Multinational companies have presence in several countries while domestic companies operate in a single country. Some companies branch to other countries for new markets, to find resources or reduce costs. There are certain distinct differences between multinational companies and local companies. The paper will highlight the differences in regards to human resource policies, strategy decisions and management practices. Additionally the paper will highlight the cultural, legal, political and financial issues faced by Toyota a top international in the world. Toyota is an automobile manufacture and is the fifth largest generating multinational company as named by the Fortune Global 500 list of 2017. Toyota operates worldwide with fifty one manufacturing centers in 28 countries and regions. Toyota sells its vehicles in more than 170 countries and regions. The company has its headquarters in Toyota, Aichi, Japan with 364445 employees worldwide. Toyota makes luxury vehicles, commercial vehicles and engines which are known for their durability and quality. Toyota gives financial services and collaborates with other businesses too.
Toyota terms its management practices as the Toyota Way. The Toyota production system also referred to as the Thinking Person System is responsible for the automobile manufacturer tremendous success of the company. The principles are actually easy to understand since they are organized in four sections. Section one outlines the long term philosophy, section two outlines the right process that produces right results, section three outlines the methods to improve value for the company by developing employees at the company and partners, the fourth section finally outlines the techniques of solving root problems to organizational learning (Coetzee et al. 2016 p. 79). The company bases its management outcomes on a long-term philosophy without consideration for short-term goals. The company establishes long term philosophy through SWOT analysis and establishing strategic plan and deploying it by creating targets for all employees. The second section focuses on establishing regular processes that bring issues to the surface. The work process at Toyota is redesigned to reduce waste through the processes of regular improvement. The third management principle involves utilizing the pull systems to attain optimum uses of resources. The fourth management principle levels out the workload by aiding the achievement of objectives of reducing waste, minimizing the burden on employees or equipment and not creating uneven output (Coetzee et al. 2016 p. 79). Most local companies are stuck at devising the right processes to produce the correct results. For local companies, the human resource management is involved in the management of employees in one country while for multinationals the manage employees in different countries. The human resource departments for multinationals deal with policies that encompass different cultures for employees in different countries while local companies only devise policies that deal with employees from the same social community.
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Multinational companies such as Toyota encounter cultural, legal, political and financial problems in certain environments. Toyota has faced cultural differences that have caused misunderstandings between the company, customers and partners. Toyota has succeeded in bridging cultures by adapting to differing cultural needs. The difference in workplace values is how the employees perceive inequalities among individuals. Some people accept authority without question while others demand justification for inequality of power. That means that executives at Toyota have had to adjust leadership styles based on the country; however multinationals such as Toyota have the advantage of relocating to countries that offer the best advantages (Brewstar, 2017 p. 126). Changes in import tariffs, environmental regulations and taxation rules have affected Toyota in most host countries such as the United States. The political climate in a multinational’s environment could affect its operations. Toyota has maneuvered risky political climates by purchasing political risk insurance. Toyota has faced certain financial issues in the 27 countries where it is located. For instance accounting practices vary from country to country; in America accounting is based on Generally Accepted Accounting Principles (GAAP) while many other countries use the International Financial Reporting Standard (IFRS). While the two sets of rules are similar some practices are different such as reporting of inventory costs and layout of financial statements.
Regiocentric orientation is a balance between geocentric and polycentric orientation. The orientation is perfect for a multinational since it works for a group of countries with comparable market aspects. Toyota designs its operational strategies on the basis of an entire region instead than individual countries. The regiocentric approach indicates a degree of sensitivity for the local conditions of a given country. Toyota utilizes the adaptation approach; the multinational has locations in several regions such as Asia, North America, Caribbean, Latin America, Europe, Africa, and Oceania. Toyota offers similar products in North America, same products in Europe, Asia. The multinational utilizes the hybrid segmentation; different countries have certain standards and consumers react differently to certain products. Toyota has the best strategy; they provide products adapted to local demand but prices are adapted to each region with differences. Toyota has chosen their locations depending on past export history, foreign direct investment on foreign markets and the experience of other automotive manufacturers. Toyota has the core capabilities to succeed in these markets due to its efficient management practices. The Toyota Way is a proven practice that has ensured the tremendous success of the company in different regions. The company’s emerging markets sales have enhance significantly between the year 2000 and 2011. The company has observed the needs of the rising middle class in its regions through localization initiatives.
If a company was to compete with Toyota, exporting would be the appropriate new market entry strategy. The advantages of exporting include reducing risks of operating oversees and giving an opportunity to learn foreign markets (Watson et al. 2018 p. 30). Toyota is known for its adaptability to foreign markets therefore learning the market needs would be the perfect strategy for a new market entrant. Utilizing the export strategy will therefore give a new market entrant competitive advantage over Toyota if the can provide products that suit market needs. Value chain dispersal and integration strategy is the process in which several enterprises in a shared market collaboratively plan, execute and manage the delivery of goods, services and information from production stage to consumption in a bid to increase customer perceptions on value and consequently establishing competitive advantage for all stakeholders. The competitive advantage of a business does not depend on a specific firm value chain but also involves the values system of which the firm is part of.
References
Coetzee, R., Van der Merwe, K., & Van Dyk, L. (2016). Lean implementation strategies: how are the Toyota Way principles addressed?. South African Journal of Industrial Engineering , 27 (3), 79-91.
Brewster, C. (2017). Human resource practices in multinational companies. The Blackwell Handbook of Cross ‐ Cultural Management , 126-141.
Watson IV, G. F., Weaven, S., Perkins, H., Sardana, D., & Palmatier, R. W. (2018). International market entry strategies: Relational, digital, and hybrid approaches. Journal of International Marketing , 26 (1), 30-60.
