Toyota Subsidiary in the United States

Question: Discuss about theToyota Subsidiary in the United States. Answer: Toyota is the eighth largest and the leading automotive company in the world. Toyota Motor Incorporation was founded in 1937 in Japan (CHAMBERS 2008, p76). The company engages in the manufacture, design, sale and assembly of passenger cars, commercial vehicles, minivans as well as related parts in United States(North America), Asia and Europe. Its current brands include Lexus, Hino, and Daihatsu. Its annual revenue as of March 2013 was $213 billion with 333,498 employees (CHAMBERS 2008, p76). The purpose of the paper is to analyze Toyotas subsidiary in the United States. It involves evaluation of the company's market share and market strategies in the United States. The paper also recommends appropriate strategies that the company should adopt to improve its performance in the foreign market. Toyotas Organizational Structure The organizational structure of Toyota Motor Corporation is based on disparate business operations around the world. Being one of the major automobile manufacturers in the world, the company has adopted a suitable organizational structure to support its strategic direction and business goals (FUJIMOTO 1999, p84). Moreover, the company has applied its organizational structure to maintain its global presence through capacity utilization. Briefly, Toyotas effective organizational structure has played a key role in its success in the global market. Toyota Motor Incorporation had operated on a centralized global hierarchy until 2013 when the company changed to divisional organizational structure (LIKER 2004, p112). According to the companys old structure, all major decisions were made in its headquarter in Japan. Moreover, all other individual business units in other countries including the United States were not allowed to communicate with each other as all were required to go through the headquarter. However, the structure proved ineffective citing complains that it slowed down the response time (TOYOTA 2016). As such, the company reorganized itself leading to the adoption of a new structure characterized by geographic divisions, global hierarchy, and product-based divisions. Global Hierarchy Despite the 2013 reorganization, Toyota Motor Incorporation still maintains its global hierarchy. However, the new organizational structure has increased the power of decision making of business on unit heads and regional heads (LIKER 2004, p1117). As such, the company has broken down the decision-making process to become less centralized. Therefore, the heads of the subsidiaries like the United States can now make crucial decisions regarding the safety of its products. Nevertheless, the company requires all the heads of business units and regional heads to report to the global headquarter in Japan. Geographic Divisions Currently, Toyota Motor Incorporation operates in eight regional divisions including North America, Japan, East Asia and Oceania, Europe, Asian and Middle East, Asia, Africa, China, Latin America and the Caribbean. Every head of the regional divisions reports to the global headquarter. Regional divisions enable the company to customize its products and service based on the regional market conditions. For example, the regional head based in the United States is responsible for ensuring that Toyota cars suit the needs of the American market. Product-Based Divisions Toyotas organizational structure is also characterized by a set of product-based divisions including: Lexus International Toyota No. 1 for North America, Japan, and Europe operations. Toyota No. 2 for other regions operations Unit Center, responsible for transmission, engine as well as other related operations. The product-based division was established mainly to promote brand and product line development. Compared to the old structure, the new organizational structure has provided greater flexibility in the management of the firm (LIKER 2004, p121). It has enabled the company respond effectively to the regional market conditions thus improving the quality of its products. Despite that fact that control of the global head has been reduced, the new organizational structure enhances continued growth and business resilience. Toyota's United States' Subsidiary Analysis Toyotas success in the United States market is attributed to the significant cost advantage over the competitors such as General Motors and Volkswagen (PHELPS 1931, p43). The company developed an innovative Toyota Production System which resulted in the cost advantage. The local car manufacturers from Detroit were unwilling to adapt new techniques for manufacturing thus losing huge market share to Toyota. The company had enjoyed immense market share since 1982 when Japanese cars contributed to more 30% of cars sold in the United States. Toyota has since enjoyed great market share up to-to-date with projections of about 15.2% by 2016.Moreover, the company is the third largest car manufacturer in the country earning it a competitive advantage in the market. History of its Entry into the American Market Toyotas entry into America market was marked by its small car Toyopet which was introduced in 1947.The company then invested the small profits realized for Toyopet in research and development to adapt to the American roads. However, the first modification of its small car performed poorly in the road test in 1957 due to vibration and heat (TOYOTA ZAIDAN 2007, p131). The company