centertopHOLMES INSTITUTE FACULTY OF HIGHER EDUCATION
HI5013 MANAGING ACROSS BORDERS
76500HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION
HI5013 MANAGING ACROSS BORDERS
The changing culture and trends across the world makes a good to get a chance to be global and worth using. There are many industries, and other businesses which are renowned internationally. Among them this report tends to analyze will discuss about an automobile company which has international fame and to be a global company how it has approached the international market along with its techniques to be in a global market along with the challenges being faced by the particular company to sustain in the international arena.
Tables of contents
TOC o “1-3” h z u Introduction PAGEREF _Toc514787537 h 3Company Background PAGEREF _Toc514787538 h 4APPROACH TO INTERNATIONALISM (Globalization ) PAGEREF _Toc514787539 h 4Strategies used by different organizations to compete in the local market PAGEREF _Toc514787540 h 5CHALLENGES AND PROBLEMS AFTER EXPANDING ACROSS ASIA/ OBSTACLES PAGEREF _Toc514787541 h 7Innovation and Product differentiation strategy PAGEREF _Toc514787542 h 8CONCLUSION PAGEREF _Toc514787543 h 9References PAGEREF _Toc514787544 h 11
Globalization contains of accrued interdependency and integration of the worldwide economy. this implies that there’ll be a rise within the movement of capital and labor. globalization comes with each benefits and downsides. the most benefits of globalization are economies of scale, larger competition and lower costs (Beck,2018). because of the advancement of globalization, the economy of the UK has huge restructuring, therefore increasing the competitive level within the market. This has occurred because of the explanation that the majority of the producing organizations of the country have transferred their production offshore. This has allowed the various business corporations to target the values and ability activities, as an example, marketing, development and style, research, then forth. so as to operate within the international market, the manager of the individual business organizations has to remember of the core trends of the international business to stay profitable within the market. within the past few years, the speed of globalisation has improved for many reasons. With the event of communication, transportation, and ICT, globalisation has unfold at a speedy pace. straightforward net access and also the sturdy presence of the social media have additional added up to the expansion and development of globalisation. different necessary factors, that have improved the pace of globalisation, ar the invention of latest electronic gadgets like, Smartphone and also the electronic payment ways like, pre-pay, e-Wallets, e-invoice, mobile pay apps then forth.
Once there was a time when vendors used to travel for the trade and now we have several options for the trade not only nationally but also internationally and that is possible through the global market and international trade. Development in multiple sectors like transportation, communication, education, health and other related phenomenon are responsible to be linked globally for the expansion of economy and business. Nowadays if a creation is unique and unexpected and the things which stand out get the attention whether it is in social media or in the market. It can be a fashion, the luxury item, or that is an automobile.
Company BackgroundAlthough the company stopped its production at the time of world war second and with the drowning economy , the Japanese brand Toyota became the largest automobile manufacturer in the world for the first time in 2008 after its huge struggle to be a global brand and after competing especially with the -then growing American automotive industry. These days around 600 subsidiary companies are involved in production of automobiles, automobile parts, and commercial and industrial vehicles. Initiated in 1933 as a division of the Toyoda Automatic Loom Works, Ltd and later Toyota Industries Corporation, now a subsidiary is a Japanese manufacturer founded by Toyoda Sakichi. Its first production car, the Model AA sedan, was released in 1936. The following year the division was incorporated as the Toyota Motor Company, Ltd., an automotive spin-off headed by Toyoda Kiichiro, Sakichi’s son. Toyota subsequently established several related companies, including Toyoda Machine Works, Ltd. (1941), and Toyota Auto Body, Ltd. (1945)
Approach to internationalism (Globalization )What if you have more goods and the demand also rises accordingly. Definitely the industry wants to expand its business out of its comfort zone as it is said ‘More risk more gain’. Toyota was becoming a renowned brand in Japan and they thought it to take it out across the nation to be a global brand. After getting the fame as Japan’s biggest car company, it listed its name as the second largest position in the world after General Motors. It produces around eight million vehicles per year, about a million fewer than the number produced by General Motors. In course of being international brand it has expanded its markets vehicles in over 160 countries. The company dominates the market in Japan, with about 45% of all new cars registered in 2004 being Toyotas. Not only in the nearby nations Toyota also has entered in the European and North American markets along with it has significant market shares in south east Asian markets like Philippines and Malaysia. Manufacturing in a single nation and supply was not enough for a global brand so Toyota opened its manufacturing or assembling stations all over the world which aimed vehicles for local markets, including its most popular model, the Corolla. The United States cannot be ignored by international traders. Toyota was clear about the idea of flourishing its business towards its competitive market of United States. With the aim of establishment in competitive market it has manufacturing or assembly plants in the USA. Joint ventures with international manufacturers marked the imitation of this new approach. At that time, the U.S. manufacturers General Motors and Ford were beginning to promote their cars plans aimed at producing small passenger cars on a global scale to meet the rising demand for these cars. So the trend of merger was practiced. The companies went in joint venture, a long-term alliance in which is member has an equity stake and exercises control and influence over decision-making that could offer fast and successful entry into a new location than trying to enter it alone. These benefits may spring from a partner’s local knowledge, the presence of existing distribution channels or the increased likelihood of a successful tender because of the presence of a local partner.
