Question

Read the article below and then answer the questions above.

Discuss the fit test, competitive advantage test, and performance test to determine whether this strategy is a “winning strategy.”

What are specific examples of the company’s strategy-making hierarchy? Be sure to discuss corporate level, business level, functional area, and operating strategy example

Betting Like SoftBank Drives Toyota’s Value Up by $19 Billion

Everywhere you turn in the transportation industry these days, Toyota Motor Corp. seems to already be there. From batteries and self-driving vehicles to lunar rovers and ride-hailing companies, the world’s second-biggest automaker is on an investment spree, pouring more than $3 billion into deals and partnerships in recent years. Toyota, which reports first-quarter results Friday, is placing bets across the board, mimicking technology investors like SoftBank Group Corp. Toyota, Volkswagen AG and other carmakers face an uncertain future as new technologies and business models ripple through the $2.23 trillion global auto industry. Uber Technologies Inc. has made younger buyers less interested in owning and driving cars, and Tesla Inc.’s success with electric vehicles has spurred bigger rivals to counter with their own products. All told, car sales will be only slightly higher in 2030, while new spending on mobility services will total $1.34 trillion, Accenture predicts. “They are developing by far the most diverse lineup of different mobility products, from personal mobility to luxury cars and various types of shared mobility and commercial vehicles,” said Janet Lewis, an analyst at Macquarie Capital Securities (Japan) Ltd. in Tokyo. “Investors, to the extent that they are invested in the auto sector, generally agree that Toyota is looking like a winner.” Indeed, shareholders are endorsing Toyota’s approach. The automaker’s stock rose 1% on Thursday, leaving it up 10% this year and adding $18.6 billion in market value. That’s better than the Topix index and other Japanese automakers, even amid tepid profit and sales growth. Analysts surveyed by Bloomberg predict quarterly operating profit will rise 1.3% to 692 billion yen, while revenue will climb 1.6% to 7.48 trillion yen. Big Bet In addition to investments and partnerships, Toyota’s spends about 1.05 trillion yen ($9.7 billion) a year on research and development. Akio Toyoda, chief executive officer and grandson of the automaker’s founder, has been holding forth at public appearances about Toyota’s transformation into a mobility service provider from a manufacturer. “My true mission is to completely redesign Toyota into a mobility company,” Toyoda said in May, saying the mission is to not just make products that move people around but provide “all kinds of services related to mobility.” Ride-Hailing Toyota’s strategy is to tie up with the strongest ride-hailing providers in each region and then integrate its hardware and software into their services. Toyota is a major investor in the world’s three top ride-hailing companies: Uber, China’s Didi Chuxing and Southeast Asia’s Grab Holdings Inc. In Japan, the carmaker teamed up with SoftBank — which has poured even more money into the three companies — in yet another mobility service venture called Monet Technologies Inc. The Japanese companies are betting that Monet can evolve into a variety of transportation-related business. For example, they envision meal-delivery vehicles that can prepare food en route to customers, or hospital shuttles that offer medical examinations. Toyota’s rivals aren’t standing still, either. General Motors Co. injected $500 million into Uber rival Lyft Inc. in 2016 while also pursuing its own robotaxi program with the Cruise Automation unit. Daimler AG and BMW AG merged their car-sharing operations this year after buying up several local ride-hailing ventures. Electrification While Toyota was first out of the gate with the Prius hybrid car, it hasn’t rolled out any mass-market EVs. Like Volkswagen and other major automakers, the Japanese company was biding its time. That will change next year, when Toyota introduces the first of six EV models planned through 2025. To secure enough batteries, Toyota recently stepped up its dealmaking with manufacturers, racing competitors to secure supplies for pure-electric and hybrid vehicles. Volkswagen and Daimler have made tens of billions of dollars in battery investments. In July, the Japanese auto giant made back-to-back battery announcements with China’s Contemporary Amperex Technology Co. Ltd. and BYD Co. Toyota also is committed to work with suppliers Toshiba Corp., GS Yuasa Corp. and Toyota Industries, as well as long-term partner Panasonic Corp. In Japan, Toyota teamed with Mazda Motor Corp, Suzuki Motor Corp., Subaru Corp. and parts makers to develop a common platform for EVs, betting that a combined effort can save development and production costs. Earlier this year, Toyota’s brought forward its EV sales target by five years. The company now expects to see annual sales of 5.5 million units globally in 2025, compared with a previous timeline of 2030. Fuel Cells Toyota placed bets on fuel-cell technology years ago, gambling that hydrogen would replace batteries to store and deliver electricity for cars. So far, the technology’s complexity and high development costs has scared off most rivals. Three years after introducing its Mirai hydrogen car, the model remains a rarity even in Japan. Even so, Toyota is keeping fuel-cell car development alive, with hopes that Chinese interest in hydrogen will create a bigger market for the technology. In April, Toyota said it will work with Chinese truckmaker Beiqi Foton Motor Co. and Beijing SinoHytec Co., an affiliate of Tsinghua University, to develop more commercial vehicles with fuel cells. In July, it struck a similar deal with carmaker China FAW Group Co. and Higer Bus Co. to supply fuel-cell systems. Hybrid Cars After keeping its hybrid-car technology in Japan, the U.S. and developed markets for years, Toyota is now seeking to enter new markets. It will supply its hybrid system to Suzuki globally, while Suzuki will sell compact vehicles through Toyota in India and Africa, the carmakers said in March. The pair also will jointly develop a multipurpose vehicle that will be sold in India under both brands. Toyota also may share the hybrid-car engine technology it pioneered with the Prius with Chinese manufacturers, seeking to catch up with rivals in the world’s biggest auto market. Toyota is in advanced talks to license its hybrid system to Chinese carmaker Geely Automobile Holdings Ltd., Bloomberg reported last year. Toyota will benefit if China eases emissions rules so that low-polluting hybrid cars aren’t penalized as much as normal gas guzzlers. Policy makers are now considering rules that would count levels from a super-low emission vehicle as one-fifth of a normal gasoline car, according to a draft of the rules released July 9 by China’s Ministry of Industry and Information Technology. A majority of Toyota’s new partners are Chinese manufacturers because Toyota wants to catch up there with Volkswagen and General Motors in the next decade. China contributed most of Toyota’s growth last year, as well as this year, thanks to new products and its Lexus luxury brand, which benefited from lower government tariffs on auto imports from Japan. Connected Cars Although Toyota lags behind General Motors and European rivals, the digital information business has been a central -- yet less visible -- element of its vision for the future. Automobiles are generating more data that can be shared in order to improve safety, monitor road conditions and help passengers. For example, many manufacturers see a future when collisions become rare because autonomous vehicles will be programmed to avoid each other. Toyota is working to have 70% of new cars connected globally by 2020, with almost all of those in the U.S. and Japan. Automakers are already using the cloud to generate revenue through telematics insurance and car-sharing services. Toyota also has talked about using data to alert dealers when cars need servicing, provide information about road and traffic conditions for smart city planning, and inform retailers where their customers are commuting from to allow more targeted marketing. Moon Plans Although less relevant for Earthlings, Toyota wants to be the first automaker on the moon. Together with the Japan Aerospace Exploration Agency, Toyota is planning to build a six-wheeled, self-driving transporter that can carry two humans for a distance of 10,000 kilometers. They expect to land a vehicle on Earth’s closest ndaimeighbor in 2029. The rover will use solar arrays and fuel cells to generate and store power. The vehicle will be big enough so the astronauts can take their suits off and live in it while exploring the lunar surface. “Toyoda is determined to shift his company into a mobility company from a conventional hardware-oriented corporation,” said Koji Endo, senior analyst at SBI Securities Co. “It’s yet to be seen if Toyota can win among the competition and rapid changes in the business model, but it seems management is determined to chase this course.”

