Toyota and Mercedes Companies' Competitive Priorities | Free Essay Example

Toyota and Mercedes Companies’ Competitive Priorities

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Topic: Business & Economics
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Introduction

This paper will compare two companies, namely, Toyota and Mercedes, which are among the world’s best automobile manufacturers and sellers. The goal is to examine their competitive priorities and operations strategies. The paper will also discuss how these companies implement and reflect their competition priorities in their processes, procedures, and management practices. In addition, it will provide the details and analysis of these companies’ processes, discussing how they use the operations to compete. The last part of the paper will give a brief conclusion that provides a forum on which other researchers can use as the basis of their study.

Competitive Priorities

Toyota

Toyota Motor Corporation is a Japan-based multinational manufacturer of automotive. Fane et al. (2003) reveal how it strives to contribute to the development of a more advanced society by making automobiles and running its businesses through the production and sale of vehicles. The company focuses on mass-production of vehicles that are affordable to the low-end customers. In February 2016, Toyota became the world’s 13th largest business entity with hefty sums of revenue. Two years earlier (2014), Toyota had as many as 338,875 employees across the world. In 2012, it ousted both the General Motors and Volkswagen Group as the world’s largest manufacturers of automobiles by production. It reported having manufactured not less than 200 million vehicles in July 2012. Another prestigious record of Toyota Motor Corporation is that it is the first company in the world to have produced over 10 million vehicles in a single year – a record that it announced in 2012 and 2013 (Toyota 2016).

Mercedes

According to the historical records, this company’s name first appeared as Daimler-Benz in 1926. However, its origins date back to the 1901 Mercedes of Daimler-Motoren-Gesellschaft and the 1886 Benz Patent-Mortowagen of Karl Benz. The latter is also the world’s first automobile to use gasoline. Mercedes-Benz is a Germany-based multinational corporation and a branch of the Daimler AG that manufactures automobile. According to Chakraborty (2013), it specialises on making buses, trucks, coaches, and luxury vehicles. Unlike Toyota, this company focuses on the high-end class that seek luxurious and expensive vehicles. Until 2013, Maybach, which is an ultra-luxury brand of Daimler, operated under the cars division of Mercedes-Benz. However, its poor sales led to the stoppage of its production. Currently, it exists under the Mercedes-Maybach that replicates the ultra-luxury models of Mercedes cars. An example includes the Mercedes-Maybach S600 that the company manufactured in 2016 (Mercedes Benz 2016).

Operation Strategies

Toyota

Despite being in the same industry, it is crucial to point out companies usually adopt unique strategies to maintain their competitiveness in the market (Kelton, Sadowski, & Zhu 2014). The world recognises Toyota as a top manufacturer and producer in the automobile industry. It uses a set of operation strategies to achieve its goals and objectives. For starters, Toyota makes its management decisions using the long-term philosophy, sometimes at the expense of the short-term targets. It creates a continuous pattern flow that enables it to bring both the internal and external issues to the surface, including using programmes for levelling out the workload and the “pull” systems to control production (Fane et al. 2003). The company promotes the culture of avoiding fixing issues in an effort to maximise the quality of production from the start while standardising its tasks to guarantee employee empowerment and continuous improvement (Slack, Brandon-Jones, & Johnston 2016).

Toyota uses a visual control to make sure that no problems remain hidden. It has also adopted the use of highly reliable and tested technologies that help it to serve both its processes and people. It also strives to grow leaders who understand how it works, run their errands in line with the company’s philosophy, and/or teach it to the other junior employees. Through this approach, the enterprise develops exceptional teams and people who understand and follow its philosophy. Toyota also expects the staff to respect its extended network of suppliers and partners, including helping them to improve, as well as challenging them (Seuringa & Müllerb 2008; Lintona, Klassenb, & Jayaramanc 2006). From a general perspective, Toyota has a set of strategic measures for managing its operations (Mula 2006).

Mercedes-Benz

Just like Toyota, Mercedes-Benz handles many operations for its management duties. For example, it reorganised its production operations of vehicle architecture in 2014 to reduce fixed costs, lift productivity, and/or improve flexibility. With the new approach dubbed the Mercedes-Benz Operations or MO, Mercedes-Benz aimed at limiting investment for each line of model. The new system helped the company to move away from a manufacturing programme run by individual factories to a system of learning that revolves around design lines and vehicle architecture (Zhua, Sarkisb, & Laic 2008).

Another strategy that this company uses to gain competitive advantage over its rivals involves implementing volume growth with a stable workforce that can help it to increase efficiency. Unless it has well-established staff members, Mercedes-Benz is likely to struggle to improve the level and quality of production. Reducing the HPV (Hours per Vehicle) production by nearly 40 percent in a span of 10 years is a significant move that helps the Mercedes-Benz to cut down overproduction. Boysen, Fliedner, and Scholl (2010) reveals how it also standardises its plants to ensure a blend of the plans with the actual operations.

Competitive Priorities

Toyota

Flexibility

Awwad, Khattab, and Anchor (2013) regard a flexible business entity as one that responds to the changes in circumstances promptly. Toyota produces vehicles in five brands, which give it more room to shift towards the model with high demand. These approaches are strategic, tactical, and operational since they help the company to meet the buyers’ needs, gain competitive advantage over its competitors, and/or balance its production level (Awwad, Khattab, & Anchor 2013). In fact, in July 2014, Toyota was Japan’s largest company by both market capitalisation and revenue. In general, the company is the market leader in selling hybrid electric vehicles around the globe and one of the world’s largest corporations that promote the adoption of the same (hybrid electric vehicles) by the international markets.

