Toyota and Hilton Hotels are the two companies chosen to answer the questions given for this assignment. The product service divide is more of a continuum in these two companies, with Toyota using large doses of intangibles to enhance its products, and all Hilton hotels offering strong product elements in their superlative service.
The Internet sites of the 2 companies, including their web pages for investors have been used for this assignment, with a standard text on Services Marketing, which also covers product elements of the Marketing Mix. The web site of the New York Stock Exchange, where both companies are listed, has also been used.
Both companies have brands for multiple segments (Payne, 2002). Toyota has automobiles for various purposes, while Hilton has different kinds of hotels for each category of guests. However, individual product brands are subordinate to corporate brands in both cases (About Toyota, 2006 and About Hilton Hotels, 2006). Hilton remains within the premium segment space in its service category, and does not operate any budget hotels, while Toyota offers economy models and commercial vehicles apart from its luxury range. Toyota therefore has a broader product range than Hilton. Distribution channels for automobiles and hotels are distinct.
Recruitment and training of front-line staff matter more for Hilton, while Toyota relies on agency and franchise personnel for most of its marketing: the People element of the Marketing Mix is therefore critical for Hilton, but incidental for Toyota. The Process element of the Marketing Mix (Payne, 2002) also matters for a hotel business, while there is less variability in customer interaction for Toyota. Process is more important for internal efficiencies in Toyota, whereas they impact directly on service levels in the business of Hilton.
Promotion is more developed in Hilton with international guest room reservations available in real time on the web site, whereas Toyota prefers to make isolated compartments of its marketing activities in various countries. This difference may be related to greater global uniformity in the decision process for reserving hotel rooms than that for investing in automobile purchases. Overall, each company has to focus on different elements on the Marketing Mix, as relevant for their respective strategies.
Toyota faces a more intense competition than Hilton, as the latter has locations as advantages for many of its properties, and has significant capacity utilization guaranteed by airlines, travel agents, and similar industry associates. The numbers of brands that can challenge Hilton are fewer than the equally reputed manufacturers with which Toyota must contend. However, Hilton must contend with more brand switching opportunities, while Toyota customers are tied in for much longer periods. Toyota’s financing business ties in customers, which is a resource that Hilton lacks (Listed Company Directory, 2007).
Word-of-mouth promotion matter equally for both companies, but Toyota has to make a greater effort for after-sales service. Toyota must provide customer finance amenities through arrangements with financial institutions, something which does not concern Hilton. However, the latter must provide lines of credit for major clients, whereas Toyota enjoys an immediate realization of sale proceeds convention (considering the automobile business in isolation and as distinct from the financing arm).
Physical Evidence and Preferential Customer elements (Payne, 2002) are vital ingredients of the Hilton Marketing Mix, whereas Toyota can rely more on its distribution chain to provide these values to customers. Maintenance of public areas and exteriors, even during lean season, is an additional cost burden to be borne by Hilton, but this would be significant in the pricing structure of Toyota’s products: Toyota manufacturing plants are not generally in customer views!
Both companies are free to price their products without regulation, but Hilton must contend with the deep discount norm for its industry, while Toyota is not as dependant on promotions and deals, except for occasionally unsuccessful models.
Both companies have composite and effective marketing functions as evidenced by the strengths of their brands, though they have to deploy different strategies to suit their respective business lines.
Comparison of Operations
Both companies believe in strong centralization and group control. Both Toyota and Hilton have sound and extensive headquarter organizations (About Toyota, 2006 and About Hilton Hotels, 2006), and exercise invasive degrees of standardization on their operations in various countries. However, Toyota has to contend with more ethnicity, and is more present in the third world, whereas Hilton basically caters to rather uniform business and vacation classes, with a strong focus on the developed world.
Though Toyota does have manufacturing plants around the world, construction of new properties and maintenance of existing ones presents larger engineering and project management challenges for Hilton. Storage and transport of finished goods, on the other hand, must concern Toyota, whereas they would not figure in agendas at Hilton. Purchasing is more complex for Toyota, with more sophistication involved in sourcing semi-precious metals, steel, and other strategic materials. Toyota has also to implement more transparency in its operations, since it is registered under the ISOI 14001 series (About Toyota, 2006).
Toyota also has to maintain more tracks of its customers and product locations because of the possibility of recalls, whereas Hilton does not have to contend with such possibilities. Toyota also has more regulations with which to contend, while Hilton has more freedom to set its quality standards.
Toyota is strongly influenced by technology, with new models, standards, and materials causing regular discontinuities in routine operations, whereas Hilton enjoys a more stable environment in this respect. There have been some improvements in telecommunications and entertainment, which have occasioned guest room upgrades at Hilton, but these are simple and minimal compared to emission standards, engine performance, and design changes with which Toyota must deal all the time.
It would appear that Hilton is in a less complex type of enterprise, while Toyota has to deal with more inter-relationships and different business atmospheres.
