1.0
COMPANY BA BACKGROUND
Company name
:
Toyota Jidosha KK
Type
:
Public (K.K.)
Industry
:
Automotive
Founded
:
Auust !"# $%&' ('" years ao)
Founder
:
Kiichiro Toyoda
eaduarters
:
Toyota# Aichi# Japan
Prod Produc ucts ts
:
Auto Automo mobi bile les# s# lu*u lu*ury ry vehi vehicl cles es## comm commer erci cial al vehi vehicl cles es## eni enine ness
Production ou output
:
Increase %#%+%#,,+ units (-ear !+$!)
Toyota otor Corporation is a Japanese automotive manu/acturer headuartered in Toyota# Aichi# Japan. In arch !+$, the multinational corporation consisted o/ &&"#"'0 employees 1orld1ide and# as o/ 2ovember !+$,# is the eleventh3larest company in the 1orld by revenue. Toyota 1as the larest automobile manu/acturer in !+$! in terms o/ production# ahead o/ the th e 4o 4ol5s1aen 6roup and 6eneral otors. Accordin to Flynn (!+$!)# in July o/ that year# the company reported the production o/ its !++3millionth vehicle.
Toyota is the 1orld7s /irst automobile manu/acturer to produce more than $+ million vehicles per year. It did so in !+$! accordin to 8ICA# and in !+$& accordin to company data data.. As o/ July July !+$, !+$,## Toyota yota 1as 1as the the lar lares estt list listed ed comp company any in Japa Japan n by mar5 mar5et et capitali9ation# 1orth more than t1ice as much as !nd ran5ed o/tban5 by revenue. Toyota otor Corporation produces vehicles under 0 brands# includin the Toyota brand# ino# ;e*us#
1.1
History
The company 1as /ounded by Kiichiro Toyoda in $%&' as a spino// /rom his /ather7s company Toyota Industries to create automobiles. Three years earlier# in $%&,# 1hile still a 1
department o/ Toyota Industries# it created its /irst product# the Type A enine# and# in $%&=# its /irst passener car# ca r# the Toyota Toyota AA.
In $%! $%!,# ,# a5i a5ichi chi Toyoda oyoda inven invente ted d the Toyoda oyoda o ode dell 6 Automa utomatic tic ;o ;oom. om. Th Thee principle o/ >ido5a# 1hich means the machine stops itsel/ 1hen a problem occurs# became later a part o/ the Toyota Production ystem. ;ooms 1ere built on a small production line. In $%!%# the patent /or the automatic loom 1as sold to a ?ritish company# eneratin the startin capital capital /or the automob automobile ile developm development. ent. 4ehicl 4ehicles es 1ere oriinally oriinally sold under under the name name @Toyoda@ ( ト ヨ ダ )# /rom the /amily name o/ the company7s /ounder# Kiichiro Toyoda. In April $%&=# Toyoda7s Toyoda7s /irst passener car# the odel AA# 1as completed. The sales price 1as &#&0+ yen# ,++ yen cheaper than Ford or 6 cars.
Toyota received its /irst Japanese uality Control A1ard at the start o/ the $%"+s and bean participatin part icipatin in a 1ide variety o/ motorsports. Bue to the th e $%'& oil crisis# crisis # consumers in the lucrative mar5et bean turnin to small cars 1ith better /uel economy. American American car manu/acturers had considered small economy cars to be an entry3level product# and their small vehicles employed a lo1 level o/ uality to 5eep the price lo1.
In $%" $%"!# !# the Toyota oyota otor otor Compa Company ny and Toyota oyota otor otor ale aless mer mered ed into into one company# the Toyota otor Corporation. In the $%%+s# Toyota bean to branch out /rom producin mostly compact cars by addin many larer and more lu*urious vehicles to its lineup# includin includin a /ull3si9ed /ull3si9ed pic5up# the T$++ (and later the Tu Tundra)D ndra)D several lines o/ 4sD a sport version o/ the Camry# 5no1n as the Camry olaraD and the cion brand# a roup o/ several a//ordable# a//ordable# yet sporty# automobiles automobiles tareted tareted speci/ically speci/ically to youn adults. Toyota Toyota also bean production o/ the 1orld7s best3sellin best3sellin hybrid car# the Prius# in $%%'.
