Strategic management at Toyota: mission, vision, and stakeholder analysis

Toyota

The mission statement for Toyota should be much more meaningful than the generic, bland "make better cars and contribute to society." Such a pointless mission statement is a waste of everybody's time. This mission statement might sound better in Japanese, but in English it is awful. It also seems like that was the mission when the company was founded. As Radtke (1998) points out, the mission statement may need to be updated as the business evolves over time. The worthlessness of this mission statement would be excusable if the rest of the "Right Way Forward" had any meaning, but it does not. The phrases are all vague, empty cliches: "putting the customer first," "high-quality vehicle at an affordable price," "the…industry has faced a difficult operating environment," "major changes are anticipated," "we will continue [to overcome challenges] in the future." None of these statements would be informative or visionary to a third-grader, let alone a Toyota stakeholder. Is there a company that does not "overcome challenges" and "put the customer first"? The details in the document are equally vague, if more long-winded. If this document is to be taken as a serious statement of the company's mission and vision, then it is reasonable to conclude that Toyota has no vision or mission.

To conceptualize the idea of "Toyota wants to be…," the company needs to have a vision that can actually inspire people and give them a sense of direction. Even boring statements like "Toyota wants to be the best-selling automaker in the world" or "Toyota wants to be the most profitable automaker in the world" are better statements, because they provide a clear sense of direction. When conceptualizing the firm, the idea must be simple, easy to understand, and something that is attainable. All stakeholders, both internal and external, should be able to clearly understand what Toyota either is or wants to be. For Toyota to communicate a clear sense of direction to all relevant stakeholders, it will need to create a meaningful, powerful mission and vision for itself.

Stakeholders

A company like Toyota has a wide range of stakeholders. The internal stakeholders include workers, managers, shareholders, the Board, and any unions they might have. External stakeholders include suppliers, government, customers, dealers, business partners, and competitors. Among the internal stakeholders, the shareholders have an interesting position. The company should be oriented towards long-term growth in the investments that the shareholders have. This should place the emphasis for Toyota on building businesses with profits that are sustainable in the long-run. The shareholders are going to want to see that the company has a plan for this. The current vision for the company makes it sound as though Toyota is going to float on the ebb and flow of the industry. The shareholder understands the challenges in the environment. What the shareholder wants to know is how the company intends to overcome them. The company right now cannot even really say what the challenges might be. That's not good enough for the shareholders.

Suppliers are a key external stakeholder. Their objectives with Toyota are to maintain their relationship with the company, allowing them to continue to build their business. The suppliers need to know from Toyota how the company is going to address its challenges, what markets it will enter, what product segments it will focus on. If Toyota says it wants to be the best-selling car company, that implies a different strategy than it says that it wants to be the most profitable or have the best reputation, even if those different objectives have some correlation.

Toyota's outline for mission and vision do not contribute much insight that would make the stakeholder satisfied. There are few specifics in the "Right Way Forward" document that illustrate strategy, and this is a major drawback. The company fails to draw links between customer satisfaction and any sort of profit or market share objectives. The company promotes some generic strategies, but fails to explain how any of that will help key stakeholders. The annual report may not be the best place for a supplier to learn about Toyota strategy, but this report does not even provide meaningful insight for the shareholder.

It is recommended that Toyota, when communicating its mission and vision for the future of the company, be far more specific and insightful. Key stakeholders are aware of everything in this document -- Toyota's Japanese market share, the existence of the Prius, that they intend to use marketing to reach customers. What stakeholders need to see is a clear path forward. Toyota needs to be specific -- if it wants 30% market share on the planet, it needs to say that. If it wants to dominate the Chinese market, it needs to say that. In a document like this, the company does not need to be specific and divulge proprietary information, it simply needs to tell people what it is already doing, and why it is doing it. There should be a statement that says where management plans to take the company in the next five years. There should be a statement that highlights the company's financial objectives, and its non-financial ones.