According to Brand Rankings Toyota is number 10 on the Fortune 500 listing of world brands. (Brand Rankings, 2014) That position did not come to it easily of that I am pretty sure.
Japanese are hardworking people as a nation, they are most resilient and bound by a strict culture. Well if this is stereotyping then it’s a good kind of stereotype. The Toyota brand reflects all those Japanese principles. As a company Toyota is truly unbeatable. Not only it has some superb competitive advantages but it’s CEO and President Akio Toyoda knows how to sustain those advantages.
Japanese are hardworking people as a nation, they are most resilient and bound by a strict culture. Well if this is stereotyping then it’s a good kind of stereotype. The Toyota brand reflects all those Japanese principles. As a company Toyota is truly unbeatable. Not only it has some superb competitive advantages but it’s CEO and President Akio Toyoda knows how to sustain those advantages.
Toyota summarizes its values and conduct guidelines with these five principles:
• Challenge
• Kaizen (Improvement)
• Genchi genbutsu (go and see)
• Respect
• Teamwork
We can clearly see that these are some very difficult aspect of business that the western car companies could not imitate.
Without further ado here are the ways that Toyota achieve and sustain competitive advantage in the VRIND theory.
1. Value-This tells us about the perceived value of a product in the minds of Customers. Toyota is absolutely unbelievable in this aspect. Not only products of the company highly reliable in terms of its superb quality, they are also fashionable and efficient vehicles. They say “one good Toyota, can last you for generations” (local belief). Along with that cars of the company are very much affordable, making it a favourite in third world countries. Its low production cost allows Toyota to charge its customers the prices that none of its customers can compete with.
• Challenge
• Kaizen (Improvement)
• Genchi genbutsu (go and see)
• Respect
• Teamwork
We can clearly see that these are some very difficult aspect of business that the western car companies could not imitate.
Without further ado here are the ways that Toyota achieve and sustain competitive advantage in the VRIND theory.
1. Value-This tells us about the perceived value of a product in the minds of Customers. Toyota is absolutely unbelievable in this aspect. Not only products of the company highly reliable in terms of its superb quality, they are also fashionable and efficient vehicles. They say “one good Toyota, can last you for generations” (local belief). Along with that cars of the company are very much affordable, making it a favourite in third world countries. Its low production cost allows Toyota to charge its customers the prices that none of its customers can compete with.
2. Rare-Is the ability of an advantage to not be accessible to others. For Toyota it’s true when it comes to its Pull production system. Most car manufactures produce cars in terms of demand forecast presumed from market research (Push production system). However Toyota is the only car company that makes car as per real demand. So a car is only assembled when a customer makes an order for it. This reduces valuable factory space and money is not tied in. Ease of transferability of this technique is very low. No matter how much other competitors try this method is only possible because of Toyota’s strict Japanese principles.
3. Inimitability-When competitors are unable to copy an advantage even if all the option for it is open to them that is when a company gains inimitability factor. The famous lean management technique of Just in Time (JIT) is the most inimitable criteria of Toyota. The sheer complexity of the technique prevents other in copying it. Many competitors has tried it but ultimately failed in the process of reducing inventory that JIT tells you to do. JIT itself has internal linkage for Toyota, as in the setup of the core business. Culture and History of the Japanese company also pays a lead role in this factor.
4. Non substitutability-Well it is no secret that the substitutes for cars are not very significant. People will always buy cars, at least as far in the future as I can see. Maybe the way we fuel our vehicles might change but cars would not.
5. Dynamic-So the final question is will Toyota be able to carry on this customer satisfaction level. The answer to that lies in Toyota’s R&D, one of the best on the planet. Toyota has a strong focus on R&D to expand its product portfolio and improve the functionality, quality, safety and environmental compatibility of its products. The company's R&D efforts are directed at developing new products and processes and improving the capabilities of existing products to meet customer demands.
Finally the only thing I can say is that if economic condition in Japan remains stable then there is nothing that can stop Toyota from being a corporate giant creating a lasting monopoly in the automotive industry.
3. Inimitability-When competitors are unable to copy an advantage even if all the option for it is open to them that is when a company gains inimitability factor. The famous lean management technique of Just in Time (JIT) is the most inimitable criteria of Toyota. The sheer complexity of the technique prevents other in copying it. Many competitors has tried it but ultimately failed in the process of reducing inventory that JIT tells you to do. JIT itself has internal linkage for Toyota, as in the setup of the core business. Culture and History of the Japanese company also pays a lead role in this factor.
4. Non substitutability-Well it is no secret that the substitutes for cars are not very significant. People will always buy cars, at least as far in the future as I can see. Maybe the way we fuel our vehicles might change but cars would not.
5. Dynamic-So the final question is will Toyota be able to carry on this customer satisfaction level. The answer to that lies in Toyota’s R&D, one of the best on the planet. Toyota has a strong focus on R&D to expand its product portfolio and improve the functionality, quality, safety and environmental compatibility of its products. The company's R&D efforts are directed at developing new products and processes and improving the capabilities of existing products to meet customer demands.
Finally the only thing I can say is that if economic condition in Japan remains stable then there is nothing that can stop Toyota from being a corporate giant creating a lasting monopoly in the automotive industry.
References
Brand Rankings. (2014). Retrieved from Ranking Te Brands: http://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=50&year=821
Thembani, N. (2013). Analysis of Toyota. Retrieved from Harvard education: http://scholar.harvard.edu/files/tnkomo/files/analysis_of_toyota.pdf
Toyota. (2014, 11 21). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Toyota#Company_strategy
Toyota Production System as a Sustainable Competitive Advantage. (n.d.). Retrieved from Ventures: http://www.1000ventures.com/business_guide/cs_efficiency_toyota_ps.html
Brand Rankings. (2014). Retrieved from Ranking Te Brands: http://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=50&year=821
Thembani, N. (2013). Analysis of Toyota. Retrieved from Harvard education: http://scholar.harvard.edu/files/tnkomo/files/analysis_of_toyota.pdf
Toyota. (2014, 11 21). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Toyota#Company_strategy
Toyota Production System as a Sustainable Competitive Advantage. (n.d.). Retrieved from Ventures: http://www.1000ventures.com/business_guide/cs_efficiency_toyota_ps.html