Quality

Unless a business can provide services or produce products of high quality, it cannot compete in the marketplace (IfM 2016). Although Toyota received its first Award of Quality Control at the early stages of the 1980s, it has faced quality problems in more than one instance due to its use of the recall programme (Wilhelm & Camuffo 2016). However, it is dedicated to manufacturing quality vehicles that help it fetch high sales year after year. With this tactical strategy, Toyota finds it easy to command a significant market share (Barnes 2008). Historically, Toyota Motor Corporation’s founder, Kiichiro Toyoda, established it in 1937 as a spinoff from Toyota Industries, his father’s company, to manufacture automobiles. However, Toyoda’s company became operational when it was still a branch of Toyota Industries in 1934 when it made the first machine referred to as the Type A Engine. Two years later (1936), it created the first passenger car dubbed the Toyota A. Currently, the company manufactures cars in various brands such as Toyota, Lexus, Daihatsu, and Ranz among others.

Cost

Being global merchandise, Toyota uses three cost strategies to cater for customer demands, earn profits, and/or fight its competitors. The company practices cost leadership by charging lower prices relative to its competitors, as well as those of standardised and related products. It also practices economies of scale. Toyota also upholds cost differentiation where it provides unique products (the brands of vehicles), conducts research, markets its products, and/or adopts a flexible mode of production. The company also uses cost focus where it charges its products according to the geographic location. Cost is a strategic, tactical, and operational measure that Toyota deploys to attain its consumers’ requirements, attain competitive edge over its rivals, and equilibrium its production capacity (Slack & Lewis 2008).

Time

Delivery is considered a competitive priority because buyers focus on satisfying their wants and needs at the right time and in the right quantity. Toyota is a master of timely deliverance of products, a strategy that enables to lead in production and sales of vehicles. For example, it became the first company in the world to have produced over 10 million vehicles in a single year between 2012 and 2013. Timeliness is a strategic, premeditated, and an effective measure that the company uses to achieve its clients’ demands, competitive benefit over its contestants, and a sense of stability in its manufacturing level.

Mercedes-Benz

Flexibility

Given its flexible approach to manufacturing luxury and ultra-luxury vehicles, Mercedes-Benz cars operate under two divisions – Production of Smart Cars and Mercedes-Benz. Since it recognises the economic constraints and the rise in fuel levy, it has also resorted to manufacturing battery-electric and full-electric vehicles to cater for the financial pressures of its customers. Mercedes-Benz uses flexibility for strategic, reasons to remain a top-notch company in the market. For instance, the company has two subsidiaries, namely, Mercedes AMG and Maybach. It also has one alliance, China. In the latter, Daimler AG works in partnership with BYD Auto to manufacture and market battery-electric cars called Denza within China. Out of the collaboration, Daimler AG announced in 2016 that it planned to sell Mercedes-Benz brands of all-electric vehicles in China. In 1999, Mercedes-AMG became a subsidiary of Mercedes-Benz of majority ownership when it became an integration of the DaimlerChrysler.

Quality

Since it is one of the world’s top manufacturers of sumptuous and ultra-luxury vehicles, Mercedes-Benz values the production of high-class cars. Hence, it focuses on making durable, unique, and aesthetically attractive cars. The production of quality products is a strategic measure that helps Mercedes-Benz to maintain the “luxury” status, gain competitive edge, acquire high profits, and/or control its production level (Sousaa & Vossb 2008).

Cost

Since Mercedes Benz does not manufacture as many vehicles as Toyota, it charges high prices for its cars. Currently, it has recognised the financial limitations and rise in the price of gas. It has also adopted the making of battery-electric and full-electric automobiles to accommodate the financial pressures of its customers. Mercedes-Benz uses cost as a strategic and tactical measure for ousting its competitors in revenues and sales, as well as bridging the gap between it and the companies that produce large volumes of vehicles (Hetzner 2014).

Time

Time management is one of Mercedes Benz’s best qualities that enable it to run its business operations, such as the yearly models and car nomenclature. The lovers of Mercedes-Benz car brands are accustomed to new models that come almost on an annual basis. For that reason, timeliness is a strategic method that enables it to meet its annual and periodic targets such as new models and car nomenclature. It is also tactical as the Company uses it to raise the bar for its competitors.

Company Processes

Since they are multinational manufacturers of automobile, Toyota and Mercedes-Benz use a range of procedures that give them the competition edge over their rivals (Kouvelis, Chambers, & Wang 2006 ). Some of the processes that they share include working in partnerships with other companies and opening branches in various parts of the world. These strategies enable them to expand their operations across the world. Every company seems to have a particular plan that defines its business operations relative to other automobile companies. Toyota depends on producing more vehicles to a significant market share where it can earn more revenues compared to its competitors whereas Mercedes-Benz manufactures most luxurious and expensive vehicles to achieve similar goals.

Conclusion

Business performance is a reflection of the enterprise’s level of competition. Those that compete best get high rewards such as high sales, a significant market share, and a large customer base among others. On the contrary, less ambitious ventures do not enjoy similar rewards. As outlined in this paper, a review of the operations of Mercedes-Benz and Toyota reveals that they have good competitive strategies. While the latter tends to rely on mass production for ousting the other companies, the previous one uses quality and pricing to its advantage. In addition, the two companies have adopted perfect methods managing competition. Although this paper focuses on Mercedes-Benz and Toyota, it forms a basis in which other researchers can compare any set of businesses.

References

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