Human resource management Summary

Presently, the concept of competitive advantage is one of the main important business strategies. All over the world, companies that have attained global leadership used strategies that differ from each other in every aspect. Therefore, to survive in the globalized market environment competitive advantage is essential.

Competitive advantage can be defined as an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition. Generating a sustainable competitive advantage may be the most essential goal of any organization. According to Porter “competitive advantage is at the heart of a firm’s performance in competitive markets”

Thus, competitive advantage means having low costs, differentiation advantage, or a successful focus strategy. Sustainable competitive advantage can be broadly defined as the quality of an organization that enables it to outperform its competitors and sustain above normal returns (Peteraf,1993). When consider the above definitions we can see that competitive advantage is a vital factor for any business organization.


Among the auto manufacturers Toyota motors is one of the leading auto manufacturers in the world. More than 170 countries and regions Toyota trades its vehicles. It manufactures and sells automobiles, including passenger cars, recreational and sport-utility vehicles, minivans and trucks. The primary markets of Toyota are Japan, North America, Europe and Asia. It is headquartered in Toyota city, Japan and employed about 316,121 people as on March 2008 and it has 52 manufacturing companies in 27 countries and regions.



Global Brand: Toyota has a strong brand value. It is the highest ranking automotive brand name. It is ranked well ahead of its competitors Mercedes, BMW, Honda, Ford, Hyundai, Prosche and Nissan. High Performance in the US: Toyota witnessed strong income growth rates in North America and its company’s second major market and it has threatened the leading American OEMs such as Ford and General Motors in North America. Strong Engineering Capability:

Toyota is identical of engineering excellence. Toyota presented the world’s first hybrid car, the Prius, which operated on a mixture of gasoline and electric power. Skilled Human Resource: Toyota is having very talented, skilled workforce to make the production system very effective.


Low Profitability in Europe: The company showed a decline in operating income in its European operations. This reflects its increasing cost base in the Europe region which is likely to impact its return on investments in the region.


Adjustments to Production Mix in North America: Toyota is expected to increase production of its fuel-efficient small and midsized cars in reply to high gasoline prices and a slowing US economy. Increasing Demand for Hybrid Cars: Toyota has developed core competency in manufacturing hybrid vehicles. The company’s hybrid car, the Prius, was the world’s first mass-produced hybrid car.


Rising Raw Material Prices: Toyota is used steel, aluminum, paints, plastics and zinc as principal raw materials. High crude oil prices lead to increase the raw material prices and it will causes to increase production cost for the company. Economic Instability: The recession is affecting to not only in the U.S., but has begun impacting the company internationally as well. Consumers trying to save money even on the little things, purchasing a newcar become less and less likely.

When consider the SWOT analysis of TOYOTA, we can identify that they are having more strengths which towards to high competitive advantage. Further opportunities available in the environment, they can utilize through their strengths. Although Honda and Nissan have earned a reputation for building high-quality cars, they have been unable to overcome Toyota’s advantages in human resource management, supplier networks and distribution systems in the highly competitive US market.

The Toyota philosophy or competitive advantage is often named as the Toyota Production System. The system is contingent in part on a human resources management policy that stimulates employee creativeness and faithfulness but also, on a highly effective network of suppliers and components manufacturers. Much of Toyota’s success in the world markets can be credited directly to the synergistic performance of its policies in human resources management and supply-chain networks.