Strategic Management in Action Cases: Case #1 Driving for Success

Read Strategic Management in Action Cases: Case #1 Driving for Success

a. Explain Toyota's keys to success.

b. Analyze the Toyota Production System and how it gained Toyota a competitive advantage.

c. What would happen if Toyota launched marketing campaigns praising the highly innovative and sporting styling of a Camry (a fairly conservative model)? How would consumers react to that message which seems inconsistent with the car's styling?

d. Why do you feel that Toyota launched its Scion car (low priced model)?.

A)  Explain Toyota's keys to success.

I think Toyota is a dominate leader in automobile manufacturing today. The principles employed at every level of the company have certainly led to a standard of quality that no one in the automotive industry can argue with.

The 14 principles are known as the "Toyota Way" and are listed below:

1. Base your management decisions on long term philosophies, even at the expense of short term goals
2. Create continuous process flow to bring problems to the surface
3. Use pull systems to avoid over production
4. Level out the workload
5. Build in a method to stop and fix problems when they are discovered, this ensures quality the first time
6. Standardized tasks provide the foundation for continuous improvement and employee empowerment
7. Use visual control so no problems are hidden
8. Use only reliable, thoroughly tested technology that serves you people and processes
9. Grow leaders who thoroughly understand the work, live the philosophy and can and do teach it to others
10. Develop exceptional people and teams who follow your company's philosophy
11. Respect your extended network of partners and suppliers by challenging them and helping them improve
12. Go and see for yourself so that you completely understand the situation
13. Make decisions slowly by consensus, thoroughly consider all options; implement decisions rapidly
14. Become a learning organization through relentless self examination and continuous improvement ("Toyota's 14 Principles : Key Success Factor," 2009)

B) Analyze the Toyota Production System and how it gained Toyota a competitive advantage.

The practical expression of Toyota's people and customer-oriented philosophy is known as the Toyota Production System (TPS). This is not a rigid company-imposed procedure but a set of principles that have been proven in day-to-day practice over many years.

TPS has three desired outcomes:

To provide the customer with the highest quality vehicles, at lowest possible cost, in a timely manner with the shortest possible lead times.

To provide members with work satisfaction, job security and fair treatment.

It gives the company flexibility to respond to the market, achieve profit through cost reduction activities and long-term prosperity.

Like competition itself, competitive advantage is a constantly moving target. For any company in any industry, the key is not to get stuck with a single simple notion of its source of advantage. The best competitors, the most successful ones, know how to keep moving and always stay on the cutting edge.

C) What would happen if Toyota launched marketing campaigns praising the highly innovative and sporting styling of a Camry (a fairly conservative model)? How would consumers react to that message which seems inconsistent with the car's styling?

Toyota wants to put into the minds of consumers, and does so in a clever way. As enthusiasts, we always love to see great driving footage and ad copy that focuses on the actual act of piloting a car, but that's really not what the Camry - and indeed most of this entire automotive segment - is all about. Toyota needs to get the message out that the Camry is all new while also reminding everyone how great past Camry models have been for the car's intended segment, and it's hoping to do that with a campaign that stretches from radio and television to billboards and print media and straight on through to social networking. Few companies understand what actually happens as a customer moves from one interaction to another. To offer the best customer experience, it is necessary to connect customer-facing and non-customer-facing functions. For example, an increasing number of companies are connecting internal data and analytically capabilities such as "next-best-action” decision making to enable contact centers and sales forces to dynamically drive interactions based on real-time customer insight. Look closely at your own company: Are handoffs seamless and informed? Are the right people armed with the right information, at the right time, to anticipate and address customer needs?

D) Why do you feel that Toyota launched its Scion car (low priced model)?

Toyota launched the brand back in 2003 as a low-cost and hip line of cars aimed at younger car shoppers. Things didn't exactly go as planned as older car buyers were attracted to the low cost of the Scion models and their promise of easy entry and exit that is easy on the hips. Instead of giving Toyota a more youthful appeal, and allow the automaker to experiment with cutting-edge vehicle designs; the brand has become rather stagnant in many respects.

As the major strategy Toyota implemented the low cost strategy. It was because it wanted to attain the low income consumers. His median age of a Toyota consumer was, as of February 2007, 54 years old. Comparatively, Scion's average buyer age is the lowest in the industry, at 39 years old. Initially, Scion's first two cars xA and xB, while unusual for American roads, have been well received among consumers not interested in standard entry-level vehicles.