Strategic Management Essay Example for Free

Strategic Management Essay Introduction For a company to succeed in its businesses, strategic management must be its main agenda. Managing multinational companies can be a hectic job and can end up in disarray if not well structured. Strategic management is based on a company’s top brass of management. The top management of the company is always at the center of decision making process on behalf the real owners of the company. This set up is in charge of mobilizing resources and structuring the company to match the external business environments. Formulating policies, planning and setting of objectives is the management’s concerns. Strategic management also deals with the achievement of the company’s vision through fast tracking the mission, programs and projects. In strategic management, there is a deliberate effort by the management to strike a scorecard that is balanced through evaluating the general performance of the business and the steps toward the achievement of the business’ set objective. Strategy in any business or company is in line with the expectations of all the stake holders of the business and must be based on the stakeholders’ objectives. Most multinational companies that have managed to be main players in the global business market have history of effective strategic management measures and settings. Such companies include the Coca-Cola Company, the Toyota Company, and the Hyundai Company among other multinational companies. Strategic management is the backbone of a successful multinational company or global business. Witcher Chau (2010) Background study For any company or business to be competitive in the market, there must be a high level and a well coordinated strategy management which is the fundamental aspect of tactics and goal setting. Strategic management is always vital in offering the direction to the business and its ultimate success. In business administration, strategic management and strategic consistency between the business and its environment needs to be struck. In various companies, strategic management is always undertaken by a management team which is mostly comprised of a Board of Directors among other stakeholders. Amason (2010) Different companies employ different strategic management approaches in trying to stay competitive in the business environment. The management boards in different companies apply different processes of evaluation and controlling the businesses and the various industries that are involved with the company. This is the case in two leading automobile companies, the Toyota and Hyundai companies. In assessing their competitors’ strategies, the two companies use various strategy management processes. Despite executing different strategic management forms, both companies consider basic factors in strategically managing their businesses. Such include the size of the organization and the need to adapt to the changes of the business environment. In order to achieve the objectives of any company, there are various aspects and concepts that need to be explored. A strategic management which is more structured may be employed in consideration to the size of the company, operations, requirements and the views of the stakeholders. Strategic management plays a very important role in shaping the way a business is run or the success and achievements of a company. Nevertheless, strategic management is always tied to the goals, vision, mission and the objectives of the company. In managing a company, the management board or team do work towards the views and expectations of the owners of the company or business. Hitt, Ireland Hoskisson (2009) Toyota Motor Corporation The Toyota Motor Corporation is based at Toyota at Aichi in Japan. The multinational company is an automaker with a large employee base of over 400000 employees with the largest manufacturing capacity of automobiles and specifically the famous vehicle brand ‘Toyota’. It terms of world revenue, the Toyota Company sits at the eleventh position and had manufactured an estimated 200 million vehicles in July 2012. Founded in 1937 as a family company by Kiichiro Toyoda, the company has been keen to strategically manage its businesses. The Toyota Company has had a choice of leadership that has embraced the benchmark of quality, perfect practices and corporate responsibility in the wake of stiff competition and technological advancement in the global market. Borowski (2010). The strategies of the company have been deeply rooted in principles that have continued to improve the respect for people, their strategy framework as been gearing towards waste cutting, positive attitude building and maximum utilization of the inherent talents of the workers. The Toyota Company has managed to create an impression of social responsibility in the global market. The company has exploited a number of strategies with a view of being the best company in terms of product quality and service provision vis-a-vis matching growing customers’ needs and technological advancement. The management board of the Toyota Company has been vigil to clinch any opportunity in developing and growing the company’s worth, a strategy that has gone a notch higher to see the company explore options of developing hybrid cars among other market strategies. The underlying strategy of the Toyota Company is rooted in rewarding merit and identifying faults in an attempt to perfect the product and service delivery. Through this basic strategy, the Toyota Company has managed to propel its influence and achieve an extensive customer base. Magee (2008). Strategy and management The success of the Toyota Company is attributed to its strategic management formula that has made them to remain competitive in the automobile market while maintaining the quality and efficiency of their products. The philosophy of management at Toyota Company has continued to evolve over a long period of time. This management philosophy has been built on the original value of the company which was centered on ‘Lean manufacturing and the concept of production in time. These two concepts have been vital in the development and growth of the company. The Toyota Company strives to produce designs of cars that are exclusively ideal and perfect. In its lean manufacturing policy, the company aims at achieving a customer ideal production which will eventually cumulate to customer satisfaction. In this quest, the Toyota Company has been producing different models of cars in order to meet the demands, taste and different preferences of its customers. Hino (2006). This has enabled the company to remain competitive and to have a