Corporate culture at Mercedes-Benz and Toyota Motor Company

Corporate Culture Analysis and Comparison

Modern business entities have evolved continuously from their predecessors of several generations in terms of corporate culture as much as they have evolved technologically. In the modern age of business, the success or failure of corporations is often substantially a function of variables and concerns that are difficult to address on a case-by-case basis, even within a single-office corporate venture. The growth of corporate business entities into multiple-site organizations, and later, into trans-national organizations further complicated the concept of promoting beneficial strategic goals and the policies and approaches to achieve those objectives within large business organizations.

As the contemporary business environment expands into the global range for more and more companies, defining, establishing, and clearly promoting a specific corporate culture is essential to allow business strategists to replicate and promote concepts, approaches, and policies that work while eliminating those that are identified as being counterproductive. Generally, corporate cultures can reflect a traditional focus on maximizing productivity and profit, and for the most part, nearly all corporations incorporate elements of those traditional concerns within their corporate culture to the extent they maintain a purposeful corporate culture.

Alternatively, corporate cultural identities can also be the product of specific interests (such as social altruism or environmental conservation) that lie wholly outside the realm of ordinary business concerns of the organization. Corporate cultures can also evolve naturally and without any purposeful involvement (or in some cases, even outside of the awareness) of corporate management; moreover, that is equally true of productive and beneficial elements of corporate culture and of unproductive and damaging elements. In principle, corporate culture is a form of organizational identity that plays a similar role within business organizations to that played by a philosophy or life maintained by individuals.

Furthermore, the age of globalization, 'round the clock news cycles, and perpetual Internet access has increased the importance of corporate culture by greatly magnifying the likely consequences of both positive and negative press, particular with respect for the competition for customers. It has also already had a significant impact on recruitment efforts since prospective employees can now learn more about potential employers than they ever could before with comparable ease and convenience. Contemporary business analysts have linked specific types of corporate cultures to customer satisfaction as well as to employee attitudes through empirical analyses. Even more importantly, they have also identified exactly how corporate cultural characteristics affect the former directly as a function of the latter.

On one hand, it is difficult to overstate the importance of corporate culture on the conduct and profitability of modern business organizations; on the other hand, there is a wide range of specific concerns or corporate values capable of resulting in successful enterprises. Naturally, certain companies will focus directly on customer satisfaction as the cornerstone of a corporate culture; others might emphasize operational efficiency and rely primarily on the quality of their products toward the same end. In that regard, the Mercedes-Benz Corporation ("Mercedes-Benz") and the Toyota Motor Company ("Toyota") represent different types of corporate culture. Both are designed to maximize the quality of their products and corporate profits, but their respective corporate cultures focus on different approaches toward achieving similar objectives.

Toyota Corporate Culture

Since 2001, Toyota has adhered to a corporate culture called "The Toyota Way"; it is supported by two "pillars" and encompasses the following general principles: (1) maintaining a corporate philosophy or sense of purpose, (2) long-term planning; (3) problem-solving processes, (4) adding value to the company through employee development, and (5) recognition of organizational learning as a direct function of root problem solutions (Liker, 2003; Russell-Walling, 2005). The two supporting pillars of the corporate culture are respect for people and continuous improvement in connection with which the company has established specific principles for maximizing both. In that regard, Toyota corporate culture emphasizes the willingness to take on challenges, continual improvement (kaizen), a managerial approach of first-hand observation or "go and see" (genchi genbutsu), respect, and teamwork (Liker, 2003; Russell-Walling, 2005).

More particularly, the Toyota corporate culture consists of 4 concepts comprising 14 management principles. The first category is a long-term philosophy; the second category is the belief that the right results are achievable through the right processes; the third category is the notion that developing employees is the key to adding value to the organization; and the fourth category is the dependence of organizational learning on the process of continually solving root problems (Liker, 2003).

The long-term philosophy component of Toyota's corporate culture is the principle that long-term organizational benefits outweigh short-term benefits, including short-term financial concerns. The right-results-through-the-right-process component of Toyota's corporate culture consists of management principles 2 through 8: (2) bringing problems to the surface is the key to maintaining a continuous process flow; (3) avoid overproduction through a pull system to coordinate the production of materials and subcomponents to reduce overproduction; (4) maintaining a consistent and level workload (heijunka) to avoid uneven production levels and overworking employees and equipment; (5) establishing a culture of quality control (jidoka) according to which every employee along the production line has the independent authority to stop production to address quality issues; (6) continuous improvement and employee empowerment through task and process standardization; (7) emphasize visual control to eliminate hidden problems; and (8) reliable and fully tested technology that best facilitates the production process and employees (Liker, 2003).

The add-value-to-the-organization-through-employee-development component of the Toyota corporate culture consists of management principles 9 through 11: (9) cultivate leaders who understand the work, live the corporate philosophy, and are capable of teaching it to others; (10) success is the result of establishing exceptional teams composed of exceptional individuals; and (11) respect the extended partnership and supplier network by challenging them and encouraging them to focus on the same quality-oriented and problem solving processes as in use at Toyota (Liker, 2003).

Finally, the dependence-of-organizational-learning-on-continuous-root-problem-solution component of the Toyota corporate culture consists of management principles 12 through 14: (12) genchi genbutsu ("go see for yourself") to thoroughly understand situations that require managerial attention; (13) make decisions slowly, deliberately, through consensus, and deliberately after considering all options and implications but implement those decisions swiftly once made (nemawashi); and (14) develop an organizational focus on learning through relentless reflection (hansei) and continuous improvement (kaizen) (Liker, 2003).

In keeping with the Toyota corporation's focus on the first-hand go and see (genchi genbutsu) management approach, it has implemented 10 specific steps within that principle (#12) that were originally introduced at the company's technical center (Liker, 2003). According to those steps, Toyota managers are all expected to maintain their perspective with respect to long-term objectives; assign definitive tasks; consider and respond to objectively validated information and data; fully exploit the knowledge and experience of others to obtain, transmit, and analyze information; disseminate information expeditiously; report, consult, and inform others expeditiously; recognize and understand your own shortcomings; strive relentlessly toward continuous improvement; extend analyses beyond common wisdom, rules, and standards; protect the health and safety of everyone in the organization (Liker, 2003).

Conclusion

In the modern age of business, corporate culture has become a defining element of major corporations. The impact of globalization complicates the competitive environment and requires strategies for maintaining corporate culture consistency across all business lines, facilities, and (as demonstrated by Toyota) even among business partners and suppliers. In a business environment increasingly characterized by tight profit margins and intense competition for customers, establishing and maintaining corporate cultures conducive to organizational success is more important than ever.

There are many different approaches and themes from which corporations must choose to incorporate those that relate most directly to their particular industries and clientele. In some cases, a focus on production efficiency may be the principal concern of a corporate culture; in other cases, understanding the specific preferences and psychology of customers and establishing meaningful connections with them is the core component of corporate culture.

Both Toyota and Mercedes-Benz have developed corporate cultures intended to further their interests by addressing the most important aspects of their business models as suggested by empirical research and proven principles of business success. At Toyota, the corporate culture strongly emphasizes the style of management it expects throughout the organization as well as strict quality control. At Mercedes-Benz, the specificity of the clientele has driven a slightly different approach to corporate culture that strongly emphasizes customer service and the maximal retention of existing customers over the acquisition of new customers. In both cases, the appropriateness of the corporate culture to the needs of the organization have been documented by their tremendous success.