TOYOTA Case study: TOYOTA'S STRATEGY IN INTERNATIONAL MARKETS Among the four typical international business strategy postures, Toyota, like many other multinational enterprises (MNES), chooses transnational Strategy. How best to implement a transnational strategy is one of the most complex questions that large multinationals are grappling with today. The need to compete with international competitors like GM and Ford forced Toyota to look for greater cost economies. However, variations in consumers taste and government regulations across countries mean that Toyota also has to be responsive to local demands. Therefore, Toyota confronts significant pressures for cost reductions and for local responsiveness. To reduce cost by standardizing, Toyota has been accelerating the process of moving toward fewer vehicle platforms, with goal of building a wide range of models on a limited range of platforms that share many common components parts or modules. The company is reportedly working toward a goal of having just 10 platforms, down from over 20 in 2000 (Hara 2004). To the almost finished products with many common component parts, Toyota adds local product features, tailoring the finished product to local needs. Thus, Toyota is able to realize many of the benefits of global manufacturing while reacting to pressures for local. responsiveness by differentiating its product among national markets. Toyota's early way into market was quite struggling. In 1957, Toyota tried to enter the US market, by establishing a subsidiary in California. Later, it proven to be a nightmare; the Toyota cars performed poorly in road tests on US highways. Obviously, Toyota people had not did enough homework on the basic local conditions in US market, simply how Americans used cars. Due to lack of local responsiveness, Toyota closed down its US subsidiary and withdrew from the market. Back home, the company started to study the feedback from American consumer surveys and US road tests, redesigned several of its models accordingly, and reshaped its market reputation considerably in US market late 1960s, selling well with welcomed product characteristics and consistently falling production cost and retail prices. Thanks to the oil price rise following the Israeli/Arab conflict, US consumers shifted to small fuel-efficient cars in droves, Toyota was among the main beneficiaries. Though this desire for small fuel-efficient cars in US market happened without Toyota's prediction, it conformed to the traditional demand for this nature due to the lack of natural resource at home, in Japan. This could be viewed at kind of learning effect and knowledge transfer within global markets, that is, transfer of cumulative knowledge achieved at Japanese operation to US market. However, market changes. Until around 1980, Toyota's internationalization strategy was centred on exports. Toyota's management had been thinking that exports were more profitable than localized production because overseas production operations could not run as well as those at its domestic assembly plants. In early 1980s, import quotas imposed by United Stated over Toyota stagnated export growth substantially. To cope with this problem, Toyota's first overseas operation, New United Motor Manufacturing Inc. (NUMMI), was born. This step could be taken as a strategic entry of Toyota in US market further. In this deal, Toyota designed the product and designed, equipped, and operated the plant, while GM's role was marketing and distributing the plant's output. By this, Toyota obtained a chance to see whether it could build quality cars in the US using American workers and American suppliers, to experience dealing with an American union. All this knowledge later proved to be invaluable. Meanwhile, the joint venture reduced the risk of jumping into a yet unknown market by decreasing the investment scale and borrowing knowledge from GM. Encouraged by its success at NUMMI and already having obtained knowledge of marketing, sales, service, etc in US market, Toyota established its first wholly owned product facility in US in 1986, followed by plants in California, Indiana, Texas and Ontario, Canada. The international strategy that generally Toyota company and most Japanese companies use is KAIZEN strategy which means continuous improvement and the impact that it has on the level of product quality. "KAIZEN" is an integrative strategy, which means a cross-functional strategy that appoints the gradual improvement, management and continuous business activities and the parameters of quality, productivity and competitiveness, with direct involvement of all staff. The product strategy of Toyota is based on high quality, on developing new innovative technologies, focusing on further research, creativity, but also hard work. Toyota is a world leader in research and development of advanced automotive technologies. Toyota develops intelligent responses to the challenges of the automotive industry today, while assuming responsibility for future generations. Regarding the problem of pollutant emissions, Toyota explores simultaneously a variety of solutions for designing fewer polluting vehicles as well. Toyota has committed to develop hybrid systems as a basic factor in manufacturing clean technology cars, combining different sources of power. It has made significant progress in designing engines that use alternative energy sources. One of the most promising approaches is combining two different sources of energy in a single system with the potential to use both. This solution is known as hybrid technology and is the most promising way to achieve Toyota's green machine. Search for innovative solutions is based on new technological concepts of this company. Unconventional ideas need a way of expression, and future technologies has to be tested in terms of daily life. Therefore, Toyota develops concepts such as the Fine-N engine powered by a fuel cell or CS&S roadster powered by a Hybrid Synergy Drive system. The fabrication technology of engines is one of the most valuable properties of Toyota. Toyota's performance range of engines and advanced design reflects the high standards set by engineers. Toyota's engines are designed for comfort and performance, while constantly aiming to reduce emissions and optimal fuel consumption. So, today, Toyota may offer its clients the following advantages: gasoline engines with advanced technology, variable rate control valves VV-i and VVT-i, D-4D common rail turbocharged engine - now available in D-CAT variant to equip Avensis, unique hybrid propulsion system Synergy Drive. Safety is a priority for Toyota. Advanced steering systems, brakes, suspension, and traction control help keep control of the car. Each is designed with a Toyota extreme care in terms of safety, using advanced computer simulations and crash tests. Body and chassis are designed to absorb energy from impact and provide a maximum occupant protection, besides SRS (Supplementary Restraint System) airbags protection system they used. As part of the changes made in 2016, Toyota created two more divisions that help it carry out its strategy across nine international regions. These include Business Unit Toyota No. 1-North America, Europe, Africa, and Japan and Business Unit Toyota No. 2- China, Asia, Middle East & North Africa, East Asia & nia, Latin America & Caribbean. Each is run by a divisional head who makes decisions for their respective region while remaining accountable to headquarters. Teyat MN Archi OMNA TOYOTA IN THE WORLD REGIONAL HEADQUARTERS Tey Moe M OMES Tayts Mr C (IMC Tayera Dhada Enge and Manding Ca Tayt Me Corpora MO Toyota M Ala Pal (TMAM Question 1: Based on the Toyota case study, critically assess the company's strategy to go international. Explain advantages and disadvantages of choosing such a strategy. Identify the core competencies of the company Question 2: Explain why joint-venture was the best international strategy the company used to go into Us Market. Would that be efficient for other international market? Justify your answer Question 3: Evaluation the type of differences/obstacles/challenges Toyota needs to cope with if the company wants to operate internationally? Select at least 3 differences/challenges /obstacles and justify your answer. How is the company dealing with these issues?