Introduction

Due to globalization and the fast-changing dynamics of the business environment, companies need
to create structures and ideas for managing its resources to remain competitive. Strategic
knowledge management and organizational learning are important elements needed to be
developed upon by companies to remain competitive. This is as a result of their potential to furnish
strategic outcomes related to capacity building and competitive advantage (Jeon et al, 2011).

This analysis is to elaborate on Toyota’s approach to strategic knowledge management and

organizational learning and also assess its use of strategic frameworks and tools.

Toyota Motor Corporation is a Japanese multinational automotive manufacturer with its

headquarters in Toyota City, Aichi, Japan. Toyota is one of the largest automobile manufacturers
in the world, producing about 10 million vehicles per year.

The importance of managing knowledge has been appreciated by businesses if they are to
constantly persist competitively and grow. Most businesses are beginning to firmly manage their
knowledge and innovation (Ferreira et al., 2015). Knowledge mechanisms are highly sophisticated,
dynamic and flexible (Carayannis and Campbell, 2009).

Knowledge management and Organizational learning

Strategic management focuses on the general feature and focus of a company. It is the art and
science of devising, administering, and evaluating cross-functional decisions that help an
organization attain its objectives (Ansoff et al., 2018). According to Morden (2006), what an
organization is now and what is it will be in the future is highly dependent on strategic management
of knowledge.

Knowledge plays a pivotal role in knowledge-based social science and, more precisely, in the
economics of innovation because it drives productivity, growth, and the survival of organizations
(Guechtouli et al., 2012; Kane, 2010).

Knowledge is the understanding gained by constant learning (Johnson, Scholes & Whittington,
2011). Knowledge as an intangible asset of a company is considered a valuable asset of the
company which performs a vital function in maintaining the company’s competitiveness in the

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business environment (Gray, 1999). How knowledge is managed determines the competitiveness
and success of the company in the long term. It is key to solving problems in relation to
competitiveness and innovation faced by organizations today (Wickramasinghe, 2003).
Management of knowledge has to do with the procedure of influencing knowledge in organizations
to foster an advantage in the long run to a business and is centered on the strategy of businesses
that involves all forms of knowledge‐based business procedures and developing organization
structures to support these (Shankar, Gupta and Narain, 2003).

According to Nonaka and Takeuchi (1995), knowledge is not limited to one person but is shared
by all other persons (human resources) within an organization. This idea is similar to the ‘routines’
concept of Nelson and Winter (1982). Knowledge or technology is divided into two forms namely
‘explicit’ knowledge or information and ‘tacit’ knowledge or ‘know-how’ (Kogut & Zander,
1992).

According to Nonaka and Takeuchi (1995), tacit knowledge is rooted in the people’s brain through
continuous learning on jobs and experiences gained. Explicit knowledge is transferred in writing
in books, documents etc.

Knowledge creation

Toyota uses ‘kaizen ideas’ in its production activities and are ideas generated by individual
workers to solve problems identified on the floor of production which is confirmed, investigated
and cause determined by the production floor leader. The ultimate end result of the Kaizen idea is
to reduce waste and improve productivity. According to Monden (2006), the individual workers
are motivated to brainstorm and bring up ideas to help solve identified problems. These ideas are
aggregated and submitted for further action to be taken. This type of problem-solving technique is
called an ‘emergent strategy’ or ‘’bottom up’’ strategy. Emergent strategies are correlated with
procedures from daily activities and it involves the active involvement of the entire organization
(Rothaermel, 2018). This strategy is one source of Toyota’s knowledge diversity.
According to Zack (2002), strategic knowledge management involves tools and frameworks
organizations use to gather, create and disseminate knowledge to aid in the formulation and
strategic decision making.

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Knowledge diffusion and sharing

The role of knowledge creation is borne by production floors in each plant. Once knowledge is
created in these production floors its uses three modes of transferring it throughout the company.
Toyota uses three mediums in diffusing knowledge namely, Knowledge dissemination by direct
interaction, knowledge dissemination by OMCD (operation management consulting division), and
knowledge diffusion by GPC (Global production center).