wider market area. The business strategies and managerial values have been collectively convened into a single structure referred to as the ‘Toyota Way’. a. The ‘Toyota Way† The ‘Toyota Way’ was one of the strategies that the Toyota Company adopted in order to help them stay ahead in the automobile industry. It is a set of values guidelines of conducts that all the employees at Toyota are expected to embrace. The strategy had two main pillars; Continuous improvement and Respect for People. Liker Jeffrey (2011). All the conduct guidelines and values of the Toyota Company are summarized into major principles of embracing challenge, striving to improve their services and products, respect to customers, teamwork and a ‘go and see’ slogan. This is a strategy that the company has employed to ensure that the employees not deviate from the main objectives of the company thus enhancing success in business thus working as a driving force towards an achievement. Liker (2003). The strategy has also aided the formation of identity and has kept the spirit of quality and service which has helped the company to be outstanding among other automobile manufacturers. Alongside the Toyota Way are four other components that complement the strategy. These components include management decisions that are based on long term deliberations and a comprehensive problem solving process. Further, the aspect of focusing on the development of the people has added a lot of value to the organization. Consequently, the Toyota Company has embraced the art of organizational learning through solving the root problems continuously in the organization. Ono (1988) b. Worldwide establishment The Toyota Company has used a world presence strategy that has made them be a common household name in terms of automobile development. Through intensive marketing and strategic management, the company has expanded tremendously thus establishing factories in a majority areas in the world that deal with assembling and manufacturing of different types of vehicles. The Company has set branch factories in countries like South Africa, Turkey, Japan, India, The United States of America, Brazil, France, the United Kingdom, and Columbia and has recently established factories in Thailand, Mexico, Malaysia, Argentina, Pakistan, Vietnam, Russia, Egypt and Mexico. In this manner, the company has been able to meet the rising demand for automobiles and have provides a large variety of automobiles thus giving the customers the large variety to choose from. This is a strategy that has ensured that the products of Toyota Company are accessed by most people around the globe. The strategy of worldwide establishment does make a company to be widely known and become easier to be identified with. c. Electric technology Strategic management is all about exploring the possible options that can assist a company to be elevated above its competitors. This means that every implemented strategy needs to be suitable to effectively achieve the mission, feasible to ensure that it is applicable and that the strategy is accepted by the stakeholders. The management team at Toyota Company has explored the application of electric technology which is feasible, acceptable and suitable. In this respect, the Toyota Company has gone a long way in releasing hybrid electric vehicles into the automobile market. It has been the first company to introduce and sell hybrid electric vehicles, thus shaping the face of the automobile industry. In 1997, the company introduced the Toyota Prius and started producing vehicles that were smaller but maintaining the luxurious touch. Such cars like Lexus and Camry were received into the automobile industry with excitement, a sign of an effective strategic management implementation. Anderson Judy Anderson (2010). In 2012 October, the Toyota Prius became the hybrid car that was best sold in the whole world and this earned the Toyota Company about 2. 8 million units. This high sale was replicated in most parts of the world. Later in 2012 October, the company was the first to manufacture a passenger car that was hybrid and a motor vehicle hybrid that was one plug in model. This model was availed to around 80 regions and countries worldwide. The company has an aim of achieving the launch of a 20 hybrid vehicles models at the end the year 2015. Hyundai Motor Company. The Hyundai Motor Company has been a main player in the motor industry just like the Toyota Company. It is a multinational automotive company with it’s headquartering in South Korea in Seoul. Founded in 1967, Hyundai is ranked the forth in terms of automobile manufacturing having sold about 3. 6 million vehicles in the year 2010. Hyundai is the largest automobile company that is integrated with an employee base of around 75000 people working in the factories worldwide. Hyundai Company has applied strategic management in its success story. The company has set up 6 development and research centers across the world. The company has also an established center in California for designing automobiles specifically for the markets in the United States of America. Hyundai Company has applied various forms of strategy to remain equally competitive. The Hyundai Company has been able to establish a system of quality management which has gone forth to help the company achieve the status of a major player in automobile industries and machineries globally. In this sense, the company has realized a top class service provider status. Lansbury, Chung , Sok Suh, Kwon Ho Kwon (2007) a. Product development. Hyundai has strived to improve the quality levels of their products through application of unique procedures. The company has applied pilot production vis-a-vis researching by center engineers in an aim to meet the desired levels of production. The pilot production is a strategy that Hyundai Company used to avoid problems during the production of automobiles in mass. Through the large pilot plants, Hyundai Company is able to ensure there is quality in the production of its models. The company is also striving towards achieving a perfect product quality in order to be at the helm of profit making. Henry (2008) b. Outsourcing Outsourcing has been part of Hyundai’s strategy to maintain the quality of products they offer. This is a strategy that amalgamates various parts manufacturers who manufacture specific automobile parts before the parts are assembled by Hyundai to form complete automobiles. This strategy contravenes the Toyota policy whereby the manufacturing of the automobiles is done wholesomely by the company. The Hyundai Company outsources companies which make parts. The outsourced parts are sub-assembled