Business level strategy

 Its business segments are automotive operations, financial services operations and all
other operations.

 Its automotive operations include the design, manufacture, assembly and sale of
passenger cars, recreational and sport utility vehicles, minivans and trucks and related
parts and accessories.

 Toyota pursues a combined cost leadership and differentiation strategy that is economies
of scopes are relevant.

 A dual focus on both cost leadership and differentiation is often required across the
various segments of the value chain.

 Toyota’s production system is reportedly the most efficient in the world.

 This efficiency gives Toyota a low cost strategy in the global car industry.

 At the same time Toyota has differentiated its cars from those of rivals on the basis of
superior design and quality.

 This superiority allows the company to charge a premium price for many of its popular
models.

 Thus Toyota seems to be simultaneously pursuing both a low cost and a differentiated
business level strategy, which is called stuck in the middle.
Corporate level strategy-

 Toyota corporate strategy is based on cutting waste that is cutting down on the distance
that things move between plants.
 Toyota's corporate strategy is reaching people on a global scale through innovation and
respect for the planet, according to Toyota Global. The company also has a vision of
utilizing talent around the world, while enriching people's lives
 Toyota Global goes on to say that the company strives to remain creative and stay ahead
of the times. the company intends to remain true to the founding principles of its
founder, Sakichi Toyoda. One of the company's five core principles is being kind and
fostering a home-like atmosphere at the workplace, which are qualities that Toyota
routinely mentions in its mission goals. Another core principle is that a company should
contribute to the welfare of a particular nation.
 Emphasis on the environment is also prominent in Toyota mission statements, along
with stressing the need for comfort and reliability. Toyota also recognizes certain
challenges like the growing number of regulations around the world pertaining to carbon
emissions, which inspires the company to enhance technology and fuel efficiencies
Funtional Level Strategy in Toyota:
In analyzing the functional level strategies of Toyota we will
actually analyze the activities or strategies towards achieving
superior efficiency, superior quality, superior innovation and
superior customer responsiveness than its rivals to have
competitive advantages. These are given bellow-
3.1) Achieving Superior Efficiency:
To be efficient and increase the production rate Toyota’s
strategy helps them to reduce costs and increase the
profitability rate. To be efficient they follow-
i) Flexible Manufacturing,
ii) Use JIT to reduce inventory ,
iii) Largest technology,
iv) Productivity rate 5.3% in 2004,
v) 19% productivity in assembling,
vi) Reduce set up times,
vii) Most efficient company in the world,
viii) Low customer defection rate,
ix) Tries to be more efficient through R&D,
x) Improve quality control etc.
All those help Toyota to reduce costs with wide range of
products with competitive advantages of value creation than
its rivals.
3.2) Achieving Superior Quality:
Toyota Motor Corp. has successively introduced to the world
new models of cars highly important to the market since
2006, such as the American best seller Camry, world’s best
seller Corolla, and the top-in-the-Lexus-series LS. So far,
everything has gone smoothly without any trouble to the
quality of each of the models. Some industry sources say,
however, that the people who are actually involved in the
production of those cars have been stretched out for too long.
“This kind of situation can’t last long,” they say. The company
appeared to have been trying to avoid any defect in its
production by setting up an inspection system like that under
an emergency alert. It is thriving on achieving a sales
increase of as much as 10 million units as early as in 2010.
The company has also to meet the challenge of high
technology advance symbolized hybrid cars, while it has to
exert efforts for the production of cheaper-priced cars meet
the competition from Chinese makers. Toyota is entering into
new fields which it has never experienced before one after
another. Risk always lurks in effort to maintain high quality. To
maintain quality they also do some tasks, this are-
i) Customer first activity,
ii) Directly supervised by the president as a whole in
development, production and sales for improving the quality,
iii) One of the largest companies with largest technology,
iv) Use hybrid technology and plug-in hybrid technologies,
v) TQM etc.
All those helps Toyota to maintain its quality of products,
increase productivity, reduce costs. Thus they differentiate
their products and raise their brand loyalty to charge a
premium price.
3.3) Achieving Superior Innovation:
To achieve superior innovation they follow-
i) Research & Development,
ii) Emphasize on improving engine fuel efficiency,
iii) Target doubling the innovation rate year by year,
iv) Investing very much on innovation,
v) Use hybrid technologies etc.
Investing in innovation is risky. If successful, the benefits can
build a competitive advantage that is difficult for others to
eliminate. However, others will try and if you fail to execute
as well in the future those benefits can disappear quickly.
Toyota shows few signs of letting others catch up though.
3.4) Achieving Superior Customer Responsiveness:
The strategies to achieve superior customer responsiveness
of Toyota given bellow-
1. General Motors Corporation
2. Ford Motor Company
3. Toyota Motor Corporation
4. Daimler and Chrysler
5. Honda Motor Corporation
All these helps Toyota to have superior customer
responsiveness than its rivals and now Toyota’s customers
are available at worldwide, created a brand loyalty which
helps Toyota to charge a premium price.