Knowledge diffusion by direct interaction

In Toyota, knowledge is disseminated via the unmediated interaction between hierarchies at

various plant. It involves the transfer of knowledge via direct connections between Toyota plants
(Higuma & Suh, 2017). For instance, knowledge gained at the assembly point may be disseminated
if it proves useful for other plants and is shared between hierarchies at various plant.

Knowledge diffusion by OMCD (operation management consulting division)

This division is made up of teams in different study groups who jointly discuss solutions for issues
in relation to production. The hierarchies in various groups transfer knowledge and solutions
created to other production points that may need it. According to Higuma and Suh (2017), the
OMCD transfer knowledge in two forms;

1. By developing and setting standards based on knowledge gained from each plant and
disseminates it. This solves disparities in knowledge gained from various plants.
2. Knowledge learned from domestic plants, overseas plants and suppliers is directly used in
solving problems.

Knowledge diffusion by GPC (Global production center).

This mode of transfer sets the most basic skills needed in automaking and develops tools to teach
these skills with well explained visual manuals to workers on the production floor.

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Role of knowledge in an organization

According to Tseng (2016), management of knowledge is vital in an organization because

1. It helps speed up access to information and knowledge.

2. Decision making is made easier when in process.
3. It fosters innovation
4. As in the case of Toyota, it improves efficiency in its production processes.
5. Creates value for customers investment

In conclusion, Toyota’s local knowledge network keeps a balance between the heterogeneity and
evenness of knowledge produced on the production floor through a blend of nodes at various
standardization levels.

Organizational learning

According to Kiernan (1993), learning will become the only viable option to corporate extinction
amidst the need to stay competitive, globalization, the need to innovate and the constant change in
information technology.

Organizations basically learn through their individual employees (Kim, 1993).

Organizational learning is knowledge acquired by individuals and it readily made available and
applied in the procedure of decision-making of an organization or used to influence others within
the organization (Miller, 1996).

Toyota Production system uses Kaizen activities in its production floors. Once the results of the
kaizen idea implemented has a positive effect on productivity, it becomes set standard. Over time,
the standards implemented on each plant are developed to meet changing conditions both internally
and externally. The Kaizen ideas is generated by workers in productions floors. The leaders then
confirm and compiles the ideas as a solution which is then submitted (Monden, 2006).

Toyota engages in constant learning by way of construction of new plants and refurbishments to
existing plants to meet changing market demands. According to Fujimoto (1997), Toyota

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constructed new assembly plants, both domestic and abroad and also implemented new assembly
systems. As a response measure to unique conditions on various production floors, unique
production systems were created. The ‘Toyota (lean) production system’ drove superior
organizational learning, innovation and control with positive implications for customer-oriented
outcomes. According to Dyer and Nobeoka (2000), Toyota domestic knowledge network
expanded overseas.

According to Heisig (2009), the important success factor involved in the management of
knowledge and strategic alternatives include human-centered elements (culture, people, and
leadership), organization-centered components (procedures and structures) and management-
oriented components (strategy, objectives, and measurement).

According to Volti (2005), Toyota has developed its production chain worldwide such as in the
US, Australia, Asia, the EU etc. Its plant manufacturing and assembling cars can be found in other
markets such as China, Argentina, Mexico etc. Volti (2005), furthermore went to say Toyota
realized that the failure to take advantage of the potential of new markets can result in negative
outcomes to its position in the business environment.

Toyota Production System (TPS) is a good example of operational effectiveness. Toyota

Production System and its operational effectiveness constitutes a competitive upper hand for
Toyota (Liker, 2004). The sharing of knowledge and organizational learning plays an important
role in establishing and mobilizing the power of the unique Toyota way.

Conclusion

The development of human resources becomes an urgent priority. An effective Strategic

knowledge management fosters a good understanding of its human resource capital as an asset and
how to capitalize on it to gain a competitive edge over its competitors for survival. According to
Mu and Benedetto (2011), once an organization has a shared partnership system, individuals will
easily meet each other's demands, enabling teamwork, facilitating information exchange and
sharing, and increasing resource unification in productivity.

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