Introduction to Strategic Management and Business Policy
At the time, the former king of Thailand, Bhumibol Adulyadej, showed concern for the
issues of possible unemployment and granted a purchase order to TMT to produce a Toyota
Soluna (Vios) and prolong the working period of Thai workers. Instead of selling the vehicle,
TMT presented it to the king as a gift; the King, in turn, granted $17,518 (600,000 baht) to
TMT to help establish the Rachamongkol Rice Mill, a project spearheaded by Ninnart Chaithi-
rapinyo, the Vice Chairman of TMT. As an ongoing TMT-CSR activity, the mill still helps rice
farmers maintain their crop prices and benefits TMT associates and the overall community.
In brief, TMT overcame the crisis of 1997 by using Kaizen to strengthen its competitiveness
and improving communication among top management and all of its associates.
In its developmental path towards sustainability, Toyota Motors set a Global Vision. The
medium- to long-term management plan is prepared and implemented with the control-
ling measures as a feedback in its management system. In the implementation process, the
Toyota Way 2001 and the Toyota Code of Conduct serves as an important global guideline
for daily business operations for all employees.
Toyota’s divisional organization structure is based on varied business operations, but
is linked to the traditional Japanese organizational structures. In 2013, as a response to the
safety issues and corresponding product recalls crisis of 2009, the centralized hierarchical
structure underwent significant changes to become more decentralized. After the re-organi-
zation, Toyota’s new organizational structure has the following main characteristics: global
hierarchy, geographic divisions, and product-based divisions. The company is now more
capable of responding to regional market conditions and is empowered to speedily respond
to issues and to provide higher quality products. However, the increased decision-making
power of regional heads has reduced headquarters’ control over the global organization.
Still, this organizational structure facilitates business resilience and continued growth.
A study by Wells and Orsato (2005) suggests that there is currently a shift away from
the current all-steel, internal combustion engine car, which requires automakers to funda-
mentally reform their systems of production. The business challenges and the governmental
regulations to preserve the environment means cars of the future have to be eco-friendly.
This created a big challenge for auto firms that have sunk investments in the existing tradi-
tional car manufacturing technology.
In 2009, as a result of its worldwide recall-crisis and with over 8 million vehicles addressing
issues related to ‘unintended acceleration,’ Toyota had a great lesson in keeping up with its
production and leveraging of quality, durability, safety, and reliability issues. The company con-
tinued to develop innovative models to overcome environmental regulation challenges and to
add a ‘humanistic’ dimension to consumers’ image of auto companies. Its strategic direction is
to go beyond zero environmental impact and achieve a net positive impact and sustainability.
SOURCES: Orsato, R. J. and P.Wells (2007a) “The Automobile Industry & Sustainability”, Journal of Cleaner Produc- tion 15 (2007) 989-993; Orsato, R.J. and P. Wells (2007b) “U-Turn: The Rise And Demise Of The Automobile Indus- try,” Journal of Cleaner Production, 15 (2007) 994-1006; Wells P, Orsato R. Redesigning the industrial ecology of the automobile; Journal of Industrial Ecology 2005;9(3):15e30; Prahalad C, Hamel G. “The core competence of the corporation,” Harvard Business Review, Vol. 79-91, May and June, 1990; “Top 100 Most Innovative Companies Shift Focus from Quantity To Quality,” Clarivate Analytics, http://www.prnewswire.com, accessed January 2017; “The Most Innovative Companies 2016: Getting Past “Not Invented Here”,” The Boston Consulting Group, https://media- publications.bcg.com, accessed January, 2017; Guiding Principles at Toyota, http://www.toyota-global.com/company/ vision_philosophy/guiding_principles.html; Jon Miller, “Challenging ‘Challenge’ Within the Toyota Way,” Quality Digest, November 19, 2012, https://www.qualitydigest.com; Lawrence Gregory, “Toyota’s Organizational Structure: An Analysis,” Panmore Institute, February 1, 2017, http://panmore.com/toyota-organizational-structure-analysis; and http://www.toyota-global.com/sustainability/environment/challenge2050/
CHAPTER 1 Basic Concepts of Strategic Management 37
The Study of Strategic Management Strategic management is a set of managerial decisions and actions that help determine the long-term performance of an organization. It includes environmental scanning (both external and internal), strategy formulation (strategic or long-range planning), strategy implementation, and evaluation and control. Originally called business policy, strategic management has advanced substantially with the concentrated efforts of researchers and practitioners. Today, we recognize both a science and an art to the application of strategic management techniques.