Mpm701A Business Process: Case Studies Assessment Answers
Case Study: Asian Pacific Multinationals
You should assess in turn four topics, namely strategy, corporate organization, core capabilities, and the role of government.
1) Toyota - Japan
2) Hitachi Corporation – Japan
3) Samsung Electronics - Korea
4) TECO – Taiwan
5) Huawei Technologies – China
Answer:
Introduction
The business operating environment in Asia-pacific and many other parts of the world experiencing economic growth has become very competitive. Both home companies and multinationals are jostling for market share and only the most innovative and adaptive companies stay afloat. In this cutthroat competitive business environment, Samsung, Toyota, Hitachi, TECO and Huawei business empires have emerged to be leaders in the region and abroad (Yan 2012).
Where many other businesses with just about the same business ideas succumbed, these multinationals have not only managed to be market leaders in the Asia-Pacific region but are also piling pressure on other global multinationals that have enjoyed unbridled growth for decades without much competition (Song & Lee 2014).
To comprehend the reasons behind these companies success, this report explores the strategic decisions the corporate structure, the core competencies and the role of the respective governments have played in enabling the companies to succeed where others failed (Peng 2017).
Toyota
With total revenue of over 260 billion USD, Toyota is among the most successful vehicle manufacturing company in the world. The company was established in 1937 and for a long time only made vehicles and machinery for local consumption in Japan. After World War II the company was mired in quality control mishaps that made their vehicles unpopular compared to competitors such as Ford Motor Company (Weng, Wei & Fujimura 2012).
However, the company addressed the quality issues and established their first assembly outlet outside Japan in 1967 to respond to the growing demand for their vehicles in Australia. Since then, Toyota has grown tremendously and has retail and assembly outlets in just about every country globally (Rother 2010).
Toyota Strategy
Arguably, Toyota is still the World largest vehicle manufacturer. Latest news suggests that Volkswagen is edging out Toyota to take the crown. In 2017 alone, Toyota sold over 10 million vehicles with the SUV brand of vehicles showing strong growth potential. To compete aggressively Toyota employs the following strategies
Cost leadership strategy. In this strategy, Toyota uses advanced technological prowess to mass produce their vehicles. The superior technology means that Toyota uses fewer resources per unit produced and hence can be able to compete favorably with other companies on pricing (Porter 2008).
On diversification strategy, Toyota has produces many types of vehicles to appeal to different customers (Manden 2012). The company produces family cars, light trucks, vans, and high-end luxury vehicles such as Lexus all targeting different customers. This is as opposed to other manufacturers such as Audi or BMW who only focus on the luxury market segment (Heller 2011).
Using growth strategy, Toyota has globalized their operations and operates on many countries which enable them to enjoy economies of scale and avoid market shocks associated with operating on a local scale (Sanchez & Heene 2010).
By employing strategic alliances, the company has shares in many other vehicle manufacturing companies such as Isuzu, Suzuki, Nissan, and Yamaha. Toyota uses its networks with these companies to expand its market penetration (Szczesny 2010).
Corporate Organization
Before the year 2013, Toyota only embraced the Hierarchical organizational structure. With this arrangement, all the major decisions regarding company growth and products rested with the company CEO in Tokyo Japan. All business units had to inform the headquarters before committing to business decisions. This made decision making slow and response to market trends very sluggish (Bekiris 2013).
However, the company has now embarked on a matrix organization structure. This is based on geographical location, products, and operations. The company still maintains the hierarchy but more decisions are made by heads of business units. The company has 8 regional divisions and four product divisions which include the Lexus division, Toyota a division, Toyota b, and the Engine supply unit (Rother 2010).
Core capabilities
According to the resource-based view theory, core competencies of an organization are scarce, difficult to replicate and difficult to transfer. With this in mind, Toyota has a pool of highly trained and specialized staff who decide the strategy of the firm. Toyota also has a very robust research and development unit that leads to innovative solutions such as their patented hybrid technology (Motohashi 2015).
