attract and maintain potential investors. The company makes its financial data, financial highlights, and financial performance available to investor through its official website. Hence, a person from any part of the globe is able to access the company’s annual financial reports and to analyze them at any time. This easy availability of financial reports for consecutive periods can enable investors to compare the firm’s current performance against past results using some key financial indicators. It is identified that the Toyota management extremely values the trust of its investors and shareholders who finance the operations of the company. The company strongly thinks that continued support from the part of investors helps the company keep its promise to enrich the lives of people through producing better cars and contributing to the concept of sustainable development. Toyota fosters greater level of investor involvement in business planning and decision making as the firm’s top management believes that investors have a crucial role to play in accomplishing the long-term goals of the business. In addition, the company gives specific emphasis to corporate communication so as to keep investors informed of recent developments in Toyota’s business environment. In short, Toyota is always committed to create value for its investors and to keep them interested in the company in the long-term.
Government Relations Strategies
Regardless of its nature and size, every business enterprise needs the support of local and national governments to conduct its market operations smoothly and uninterruptedly. This government support is more essential in case of multinational corporations like Toyota that has operations in most of the countries worldwide. Recognizing the inevitability of strong government support, the Toyota management has been always committed to comply with laws and regulations set by local/national governments. In addition, the company offers a large number of job opportunities to local people thus helping governments to improve their unemployment rate, which is identified to be a key indicator determining economic development. When the company supports government’s efforts to create more job opportunities in the country, the government in turn may be ready to cut tariff rates imposed on the business. Therefore, it appears that promoting community welfare is an integral part of Toyota’s government relations strategies. The company jointly operates with different local/national governments worldwide to alleviate property, to promote child education, and to enhance community health.
Crisis Communication Strategies
Considering the huge size and market potential of the company, one can say that the firm’s crisis communication strategies are very poor. Ineffective crisis communication caused the company to suffer severe reputation damage during the times of recent product recalls. To illustrate, when the quality issue of unintended acceleration was first reported to the company, the Toyota management was absolutely confused about how to handle the situation. Instead of investigating into the issue deeper, Toyota representatives reacted to the customer complaints differently and confused customers by suggesting different causes. Toyota did not attempt to reassure the target market and this uncertain situation caused owners to fear for their safety and prospective buyers switched their demand to alternative brands. Market analysts indicate that poor crisis communication strategies adopted by Toyota representatives ultimately ended up in “a series of costly recalls, lawsuits, and lost business – causing Toyota and their dealership network to incur further losses from hefty discounts and implementing the recalls” (Kalb, 2012).
Recommendations
As noted already, it is recommendable for the company to improve its relationship with the mass media so as to enhance its responsiveness and effectiveness in handling crisis scenarios such as product recalls. In addition, the company should develop more effective crisis communication strategies to minimize the impacts that different crisis scenarios can have on the business. First of all, there should be consensus from the part of company representatives while responding to a crisis situation to avoid uncertainty and ambiguity. It is advisable for the Toyota management not to compromise its quality advantage for increasing the market share of the business. Finally, the company is suggested to open more production plants in fast emerging counties like China, India, and Brazil where production cost is relatively low.
References
Business Insider. (2014). Toyota’s Got A Bizarre New Ad Campaign And It’s Going Viral. Retrieved from http://www.businessinsider.co.id/toyotas-got-bizarre-new-ad-campaign-going-viral/
Christopher, E. International Management: Explorations Across Culture. Kogan Page Publishers, 2012.
Dudovskiy, J. (2016). Toyota Marketing Strategy. Research Methodology. Retrieved from http://research-methodology.net/toyota-marketing-strategy/
Kalb, I. (2012). How Toyota's Crisis Management Failures Added To The Billion-Dollar Settlement. Business Insider. Retrieved from http://www.businessinsider.com/toyota-paying-billions-because-of-marketing-failures-2012-12?IR=T
Press Trust of India. Toyota asked to improve worldwide media relations. Business Standard. Retrieved from http://www.business-standard.com/article/companies/toyota-asked-to-improve-worldwide-media-relations-110071300200_1.html
Toyota Global Vision. Official website. http://www.toyota-global.com/company/vision_philosophy/toyota_global_vision_2020.html
Toyota: The Company. Retrieved from http://www.toyota.com.au/toyota/company/vision-and-philosophy
Toyota: Business Objectives. Retrieved from http://www.toyota-global.com/company/history_of_toyota/75years/data/company_information/management_and_finances/management/business_objectives.html
Toyota: CSR Policy. Retrieved from http://www.toyota-global.com/sustainability/csr/csr/policy.html
Toyota Motor Sales Co., Ltd. Organizational chart. July 1950: Toyota Motor Sales Co., Ltd. Established. Retrieved from http://www.toyota-global.com/company/history_of_toyota/75years/data/company_information/management_and_finances/management/organizational/organizational_changes02.html
Toyota: The rise of global corporation. Retrieved from http://faculty.haas.berkeley.edu/brchen/Toyota_Rise.pdf
75 Years of Toyota. Retrieved from http://www.toyota-global.com/company/history_of_toyota/75years/text/taking_on_the_automotive_business/chapter2/section2/item3.html
