Influences that Affect The Operation of Toyota

Toyota’s operational objectives are influenced by both internal and external factors. Do you consider internal or external factors more important influence Toyota’s objectives?

Operational objectives are specific, focused targets of the operations management function within an organisation. Operations management is the process that uses the resources of an organisation to provide the right goods or services for the customer.

Firstly, Internal factors such as a company’s corporate objectives and overall aims or philosophy can influence or even completely determine the operational objectives as firms must ensure they are consistent. If they aren’t then there is a high chance that the overall aims of a business will not get met and so the chance of success is much lower. For Toyota, who overall aim to provide customers with high quality, at the lowest cost in a timely manner with small lead times whilst having a philosophy of minimising the environmental impacts their operational objectives will be based on efficiency and the environment. As their overall aims are environmentally and efficiency based, they have chosen their operational objectives in consistency with these, for example Toyota have decided to have a 50% reduction in carbon dioxide emissions and target cost savings for £1 billion. If their corporate aims were different (for example to be the most profitable) they would set operational objectives differently accordingly (such as reduce cost as much as possible whilst maintaining price). Therefore overall I would say that the corporate aims and external factors are the most important factor as they can practically determine and decide the operational objectives, if success is wanted to be ensured.

External factors are also important in influencing operational objectives for businesses such as the environmental legislation/pressures from the government and consumers. Businesses whom have a better environmental impact will gain certain certificates and rewards that other businesses may not and so they will gain a higher reputation and possibly a USP from being eco-friendly, it can also cut costs in the long run too. For Toyota and the car market this is become an increasingly wanted or even needed feature of products, the pressures from consumers and the government with their emissions tax have almost forced businesses to react by making their processes more eco-friendly. This has happened as Toyota have set a lot of new operational objectives based on the environment such as the 50% loss in carbon dioxide emissions which will help to reduce the amount they pay for their emissions. Overall the cost of disposing of wastage and damaging the environment, and the benefit in demand and reputation from becoming more eco-friendly may incentivise firms such as Toyota to become more eco-friendly and set their operational objectives with this in mind. Despite this, becoming eco-friendly is usually quite costly so for small firms or firms that wish to gain lots of profit, environmentally friendly operational objectives may not be consistent with the corporate aims. For Toyota however the investment was clearly worth it as they have won many awards (e.g. Big Tick) and gain a large reputation through this, which no doubt has increased demand.

Other ways that internal factors can influence operational objectives is through the nature of the product and the resources that a firm may have available. A firm with more resources may be able to set more ambitious objectives and so influence them, also different markets (niche and mass) will create different objectives also. For Toyota their product is quite easy to mass produce as they are cars, and so they have a quick production line, as they are also quite a profitable and well known successful business, they are likely to have lots of available resources such as finance and HR. This enables Toyota to set quite ambitious operational objectives and set up processes such as their TQM, through their good and likely expensive training/HR. They have created their objective of “never pass on poor quality to the next member” which has also come from their human resources and TQM system. As the resources available and the size of Toyota has changed or even determined their objectives I would therefore again say that internal factors are more important than external factors in determining operational objectives depending on the nature of the good created.

Lastly an external factor such as technology can influence mainly how ambitious operational objectives are and perhaps determine them entirely. This is because as technology advances there are more things you can do to improve, which can both save money on costs but this can also improve/influence a business’s operational objectives. To Toyota this is an important factor in influencing operational objectives as their long term aims are to maximise efficiency, to do this a lot of advanced technology has to be added to the process. With better technology they have been able to introduce more energy efficient cars, reduce the time required to complete a model change and the time in the body shop. All of these factors allow the business to save money, by saving money they are able to set an ambitious operational target of creating £1 billion worth of savings from purchasing materials especially as they have reduced wastage by using the 5 R’s. Overall the more technological advancement there is, the greater efficiency and lower costs a firm can gain, this influences to which extent they will meet their overall aim, and determine how ambitious their operational objectives can be whilst still being realistic, and therefore external factors are quite an important influence.

In conclusion both external factors and internal factors influence operational objectives to some extent such as environmental pressures and reputation they would gain from being environmentally friendly, would cause the business to set more eco-friendly objectives. For Toyota who make cars I would say that external factors such as the environment may affect them more than other companies because cars can have a large impact. Despite this however for most businesses I feel that internal influences would have a larger impact specifically on the ambition within the operational objectives, and perhaps some factors may actually determine the objectives altogether such as the corporate aims as they must be consistent. Overall, I would say for most businesses internal objectives would be the more important factor in determining their operational objectives however for Toyota and other companies in the car industry, especially recently I would say that external factors such as the technological change and environment would affect their operational objectives and perhaps even success as a whole if they were to ignore these factors, therefore external factors would be more important to Toyota.