Toyota: where innovation leads to competitiveness
How the four framework strategies combine to sustain a firm in global markets.
- Sector
- Automotive
- Source
- Week 2 tutorial mini-case
The case in brief
The Tutorial 2 slides summarise Toyota’s competitiveness in eleven statements covering its mission, products, differentiation, resources, suppliers, logistics and customer service. Students watch a video and map these statements onto the four framework strategies.
Key facts
- Mission
- To attract and attain customers with high-valued products and services and the most satisfying ownership experience
- Product/market scope
- Automotive products for B2B and B2C customers of different segments
- Basis for differentiation
- Quality, reliable and cost-effective products
- Core competencies
- Hybrid and electric vehicles, good suspension systems, great price, reliable products
- Strategic assets
- Dealer, sales and spare-parts locations almost everywhere in the world
- Suppliers
- 800+ suppliers in an open-door policy relationship; most are SMEs
- Logistics
- Milk-run service collecting parts from multiple suppliers and delivering just in time
- Customers
- B2B, B2C and B2G, segmented demographically, geographically and behaviourally
- Support and pricing
- After-sales service, support centres, delivery, EV charger installation; personal and business finance
Analysis through module theory
Four framework strategies (Barringer & Ireland, 2019)
Core strategy: the mission, broad B2B/B2C scope and differentiation on quality, reliability and cost. Strategic resources: competencies in hybrid and electric vehicles and a global dealer network. Partnership network: SME suppliers and logistics partners. Customer interface: B2B, B2C and B2G targets, extensive after-sales support and a finance-based pricing model.
Innovation types (Tutorial 2)
Hybrid and electric vehicles are product innovations that sit in the value proposition. The just-in-time milk-run is a process innovation in the value architecture. EV charger installation and finance extend the customer interface around the product.
Discussion questions
- 1.Which of Toyota’s four components would be hardest for a competitor to imitate?
- 2.How does an SME supplier network support Toyota’s basis for differentiation?
Takeaways
- Competitive advantage comes from components that reinforce each other, not from one product.
- Partners, including SMEs, can be central to a large firm’s competitiveness.