Toyota also boasts superior manufacturing ability with 75% global reach. The company also spearheads the industry changing Just-in-Time (JIT) also referred to as the Toyota Production System which ensures no wastage during production. Other core capabilities include strong global marketing networks and numerous capital investments (Weng, Wei & Fujimura, 2012; Manden 2012).
The Role of the Government
The Japanese government strongly backs the company. In many instances, the government extends help to the company in terms of financial assistance and tax concessions. The government has lately been at the forefront of reducing the value of the Yen since the expensive currency makes it hard for the vehicles to compete on pricing (Szczesny 2010).
Hitachi Corporation
Founded in 1917 and listed as a company in 1920, Hitachi corporation is a company that has defied many existential odds since its formation to become one of the market leaders in the manufacture of machinery, electrical components, and semiconductors across the world (Bowonder & Miyake 2008).
Hitachi Business Strategy
To remain competitive in the face of fierce competition from other multinationals such as IBM, Samsung and a host of other emerging Chinese companies, Hitachi has differentiated itself by pursuing superior quality. Their products last longer and are very popular among their customers (Porter 2008).
Hitachi is also pursuing a growth strategy with the focus on globalization. The company has subsidiaries and wholly controlled marketing networks across the globe. Further, Hitachi is also aligning its products to market needs to be able to anticipate future demands. Lastly, Hitachi has diversified their products to take advantage of different markets. While many of its competitors like IBM focus only on ICT, Hitachi manufactures home appliances, machinery and has lately ventured in the water supply (Hitachi 2010).
Corporate organization
Currently, Hitachi has 34,900 employees. The company embraces a functional organization structure with the head being the CEO. Line managers in charge of sales, finances, human resources, customer care, research and development, and operations report to the CEO or the regional division managers who in turn reports to the CEO (Lei & Slocum 2013).
Core capabilities
The company has is one of the most adaptive organizations and has been able to use its remain competitive. Hitachi currently has a strong research and development team. It has 33 research centers in Europe, Asia, and the USA. The company is renowned for its innovation being the major supplier of semiconductors to some of the largest corporate particularly in the energy sector (Nobre 2012).
The Role of the Government
The role of the government in Hitachi case cannot be gainsaid. In multiple occasions, the government has bailed out the corporation from near collapse, first in the late 1940s and again in the 1980s when it faced recession. The government also builds networks and opportunities in other countries which Hitachi exploits. That is besides being a direct customer of their products (Hitachi 2010).
Samsung Electronics
Founded in the late 1930s as a trading company in South Korea, Samsung has become a master at adaptability and diversification. The company ventured into textile business, construction, chemical production and later electronics. Samsung split into 4 strategic business units in the late 1980s and of those divisions, the electronics division has been the most successful by far. It has become the biggest corporation in South Korea and contributes immensely to the Country's foreign exchange (Jurevicius 2018).
Samsung strategy
The company has pursued a diversification strategy since its inception. Besides electronics, Samsung also does construction, medical equipment and develops aviation technology (Reuters 2016).
To maintain a sustainable competitive advantage, Samsung also pursues a growth strategy. Currently, the company is the largest smartphone maker having subdued Nokia in 2012. In the smartphone market, many original equipment manufacturers (OEMs) which Samsung is part and parcel produce near-marching gadgets with very similar capabilities (Jurevicius 2018).
Samsung has embraced a product differentiation strategy by equipping their smartphones with higher quality displays, an intuitive interface called TouchWiz and an application store which other OEMs cannot match Samsung has also followed a merger and acquisition strategy. The company merged with Sony to manufacture display screens and later acquired Sony's share when they parted ways (Peng 2017).
Corporate Organization
Samsung prescribes to the divisional organizational structure. The company has over 320,000 employees spread across the globe. It also has over 210 subsidiaries across the world. All the employees work under 3 main divisions namely, the Information, communication and a mobile division which manages the mobile phones (Bekiris 2013).