into some modules which are further assembled into final automobiles. This strategic management aspect has made the Hyundai Motors Company to save a lot in terms of profits. Through outsourcing, the company has been able to shift its concentration more on marketing and product development and not to worry about the production of parts. This aspect of the Hyundai production model has been advantageous to the company as it accumulates more resources and channels them towards marketing and improving on its products. c. Advanced philosophy and Quality innovations strategies The achievements made by the Hyundai Motors have been as a result of quality innovations. The company, through strategic management organs, has weathered the challenges of hostile and competitive business environment through application of innovation. There has been an increase in customer satisfaction which has proved that the Hyundai Company has the ability to marshal massive shares in the market. As a result of aggressive and intensive innovations, Hyundai has come up with vehicles which meet the customers’ demands, wishes and comfort. This has been in line with the achievement of the company’s objective of meeting customer satisfaction and bringing ultimate elegance, enjoyment and creating confidence in its customers. The style and luxury that is aimed at by the Hyundai Company is thereby achieved. This strategy has ensured that Hyundai Company stands out in terms of class and design, making its products popular among people worldwide. Despite the growing fierce competition in the automobiles industry, Hyundai Company has managed to stay at the top in terms of quality and market base as a result of its management philosophy which is advanced. Its strategy has ensured that there is a clear cut for the future of the Company not leaving the customers behind. Hyundai’s philosophy has seen an increased favor among the customers due to its striving to make products of good quality and its main goal of laying emphasis on the satisfaction and efficiency of its products to the customers. Hyundai has continued to be a global brand name in automobiles. This has been boosted by the fact that the company has been creating an impression of fairness and transparency in terms of the acceptable and expected business ethics. d. Expansion of production Hyundai Company has employed the strategy of market expansion as a way to ensure it achieves its main objectives. It has increased the shares of its export in the market internationally and domestically. During the economic recession in the year 2009, Hyundai still managed to export 1. 3 million vehicles amidst a production capacity of 1. 6 million units. This strategy ensured that the company stayed at the top of automobile manufacturing and assembly industries when other players were diversely affected by the recession. Its marketing strategy and management strategy strength is further exhibited in the company’s success in increasing its market shares in the United States of America. This has gone a long way in improving on the quality of the company’s products. Hyundai has also extended its competitiveness in engaging in overseas businesses since the late 1990s. It has established its products in Alabama, Montgomery among other areas. In North America, Hyundai’s plant was ranked second in the level of productivity. e. Electric vehicles Just like the Toyota Company, the Hyundai Motor Company has embraced the use of electricity in the manufacture of vehicles. The company has introduced a hybrid electric automobile to match the increasing technological advancement. In 2008 November, the company introduced the first electric car which was facilitated by the technology of lithium polymer battery. In applying the electricity technology, Hyundai Company aimed at achieving sophistication, style and class in order to remain as competitive as possible. Chris, Masrur, Gao (2011). The strategy of applying electricity technology has ensured that the company has been at par with the other automobile producers to ensure that it does not lose its grip on the top spot in the global business. Society of Automotive Engineers (2000). Conclusion. Strategic management has been the center of interest for both the Toyota and Hyundai automobiles companies. Both have gone out of their way to establish global markets and have embraced the use of electricity in automobile development. Toyota Company manufactures its own vehicles from scratch while the Hyundai Company opts to outsource for parts manufacturers in order to reduce the costs incurred. The role of strategic management is evident in the two automobiles companies as both do have a team or a board of managers that is always tasked with the responsibility of formulating policies to help the company grow to transcendent heights. The board reviewing possible strategies in the companies does work towards actualizing the aims and objectives of the companies. The owners’ wishes can never be ignored in the strategic management process. References Allen C. Amason (2010). Strategic Management: From Theory to Practice. NY: Taylor Francis. Anthony Henry (2008). Understanding Strategic Management. NY. Oxford University Press. Arkadi Borowski (2010). Report on the Toyota Company. UK: GRIN Verlag. Barry J. Witcher, Vinh Sum Chau (2010). Strategic Management: Principles and Practice. UK: Cengage Learning EMEA. Chris Mi, M. Abul Masrur, David Wenzhong Gao (2011). Hybrid Electric Vehicles: Principles and Applications with Practical Perspectives. UK: John Wiley and Sons. Curtis Darrel Anderson, Judy Anderson (2010). Electric and Hybrid Cars: A History. UK: McFarland. David Magee (2008). How Toyota Became #1: Leadership Lessons from the Worlds Greatest Car Company. UK: Penguin Group. Jeffrey Liker (2003). The Toyota Way: 14 Management Principles from the Worlds Greatest Manufacturer. McGraw Hill Professional. Liker, Jeffrey (2011). The Toyota Way: Management Principles and Field book (eBook). NY: McGraw-Hill Professional. Michael A. Hitt, R. Duane Ireland, Robert E. Hoskisson (2009). Strategic Management: Competitiveness and Globalization: Cases. Canada: Cengage Learning. Russell D. Lansbury, Chung-sok So, Chung-Sok Suh, Sung-ho Kwon, Seung-Ho Kwon (2007). The Global Korean Motor Industry: The Hyundai Motor Companys Global Strategy. Seoul. Taylor Francis Satoshi Hino. (2006). Inside the Mind of Toyota: Management Principles for Enduring Growth. Productivity Press. Society of Automotive Engineers (2000). Hybrid electric vehicles. Society of Automotive Engineers. Nov 1. Taiichi Ono (1988). Toyota Production System: Beyond Large-Scale Production. Tokyo: Productivity Press.