Synopsis of a Contemporary Strategic Issue.

innacle of Japanese innovation, very recently, Toyota has had to recall 8m vehicles due to “unintended acceleration” (The Economist, Feb 11, 2010). Toyota Prius (the hybrid vehicle) has developed problem with brake pedals that refuse to open (The Economist, Feb 9, 2010) and 440,000 vehicles would have to be called back. The firm’s reputation for quality on which the organization was built has been shattered. Toyota is busy chasing volumes at almost any price. Its global market share has fallen to 11.8% from 13.1% (Appendix A).

The business environment is currently turbulent and according to Ansoff, to survive and succeed in an industry the firm must be able to match the aggressiveness of its operating and strategic behaviours (Thompson & Martin, 2005). The business environment is characterized by several factors and the resources of the organization and the values must be congruent to the needs of the environment.

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Changeability of the market environment- the current market is turbulent due to global economic downturn. Besides, due to the large amount of vehicle recall, Toyota’s market capitalization has dropped. The cost of recall is $2bn dollars (The Economist, Feb 9, 2010).

Globalization, individualizations, digitalization and increasing competition have increased the speed at which change is taking place in the industry (Jain & Garg, 2010). The car makers can now expand to new markets a fast pace.

Fertility of technology: The firm has always prided itself in being leaders in innovation but the cars rolled out recently have problems with brakes. The floor mats are badly fitted. All these suggest that the organization has to rethink its outsourcing policies. Toyota has depended on several layers of suppliers which has helped them to reduce the costs (SD, 2006) but they need to take note that most of the accelerator pedals were supplied by American parts-maker (The Economist, Feb 11, 2010). 

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