Management Science: Toyota Case Study
Toyota has developed into a renowned vehicle manufacturer in the last century attributed to the adoption of efficient production processes that form their basis on continuous innovation. Increased global growth of the brand remains attributed to the integration of new manufacturing plants globally, which has enhanced access to the company vehicles for the majority of the world's population. The need for the provision of quality has developed into a vital aspect guiding the production and operational processes adopted within the company necessary in enhancing global expansion (Arsenault & Castellas, 2008).
The global expansion of business processes remains crucial in ensuring business survival in the long-run. The penetration of a firm’s products to the world market influences the level of growth and innovation of the firm due to the high degree of demand and the need for the continuous provision of quality products. The global expansion involves the development of business manufacturing processes across varied global locations considered instrumental in capturing the new markets through ease of access to company products (Giesen et al. 2007). Additionally, increased global expansion provides the majority of firms with advantages developing from economies of scale through the adoption of low-cost and efficient production processes.
Toyota has developed a concrete global growth strategy that recognizes the need for global growth but places emphasis on the introduction of low-risk growth processes. The approach adopted remains vital in reducing potential risks attributed to growth present in the environment. The company recognizes the need for the integration of additional plants across varied global locations, which remains crucial in capitalizing on the economies of scale attributed to the production processes. The study seeks to integrate an analysis of the factors that Toyota should consider in the adoption of the global strategy considered vital in influencing effective global growth.
Overseas production
The approval of production activities in foreign markets specifically developing countries provides the company with an opportunity to capitalize on the economies of trade. For instance, the production costs incurred in the U.S. plants together with the existent regulating policies increase the cost of production, which ultimately enhances the cost of the vehicles purchased. The adoption of manufacturing processes in expensive locations leads to the provision of high product prices that may result in loss of customers attributed to the high level of competition in the global markets (Lou, 2007).
The integration of overseas production influences a reduction in the costs attached to raw materials, labor and regulatory processes, leading to reduced overheads and increased profits. The existence of low production costs leads to the provision of favorable prices thus maintaining the firm’s competitive capacity within the local and global markets (Tempel & Walgenbach, 2007). For instance, the integration of production processes in Mexico would lead to a drastic reduction in operational cost thus reducing the price and increasing the company’s revenue.
Overseas production provides a new avenue for operations and innovation as the new environment exposes the business to new aspects, which remain unique to the country (Tempel & Walgenbach, 2007). The unique aspects may remain crucial in reduction of the operational costs incurred leading to increased profits. For instance, the incorporation of a manufacturing plant in Mexico will remain crucial to the company as the location provides ease of access to resources. Ease of access leads to a reduction in the cost of production attributed to transportation and high resource costs (Luo, 2007). Therefore, the reduction in operational costs leads to a reduction in the sale price that remains vital in market penetration and the development of a larger market base for company products (Tempel & Walgenbach, 2007). The establishment of the plant in Mexico will provide Toyota with a competitive advantage through the provision of higher quantity at reduced prices to the North and South American markets.
Environmental Sustainability
The need for environmental sustainability develops into a crucial aspect of the global environment due to the existence of policies geared towards regulating the level of carbon emissions and influencing the safeguarding of the environment in the adoption of the firm’s manufacturing processes (Luo, 2007). Toyota has remained actively involved in the introduction of sustainable manufacturing processes, which develop into a vital component influencing the growth of the company’s market share and competitive capacity in the global environment.
Increased involvement in sustainable production and corporate social responsibility initiatives has remained instrumental in influencing overall business growth in the market. The adoption of operational processes geared towards controlling business efficiency remains critical in limiting the level of carbon emissions and consequently affecting environmental sustainability.
Operational Costs
The goal of any business is to develop the profit capacity through a reduction in the operational costs and consequent increase in profits that facilitate continuous growth. The operational costs may be reduced through the integration of the company business processes across diverse global locations that provide numerous operating benefits including affordable resources, developed infrastructure, and favorable operational policies (Luo, 2007). The incorporation of operations in a region that provides the highlighted benefits remains crucial in influencing overall business growth through the development of the firm’s competitive capacity and increased profits.
Conclusion
In conclusion, the adoption of an expansion strategy remains crucial for all firms and businesses in the market. About Toyota, global development remains important in influencing the growth of the firm through increased reduction in operational costs, overseas production and the adoption of manufacturing processes that maintain high levels of sustainability.
References
Arsenault, A. H., & Castells, M. (2008). The structure and dynamics of global multi-media
business networks. International Journal of Communication, 2, 43.
Giesen, E., Berman, S. J., Bell, R., & Blitz, A. (2007). Three ways to successfully innovate your
business model. Strategy & Leadership, 35(6), 27-33.
Luo, Y. (2007). A coopetition perspective of global competition. Journal of World Business,
42(2), 129-144.
Tempel, A., & Walgenbach, P. (2007). Global Standardization of Organizational Forms and
Management Practices? What New Institutionalism and the Business‐Systems Approach Can Learn from Each Other*. Journal of Management Studies, 44(1), 1-24.
