Toyota’s Organizational Structure

Organizational structure refers to a kind of framework utilized in business by a company. The purpose of a structure is to locate the most efficient ways to delegate roles responsibilities and power to a company’s staffs along with departments. Organizational structure has a role in controlling and coordinating information flows amongst various departments along with levels of management in every organization. Possessing an appropriate organizational structure permits a firm in implementing enhanced operating procedures, state what staffs assists in decision-making.  Organizational structure that an organization utilizes overtime usually dictates its culture. Usually in order to change organizational culture, the organizational structure requires a review as well.

 Toyota industries are among the most renowned multinational companies. This company has enjoyed dominance in its automobile industry for decades. The company has registered persistent growth over the years and this is owed to its organizational structure. Toyota Company utilizes a divisional organizational structure, with considerable influence entrusted to every business division (Toyota, 2014).

The company’s divisional structures take the form of geographic area structures also known as multidivisional entities. This structure divides regions into individually reliant entities or divisions in terms of their physical location. Every entity or division operates independently from the parent firm. This structure has enabled the firm to precisely evaluate every division’s performance along with encouraging managers improve their performances.   The divisional structure has enabled Toyota perfectly fit into many nations’ cultures. Organizational culture is usually influenced by the local factors, thus, for a successful business venture and as a multinational, the divisions have been able to form organizational cultures that conform to the local norms (Dartey-Baah, 2013).

The Toyota Company is a multinational whose success is based on its linear-active cultural approach to business and financial dealings (Lewis, 2012). Its divisional structures allow and practices linear-active features such as planning ahead, carrying out action chains a long with attaining precisely stated objectives with precision (Toyota, 2014). The Japanese linear active cultural category possesses additional crucial characteristics such as: they in equal measures listen and speak, they rarely interrupt, promotes products and dislikes losing  (Lewis, 2012). These Japanese cultural features have enabled the multinational fit in numerous world cultures by forming structures, which emulates local perceptions. Every division of the company is therefore charged with its individual responsibility to survey, listen, and study ways in which the company’s products can be promoted in their respective regions.   The planning ahead characteristic assists in studying cultures and business setting of the host countries prior to setting up shop. The linear-active cultural dimension encourages the divisional managers to respect figures and facts on the ground regarding the human and national cultures.  After the identification of problems, they are solved speedily and in a sequence (Lewis, 2012). Sequential problem solving entails solving one problem or task at a time to ensure that all issues are taken care of.

According to Hofstede’s cultural dimensions, Toyota is falls under reduced power distance. The reduced power distance encourages innovation and invention in the manufacturing processes (Dartey-Baah, 2013). The divisional organizational structure has enabled distribution of power among the managers, which has in turn enabled the managers distribute power to employees. This means that employees have an input in the daily manufacturing processes (Toyota, 2014). This culture enables reduced centralization that fosters staffs interaction to permit more creativity along with exploration that is essential for triumphant originality. For instance, the lean thinking manufacturing strategy the company utilizes globally, encourages employee participation to a very large extent. The processes are usually staff oriented in order to make them more efficient (Dartey-Baah, 2013). The reduced centralization depicts the characteristics of organic structure that permits lateral communication to guarantee successful business operations.

According to Hofstede , multinational companies have to make policies to guarantee smooth learning of business, such policies carry risk that the business require to make a decision to continue or to stop the new venture (Dartey-Baah, 2013). He states that low power distance firms enjoy less power struggles and misunderstanding since managers and subordinates have nearly equal contribution in the learning of processes of the factory. The riskiness of decisions made by the Toyota industries in venturing into a region is reduced by the existence of divisional organizational structure. This is because policies will be made according to the regional cultures and the settings in which they operate. This is much less riskier compared to a universal organizational approach.

International teams provide immense potential for multinationals to tap from. This is an aspect that Toyota’s divisions have fully utilized (Lewis, 2012). To be able to fully comprehend the local cultural mix of the host nations the company usually hires local employees. The managers might be posted by the parent company initially in order to orient the locals with the firm’s goals and organizational structure; however, later the local individuals are usually promoted to at times to head the divisions. The strategy of engaging locals along with individuals from the parent company offers the firm broader insights as compared to a team composed of only a single nationality (Lewis, 2012). It is very rare to hear a Toyota firm having a cultural crush this is because the divisions have taken strategic measures to guarantee that this never happens. The diversity of the firm’s staffs is an asset that enhances diversity and development.

According to Lewis (2012), the Japanese are inclined to hinting with regard to what they would prefer done instead of giving forceful instructions and recommendations. The Toyota parent Company usually awards the divisions autonomy and makes particular recommendations on a number of issues such as production, marketing, hiring including others, however, it requires the divisions to function according to their settings’ requirements. Though the company has entrusted considerable power on the divisions, crucial matters are usually solved through a Business Operation Committee (Toyota, 2014). This committee enables the president congregate with the division heads to frequently scrutinize and evaluate the status of their respective business operations implementation. During Management Council meetings the managing personnel, audit along with supervisory board affiliates congregate to offer and substantiate the monthly business operations’ status and give entire deliberations to the Board of Directors (Toyota, 2014). Issues regarding human resources, procurement, production, technologies along with quality are deliberated during the respective functional meetings.

The current divisional organizational structure utilized by Toyota works perfectly for the company. Toyota being a multinational company that has branches literally in almost all the nations cannot utilize a universal strategy to tackle business operations due to the dissimilarities of the varying local cultures. The fact that understanding local culture is an essential part of the business operation, Toyota through its divisions has been able conquers the cross-cultural barriers. Employing locals is an additional strategic that has made the divisions extend their business diversity. Thus, the divisional organizational structure should not be changed.  

References

Dartey-Baah, K. (2013). The Cultural Approach to the Management of the International Human Resource: An Analysis of Hofstede’s Cultural Dimensions. International Journal of Business Administration, 4(2). Retrieved from https://edge.apus.edu/access/content/attachment/263603/Assignments/753ec510-76a8-4acc-84d1-53099199b85e/CulturalapproachtoManagementinternationalhumanresource.pdf

Lewis, R. D. (2012). When teams collide: Managing the international team successfully. London: Nicholas Brealey Publishing. Available from http://common.books24x7.com.ezproxy2.apus.edu/toc.aspx?bookid=47354.

Toyota. (2014). Corporate Governance – TOYOTA INDUSTRIES CORPORATION. Retrieved from http://www.toyota-industries.com/corporateinfo/governance/