The second division is called consumer electronics and is in charge of consumer electronic devices such as televisions, fridges, cookers, air conditioners among other home appliances. Lastly, the company has a device solution compartment which deals with all challenges involved after the sale of the smartphone. The division tackles challenges like phone recalls and quality issues (Song & Lee 2014).
Core capabilities
Samsung core capabilities include highly skilled staff who are behind numerous new products. The company also boasts superior technology compared to other OEMs. They, for instance, introduce a foldable smartphone in the near future. In addition, Samsung also has a vibrant research and development division. Lastly, the company is very innovative and has showcased its market-changing solutions on many occasions (Jurevicius 2018).
The Role of the Government
The South Korean government is very supportive of Samsung and has created an enabling environment where the company can thrive both at home and away. The government has provided the company with financial assistance and offered tax breaks to encourage growth (Song & Lee 2014).
TECO Corporation
Established in 1956 the Taiwanese company established itself by producing high-quality motors that fit a wide range of uses. The company diversified and began light machinery production and later ventured into the home appliances market (Motohashi 2015).
Company Strategy
The company commands over 7% of market share in the electric motor section and is gaining momentum in the home appliances market. The growth strategy is evident where the company has ventured to the Middle-East and the US markets. The company also pursues an acquisition strategy having bought Westinghouse Company in the USA. TECO has also merged with Tai-an Electric Company to expand their operations. To gain a foothold in the USA the company has established a strategic alliance with CTC. Lastly, the company is pursuing a product diversification strategy to widen its market (Yan 2012).
Corporate Organization
TECO is still a relatively small company when compared to behemoths like Samsung or Sony. For this reason, the company has a functional organization structure where the people are grouped according to the functions they deliver to the company. The company has a President who is the overall decision maker. Some roles such as finance are merged to be headed by the vice president. The company has a board to who the president answerable. Other functions include the sales, human resource, customer care department and the research and development department (Bekiris 2013).
Core capabilities
The company is very adaptive to the changing business environment. TECO also boasts very innovative staff as evidenced by the products they release to the market. The company has an able research and development section and recently announced a breakthrough in the production of high capacity turbines.
The role of the Government
The government has created an enabling business environment where entrepreneurial ventures such as TECO can blossom and thrive. The government is also encouraging production by offering tax breaks. Finally, the government protects the company from competing products in the market by imposing tariffs to competition (Lei & Slocum 2013).
Huawei Corporation
The company was established in 1957 as a trading entity mainly dealing with electrical sales. However, the company ventured into the manufacture of communication equipment and installation company. The company decided to enter the lucrative smartphone market and has become one of the leading manufacturers with a presence in 140 countries (Yan 2012).
Company strategy
The company has employed a number of strategies to be competitive in the market. One strategy is cost leadership. In this strategy, the company manufactures phones at low prices and competes on the pricing front by supplying cheap but feature rich devices (Sanchez & Heene 2010).
The company also employs expansion strategies that have enabled it to venture in over 140 countries. Huawei embraces specialization strategy where it only deals with telecommunication equipment. Moreover, the company follows an advertising strategy to inform potential buyers of the latest devices. Finally, the company follows a rapid production strategy where it can mass produce many product models to enjoy economies of scale (Motohashi 2015).
Corporate organization
With over 140,000 employees Huawei certainly has a huge workforce. The company also has 166 executives headed by a CEO. The company has a divisional organization structure comprising of functional divisions, geographic divisions and the research division. Operating in Europe, Asia, and the Middle-East, Huawei has a very expansive research division and 45% of its employees work in the research and development section. All divisional heads answer to executives who in turn answer to the CEO (Bekiris 2013).
Core capabilities
The company has an elaborate research and development which is keen on developing new solutions to the customers. The company also has an increasing number of patents which can be explored to generate revenue in future through licensing. In addition, the company has innovative staff who are at the forefront in delivering smart solutions to their customers.
