Table of Contents
Retailing is a set of business activities and strategies that brings value to services and products, sold to consumers for family or even personal use. Even though many people often perceive retailing as just the sales of goods in stores and distribution centers, retailing may also involve the sale of various services such as doctor’s exam, an overnight lodging in a certain motel, a haircut, or pizza delivery. Retailing can be performed online too, for example, when someone orders a T-shirt right from their mobile phone app or their personal computers. Simply, one cannot claim that all retailing is performed in distribution centers and stores since online shops also offer retailing.
Effective and efficient management controls the operations of a business to a large extent. The retail management ensures that the products are well arranged and also the prices are well labelled on their assigned shelves. The management ensures that there’s a clear record of the inventory. It plans the store very well for attractiveness and doesn’t keep the customers on wait. Proper management will make sure that the stores are ever clean and ensures that the stock is ever available. This paper evaluates the retail management of Toyota Company, its retail and merchandise strategies as well as provides recommendations for improvement.
A retailer is a specific business that usually sells products and services to consumers/customers for their use. Retailers are considered as a key component within a supply chain that links consumers with producers. A supply chain is a set of industries, organizations, companies, or firms that produce and deliver services and goods to consumers (Levy, Weitz, & Grewal, 2014). In simple terms, retailers usually buy goods from wholesalers or the manufactures and resell them to consumers at higher cost to get profit. Thus, retailers are quite important because it would be a difficult task for manufacturers to get to their consumers without middlemen. Consequently, retailers add efficiency to businesses.
Retail management is the process that involves promoting greater and higher sales of goods and services to customers as well as boosting consumer satisfaction by getting a clear comprehension of what they need exactly. A normal retail management strategy for a certain manufacturing company may involve a research on the retail process that usually distributes the finished goods to consumers in order to establish their feedback. Retail management ensures that the shopping process is an interesting moment for customers whenever they visit stores. For example, Rodney wanted to buy his wife, Brenda, a beautiful watch for their anniversary. He visited the nearest retail shop, but it took the retailer almost 30 minutes to find a watch (“Retail Management,” n.d.). This hurt Rodney and he promised never to visit the store again. A retailer should not keep the customer waiting for 30 minutes just looking for a watch. Therefore, retail management ensures that customers easily locate the merchandise and proceed to the next thing quickly.
Toyota Retail Management Strategy
Toyota Motor Corporation is the largest automotive manufacturer in the world. The company has produced over 10 million vehicles annually since 2012. Toyota has also been listed as the largest company in Japan based on market capitalization rankings (Reichental, 2015). The company has built a consummate reputation for durable, high quality, and reliable cars. Due to the proper implementation of Retail Management System, the company has been able to achieve such a high mark of excellence and success. The success of Toyota in the 21st century has been bolstered by the ability of its leaders to develop intellectual monetary capital via knowledge creation by tacit to explicit sharing of this knowledge globally (Ichijo & Kohlbacher, 2007). This knowledge sharing ability of Toyota’s has constituted a competitive advantage for this company. Therefore, the following is the assessment of the three distinctive retail strategies that Toyota has used to develop effectively:
Learn Local, Act Global
Toyota’s knowledge creation strategy in the automotive industry has emerged from developing knowledge in Japan by tacit and relaying it to affiliations and subsidiaries around the world. This helps them meet the needs of consumers in their very own countries (Ichijo & Kohlbacher, 2007). The effective retailing practiced by Toyota has enabled it to meet effectively customers’ and market demands across the globe. At the same time, the tacit to explicit knowledge transfer has helped the company maintain its standards since the skill used at local level is the same as the one applied at a global level. Toyota, together with its local partners and local staff, has been able to instill effectively this knowledge to foreign and developing markets. The cars that Toyota sells abroad are not locally produced, apart from a few countries where the industry has not built its producing centers, only assembly lines. Therefore, the TPCA and IMC initiatives are quite innovative approaches, used by Toyota.
The magnificent growth of the internal, Japanese market, has forced the company to search for new opportunities abroad. It was difficult for Toyota to meet the market demands abroad without incorporating the foreign market manufacturing strategy (Ogutu, 2016). Some of these markets that has Toyota invested in are Europe and North America. However, the company has faced fierce competition from the big global players, which has forced it to improve production and quality through knowledge management. The high price considerations by customers, present in the markets, has required a change in strategy. Hence, Toyota implemented its approach of “learn local, act global” (Carrillo, Robinson, Al-Ghassani, & Anumba, 2004). This approach involved learning the needs of the local market and then adapting to these particular needs by providing exactly what the local consumers required. The working place for any company has been recognized and valued as the core of knowledge creation and as the priority for a frontline company.
For any company, significant knowledge is found in the workplace as well as around the service and sales organizations that interact directly with consumers. The front line of Toyota Company underscores the significance of tacit knowledge and the strategy of creating and managing it. The creation of this knowledge is a human process that highly depends on the company’s system of sharing information, and it cannot be easily replicated (Carrillo et al., 2004). In other words, the knowledge transfer has to be enabled by the creative an effective management system of this knowledge. Thus, knowledge creation, protection, sharing, and discarding highly depend on enabling approach, which is rather essential in retail management.
