Question: Introduction In 1937, Kiichiro Toyoda founded the Toyota Motor Corporation, headquartered in Aichi Prefecture, Japan. The company, now headed by Akio Toyoda, the President and Representative Director, has a capital of around $179,399 million. About Toyota Motors Toyota is well-known as the most leading Japanese automobile company. By creating more innovative

Introduction In 1937, Kiichiro Toyoda founded the Toyota Motor Corporation, headquartered in Aichi Prefecture, Japan. The company, now headed by Akio Toyoda, the President and Representative Director, has a capital of around $179,399 million. About Toyota Motors Toyota is well-known as the most leading Japanese automobile company. By creating more innovative car design and spending billions of dollars in advertisement a year, Toyota has appeared in the eyes of many auto consumers worldwide. Toyota has built its reputation globally by producing high quality vehicles at affordable prices. Toyota has reduced their prices as compared to other automobile makers. Toyota believes that the role of purchasing should be long term at the lowest price and no compromise on the production of quality products. Its primary business activities involve automotive manufacturing. As of March 2016, the company employs around 348,977 people. Sakichi Toyoda, the founder of Toyota Industries, set certain Guiding Principles that reflect Toyota’s organisational culture and values, and are the basis for the corporate management philosophy. These were first revised in 1992, and again in 1997, to support its operations in a multicultural environment. They were modified in response to the societal changes and the company’s business structure, which support its global vision, strategies, and operations worldwide. An example of its strategy to keep with the changing times is the Toyota Way 2001, which focuses on CSR and customer orientation, innovative management, and the nurturing of its employees’ creativity and teamwork, mutual trust, and respect between labour and management. At the heart of the Toyota Way are two pillars—continuous improvement and respect for people. These are supported by five values: challenge, continuous improvement (kaizen), seeing for yourself (genchi genbutsu), respect, and teamwork. Challenges and Strategy Implementation at Toyota Motors In 1997, Thailand, a regional hub of Toyota’s auto manufacturing industry in ASEAN, faced an economic crisis resulting from over-investment in real estate and a liberal financing policy. Toyota Motor Thailand Co., Ltd. (TMT) subsequently encountered huge losses. To overcome the crisis various actions were taken—the TMT first requested and received two capital injections, totalling US$200 million, from Toyota Motor Corporation in Japan. However, since the automotive market was down by about 75%, the TMT had to use a job-sharing approach to retain its skilled, but redundant, workforce. Together with this measure, the company observed it’s “no lay-off” policy by sending about 200 idle associates to Japan for training, while others assisted their local dealers. To avoid further losses, TMT focused on 100% localization of parts and took advantage of export opportunities. Undertaking new business reforms, such as online management of vehicle supply and demand and the formation of project teams in finance and marketing, helped boost new vehicle sales. For dealers and suppliers, TMT granted credit lines and short-term loans.

At the time, the former king of Thailand, Bhumibol Adulyadej, showed concern for the issues of possible unemployment and granted a purchase order to TMT to produce a Toyota Soluna (Vios) and prolong the working period of Thai workers. Instead of selling the vehicle, TMT presented it to the king as a gift; the King, in turn, granted $17,518 (600,000 baht) to TMT to help establish the Rachamongkol Rice Mill, a project spearheaded by Ninnart Chaithirapinyo, the Vice Chairman of TMT. As an ongoing TMT-CSR activity, the mill still helps rice farmers maintain their crop prices and benefits TMT associates and the overall community. In brief, TMT overcame the crisis of 1997 by using Kaizen to strengthen its competitiveness and improving communication among top management and all of its associates. In its developmental path towards sustainability, Toyota Motors set a Global Vision. The mediumto long-term management plan is prepared and implemented with the controlling measures as a feedback in its management system. In the implementation process, the Toyota Way 2001 and the Toyota Code of Conduct serves as an important global guideline for daily business operations for all employees. Toyota’s divisional organisation structure is based on varied business operations but is linked to the traditional Japanese organisational structures. In 2013, as a response to the safety issues and corresponding product recalls crisis of 2009, the centralized hierarchical structure underwent significant changes to become more decentralized. After the re-organisation, Toyota’s new organisational structure has the following main characteristics: global hierarchy, geographic divisions, and product-based divisions. The company is now more capable of responding to regional market conditions and is empowered to speedily respond to issues and to provide higher quality products. However, the increased decision-making power of regional heads has reduced headquarters’ control over the global organisation. Still, this organisational structure facilitates business resilience and continued growth. A study by Wells and Orsato (2005) suggests that there is currently a shift away from the current all-steel, internal combustion engine car, which requires automakers to fundamentally reform their systems of production. The business challenges and the governmental regulations to preserve the environment means cars of the future have to be ecofriendly. This created a big challenge for auto firms that have sunk investments in the existing traditional car manufacturing technology. In 2009, as a result of its worldwide recall-crisis and with over 8 million vehicles addressing issues related to ‘unintended acceleration,’ Toyota had a great lesson in keeping up with its production and leveraging of quality, durability, safety, and reliability issues. The company continued to develop innovative models to overcome environmental regulation challenges and to add a ‘humanistic’ dimension to consumers’ image of auto companies. Its strategic direction is to go beyond zero environmental impact and achieve a net positive impact and sustainability. (Source: Hoffman, A., Hunger, J., Wheelan, T. and Bamford, C., 2018. Strategic Management and Business Policy: Globalization, Innovation and Sustainability, Global Edition. 15th ed. Harlow: Pearson Education Limited) Answer ALL questions Q1. (a) Using the case information, define cooperative strategy. Can you identify the different types of corporate-level cooperative strategies that are available for Toyota Motors to implement? (15 marks) (b) Multiple factors and conditions are influencing Toyota Motors Co. to use the international strategies. Analyse FIVE (5) factors that provide a basis for international business-level strategies. (10 marks)

Q2. (a) Toyota Motors has encountered huge losses due to economic crisis. What business level strategy is being used? How would Toyota Motors change this strategy to improve its competitive position? Justify your answer. (10 marks) (b) Based on what you know, how would you compare the different types of organisational structures that are used to implement the multidomestic, global and transnational international strategies. Provide evidence from the case to demonstrate this. (15 marks)