The role of government
The Chinese government has enforced crippling policies such as the great firewall that is unfriendly to Western Companies. Huawei gets to benefit from reduced competition. In addition, the government is currently engaged in trade wars with the USA which has resulted in high tariffs for imports. This means that Huawei has an advantage on the price front as customers choose affordable devices (Yan 2012).
Conclusion
This paper inquires the strategies that five Asia-Pacific Businesses namely, Toyota, Hitachi, Samsung, TECO, and Huawei make to sustain a competitive advantage. The paper has explored the structural composition of the companies as well as their core capabilities. The paper concludes by examining the role that governments play and how they affect these multinationals.
References
Bekiris, F. (2013). Ownership structure and board structure: are corporate governance mechanisms interrelated?. Corporate Governance: The international journal of business in society, 13(4), pp.352-364.
Bowonder, B. and Miyake, T. (2008). Innovations and strategic management: a case study of Hitachi Ltd. Technology Analysis & Strategic Management, 6(1), pp.55-81.
Dudovskiy, J. (2017). Samsung Business Strategy and Competitive Advantage: effective exploitation of market readership - Research-Methodology. [online] Research-Methodology. Available at: https://research-methodology.net/samsung-business-strategy-competitive-advantage-effective-exploitation-market-readership/ [Accessed 1 Oct. 2018].
Heller, V. and Darling, J. (2011). Toyota in crisis: denial and mismanagement. Journal of Business Strategy, 32(5), pp.4-13.
Hirano, H. (2009). JIT implementation manual. Boca Raton, Fl.: CRC Press, pp.36-42.
Hitachi (2010). Hitachi strengthens its water business. Filtration Industry Analyst, 2010(10), p.1.
Jurevicius, O. (2018). Samsung SWOT Analysis (6 Key Strengths in 2018). [online] Strategic Management Insight. Available at: https://www.strategicmanagementinsight.com/swot-analyses/samsung-swot-analysis.html [Accessed 1 Oct. 2018].
Lei, D. and Slocum, J. (2013). Demystifying your business strategy. 1st ed. New York: Routledge, pp.5-22.
Monden, Y. (2012). Toyota production system. Boca Raton: CRC Press, pp.28-42.
Motohashi, K. (2015). Global business strategy: Multinational corporations venturing into emerging markets. Tokyo: Springer Publishers, pp.4-15.
Nobre, F.(2012). Technological, Managerial and Organizational Core Competencies: Dynamic Innovation and Sustainable Development. 1st ed. Palo Alto: IGI Global.
Peng, M. (2017). Global Business. Australia: Cengage Learning, pp.28-34.
Porter, M. (2008). Competitive Advantage. 1st ed. New York: Free Press. pp.24-28.
Reuters (2016). How Samsung Tripped on Quality Control in Its Rush to Beat Apple. [online] Fortune. Available at: https://fortune.com/2016/09/06/samsung-apple-galaxy-note-quality/ [Accessed 1 Oct. 2018].
Rother, M. (2010). Toyota Kata. New York: McGraw-Hill, pp.28-34.
Sanchez, R. and Heene, A. (2010). Enhancing Competences for Competitive Advantage. 1st ed. London: Emerald Group Publishing, pp.23-28.
Song, J. and Lee, . (2014). The Samsung Way: Transformational Management Strategies from the World Leader in Innovation and Design. 1st ed. New York: McGraw Hill, pp.127-130.
Szczesny, J. (2010). Japanese government boosts Toyota. [online] Oakland Press. Available at: https://www.theoaklandpress.com/news/japanese-government-boosts-toyota/article_f5ea032f-8392-592b-99c7-88f5136b9c28.html [Accessed 28 Sep. 2018].
Weng, W., Wei, X. and Fujimura, S. (2012). Dynamic routing strategies for JIT production in hybrid flow shops. Computers & Operations Research, 39(12), pp.3318-3320.
Yan, H. (2012). Entrepreneurship, Competitive Strategies, and Transforming Firms from OEM to OBM in Taiwan. Journal of Asia-Pacific Business, 13(1), pp.16-36.
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