o1ever# in !+$$# Toyota# alon 1ith lare parts o/ the Japanese automotive industry# su//ered su//ered /rom a series o/ natural disasters. The !+$$ Toho5u Toho5u earthua5e earthua5e and tsunami led to a severe disruption o/ the supplier base and a drop in production and e*ports. evere /loodin durin the !+$$ monsoon season in Thailand a//ected Japanese automa5ers that had chosen Thailand as a production base. Toyota is estimated to have lost production o/ $0+#+++ units to the tsunami and production o/ !,+#+++ units to the /loods.
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Toyota 1as also involved 1ith several recalls over the past /e1 years. From 2ovember !++% throuh !+$+# Toyota recalled more than % million cars and truc5s 1orld1ide in several recall campains# and brie/ly halted production and sales. Toyota initiated the recalls# the /irst t1o 1ith the assistance o/ the .. 2ational ih1ay Tra//ic a/ety Administration (2TA)# a/ter reports that several vehicles e*perienced unintended acceleration.
In 8ctober !+$!# Toyota announced a recall o/ '.,& million vehicles 1orld1ide to /i* mal/unctionin po1er 1indo1 s1itches# the larest recall since that o/ Ford otor Company in $%%=. The move came a/ter a series o/ recalls bet1een !++% and !+$$ in 1hich it pulled bac5 around $+ million cars amidst claims o/ /aulty mechanics. In arch !+$,# Toyota areed to pay a /ine o/ E$.! billion /or concealin in/ormation and misleadin the public about the sa/ety issues behind the recalls on Toyota and ;e*us vehicles a//ected by unintended acceleration.
1.2
Main Activities
Toyota has lon been reconi9ed as an industry leader in manu/acturin and production. The main business activities o/ Toyota 1ere not con/ined only to automobile# but a vast array o/ di//erent activities and businesses.
a. aterial andlin uipment The aterials andlin uipment ement develops# produces# sells and provides services /or a broad rane o/ products# /rom industrial vehicles centered around a /ull line3up o/ li/t truc5s (+.03 to ,&3ton capacities) to materials handlin systems. ;i/t truc5s# a mainstay product o/ this sement# are delivered to customers around the 1orld under the T8-8TA# ?T#
b. Automobile From vehicle assembly to parts production# the Automobile ement enaes in a 1ide variety o/ car3related businesses. ;everain syneries amon its business divisions in development and production# the Automobile ement accounts /or 0,.&G o/ consolidated net sales and represents the larest business sement o/ Toyota Industries. Hith its strenths 3
as an industry leader in uality# cost and delivery# the 4ehicle ?usiness produces compact to midsi9e automobiles. This includes enines /or both electric and bio3/uel.
c. ;oistics The ;oistics ement is composed o/ three business pillars: plannin# desin and operation o/ distribution centersD land transportation servicesD and hih value3added services such as cash collection and delivery and cash proceeds manaement services and data storae and manaement services.
d. Te*tile achinery Hith a history datin bac5 to the invention o/ an automatic loom by Toyota Industries /ounder a5ichi Toyoda# the Te*tile achinery ?usiness is a 1orld leader in the te*tile industry bac5ed by an interated structure that encompasses development# production# sales and service o/ 1eavin and spinnin machines.
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2.0
INDU!RY ANA"YI
Toyota otor Corporation is a Japanese company /ounded in $%&'# 1hich enaes in the desin# manu/acturin# assembly and sale o/ passener cars# minivans# commercial vehicles# and related parts and accessories primarily in Japan# 2orth America# urope# and Asia. Current brands include Toyota# ;e*us# Baihatsu and ino. Toyota otor Corporation is the leadin auto manu/acturer and the eihth larest company in the 1orld. Toyota otor Corporation competes in the automotive industry as /or the past /ive years 1ere tumultuous /or automobile manu/actures. Burin periods o/ hih /uel prices# more /uel3e//icient vehicles are in demand. 8ver the past /ive years# the price o/ /uel has been risin# 1hich has encouraed the adoption o/ hybrid and other /uel3e//icient models. For e*ample# Japanese carma5ers such as Toyota o//erin more /uel3e//icient vehicles too5 mar5et share /rom manu/acturers o/ lare vehicles throuhout the latter hal/ o/ the past decade. ;ast# product innovation can spur demand# especially 1ith reard to more /uel3 e//icient vehicles such as hybrids and electric models. The more /uel3e//icient a model is# the more li5ely a consumer 1ill be 1illin to invest up /ront in a ne1 car /or potential savins on /uel costs do1n the road.
