Major Influential Factors in Implementing Global Strategies in Toyota Motor Corporation

Toyota Motor Corporation
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Toyota Motor Company
Table of Contents TOC \o "1-3" \h \z \u 1. Introduction PAGEREF _Toc85964907 \h 32. Background to Toyota Motor Company PAGEREF _Toc85964908 \h 33. Major influential factors in the implementation of global strategies PAGEREF _Toc85964909 \h 43.1. Theoretical discussion PAGEREF _Toc85964910 \h 43.2. Influential factors in implementation of global strategies in Toyota PAGEREF _Toc85964911 \h 74. Barriers to implement global strategies PAGEREF _Toc85964912 \h 94.1. Theoretical discussion PAGEREF _Toc85964913 \h 94.2. Barriers to implementation of global strategies in Toyota PAGEREF _Toc85964914 \h 115. Suggestions to prevent failure to implement global strategies PAGEREF _Toc85964915 \h 125.1. Theoretical discussion PAGEREF _Toc85964916 \h 125.2 Suggestions to prevent failure to implement global strategies in Toyota PAGEREF _Toc85964917 \h 136. Conclusion PAGEREF _Toc85964918 \h 14References PAGEREF _Toc85964919 \h 15
1. Introduction
The success of multinational enterprises operating in the modern business environment depends significantly on their global strategy. According to Tallman and Pedersen (2011), global strategy is a “strategy with comprehensive worldwide perspective” (p.12). A key aspect of this definition is the worldwide perspective which implies that global strategies take into account factors beyond the home country’s boundaries, such as international taxation laws, cultures, and financial systems. Global strategy is thus wider in scope, and as a result, a myriad of factors are taken into consideration when developing a strategy for the international marketing environment. In this paper, I will evaluate the implementation of global strategies in Toyota Motor Company, one of the popular and biggest automobile companies in the world. I will first provide the company’s background before examining the major influential factors in implementing its global strategies. I will then analyze the barriers to the implementation of global strategies in the company before offering suggestions to prevent failure to implement these strategies.
2. Background to Toyota Motor Company
Toyota was founded in 1937 by Kiichiro Toyoda, who changed the focus of the company from the manufacture of the automatic loom to automobiles (Toyota Global, n.d.). The Japan-based company has 372,434 employees who help it attain its goals (Yahoo Finance, 2021). The company has a market capitalization of $240 billion, implying that it is one of the biggest in the world. Today the company owns and operates 67 manufacturing firms spread across the world (Toyota UK, 2021). Its products, primarily automobiles, are marketed and sold in more than 170 countries (Toyota UK, 2021). Some of its popular automobile products include the Prius+, GT86, Yaris GR sport, Hilux, and Landcruiser G8. Toyota leads the global automobile market share with 8.5%, ahead of Volkswagen and Hyundai, which are second and third, respectively (Figure 1).
Figure 1: Global automotive market share 2020
Source: Statista (2020)
The company’s 2019 annual report presents some of the global strategies the company has been and is implementing to improve its market share and cement its position as the world’s leading automobile brand. According to its president, Akiyo Toyoda, Toyota is partnering with other companies to boost its competitive advantage (Toyota, 2019). In addition, the company is transforming itself into a mobility company from primarily being a manufacturing one. In 2018, the company invested $1 billion in Grab, an Indonesian company dealing with transportation, financial services, package and food delivery, and mobile payments (Automotive World, 2018). Therefore, while the company primarily deals with the manufacturing and sale of automobiles, its recent investments show that it is transitioning into a mobility company.
3. Major influential factors in the implementation of global strategies
3.1. Theoretical discussion
The article by Aboutalebi et al. (2016) provides a comprehensive overview of the major influential factors in the implementation of global strategies. As shown in figure 2, the authors categorize these factors into ten, each having individual factors.
Figure 2: Influential factors in strategy implementation
Source: Aboutalebi et al. (2016)
As can be seen in the figure above, the aspects outlined by Aboutalebi et al. (2016) fall within the inner-organizational factors that influence the implementation of global strategies. This can be compared to a great extent to Hrebiniak (1992), who also examined the influential factors of global strategy implementation (Table 1).
Table 1: influential factors of global strategy implementation
Aboutalebi, et al. (2016)

Hrebiniak (1992)

Strategy and Organizational Factors
Human Resources
HRM
Corporate Culture
Organization’s vision, values, and ethics
Organizational Capabilities and Resources
Structure and fit
Systems and Processes
Communication and Relationship
Implementation Management

Sound Planning
Technical feasibility
Political Acceptability
CEO Commitment
Organizational structure
Incentives and Controls
Human Resource issues
Coordination and communication
Available resources

