Toyota's Global Business Strategy
Toyota, to all intents and purposes, has become a model for the automobile industry. As Taylor & Kahn (1997) write, automobile manufacturers are not trying to compete with Toyota as much as they are trying to learn from it and, strangely enough, Toyota appears to be quite a willing tutor. This is evidenced in the fact that, on a bi-monthly basis, the top automobile manufacturers across the United States are given a tour of Toyota’s plants and production and manufacturing facilities (Taylor & Kahn, 1997). This, however, does not put Toyota in any immediate danger of its giving away its secrets to its competitors since, as Schonberger (2001) points out, Toyota’s lean manufacturing model is not an industrial model per se as much as it is a management philosophy. This management and manufacturing philosophy is, without doubt, the key to Toyota’s global success but, upon consideration of the reasons for its recent overtake of the U.S. market, one finds that it is a combination of both its decision to Americanize and its management philosophy.
Toyota has Americanized and, its Americanization is largely, although not entirely, responsible for its success in the U.S. market. As Naughton et al. (2005) explain, a change of leadership at Toyota led to the abandonment of its “cooperative competition doctrine,” as which outlined that Toyota’s presence in the United States would not be that of a competitor whose goal was to overtake leading American car manufacturers such as GM. Instead, Toyota was to maintain a “respectful distance” in order to avoid arousing both public and political anger as a direct outcome of its appearing to undermine U.S. symbols, in this case GM (Naughton et al., 2005). Therefore, even though it had the capacity and the potential to compete with GM and, eventually, to dominate the U.S. market, Toyota’s leadership made the strategic decision to avoid doing so.
Toyota’s decision to forgo its “cooperative competition” philosophy is not, in itself, responsible for its successful expansion of its U.S. market shares. Instead, the decision to Americanize is at the heart of its success. Fujimoto (1999), best explains this when arguing that Americanization allowed for the positioning of Toyota, not as a foreign competitor whose aim was the weakening of the American economy and the strengthening of the Japanese one but, as a domestic manufacturer, an American automobile manufacturer whose origins happen to be foreign. Indeed, its decision to hire American managers in its U.S. plants and offices and to give itself a quintessentially American image facilitated public and political acceptance of it as a constructive addition to the American economy (Fujimoto, 1999). The implication here is that Americanization effectively annihilated the protective barrier which domestic consumers generally impose vis-à-vis foreign competitors whom they believe function as a threat to the heath of the domestic economy and, by extension, to the livelihood of the domestic labor force (Fujimoto, 1999).
That Toyota’s decision to reinvent itself as an American company, to abandon its “cooperative competition” doctrine, is that one change which stands out as central to its recent successes on the U.S. market, is an opinion echoed by several (Taylor & Kahn, 1997; Fujimoto, 1999; Schonberger, 2001). Taylor & Kahn (1997), contend that success on the American market was not simply an outcome of its adoption of an American `image,’ but its highly successful embrace of the American management and competitive philosophy. This philosophy, tending as it does towards the brash, bold and aggressively competitive, is a key factor in the company’s emergence as a leading competitor on the U.S. automobile market. Not only does it communicate a sense of confidence which, in turn, generates consumer confidence in the company but it has fortified the `American’ image which Toyota adopted as a strategy for entrance into, and potential dominance over, the American automobile market (Taylor & Kahn, 1997).
Accordingly, on the basis of the stated, it can safely be asserted that success is partially due to its decision to enter the American market as an American, or immigrant, company, rather than as a foreigner. Americanization only partially explains Toyota’s success on the American market but, it neither explains its growing dominance over it, nor its rise as a global player. To understand these, one must turn towards Toyota’s decision to adhere to its lean manufacturing and management philosophy, irrespective of country and culture of operation. As Schonberger (2001), explains the lean management and manufacturing philosophies are not just typically Japanese but as implemented by Toyota, are both particular and unique to the mentioned automobile manufacturer. This means, as Schonberger (2001) asserts, that its transference to any country in which Toyota decides to set up operations, entails substantial investment in employee training and, not just education but, re-education. Needless to say, this decision is both resource and time-consumptive and the adherence to already existent management strategies and manufacturing models may have been more economical. The fact that Toyota decided to adhere to its system and to invest the requisite time and resources into changing the mindset of labor forces it hired in plants outside of Japan is, according to Schonberger (2001) fundamental to its emergence as a global player.
A fuller appreciation of the extent to which Toyota’s emergence as a leading automobile manufacturer on both the global and the US markets is directly related to its lean philosophy, is predicated on understanding the implications of the aforementioned. In brief, lean manufacturing relies on flexible manufacturing quotas and product designs, seeking to minimize inventories through the adoption of a manufacture/supply on demand mode of manufacturing (Lin & Hui, 1999). Products are manufactured in response to demand and minimal inventories, if any, are maintained. More significantly, assembly lines are designed for the manufacturing of more than one model. As Lin & Hui (1999) explain, this means that the labour force, indeed Toyota’s entire HR, must be trained in Just-in Time manufacturing and need to have a range of diverse skills so as would allow for their operation in more than one capacity. On the face of it, this may not sound too complex but when considering that this is an utterly unique concept, especially in a industry which focuses upon, and stresses specialization, the full implications of Toyota’s decision to change its various environments of operation to suit its own demands, and the role which this has played in its success, become very clear.
In conclusion, to the argument presented in the above, no single factor can be held responsible for Toyota’s emergence as a global player. The fact that it has emerged as such and is on the verge of overtaking the American market is, in the final analysis, due to both its decision to transfer its lean principles to whatever country and culture it operates in while, at the same time, adopting the `face’ of that culture so as to communicate an image of itself as an insider, rather than an outsider. It is these two factors which are responsible for Toyota’s global success.
Fujimoto, T. (1999) The evolution of a manufacturing system at Toyota, New York: Oxford University press.
Lin, Z. & Chun, H. (1999) “Should lean replace mass organization systems? A comparative examination from a management coordination perspective”, Journal of International Business Studies, 30(11), 45-79.
Naughton, C. et al. (2005) `Toyota triumphs,’ Newsweek, 145(19).
Schonberger, R. H. (2001) Let’s fix it: Overcoming the crisis in manufacturing, London: Free Press.
Taylor, A. & Kahn, J. (1997) `How Toyota defies gravity’, Fortune, 136(11).