2.1
!oo#s Use$ !o Descri%e t&e In$'stry
The practical e*pression o/ Toyota7s people and customer3oriented philosophy is 5no1n as the Toyota Production ystem (TP). This is not a riid company3imposed procedure but a set o/ principles that have been proven in day3to3day practice over many years. any o/ these ideas have been adopted and imitated all over the 1orld. TP has three desired outcomes: •
To provide the customer 1ith the hihest uality vehicles# at lo1est possible cost# in a
•
timely manner 1ith the shortest possible lead times. To provide members 1ith 1or5 satis/action# >ob security and /air treatment. It ives the company /le*ibility to respond to the mar5et# achieve pro/it throuh cost
•
reduction activities and lon3term prosperity. 5
TP strives /or the absolute elimination o/ 1aste# overburden and unevenness in all areas to allo1 members to 1or5 smoothly and e//iciently. The /oundations o/ TP are built on standardi9ation to ensure a sa/e method o/ operation and a consistent approach to uality. Toyota members see5 to continually improve their standard processes and procedures in order to ensure ma*imum uality# improve e//iciency and eliminate 1aste.
a. ;ean anu/acturin ;ean manu/acturin is a manaement philosophy derived mostly /rom the Toyota Production ystem (TP). Toyota is reno1ned /or its /ocus on reduction o/ the oriinal Toyota seven 1astes to improve overall customer value# but there are varyin perspectives on ho1 this is best achieved. The steady ro1th o/ Toyota /rom a small company to the 1orlds larest automa5er has /ocus attention on ho1 it has achieved this success. The second approach to lean manu/acturin# 1hich is promoted by Toyota# called The Toyota Hay# in 1hich the /ocus is upon improvin the @/lo1@ or smoothness o/ 1or5# thereby steadily eliminatin mura (@unevenness@) throuh the system and not upon 71aste reduction7 per se. Techniues to improve /lo1 include production levelin# @pull@ production (by means o/ kanban) and the Heijunka box. This is a /undamentally di//erent approach /rom most improvement
methodoloies# and reuires considerably more persistence than basic application o/ the tools# 1hich may partially account /or its lac5 o/ popularity.
6
Biaram $: ;ean anu/acturin
b. Kai9en 3 Continuous Improvement Kai9en is the heart o/ the Toyota Production ystem. ;i5e all mass3production systems# the Toyota process reuires that all tas5s# both human and mechanical# be very precisely de/ined and standardi9ed to ensure ma*imum uality# eliminate 1aste and improve e//iciency. Toyota embers have a responsibility not only to /ollo1 closely these standardi9ed 1or5 uidelines but also to see5 their continual improvement. This is simply common sense 3 since it is clear that inherent ine//iciencies or problems in any procedure 1ill al1ays be most apparent to those closest to the process. The day3to3day improvements that embers and their team leaders ma5e to their 1or5in practices and euipment are 5no1n as 5ai9en. ?ut the term also has a 1ider meetin: it means a continual strivin /or improvement in every sphere o/ the Company7s activities 3 /rom the most basic manu/acturin process to servin the customer and the 1ider community beyond.
c. Just in Time It is perhaps not 1idely 5no1n that the 7>ust in time7 approach to production that has no1 7
ained almost universal acceptance in 1orld manu/acturin 1as actually pioneered by Toyota. In /act# a Toyota enineer coined the term itsel/. This# too# is a simple but inspired application o/ common sense. ssentially# 7>ust in time7 manu/acturin consists o/ allo1in the entire production process to be reulated by the natural la1s o/ supply and demand. Customer demand stimulates production o/ a vehicle. In turn the production o/ the vehicle stimulates production and delivery o/ the necessary parts and so on. The result is that the riht parts and materials are manu/actured and provided in the e*act amount needed 3 and 1hen and 1here they are needed. nder 7>ust in time7 the ultimate arbiter is al1ays the customer. This is because activity in the system only occurs in response to customer orders. Production is 7pulled7 by the customer rather than bein 7pushed7 by the needs or capabilities o/ the production system itsel/.
