Toyota as a Global Corporate Citizen
Toyota’s incredible success as a truly global corporate power can be attributed to many factors, but the one that sets it apart is its emphasis upon being a “good corporate citizen” of every country in which it does business. By respecting and engaging the culture and communities in which it markets its products, Toyota minimizes concerns over the import status of its products. In the countries where Toyota has established large manufacturing operations, these investments have even given the company favored status in state and local communities as a large employer. These strategies, combined with Toyota’s traditional team-oriented and methodology based management have created a company which can deliver high quality products in an efficient business model.
Toyota International Marketing Strategies
As it has from its humble beginnings in 1937, Toyota continues to win success by blending smart business with social, cultural and environmental awareness. Toyota’s marketing material and news releases consistently stress social awareness and responsibility as strongly as profitability to measure corporation’s success. For example, Toyota’s mission statement calls for “stable long-term growth, while striving for harmony with people, society and the environment,” while their website repeatedly describes their social contributions and efforts to be a “good corporate citizen” (Toyota website, 2005). This approach is key to Toyota’s global success from a marketing standpoint.
Unlike many other auto manufacturers, Toyota has gone beyond promoting the product itself in the creation of their brand. By extending manufacturing operations into their target markets, Toyota makes their brand socially and politically more acceptable. Americans can buy Toyotas and still “buy American.” Europeans can spend their Euros at home. Toyota’s awareness of and sensitivity toward the socio-economic forces that affect their market have shaped their international marketing and operational strategies and become central to their highly successful and truly global corporation.
Toyota’s Social Conscience
Toyota dealt with their one and only labor strike in 1950, from which they emerged “firmly committed to the principles of mutual trust and dependence.” This phrase describes well their overall philosophy of doing business not only with their employees, but with nations where Toyota products are sold.
A Case Study: Toyota in America
Toyota’s approach may have been a hard-won lesson resulting from early mistakes in marketing their autos in America. When they initially sought to market automobiles in the U.S. in 1957, the effects were “disastrous” according to the Toyota website for Great Britain. The first model introduced, the Crown, was completely wrong for the U.S. market. In addition, Toyota met resistance from a market accustomed to buying only American products. And because of economic conditions, U.S. citizens were hesitant to spend U.S. dollars on imports. “Buy American” and “Eat Your Import” were the slogans seen everywhere on bumper stickers, T-shirts and hats. With the introduction of the Corona model in 1965, Toyota dealers experienced some success because the Corona was far better suited to the U.S. market. It was smaller, had aggressively lower pricing than American cars and excellent fuel economy. Yet Toyota sales were still no threat whatsoever to American carmakers at that time.
Social Factors Influence U.S. Auto Sales
An unpredictable event occurred which brought Toyota to the forefront. The OPEC oil embargo that began in 1973 sent Americans in search of fuel-efficient cars, and U.S. manufacturers simply could not deliver. Toyota was one of a handful of brands that could, and therefore reaped tremendous benefit as sales rose while that of U.S. manufacturers (still producing the huge gas-guzzlers favored by Detroit designers) rose much more slowly or dropped. Toyota owed its initial success in the U.S. market to social factors.
Toyota in Joint Venture with General Motors
Whether Toyota management learned their lesson from the oil embargo, or from their earlier experience with the labor strike (or a combination of both) is unclear, but no matter what the case, they seemed to put their philosophy of being a “good corporate citizen” into high gear in 1984 when they went into partnership with U.S. auto manufacturer General Motors. The deal seemed the perfect win-win situation for both companies: General Motors would learn manufacturing and quality methods from the Japanese, and Toyota would learn how to run manufacturing operations with American employees. The resulting partnership allowed Toyota to claim they were selling cars made in America to Americans (negating the “Buy American” argument that still hampered sales in some market segments).
This partnership (called NUMMI for New United Motor Manufacturing, Inc.) also exposed American auto makers to Toyota’s team-oriented culture. Though sometimes criticized for hampering creativity and originality, Toyota’s team-based approach created an environment where quality and productivity could be maintained at peak levels. Toyota also employed a “just-in-time” supply chain methodology which drastically reduced their raw material inventory, and kept the company running “lean” from a financial standpoint. Exposure to these methods helped American auto manufacturers begin to think and move beyond the recession that followed the oil embargo toward greater efficiency and a renewed ability to compete (Toyota website, 2005).
The NUMMI partnership also strengthened Toyota’s and Japan’s position politically. Though there was still a trade deficit, Japan was moving toward a far more equal distribution of resources. Toyota slowly became an important employer in depressed areas of the Americas such as Kentucky, West Virginia, etc. Instead of a foreign corporation “stealing” American dollars, Toyota became an integral part of the communities where their products were sold.
Toyota in America Today
In recent years, Toyota has dominated sales figures for the U.S. market, and has at least nine operational centers that include both manufacturing and design. This investment and community presence has made Toyota not only an integral supplier of automobiles, but of jobs as well. In North America, Toyota manufactures 1.44 million automobiles, 1.27 million engines and almost 400,000 transmissions per year (Toyota website, 2005). In fact, according to sales figures published by Toyota, a Toyota vehicle purchased in the U.S. is more likely to be manufactured in America than in Japan (Toyota website, 2005). Recent news items include new or expanding manufacturing plants in North America (Alabama, Texas and Tennessee in the U.S., plus new plants in Canada and Mexico), clearly showing a healthy, growing commitment to the West.
Toyota in Other Countries
Does the American example hold true in other foreign markets? According to Toyota, the company’s first major foreign market was the United States, and the lessons learned there informed strategies later used in the European and other markets (Toyota website, 2005). Toyota has replicated not only the practice of customizing automobile models to meet market needs (as they did with the Corona in the U.S.), but also the practice of placing manufacturing plants in countries where they market their products. Toyota currently has 51 manufacturing companies in 26 countries. While the 12 manufacturing plants located in Japan manufacture about twice the total number of cars of those manufactured overseas (and are clearly central to corporate operations, it is obvious that with 51 overseas plants in 26 countries, Toyota is expanding manufacturing capabilities overseas. Clearly, Toyota is heavily committed not only to its global marketing strategy, but its strategy as a global “citizen” as well.
Other Aspects of Toyota Management Style
Toyota’s organization and management methods work seamlessly with their marketing strategy in a way seldom achieved by organizations of their size. As with cities, large corporations often grow organically, and take on infrastructure and organizational characteristics as they acquire new additions. With Toyota, the emphasis has been upon maintaining a single management culture which is flexible enough to adjust the product and marketing strategies to each new market. Toyota is centrally controlled by the corporate offices in Japan, and Toyota Motor Corporation (the parent corporation) owns a majority of the stock for all subsidiary and overseas operations (Toyota Annual Report, 2005). However, overseas offices are managed by a combination of Japanese and local executives. This collaboration allows Toyota to better understand the needs of their market while maintaining control over profitability and brand identity.
One weak point in the Japanese approach may be their traditional hesitance to include women in positions of influence. In countries where women are leading the market as purchasers, this oversight could certainly cost them in the long run. It remains to be seen whether Toyota can adjust its cultural approach enough to include women into its power structure, or at a minimum, the marketing arm of the organization.
References
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Toyota.com website. (2005). Sales and Service. Retrieved December 18, 2005 from: http://www.toyota.com/about/operations/sales-service/index.html.
Toyota.com website. (2005). Toyota Global Production Center. Retrieved December 18, 2005 from: http://www.toyota.co.jp/en/special/gpc/gpc.html.
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