a. What type of structure did the firm utilize before its performance declined?

b. Describe the situation the firm was experiencing that caused it to change structure.

c. What structural adjustments did the firm make?

d. What additional steps did the firm change to create value?

e. A proper match between strategy and structure can lead to a competitive advantage. How did
the changes at your firm create a competitive advantage?

f. Analyze and describe how your firm has changed during this time in terms of structure and
strategy.

TOYOTA MOTOR CORPORATION

Toyota Motor Corporation (TMC), a Japanese-based car manufacturer founded in 1933, is

now considered one of the largest automobile manufacturer in the world. Among the automotive
market, TMC has led the competition since 2008, after surpassing General Motors. In 2019,
Toyota owned 10.24% of the global automotive market share, only to be followed by Volkswagen
with only a 7.59% share.

The Toyota led the automotive industry by its Toyota Production System (TMS), a system
that emphasizes production efficiency. The discovery of this manufacturing system has led the
company to be followed by different other firms, not limited to automotive companies, but even
throughout various manufacturing firms, to such extent that the TMS has become one of the
pillars to what has been known as the Lean Manufacturing.

a.

In order to take advantage of the TMS, Toyota has operated through a multidivisional (M-
form) structure, which separates the business to which the top management delegates
responsibility for day-to-day operations & strategies to division managers. By applying such
structure, the company has created an efficient system of resource allocation, and a systemic
functional hierarchy with autonomy, further improving the operation’s efficiency.

b.

However, despite being the globe’s top manufacturer of automotive products, TMC has
shown a declining sales volume trend, especially in the North American region from the years
2017-2018, and such trend was foreseen to continue in the financial year 2019. As a result of this
analysis, TMC has initially increased its marketing and incentive spending especially within the
North American Region in order to maintain its current market position. However, this only
resulted to a blow towards the operating margins of the company.

c.

As a result of this pressure, TMC announced several changes within its structure. It was
primarily aimed to innovate its overall business model. To achieve such feat, the firm made
decisions on changing the responsibilities of operating officers, as well as the responsibilities of
senior professionals. Alongside this, the company also made changes within its organizational
structure, such as adding a Vehicle Development Center and a dedicated Zero-Emissions Vehicle
(ZEV) Division.
 The ZEV division was initially introduced as a result of the changing consumer
preferences in the aforementioned decline in performance. The responsibilities of the ZEV
division would primarily be related to the business strategy planning for Battery Electric Vehicles
(BEVs) and Fuel Cell Electric Vehicles (FCEVs), all in order to address the environment-friendly-
vehicle demands of the consumers as a result of the awareness towards Climate Change.

Furthermore, the Vehicle Development Center was introduced as a means of moving

towards sustainable growth. This is added to the organizational structure as a means to hone its
manufacturing abilities in the real world and to strengthen the competitiveness of its products
from the viewpoint of its customers, complementary to the initial introduction of the ZEV Factory.

Alongside these two new additions to the firm, TMC also reorganized their existing
divisions, in order for these 2 new fields in the company to fit in with the current organization, as
well as to further improve the company’s efficiency in operations.

d.

Alongside the organizational restructuring, the firm also decided to hire new Audit and
Supervisory Board Members as an initiative to introduce new ideas within the organization.
Furthermore, by noticing consumer preferences, TMC also continued the increase of its
marketing and incentive spending despite the initial loss it had shown in the recent years, in hope
of showing improvement through listening towards its customers.

e.

These changes have clearly shown movements towards creating competitive advantages
with the TMC. Through the ZEV and Vehicle Development Center, TMC has chosen innovation
as a means of competitive advantage against its rivals. TMC has slowly made the automotive
industry gradually move towards a fast-cycle market, especially throughout developed countries
such as USA. Furthermore, by reorganizing the existing divisions, this innovation capability of
TMC has become integrated by the existing capability of the company of being efficient with its
Toyota Production System.

f.

Overall, the organizational structure of TMC has barely changed, in such that it still
retained its overall hierarchy being a multidivisional structure. Its changes were only done as a
means of addressing its current insufficiencies towards the changing needs of its customers. As a
result, the introduction of the two new divisions have only made TMC more flexible towards
customer changes, as well as become more efficient as well as innovative, relative to its
competitors. Through these changes, it has been clear that Toyota have showed positive results,
by maintaining its position as the leading automotive product manufacturer globally, with its
current market share of 10.24% in 2019.
Sources:

https://www.statista.com/statistics/316786/global-market-share-of-the-leading-automakers/
(Market Share)

https://www.britannica.com/topic/Toyota-Motor-Corporation
(TMC info)

B.
https://www.forbes.com/sites/greatspeculations/2018/05/24/why-has-toyotas-north-american-
operation-remained-weak/#793017897348

C.

https://global.toyota/en/newsroom/corporate/28495921.html ^