The lin5ae bet1een customer demand and production is made by analysin ta5e time# a device /or measurin the pace o/ sales in the mar5et in relation to the capacity o/ a manu/acturin plant. Toyota never tries to accommodate chanes in demand by ma5in substantial chanes in individuals7 1or5loads. Assinin more members to a line means that each handles a narro1er rane o/ 1or5. Assinin /e1er means that each handles a broader rane.
2.2
Key Co()etitor
8
Biaram !: a>or competitors /or Toyota
*or$ is an American multinational company. Their head o//ice is located in Bearborn#
ichian. (A). Incorporated on June $=# $%+&. Their ma>or products are Ford Fiesta# Ford ustan# Ford *plorer and Ford ondeo. +o#,s-aen is a 6erman ultinational Co. Their head o//ice located at Hol/sbur# 6ermany. Incorporated in year $%&'. Their ma>or products are Passat# Jetta# and Taure. Genera# Motors is an American Automobile Co. Their head o//ice located at Betroit# ichian (A). Incorporated in $%+". Their popular brands are Chevrolet and olden. a>or products that produced by them are Aveo# 8ptra and Commbador.
2./
Co()etitors Proi#e
a. Ford enry Ford invented Ford in year $%+&. The company started ma5in the odel3T in $%+& and it started in Bearborn# ichian. Ford otor Company manu/actures cars as 1ell as tractors# truc5s# and school. The companys core and a//iliated automotive brands include Aston artin# Ford# Jauar# ;and
aain.
b. 4ol5s1aen 4ol5s1aen 1as /ounded by 2a9i Beutsche Arbeits/ront and established on !"th ay# $%&'. The company is located in Hol/sbur# 6ermany. Their company sloan is Bas Auto 1hich means The car. Its production in =! plants across !$ countries and sales in $0& countries 1ith the net revenue o/ euro $!=.% billon.
c. 6eneral otors 6eneral otors is one o/ the 1orlds larest car and truc5 manu/actures# /ounded in $%+" as a oldin Company /or c;auhlin and ?uic5 toc5s and allied in $%$% in Flint# ichian. The 6 automotive brands today are 4au*hall# ?uic5 # Cadillac# Chevrolet# 6C# olden# 8pel# and Hulin. Former 6 automotive brands include c;auhlin# 8a5land# 8ldsmobile# Pontiac# ummer # aab# and aturn.
2.
Co()etitors Co()etitive Oerin
a. Ford Ford has cost advantaes and competitive advantaes. Ford o//er lo1 production cost# because they cut do1n o/ hue e*penditure on ra1 materials 1ith the online manu/acturin process. Ford o//er di//erent product such as production o/ smart cars 1ith /uel e//iciency 1ith centrali9ed decision ma5in system.
b. 4ol5s1aen 4H has an iconic brand port/olio by ivin customers ample choice. They also have sel/3 substitutes because brands compete amonst themselves. 4H also has technoloical leadership and innovative desins and concept cars to satis/y tomorro1s needs.
c. 6eneral otors
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6eneral otors has a stron brand port/olio 1ith its stron vision and stratey that allo1s them to does more than >ust autos. 6eneral otors also happen to be a leader in innovation as they continuously improve their products. 8ther than that# 6eneral otors also lac5 o/ capital constraints.
2.3
Co()etitors trateies
a. Ford Ford implemented the centrali9ed decision ma5in system. This allo1ed the company to concentrate on the available mar5et opportunities both locally and internationally. Hith the implementation o/ centrali9ed decision ma5in system# the top manaement becomes more enaed in the development o/ products to satis/y the customer e*pectation in various mar5ets (porter# $%"=). This stratey allo1ed the company to improve the communication system /rom top to bottom.
