Driving Forces behind Toyota’s Decision to Embrace Innovation

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Driving Forces behind Toyota’s Decision to Embrace Innovation

Usually, before an organization makes a decision or a resolution, it comes as a result of a prolonged analysis of various factors often during a single or many meetings. It could be an annual general meeting, a meeting of directors, an ordinary meeting, or an extraordinary meeting. Whatever the kind of meeting, depending on the type of organization, there must be resolutions made within the meeting. This paper investigates the driving forces behind the decisions made by specific companies. In particular, the paper focuses on the decision by the Toyota multi-national company to adopt innovation as one of the key philosophies of the company.

In 1979, Michael E Porter, a business analyst from Harvard, came up with what he called forces of competitive position analysis thus representing a theory based on five forces. To some extent, Toyota limited incorporated most of these forces in their philosophy. In Toyota, various factors were considered before adopting the philosophy of innovation (TOGO, Y.et al, 1993). Like Toyota limited, many other analysts use porter’s five forces to assess whether specific products and services are gainful. By knowing where the power lies, the theory can be used to determine the areas of weakness so that they can be improved and areas of strength to minimize on blunders.

The following are the driving forces behind the decision of adopting the innovation philosophy at the Toyota multinational company. It is out of these reasons that were discussed in the meetings that were held which resulted in this theory.

The first driving force is the value of the company. In a manufacturing business, company value has always guided most of the company’s decisions. The value of the company is always visible in the way the company spends both finance and time. It is also advisable that in such cases the employees should be in a position to understand the company’s position and expectations. Not only will the values of the company be upheld in reports made at the end of the year and other company presentations, but also in the way people behave within the premises of the company. That is why it is paramount for the company workers to know the company’s big dreams and also participate in achieving those dreams (SHIMASAKI, C. D. 2014).

Secondly, buyer power is another driving force behind the decision of innovation policies in a company. This is due to the available number of buyers in the market and the importance accorded to a particular individual buyer to the company. The loss that can be experienced from a buyer shifting to a different supplier is also significant. It means that when a company has very few major buyers, they always dictate conditions.

Another driving force behind the innovation policy is competition. This is an important factor; if there are various competitors in the market who are offering similar services and products, the size of the market share enjoyed by a particular company is reduced. Often, the only solution to maintaining the market share is through enhancing innovation.

Threat of substitution is also another driving force behind the decision of opting to embrace innovation. Where substitute products are present in the market, chances of customers turning to the other alternatives in case of increased prices are high. It affects the company in terms of power of supply and attracting customers leaving the company with no option apart from innovation policies.

In conclusion, there are various driving forces behind the decision of Toyota limited adopting the philosophy or policy of innovation. These forces include the company’s value, buyer power, competitive rivalry, and the threat of substitution. There is no doubt that the above-mentioned factors are the main driving forces behind the decision of Toyota’s policies and any other similar company in terms of operations.

References

SHIMASAKI, C. D. (2014). Biotechnology entrepreneurship: starting, managing, and leading

biotech companies. HYPERLINK “http://lib.myilibrary.com?id=589159″http://lib.myilibrary.com?id=589159.

TOGO, Y., & WARTMAN, W. (1993). Against all odds: the story of the Toyota Motor

Corporation and the family that created it. New York, NY, St. Martin’s Press.