then decided to start the development process from scratch and was able to make a new Toyopet capable of withstanding the local conditions in 1960. The following five years saw the company develop Toyota Corolla which sold more than six thousand models. Toyota later in 1965 invested in small car as a competitive advantage over its competitors from Detroit who made big cars with huge horse power. This gave the company a competitive edge over the American car makers. Their small cars were preferred by customers due to their speed, and this earned the company tremendous economies of scale. Moreover, the company targeted the middle class who composed a considerable portion of the American population. It gave its customers the fast mover value as opposed to big cars with expensive options offered by other manufacturers (TOYOTA ZAIDAN 2007, p135). Apparently, in efforts to leverage talent and diversify its leadership, Toyota is led by James Lentz as the senior executive officer of North America Region. Appointment of James Lentz is aimed at facilitating its efforts as a worldwide customer-focused company (CORPORATE NEWS 2016). Moreover, the company is further strengthening its presence and integration in North America for quick response to customer needs. Therefore, with Lentz at the top of its management, the company aims to improve its services in the region as a competitive advantage. Next in the chain is Osamu as the president and chief executive of TEMA followed by Julie Hamp as the region's chief Communication Officer (CORPORATE NEWS 2016). According to the company's president, Akio Toyoda, it has invested in a diverse and experienced team of executives to enable it to serve its customers better. The team is composed of individuals with unique perspectives, fresh perspectives, and global mindset required improving its regional integration. For instance, as TEMA's president and executive officer, Osamu is responsible for promoting the One Toyota initiative aimed at integrating a single headquarter in North America through collaboration (CORPORATE NEWS 2016). Julie on the other hand ensures the company's global communication, overseas external affairs, and public affairs. Being the third largest automotive company in the United States, Toyota enjoys significant market share in the region. However, the company faces pressure for flexibility and innovation in manufacturing and development of the automobile in the United States (GRIFFIN 2014, p172). The department responsible for development is not only challenged by complex nature of the digital technology but also the reduced life cycle of products. Apparently, the automobile industry in the United States is characterized by parallel development where many companies such as General Motors, Tesla, and Voxwagen are developing more and more products for special groups (WHITEHURST 2011, p 64). The increased pressure thus threatens Toyotas position in the region as far as market share is concerned. Although the company aims at achieving a market share of more than 15% by the end of 2016, it is subject to challenge by other players. Moreover, other competitors like BMW have adopted the use of virtual reality development techniques to shorten development time thus adding to the market pressure. Therefore, the company needs to establish new development techniques to curb the existing pressure in the market The automotive market of United Stated is diversified thus open for new and existing players to outperform each other (GRIFFIN 2014, p 73). As such creates a competitive environment which makes it difficult for a company to remain competitive in a fast-transforming industry. Companies like Mercedes Benz, Voxwagen as well as the local players have a significant share in the market with innovations. Therefore, the main business requirement is to adapt in such an ever-changing environment. The company needs to identify the effective method and problem-solving tools and implement them efficiently. It is no doubt that Toyota has invested in a more experienced management team to ensure that it is resilient and responsive to the changing market. Therefore, the company stands a chance of surviving and promoting its presence in the country. Consumers now want a product that satisfies their unique needs as opposed to accepting standardized products. Several companies in the automobile industry have thus downsized target groups to enhance customer attraction to the available products (SHENKAR 2014, p 52). However, the increased global competition has made this impossible as customers are focused on price rather than brand loyalty. As a result, automobile companies are faced with new market requirements. Therefore, Toyota is challenged to make products matching the new market demands In conclusion, Toyota enjoys a significant presence in the North American market. This is attributed to its customer-focused strategy of product development, variability, and resilience. However, transformation and diversification of the market challenges its position. New customer needs require new technological, management, and development approaches. Therefore, the company needs to adopt new methods and strategies to maintain and improve its position in the market. References Whitehurst, K. (2011).Consumer groups' capacity to assess potential consumer impacts of policy proposals. Toronto, Ont, Consumers Council of Canada. https://www.deslibris.ca/ID/227680. 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