Ford motors adopted the stratey that allo1ed it lo1 production cost by cuttin all the e*cessive cost involved in these operations. The hue e*penditure on ra1 materials 1as cut do1n and the online manu/acturin process 1as introduced that /ocus on the development o/ cars on one process rather than havin di//erent sements o/ enineerin and production. These strateies 1as established cost advantae and ive the company advantae over its competitors in terms o/ lo1er cost (porter# $%"&)# in the mean 1hile company /ocused on producin smart cars that 1ere not price sensitive and o//ered the /unctionality o/ traditional /ord cars.
b. 4ol5s1aen 4ol5s1aen 6roup has an attractive product port/olio and it is made up o/ t1elve success/ul brands that e*cite millions o/ customer 1orld1ide year in and year out. In year !+$,# they manae to rein/orce the distinct and individual imae o/ each brand and optimi9ed their mar5etin positionin. The stratey used by 4ol5s1aen is brand diversity. This brand pro/ile# 1hich creates trust in their customers# is the reason the 4ol5s1aen brand is the /irst choice /or millions o/ customers 1hen buyin a car. 6lobal brand manaement /ocuses on the 1ishes and pre/erences o/ customers# today and in the /uture. They are the startin point /or developin innovations that are driven by demand# 1hile remainin a//ordable. ?ased on this# 11
the 4ol5s1aen brand aims to become the most innovative volume manu/acturer 1ith the best uality in each class in the medium to lon term.
c. 6eneral otors 6eneral otors implemented lead in product and technoloy as 1ell as deliverin core operatin e//iciencies. In year !+$0# it 1as said that about !'G o/ 6s lobal sales volume is e*pected to come /rom products ne1 or re/reshed 1ithin $" months and that /iure is e*pected to rise in the near /uture. 6 developed an innovative i*ed aterial ?ody tructure that uses 63patented 1eldin technoloy and a combination o/ steel and aluminium stampins# castins and e*trusions to deliver desins that are liht1eiht# use !+ percent /e1er parts# have class3leadin torsional sti//ness and e*hibit superior noise and vibration characteristics. As /or deliverin core operatin e//iciencies# 6 try to improve their relationships 1ith suppliers# derive more lobal volume /rom /e1er vehicle architectures and lo1er enterprise costs /or material and loistics is e*pected to deliver sini/icantly better variable marins on upcomin hih3volume product launches.
2.4
Co()etitors *'t're trateies an$ Goa#s
a. Ford Hhen tal5s about /uture strateies# Ford has come out 1ith three tools to stimulate /uture thin5in 1hich are 1ild3card analysis# spendin time thin5in o/ lobal consumer trends and scenario plannin. Hild3card analysis means loo5in at thins that have a lo1 probability o/ occurrin because i/ they do happen# they have a hih probability o/ chanin human conditions. econdly# by thin5in o/ lobal consumer trends# Ford 1ill study about lens o/ society# technoloy# economics# environment and politics. ;astly# scenario plannin is 1here all the trends add 1ith some other ualities and scenario# and then Ford can produce somethin better. Fords /uture oals are to desin and manu/acture vehicles 1ith sa/ety e*cellence /ocused on real 1orld sa/ety and o//er innovative sa/ety and driver assist technoloies. Ford also 1ants to play a leadership role in vehicle sa/ety and driver assist research and innovation. 8ther than that# Ford also taretin to reduce 1aste sent to land/ill by ,+ percent on a per3vehicle basis /rom !+$$ to !+$= lobally.
b. 4ol5s1aen 12
The main oal o/ 4ol5s1aen is to become the economic and ecoloical leader o/ the lobal automotive industry. 4ol5s1aen 1ants to ain a position o/ the 1orld7s leadin manu/acturer by usin intellient innovations and technoloies to shape customers7 satis/action and uality. As /or the sales# 4ol5s1aen e*pectin their sales to e*ceed $+ million vehicles per yearD and 4ol5s1aen 1ants to rely upon development o/ lare ro1th mar5ets. 8ther than that# the pro/itability o/ sales be/ore ta*ation is e*pected to reach at least "G thus uaranteein /inancial sa/ety and ability o/ the roup to /unction in the periods o/ economic do1nturn. 4ol5s1aen also 1ishes to be an e*cellent employer on all mar5ets# amon di//erent communities and in all reionsD this is the prereuisite /or creation o/ reat teams o/ employees.
