Analyze How Should Mcthai Maintain Its Market Competitiveness During the Global Recession

World’s largest carmaker Toyota has announced that it will reduce its worker’s working hour and wages in the UK by 10% (BBC Business). The aim of this strategy is to reduce its high labour turnover which is caused by the global recession. Toyota announced from its annual report that during the year of 2008 the company has experienced difficulties in its sales, production and marketing, which lead to the loss of $ 1.6 billion (see Toyota Announces Results for January 2009 for latest update). “This would be Toyota's first operating loss since 1950”, Toyota spokesman Steve Curtis said (CNNMoney.com).

This announcement will take effect on the 1st of April 2009 and has been described as a “positive move” by the Unite union as they were the representative for the workers who negotiated this plan. This plan will provide stability to the Toyota workers as they will not be made redundant and a steady income will still made. On the other hand, Toyota can still maintain a high-level skilled work force ready when the upturn comes. Toyota tries to maximize its profitability by reducing costs and even downsizing as a measure to counter the global recession.

In the UK, Toyota has already suspended a night shift production line for a total of four weeks in order to reduce operating costs. Toyota is also considering downsizing in the UK, it has already cut 200 temporary jobs and opened a voluntary redundancy scheme. A voluntary redundancy scheme is a financial incentive offered by an organization to its employees with the purpose of attracting volunteers to leave the organization, due to downsizing or restructuring situations. The purpose is to circumvent union employee regulation laws. {draw:frame} {draw:a}

The advantages of this plan would be that it has provided a motivation towards its workers as they only lose 10% of their wages rather than being made redundant which fits the Taylor’s motivation (Wikipedia, Scientific management) as money is the basic motivator of all workers. This plan can be seen as a paternalistic style of management as Toyota has put its workers into a greater deal by only making a small decrease in wages rather than making them redundant. Also this plan can help Toyota to maintain its good reputation compare to its competitors as many other carmakers have already made many workers redundant due to profit loss. The disadvantages of this plan would be if the global recession continues to decrease Toyota will have to eventually make most of its workers redundant and continues the process of downsizing, in order to avoid further profit losses.

Also workers could become de-motivated as they are unsure of their own future, and workers are not achieving their full potential which does not match the basics of Maslow's hierarchy of needs, physiological and safety needs. Therefore worker feels insecure and becoming de-motivated. In evaluation, I think Toyotas plan to reduce the working hour and wages of its workers by 10% is a reasonable cut which will provide some decrease in costs and profitability will increase.

But in order for Toyota to stop losing profits and avoiding downsizing cutting jobs it’s not the best option. Toyota must find an alternative solution which will give customers the confidents to purchase their cars. In order to do this Toyota must transform its existing products into new products which will provide them with a unique selling point or a competitive edge. Therefore Toyota must carry out a deep market research for their product development, examples could be eco-cars, or ultra-cheap cars such as the TATA Nano. Tokyo — TOYOTA MOTOR CORPORATION (TMC) announces today its production, domestic sales and export results, including those for subsidiaries Daihatsu Motor Co., Ltd. and Hino Motors, Ltd., for January 2009.

Bibliography http://money.cnn.com/2008/12/22/news/companies/toyota/index.htm BBC Business, last updated at 13:41 GMT, Wednesday, 11 March 2009 http://news.bbc.co.uk/2/hi/business/7936397.stm Wikipedia, Scientific management, http://en.wikipedia.org/wiki/Scientific_management Toyota Announces Results for January 2009 http://www.toyota.co.jp/en/news/09/0225.html