One of the key driving forces behind the continued success of Toyota is its embrace of Lean Manufacturing and Just-In-Time Production techniques. Then there is the overarching set of philosophies and values brought under the term the Toyota Way. The Toyota Way can be further broken down into 4 components. First is a long-term approach to management decision making; second is a systematic approach to problem-solving; third is value addition to the company; and fourth is to focus on solving persistent problems facing the company. These principles and procedures add up to form the formidable Toyota Production System.
By applying Michael E. Porter’s Five Forces Analysis, we can arrive at a better understanding of Toyota’s current business environment. The five external forces acting upon a business are 1.Bargaining Power of Suppliers; 2.Bargaining Power of Customers; 3.Threat of New Entrants; 4.Threat of Substitute Products; all of which contribute to the 5.Competitive Rivalry within an Industry. In the current global economic and political context, Toyota is fairly well placed in tackling these extraneous factors that have the potential to alter business prospects. Especially under the regime of neo-liberalism, companies such as Toyota can avail of cost-effective supply of raw materials. The flip side though, might be the bargaining power of customers; but this can be overcome by Toyota’s brand power and leadership position within the industry. The threat of substitute products is a negligible threat and so is the threat of new entrants, as establishing brand equity in the automobile industry is not an easy task.
Toyota has been tasting success consistently for over five decades now. This is not only true in its native Japan, but also across the world. When one looks for the reasons why it is so successful, the answers are again to be found in the tenets comprising The Toyota Way. The key ingredients that make the Toyota Way can be summarized as Challenge, Improvement, Learning, Respect and Teamwork. These factors have stood the test of time and are bound to take the company forward in the future too. (Liker, 2004, p.23)
The company now has strategic plans to surpass General Motors and assume leadership position in the global automobile industry. To achieve this goal, the company has set itself to garner a 15 percent global market share by 2010. Not only is Toyota focused on maintaining its leadership position within the automobile industry but also keep ahead as a global business corporation. As of 2009, Toyota ranked among the top-5 companies in the Fortune 500 list, and this is no mean achievement given its humble origins in Japan. The company would strive to maintain this distinction in the years ahead while also serving its patronage with high-quality products that are state-of-the-art and also efficient in design and energy consumption. (Piotrowski & Guyette, 2010, p.89)