4ol5s1aen pays particular attention to the uestion o/ the environmental protection and pro/itability o/ its vehicle3related pro>ects so that the riht products contribute to success in challenin mar5et conditions. 4ol5s1aen e//orts are /ocused on determinin ne1 ecoloical criteria in such /ields as: production o/ vehicles# areates and liht constructions. oreover# 4ol5s1aen see5s to broaden a roup o/ reular customers o/ them by acuirin ne1 recipients o/ their services 1orld1ide. Baily activities# aimed at improvin productivity and uality are carried out 1ithout time limit# reardless o/ the overall economic situation. These strateies# toether 1ith consistent cost and investment discipline# 1ill aid in reachin 4ol5s1aens lon3term ob>ectives concernin pro/itability and ensurin /inancial solvency.
c. 6eneral otors 6eneral otors /uture oals are to increase . mar5et share to &&G# improve customers satis/action as evidenced by points o/ mar5et share# not /ractions. That is the reason 1hy 6 spendin billions in advertisin and incentives in the name o/ mar5etin every year. o1ever# there e*ist /ar less e*pensive and /ar more productive methods o/ acuirin and retainin customers# and the plan calls no capital investment and it o//ers the opportunity /or lare reductions in mar5etin e*pense. The strateies used /or 6eneral otors are to implement both innovative and proven mar5etin techniues# raise mar5et share $ percentae point in each o/ /ive 5ey areas. They also plan to rema5e corporate imae as a leader by actin rather than re3actin. 8ther than that# 6 also chanes their /ocus o/ advertisin /rom distress to aspiration.
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/.0
*IRM PRODUC!ION AND OP5RA!ION MANAG5M5N! I!UA!ION
/.1
Interna# Ana#ysis o *ir(s trent& an$ 6ea,ness
a. trenth Toyotas strenths indicate that the /irm is capable o/ 5eepin its position as one o/ the top auto manu/acturers in the 1orld. Toyota is considered to be the 1orlds larest automobile producer. Toyota has been operatin 0$ manu/acturin companies in != countries includin $! in Japan. Toyota has one o/ the stronest brands in the lobal automotive industry. The companys lobal supply chain is also a strenth that enables resilience and mar5et3based ris5 minimi9ation. Toyota possess a po1er/ul mar5et position by promotin innovative production techniues that emphasi9e on eliminatin 1astes and overall improvement in the manu/acturin side has made Toyota# the true technoloical mar5et leader. Furthermore# Toyota has an orani9ational culture that /acilitates rapid innovation# 1hich is crucial /or lon3term competitive advantae. Toyota has been 5no1n all over the 1orld /or its products uality# durability and reliability. Innovation is the 5ey success /actor throuh massive production in hybrid vehicles all over the 1orld that has been increasin Toyotas sales. Toyotas investment in < LB Bepartment is the reason /or the recent improvement in the desin and research centers in the 1hole 1orld and the availability o/ production /acilities is hih lobally.
b. Hea5ness Toyotas 1ea5nesses point to possible ine//iciencies in the orani9ation. Toyotas lobal hierarchical orani9ational structure prevents ma*imum /le*ibility o/ reional operations. Also# the companys culture o/ secrecy is a 1ea5ness that reduces response times in addressin emerin problems. In addition# Toyota implemented massive product recalls startin in !++%. These recalls 1ea5en the /irm because the recall processes consume business capacity that could be used /or product distribution instead. ?ecause o/ this# Toyota is o/ten bein critici9ed as the /orein importer.