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Toyota has generated such an enabling approach for retail management by utilizing the following enablers - creating a vision for knowledge and instilling in the company’s core. The company has achieved this by successfully transferring the knowledge from local to global markets. Toyota is an actual and precise learning organization with an evolving and learning environment (Whitman Unviersity, n.d.). The company has a continued learning and improvement approach in all its objectives. Managing conversations is another technique, utilized in this area of retail management. This approach has facilitated communication among all Toyota employees, which boosts tacit to explicit knowledge sharing ability within the company (Harmon, 2017). Toyota has also cultivated a culture of dialogue within its management and has built a listening capability. Therefore, the company has fully mastered this approach.
Toyota has knowledge activists. This are the proselytizers of the company, being a cross-levelling agent through the sharing of information to everyone. The mobilizers of knowledge are people responsible for connecting knowledge as well as energizing it. Creating the approved context is also an important approach used by Toyota. This examines the strength of connections within Toyota as an organization. At the same time, it evaluates the strategy, structure, and knowledge enabling. Toyota has sought to establish a constant interaction between supplier and consumer networks. The globalization of local skills has been used by Toyota to disseminate knowledge to the global market. Thus, it is significant for any organization that the knowledge created locally should be transferred to other local units efficiently, efficiently, and freely be (Ichijo & Kohlbacher, 2007). Therefore, the development and utilization of leadership skills is an essential factor in ensuring that the enablers work closely together in an effective manner.
Toyota has successfully applied its retail management system in a front-line manner. This has helped curb the challenges of identification, nurturing, and deployment of knowledge within global operations (Adasher, 2012). This move has also helped in leasing the power of tacit (personal) knowledge. This approach has given Toyota the ability for its subsidiaries, business units, and functional departments. The frontline approach, as implemented by Toyota, has strongly supported the knowledge creation process. These approaches have made Toyota a multinational company, so its success serves as the definite role model for other companies to implement the approaches, assumed by Toyota.
The example set by Toyota does not mean a mere copy-paste method by other companies. However, it means a close observation and development of an effective approach by other companies. These companies should strive to develop with more successful approaches to handling their retail management systems. The Toyota approach also evolves and develops due to the Kaizen principle that believes in continuous improvement. Continuous improvement and learning are necessary if companies wish to develop corporate success, obtain competitive advantage and as well as survive in the conditions of modern knowledge economy.
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Merchandise Management at Toyota
Thin Fabrication and Six Sigma
Toyota is a champion of operations direction, and it is responsible for introducing the fabrication scheme also known as Toyotaism. Thus, this strategy of retailing deals with the riddance of otiose resources, especially those that do not refer to the value of terminal merchandise (Toyota, n.d.). Thin fabrication involves solely employing resources towards good and proper services, characteristics that customers want, or merchandise, thus giving customers the largest value with reservedly low resources. When using the operations direction method, Toyota gives priority to the countries that have plenty of waste materials because the work is either uneconomical, it can be eliminated, or it adds no value.
Even though Toyota has prospered in using thin fabrication has a retail tool, some other important schemes are employed by the company to boost its profits. Thus, six sigma is a controversial attack operation direction technique (Naruo & Tumo, 2007). Six sigma ensures that there are minimal defects in the end products and it scales up the quality of the products that reach customers. The six-sigma approach also relies heavily on its different core areas. At the top of hierarchy is the executive management of Toyota Company, responsible for pushing the vision of six sigma. Below the management are the degrees that are responsible for executing the vision and strategies, statistical undertakings, mentoring, specific undertakings, and coordination.
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Another retail technique, utilized by Toyota Company, is the Kaizen principle. The Kaizen rule focuses on the continuous improvement of services. Furthermore, it focuses on eliminating the operations that do not add value to the final merchandise (Naruo & Tumo, 2007). The thought of continuous improvement is practiced daily within the organization, and it brings all the employees of Toyota together so that they could work on a common goal that will finally result in a better product. Another significant quality of Kaizen is to concentrate on executing little experiments and evaluating how they fare as well as their consequences. This approach ensures that the company does not just implement sweeping alterations that lead to losses. Additionally, Kaizen incorporates an altitude of self-denial, improved morale, teamwork, and suggestions for the improved quality of products within the company’s manufacturing facilities across the world.
Retail Management Recommendations
A number of proposals can be given to Toyota that would help improve its retailing services. Toyota already utilizes the Kaizen principle, six sigma, and thin fabrication techniques in the production of vehicles, as discussed above. However, these three techniques should be applied in concurrence to each other in order to deliver ultimate products that would beat those of Ford Company, for example. The company should utilize the six-sigma attack for the vehicle industry where this rule will work properly to improve the merchandise quality. Further, six sigma may be coupled with thin fabrication to control quality, while waste direction can be significantly controlled with the same direction and procedure. This approach will not simply focus on waste resources, but it will also guarantee the improved operations direction for the management. Kaizen, being an improbable and successful tool, should be implemented in all operations of the company. The company should establish a department that deals only with Kaizen techniques and procedures.
It can be concluded that Retail Management System is crucial for Toyota Company and other companies as well. The company has very strong retail strategies, incorporated within its system of operations. Such strategies as ‘learn local, act global’ have helped the company prove its authority across the world. They help the company develop products in foreign markets and sell them there with their original quality. It has been determined that such principles as Kaizen should be implemented in all the areas of the company’s operations to improve retailing on a daily basis.
Other strategies, applied by the company in bid to assert its authority in the vehicle industry, are knowledge enabling and frontline management. The former technique has ensured that the company employees are able to communicate their ideas easily. At the same time, the latter strategy within Toyota has facilitated the transfer of knowledge from one business unit to another. These company strategies can be said to be quite effective and efficient in the way they have been applied. Recommendations were also offered on how Toyota can improve its operations from a strategic point.