Strategies used by different organizations to compete in the local marketAs part of this policy, Isuzu and Suzuki also entered into international manufacturing tie-ups with General Motors; Toyota established a joint venture company, New United Motor Manufacturing Inc. (NUMMI), with GM in the United States; and Ford expanded and reinforced its ties with Toyo Kogyo (now Mazda) in a strategy centered on Asia and the Pacific region.
Its entry in multinational market especially in Europe was its grand success in capturing the big market. After its presence in Brazil it started to expand gradually and profited in building long-term relationships utilizing local distributors and local labor. Signing the first distributor agreement in Denmark, in 1960s, the brand initiated to import first car to Europe and it could obtain its distributors other regions. No doubt the company faced the problems in car maker nations due to their strong sales networks like Great Britain, Germany, France and Italy. Despite that its exports to other markets grew significantly. Strategy of having at least one dealer or distributor in each country helped to capture the market. Internationalization process of Toyota in the Euro market started afterwards than American and Asia where in this market the policy was applied in a little bit different way of enter due to the size and the policies adopted by the concerned authorities.
By 1972, company made Europe as its second international market exporting more the three hundred thousand units. At the prime of profit to organization by a huge of exports some of the European countries adopted the policies to protect their automotive industry. Moreover, the European commission wrote to Japanese government to minimize their export to the member countries of European commission. This situation forced the company to change its strategy to approach the international market. As a result it changed its strategy not to be limited with in the Europe and surroundings. The USA, the UK, the Australia, ASEAN countries and the South Africa were remaining major market with the better so it expanded its network globally to those regions. Unlike other brands, Toyota enlisted its name as a producer of hybrid cars. Toyota is keeping an eagle eye on increasing demand for such vehicles aiming to sell it as an option for those cars which are fully dependent on gas. Not only had that it seemed caring the global warming being caused by poisonous smoke of cars. Markets of Russia, China and India are emerging and huge markets so the Japanese are concerned typically on the Chinese market as it has enlisted their country as the highest growth in terms of economic growth and the automotive portion has a high demand it needs to be expanded, which makes Toyota haste for grasping the Chinese market.
Toyota is so popular that it crossed the borders into Asia and other continents. It has uniqueness in in various fields. We already talked about its hybrid car which is about its product strategy. The uniqueness in quality, innovative technologies with research and Japanese hard work made it to be an international brand.
The oil and economic crisis in Southeast Asia did not made huge effect on its international sales. It was managed by the increase in sales in the North America and Europe and had no extensive effect on its overall profit.
Challenges and problems after expanding across Asia/ obstaclesFirms go global to enhance their market share which is linked with profit. In previous times it was a tough thing to practice but with the advancement in technology and by the use of internet many companies are expanding their business globally. The other advantage of being global can also increase the presence which leads to brand’s prestige. It is just like added prestige to the existing prestige. Hoping many thing brands go global. The Toyota motor has faced various obstacles while expanding their business internationally.