Comparison of Human Resources Management
The relative natures of business make people more important for Hilton than for Toyota: this is reflected in the competencies promoted in the respective web sites (About Toyota, 2006 and About Hilton Hotels, 2006). Technology and systems weigh so heavily in Toyota’s success that it can rely on smaller numbers of subject-matter specialists, whereas even one customer upset at the behavior of low-level staff, can dilute the Hilton brand. The Human Resources challenge for Hilton is to inculcate the core brand values in every employee at all its properties. The People and Preferential Customer elements of the Marketing Mix matter more for Hilton than for Toyota.
Recruitment is highly centralized in Japan for Toyota, while Hilton must retain local expertise for this purpose in all major countries and regions. Searching for quality talent is a more exhaustive task for human resources professionals in Hilton, since the process has to reach in to lower levels of the organization.
Production-line jobs at Toyota are easier to specify and for induction training purposes, and the numbers and importance are on the wane in any case, because of the spread of robotics. Artificial intelligence cannot replace the human element at Hilton. Both companies are equally vulnerable to industrial relations in certain countries, which tolerate militant postures by Unions-the U.K. would be a prime example of this common concern. Toyota and Hilton are in similar situations when it comes to negotiating with external leaders for their blue-collar workers.
Career planning, appraisal, and remuneration matters are probably more international at Hilton, and relatively ethnic in a Japanese sense at Toyota. Senior Executives at Hilton are more eclectic than at Toyota, so their mobility options are also greater. Diversity issue matter more at Hilton, because Toyota conforms to a more conservative and closed pattern as a clearly Japanese entity.
Human Resources Management at Toyota has an additional function compared to their peers in Hilton, with respect to training of franchisee and distribution chain employees. Hilton follows the business model of strongly branding all the properties which it operates, apart from the ones which it owns, while Toyota is clear-cut in leaving customer service to associates in its distribution chain. However, disgruntled customers at show-rooms will hurt the Toyota brand, so the company has to be able to influence people who are not their own employees.
Comparisons of Accounting and Finance
Both companies are publicly listed on U.S Exchanges (About Toyota, 2006 and About Hilton Hotels, 2006). However, Toyota offers only Advance Depository Receipts, retaining equity ownership exclusively in Japan. We may therefore expect that both companies have to follow similar treasury standards. The accounting, disclosure, and governance standards of the United States, which are amongst the best in the world, would apply to both companies. Both companies have adequate investor information on the web sites, and must follow accounting practices of comparable if not the very same standards.
There are however, major differences in corporate finance strategies. Toyota invests capital in entities which it does not own fully, whereas Hilton develops revenue lines from properties which it does own. Both companies are in capital intensive lines of business, and both are vulnerable to seasonal fluctuations in cash inflows.
Neither company is backward integrated in to ownership of key suppliers. Public statements about future business prospects indicate that both companies have exhaustive planning and budgetary control systems in place, though information on their internal processes is not available.
Both companies have ambitious capital expenditure plans, and exhibit high credit-worthiness and potential for leverage. The lines of business and investor environments are too different for relevant comparison, but Toyota has greater return and value appreciation potentials.
Toyota has a finance business apart from its core activity of automobiles (Listed Company Directory, 2007). This tangent is to help customers and sellers pay for the company’s products. Hilton does not require any such service for its clients and associates. One may conclude that the Toyota needs more complex accounting procedures because of the need to keep track of dues from customers.
Both companies have adequate representation of the finance function in their top management groupings, and neither is known to have been cited for financial irregularities, or for audit and disclosure lapses. It is possible to conclude that the accounting and finance companies of both companies meet the best international standards. Toyota has been recognized by the New York Stock Exchange for excellence in investor relations, which is an additional and significant feather in the cap of its finance function: Hilton cannot claim any such public recognition of excellence in its finance function as yet.
Comparison of Information Management
The online reservation amenity and the reward program for loyal customers show, from the respective websites, that Information Management is more fully used by Hilton. The Toyota website lacks multi-media Information Technology use, which could have enhanced browser experiences. It may be that the company uses Information Technology more fully for secret internal processes, but such technology application is lacking in the public space for the company. Hilton also has concrete evidence of using Information Technology to enhance customer value through its express check-out facility, whereas Toyota makes no mention of such conveniences at its show rooms, or for after-sales-service alerts.
Toyota has not used opportunities of newsletters and clubs for its customers, which Information Technology offers. The customer response facility on the web site is better and easier to use in the case of Hilton (About Toyota, 2006 and About Hilton Hotels, 2006). Hilton does not allow customers to feel any difference in properties which it operates without owning, whereas Toyota has no perceptible use of Information Technology to standardize customer experiences at all the show rooms and outlets where its products are retailed.
Hilton does a better job of enhancing its brand through useful information on related matters, such as places of interest near its properties, whereas Toyota seems to be pre-occupied with hard product features of its models alone. However, both companies use Information Technology to build images of being attractive employers, and devote spaces on their websites for corporate and recruiting issues.
Overall, Toyota needs a superior accounting and finance function, and encounters more complex operations, while marketing is of equal importance to both companies, and while Hilton excels in Human Resources Management, and Information Technology.