Answer 1

The Fit test

How well the strategy fits the organization's circumstance? The strategy needs to fit with the outside (showcase and competitive conditions) and inside (inward assets accessible) parts of the organizations generally speaking circumstance.

Competitive Advantage test

It is the strategy helping the organization accomplish a maintainable competitive advantage? The greater and increasingly strong the competitive advantage, the more dominant it is.

Performance test

It is the strategy delivering great organization performance? Solid organization performance is vital. There are to pointers that help with this: 1) Competitive quality and market standing 2) Profitability and fund quality.

The corporate culture of Toyota Motor Corporation depends on esteeming the job of the person simultaneously and the person's innovative, much consideration is paid to the organization's notoriety dependent on the nature of the items. In any case, the basic leadership process was excessively founded on the organization's mind boggling progressive system to give the fast reaction to the unmistakable issues or clients' desires.

It was important to build up the methodology as per which directors could settle on the fundamental choices as indicated by the present information and data. The positive changes in the basic leadership framework proposed by the organization's key division can be talked about as effective to address the referenced issues.

The principle challenges for the usage of this strategy depend on the characteristics of the organization's authoritative structure contingent upon the severe vertical pecking order.

Functional level methodologies is an administration module which characterizes the choice procedure in the association. This will examine business and corporate level rude awakenings and consolidation them in to a strategy.

Toyota follows lean assembling standards in its booking. The organization's objective for this key choice territory of operations the executives is to limit working expenses. Cost-minimization is kept up through HR and asset booking that changes as indicated by economic situations.

Toyota's primary escalated development strategy is advertise infiltration. This serious strategy bolsters business development by coming to and drawing in more clients in the association's present markets. To satisfy this serious development strategy, Toyota guarantees that it offers items for each market portion

Functional level techniques are those planned for improving the viability of an organization's operations to accomplish the unrivaled productivity, predominant quality, better development and prevalent client responsiveness than have upper hands in industry than its opponents.