First and foremost thing before the firm expansion the company has to go for feasibility study. Among them understanding the local situation for the market was also the challenging factor for them. Before entering the European market they knew about the local condition. Concluding it with the fertile area for sales it expanded there. But the both problem and an advantage both lies according to the policy by the law enforcement agency. In the entry mode some kind of high risk had appeared like a merger venture in United Kingdom, or wholly owned subsidiaries in France.
There are two sides of the coin one is the restriction which definitely disappoint the investor whereas sometimes host becomes too flexible and exercise up to tax holidays or providing motivations via incentives. We have an example of oil crisis period. As Toyota motors were highly popular in less fuel consumption it increased its export significantly. At the prime time the government announced new rules to protect local companies nearby. So to adapt the situation Toyota shifted market center from Danish territory to the English. It was an action from only exporting to the joint venture. Leaving the unstable countries in their economy Toyota internationalize in Denmark, UK, France and so on because all of them are listed as developed and the nations with economic stability.
Innovation and Product differentiation strategy
China is a leading economy in this era where Japanese automakers are affected due to anti- Japanese sentiment in china. So automakers from Korea and Germany are taking advantage in Chinese market. Toyota is losing its potential growing market due to escalated tensions between these nations. This scenario can affect in Toyota’s long-term benefits. Despite being Asian automaker its failure to be in the top list and ahead of general motors is a huge challenge for the company. Another factor is we discussed earlier about its eco- friendly cars; though it initiated this, it made a delay its mainstream environment friendly motors seems disappointing. The future of vehicle is in the innovation and it shows the innovative path towards the electric vehicles. In the electric vehicle segment Toyota seems backward in comparison to General Motors.
According to an Article, “Toyota’s portfolio lacks the strength in the mainstream electric vehicle segment. The competition in the EV segment is likely to intensify in years to come. Legacy automakers (XLY) such as General Motors (GM) and Ford (F) have already jumped in the race to compete with Tesla’s upcoming first mass-targeted EV Model 3.
Notably, GM plans to launch its all-electric model, the Chevrolet Bolt, in 2017. The car, which may be priced around $30,000 after federal incentives, is estimated to have a 200-mile range. The Chevrolet Bolt will be a mass-targeted EV. The production of this vehicle is expected to begin in late 2016 at the company’s Orion assembly plant. In our view, it’s high time for Toyota to gear up and showcase its strength in the mainstream electric vehicle segment.”
One of the major problems faced by the company was economic recession but Toyota could address it but the issue of recalling sold vehicles on 21 January 2010 made a huge difference in the image of the brand. The media along with its users, politicians started reacting which made a huge effect on its established image. The negative news became viral via the social Medias like twitter and facebook and hit even the local market of Toyota including India, China, and Europe and around the world. Until the company is too keen about its product and take action accordingly, it can cause a great harm in the established image. Conclusion
Although Toyota faced various problems in expanding the business from recalling the products to oil crisis along with the restrictive policy of national, international law enforcement agencies, it managed to be a leading company. Taking responsibility of a multinational brand it has strategic global policies considering the characteristics of markets in which it acted accordingly. It seems Toyota has adopted the policy of ‘think global, act local’. It is proved by its expansion of business using the local labor and merger with the other companies in international sector to address the local needs. By the above credentials we can say the success behind the story is its high quality products with researched technology, eagerness in new models according to the demand of market, new and genuine technologies along with the care for the environment and fuel consumption addressing the consumer needs. Toyota seems capturing the growing potential markets with economic prosperity. In some countries of Europe and other emerging countries it has expanded with the lower wage and flexible markets.
In the growing markets of Brazil, Russia, India and China Toyota made low cost cars to compete with the Cherry and Tata motors. Just like a saying “There is never sun set in British Empire” even after the global economic crisis the company manages to remain on the top of the most successful multinationals companies of automotive sector. Despite the fact that company recalled its sold vehicles from the market, still it has won the heart of its customers by it loyalty and honesty. Not only they took the vehicles back but also asked public apologies for their short comings and vowed to address these problems by the innovative technologies. By facing many ups and downs Toyota managed to cross the national boundaries and established itself as a global brand.
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