Comparison of and Recommendations for Productivity
The productivity comparisons for these two companies and my recommendations in this regard, relate primarily to business definition, and to levels of integration and disengagement. Hilton suffers chronic underutilization of its competencies.
Enhanced airport services, airline operation, and conducted tours, are the sorts of horizontal integration it should consider to generate more revenue from its base of fixed costs. It may be justified in staying away from actual travel work such as airline operation because it would call for large influxes of fresh commitments, but by improving retail services at airports, and by conducting packaged events for premium customers groups, it can certainly capture significant new values and high margins, without adding to the present infrastructure.
Hilton should also move faster out of North America in to emerging markets and popular adventure and eco-tourism destinations, because this would leverage its expertise in constructing and operating hotels, more fully. The company must have accumulated know-how which is used only marginally in the mature markets in which it is focused now.
Finally, Hilton should copy other chains and build its culinary expertise and resources in to processed food brands, brands of alcoholic beverages, especially wines, and specialty outlets for fine dining.
Overall, Hilton’s productivity is hampered by a narrow business definition. It has acquired assets and built capabilities to support the corporate brand that have large and profitable applications outside the field of hotels.
Toyota has gone to the opposite extreme of Hilton, and spreads its resources too thinly for optimal returns. The fixed costs of design, dealer support, and after-sales-service imply that it should exit from economy-priced product and customer segments. The expansion of premium-priced segments in major markets justifies exclusive focus on them, in productivity terms.
It is significant that Toyota has experienced losses through recalls of one of its cheaper models in the recent past (Listed Company Directory, 2007). Developing pressures on the environmental conservation front demand that it concentrate more on new technologies for its engines, at the cost of resources presently tied up in low value segments, even if they contribute high volumes. The company is still in the process of creating new manufacturing capacities (Listed Company Directory, 2007), so this is an opportune time for it to consider restricting its involvement in segments with relatively low returns.
Rising customer expectations and the spread of some of its hitherto proprietary technologies to competitors, also point to the need to try and serve fewer customer groups, albeit to do this with greater effectiveness for the segments in which it decides to remain. Such an approach may require that it move away from shared dealerships to owned-showrooms in star markets, while withdrawing support activities for other markets that do not yield top returns. Business contraction will improve productivity for Toyota: the company is better off than Hilton in this parameter, but needs to review some of its operations in order to sustain the edge.
Comparison of and Recommendations for Quality
Toyota is a step ahead of Hilton in terms of quality, primarily because of its ISO 14001 registrations (About Toyota, 2006). It is one of the first companies in the automotive sector to seek ISO registration. The company has reduced the amount of land it needs for manufacturing, and the quantity of paint it consumes, because of ISO procedures. The registrations have also resulted in important productivity gains in areas such as recycling and waste management. The ISO system leads to continuing improvement, so by maintaining its ISO status, Toyota can look forward to continuing quality gains. Though the company continues to suffer from occasions for model recalls (Listed Company Directory, 2007), the probabilities of such events are low.
The decentralization of Toyota’s operations is also responsible for its strong ratings in terms of quality. The company brands similar models very differently in each country, and is sensitive to ethnic needs and perceptions. The company is able to meet top quality standards by considering the views and needs of local customer groups with care. Though the ownership and top management of Toyota is centralized in Japan, the company is sensitive to the peculiarities of all customers and geographical groups which it tries to serve. It is a mark of Toyota’s excellence in quality that it has been able to garner market shares from established manufacturers of luxury automobiles, and has brands with top ranks in premium segments.
Though Hilton is a quality brand in general terms, it does not follow the ISO system, and suffers set-backs as a consequence. One of its hotels has recently been forced to suspend operations because of a virus outbreak (Listed Company Directory, 2007). The company also faces litigation from the family of a person killed inside a room-sized air-conditioning unit in one of its properties (Listed Company Directory, 2007). These are recent examples, and the company is vulnerable to more incidents of this nature at any time.
Overall, company is not a matter to be left to chance, or something which can be limited to certain compartments of the business alone. Hilton will need to adopt a system which makes quality more assured in all aspects of its operations. The recent incidents reported indicate that while the company may be well versed in such quality aspects as house-keeping of its rooms, it lacks appropriate standards in other technical areas related to security and public hygiene.
Every enterprise will have limits and gaps in its areas of expertise, and only a system such as ISO can raise quality standards uniformly. However, the recent incidents are exceptions and Hilton is generally associated with high quality standards. The popularity of its reward system for regular guests, and the premium rates it charges are indicators in this respect. Overall, Toyota has a more reliable quality system in place, compared to Hilton, and the latter can catch up through a systematic and concerted effort.
About Toyota, 2006, Company Website accessed January 2007 from:
About Hilton Hotels, 2006, Company Website accessed January 2007 from http://www.hilton.com/en/hi/brand/about.jhtml
Listed Company Directory, 2007, New York Stock Exchange Web Site, accessed January 2007 from http://www.nyse.com/about/listed/listed.html
Payne, A. 2002 The Essence of Services Marketing, Prentice-Hall