In terms of the international corporate level strategy of Toyota, this essay focuses on its core competencies and value chain to decide what can bring a sustainable competitive advantage to Toyota.
3.1. Core Competencies
Core competencies are the substance of what makes a corporation different from its competitors and have the ability to provide unique value to customers (Leonard-Barton, et al 1994).
Furthermore, according to Prahalad & Hamel (1990), core competency has four characteristics that it is rare, non-substitutable, costly to simulate, and can create value for clients. The paragraph below will focus on the specific situation of Toyota.
Firstly, Toyota is one of the largest automaker to push hybrid electric vehicles in the world, with high-tech development not only in auto-device making but also in non-automotive activities. This kind of technology is rare and difficult to imitate, as it contains a large amount of science, human intelligence and time value. Unlike choosing fruit to eat, there are no alternatives to substitute the technology such as hybrid electric vehicles as it has unique and rare characteristics.
Secondly, it has an excellent trade mark in Myanmar (Eleven, 2012), which establishes a solid foundation in stepping into the market of Myanmar. The Japanese government gives Myanmar about US$504 million loan (Business Daily News 2013), which also forms a promising base for Toyota to come into Myanmar. In this case, Toyota has received the support not only from the promising customers in Myanmar but also from its government, which generates non-substitutable value and core competencies for itself. More specifically, the company’s prestige in Myanmar is so significant that it can stimulate the buyers’ purchasing power and bring identifiable values to the consumers. Furthermore, with the help of the government, the company seems to have more tightly relationship with Myanmar, which is a non-duplicated competitive advance.
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Thirdly, Toyota has adopted “Toyota Way 2001” (Fane and Gray 2003) in April 2001. The strategy focus on “continuous improvement” and ”respect for people”, which has five competencies including challenge, improvement, teamwork, respects and going and seeing. In this way, Toyota will put energy in doing research and development in order to achieve the target of improving continuously, so that it can generate a huge possibility to fight against the competitors.
Fourthly, Toyota always set unreachable targets (Oxnard 2004) to stimulate its staff’s potential ability in order to bring more profits and market shares. In this way, the staff in Toyota may feel some kind of pressure so that they may try their best to figure out the large quantities of ways and select the best one to achieve each relatively impossible objective. Therefore it can allow the company progress permanently.
Lastly, Toyota’s net sales raised 99.6 billion yen (20.5%) to the total yearly amount of 584.5 billion yen (Global data 2013), which provides the financial base for its corporate strategy in seizing market shares in emerging economies. In this way, the company has sufficient funding in stepping into the new emerging market Myanmar, which can generate the sustainable competitive advantage.
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To conclude, the international corporate strategy of Toyota is to use its core competencies such as high quality technology, adequate financial foundation and continuously improvement by setting unreachable targets to open the emerging markets in Myanmar with the supports of the local customers and industries, and the help from the Japanese government.
3.2． Value Chain
When it comes to the value chain, Prahalad & Hamel (1990) mentioned that the value chain is the activities which can add value for a business’s product. It is divided into two parts, namely support activities and primary activities. Additionally, core activities are the main resources for adding value. For Toyota, there are four ways to accumulate value in its value chain.
Firstly, Myanmar includes widespread of cheap forced labor and natural resources (Quirke 2013).
In this way, the corporation can use the cheap labor resources and abundant natural resources, thus the inbound logistics in the value chain can be achieved on a relatively economic base. Therefore, the company’s corporate strategy in opening markets in Myanmar is to reduce the costs while guarantee the high quality of the products.
Secondly, the growth rate in the emerging markets is growing at an accelerate speed, which can provide opportunities to satisfy the identifiable customer needs more effectively and efficiently (Ichijo & Kohlbacher 2008).
In this case, the emerging markets are the ones with a large quantity of opportunities and resources, which means that the economy in Myanmar has huge potentials and promising future. Therefore, the corporation can gain more value when doing the marking and sales in the value chain.
Thirdly, Toyota focuses on making vehicles and machines for factories use to meet the demands of Myanmar (Eleven, 2012).
From this we can see that the company’s strategy putting emphasis on the localization in order to have better understanding of Myanmar demands, and pay sufficient and specific attention to the local needs. In this case, the valuation in human resource management in the value chain can be enhanced as the company can hire the local employees who have more specific and accurate knowledge about the special needs in their hometown. Furthermore, Toyota has many factories in the majority parts of the world, in order to manufacture and assemble vehicles for the local markets. It is a dispersion configuration of activities to many markets, which allows Toyota produce products using local resources and human resources to meet the multi-domestic market need. Ichijo & Kohlbacher (2008) mentioned that Toyota’s globalization development strategy focus on “learn local, act global”, also prove its corporate strategy focusing on being more familiar with the local circumstances and situation in the industry.
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Lastly, Toyota plans to work with its Daihatsh Motor Co. unit to manufacture compact cars for emerging markets such as Myanmar (Mukai & Hagiwara 2013).
In this approach, co-ordination has been established that enables the corporation to handle more configuration and gain a more competitive advantage than its competitors in the emerging markets.
In conclusion, Toyota use the international corporate level strategy to decrease unnecessary costs by using domestic human resources and natural resources, to generate huge potential profits and opportunities in emerging markets with high growth speed, to understand the local environment and to meet the specific requirements. As a consequence, the total value chain for Toyota has increased.
Reference:
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Fane & Gary R. (2003), Competitive advantage the Toyota way, Business Strategy Review, 4(4), 51- 60.
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Leonard-Barton D, Bowen H K, Clark K B, et al (1994), Prototypes: Tools for learning and integrating, Harvard Business Review, 72(5): 124-126.
Mukai A. & Hagiwara Y. (2013), Toyota targets Myanmar among new emerging markets for expansion, Bloomberg, viewed 28 September 2013,
Oxnard, T. (2004).
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Strech: How Toyota reaches for big goals, Supply Chain Management Review, 8(2), 28-35.
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