Source: Developed by the author for this work
From the table above, it is deduced that the influential factors in global strategy implementation overlap between the two sources. It is apparent that the scholars agree that human resources, communication, organizational structure, and organizational resources are vital factors in implementing global strategies. In addition, the organization’s vision, values, and ethics, as listed by Aboutalebi et al. (2016), corresponding to the political acceptability that Hrebiniak (1992) speaks of. According to Hrebiniak (1992), political acceptability means that the strategic choice of the organization is in line with its needs, values, and preferences. Therefore, to a great extent, the scholars agree on a similar concept as influential in global strategy implementation. Furthermore, the CEO commitment mentioned by Hrebiniak (1992) falls under the implementation management covered by Aboutalebi et al. (2016). Under Hrebiniak (1992), incentives and control can also be found in the implementation management category by Aboutalebi et al. (2016). Therefore, the two sources are consistent to a great extent regarding the factors that affect global strategy implementation. Perhaps, the only difference lies in the technical feasibility Hrebiniak (1992) stipulated, which cannot be found in Aboutalebi et al. (2016). Nevertheless, the majority of the internal factors that influence global strategy implementation are consistent among scholars.
In his research, Aboutalebi (2019) presents several external influential factors, some of which include:
* Technology: this refers to the degree to which players in the industry rely on industry-specific or non-industry-specific machinery to carry out day-to-day operations.
* Supply: this is the exchange of information, machinery, materials, and parts among different industry players to facilitate operations.
* Legislations: Different jurisdictions have different laws and policies that impact the business operation and can determine how a company will implement its global strategies.
* Products: the outputs of players in an industry also impact how companies implement global strategies.
* Uncertainty: this refers to the predictability of industry-related changes.
The figure below presents these external factors that influence global strategy implementation.
Figure 3: External factors that influence global strategy implementation
Source: (Aboutalebi, 2019)
3.2. Influential factors in the implementation of global strategies in Toyota
Toyota’s global strategy implementation is influenced by many factors both in the company’s internal and external environments. The company’s leadership is one of the most influential factors in the company’s implementation of global strategies. In the company’s 2019 annual report, in three pages, the company’s president describes the commitments and the direction Toyota is taking in the near future (Toyota, 2019). Akio Toyoda explains how the company has an unwavering commitment to developing its people, whom he calls “friends.” The company’s president also recognizes compassion as one of the strengths in the company’s success (Toyota, 2019). It is important to note that compassion, in this case, relates to how the company treats its people. In his message, he also specifies how the company is moving towards mobility as well as its joint venture with Panasonic Corporation (Toyota, 2019). To a great extent, therefore, there is a high level of commitment by Toyota’s leadership in the implementation of global strategies.
The lean production system is also a key success factor in the implementation of global strategies in Toyota. The popularity of the lean production system, which many companies have adopted, was spearheaded by Toyota. As explained by Sisson and Elshennawy (2015), Toyota is recognized as being a pioneer of lean production, which has helped it attain tremendous growth. Within the company, lean is referred to Toyota Production System (TPS), which the president of the company recognizes as its bedrock (Toyota, 2019). According to Sisson and Elshennawy (2015), the lean production system seeks to shorten lead times by focusing on value-added activities and removing wastes in the production process. According to Osono et al. (2008), the company’s TPS system has been instrumental in helping it manufacture reliable and high-quality cars that have attained success in the international markets. In this sense, as implemented by Toyota, TPS has been a key factor in implementing global strategies.
Toyota’s implementation of global strategies is also influenced significantly by human resources. In Sisson and Elshennawy’s (2015) article, the authors explain how employee engagement and training are key to Toyota’s process and the lean production system as a whole. For example, when the company started its production plants in the U.S., it sent representatives from Japan to train leaders in the new location (Sisson & Elshennawy, 2015). Osono et al. (2008) also note that human resources are as important as the TPS system. Human resources is thus a major influential factor in the company’s implementation of global strategies.
Toyota’s financial resources are also a key factor in the implementation of global strategies. Its financial strength helps it enter into strategic agreements to improve its position in the international market. For example, as mentioned earlier, the company invested $1 billion in Grab as part of its strategy to transform into a mobility organization (Automotive World, 2018). Recently, the company invested $3.4 billion in the U.S. to foster the development of electric vehicles in the region (Ohnsman, 2021). Its financial resources have thus been a key influence in the implementation of global strategies.
Toyota’s culture also influences to a great extent the company’s implementation of global strategies. According to Takeuchi et al. (2008), the company’s culture is characterized by openness, where employees are encouraged to be forthcoming about the problems they face and the mistakes they make. In addition, the company has a philosophy known as “the Toyota Way,” which defines the values its people should implement in their day-to-day work (Toyota Europe, n.d.). Toyota’s annual report also notes how it has a culture of improvement throughout the company (Toyota, 2019). The company’s culture, therefore, plays a key role in the implementation of global strategies.
As presented in its 2019 annual report, the company’s global vision also shapes its implementation of global strategies. As shown in the figure below, the vision involves developing even better cars that exceed customer expectations and contribute to communities’ enrichment (Figure 4).
Figure 4: Toyota’s Global Vision
Source: Toyota (2019)
From the external environment, competition is also influential in the company’s implementation of global strategies. For example, the company notes in its annual report that the automotive market is extremely competitive and volatile (Toyota, 2019). Although it is leading in market share, as Statista (2020) shows, other industry players such as Honda, Ford, Hyundai, and Volkswagen provide extreme competition that shapes its global strategies.
Climate change is also a key external factor that influences Toyota’s strategies. As a result, Toyota and the industry, in general, are moving towards producing environmentally-friendly electric vehicles. According to Kelly (2021), Toyota plans to spend $13.5 billion on developing electric vehicle batteries by 2030. By 2050, the company plans to zero Carbon dioxide emissions in its vehicles, life cycle, and production plants.
4. Barriers to implement global strategies
4.1. Theoretical discussion
The implementation of global strategies in organizations faces key barriers that derail growth and progress. Many scholars have researched the main barriers that hamper the implementation of global strategies. The works of Cândido and Santos (2019) and Vigfússon et al. (2021) can help in understanding the barriers that organizations face in implementing global strategies (...