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/.2
!&e In$'strys trent& an$ 6ea,ness 7A'to(o%i#e In$'stry8
a. trenth Automobiles represent /reedom and economic ro1th. Automobiles allo1 people to live# 1or5 and travel in 1ays that 1ere unimainable a century ao. Automobiles provide access to mar5ets# to >obs. 2early every automobile trip ends 1ith either an economic transaction or some other bene/it to the uality o/ li/e. Intense competition in the maturedMdeveloped mar5ets has /orced automobile manu/acturers to taret developin economies. ?ut these developin economies have hih demand /or 4F products (value /or money). In the automobile industry# 4F products 1ould be /uel e//icient# hih mileae vehicles because ma>ority o/ customers in these nations pre/er vehicles /or commutin. 8n the other hand# developed nations need is o/ vehicles /or interstate travellin and hih speed vehicles suitable /or lon route 1ith hih enine po1er.
b. Hea5ness Controversies relatin to recallin vehicles on account o/ some technical dis3/unctionality or non3abidance cars are very common in the industry. 8ver the last &3, decades the automobile mar5et has shi/ted /rom demand to supply mar5et. Availability o/ lare number o/ variants# ti// competition bet1een them# and lon list o/ alternatives to choose /rom has iven po1er to customers to choose 1hatever they li5e.
/./
!oyotas trent& an$ 6ea,ness aainst t&e In$'strys trent& an$ 6ea,ness
trent&
!oyota
$. tron brand imae. !. 6lobal supply chain. &.
6ea,ness $. ierarchical orani9ational structure. !. ecrecy in orani9ational culture. &. //ects o/ product recalls in recent years.
$. volvin industry. !. Continuous product innovation A'to(o%i#e $. Cars recalled L technoloical advancement. !. ?arainin po1er o/ consumers. In$'stry &. Increasin demand o/ 4F vehicles. Table $: The comparison o/ strenth and 1ea5ness the automobile industry 15
/.
!&e A$vantae an$ Disa$vantae o !oyota aainst A'to(o%i#e In$'stry
Toyota has a stron brand imae# 1ith this advantae# Toyota can e*pand their mar5et to countries li5e ?ra9il# India# China that is not been e*plored by Toyota can be a pro/itable advantae /or the orani9ation to ma5e lare investments. Toyota emphasis on
/.3
C'rrent Pro$'ction9 O)erations an$ '))#y C&ain Pro%#e(s
/.3.1
Pro$'ction
The Toyota Production ystem (TP) is an interated socio3technical system# developed by Toyota# 1hich comprises its manaement philosophy and practices. The TP orani9es manu/acturin and loistics /or the automobile manu/acturer# includin interaction 1ith suppliers and customers. Kai9en is the heart o/ the Toyota Production ystem. ;i5e all mass3production systems# the Toyota process reuires that all tas5s# both human and mechanical# be very precisely de/ined and standardi9ed to ensure ma*imum uality# eliminate 1aste and improve e//iciency. Toyota embers have a responsibility not only to /ollo1 closely these standardi9ed 1or5 uidelines but also to see5 their continual improvement. This is simply common sense 3 since it is clear that inherent ine//iciencies or problems in any procedure 1ill al1ays be most apparent to those closest to the process. The day3to3day improvements that embers and their Team ;eaders ma5e to their 1or5in practices and euipment are 5no1n as 5ai9en. ?ut the term also has a 1ider meetin: it means a continual strivin /or improvement in every sphere o/ the Company7s activities 3 /rom the most basic manu/acturin process to servin the customer and the 1ider community beyond. 16
/.3.2
O)eration
Toyota otor Corporation has lon been reconi9ed as one o/ the leadin companies in the automobile manu/acturin industry (Homac5 et al# $%%+). ;ynch (!++%) states that Toyota otor Corporation7s rapid rise to success can be pinned do1n to its operations and mar5etin strateies. Its manaement philosophy has evolved riht /rom the time o/ its oriin and has been re/lected in the 1ay in 1hich the orani9ation operates. ome o/ the 5ey /eatures o/ the orani9ation7s operations have involved ;ean anu/acturin techniues# as 1ell as the Just in Time supply chain manaement processes# 1hich the orani9ation 1as very instrumental in developin. Toyota otor Corporation (!+$+) states that Toyota7s production system is /ully immersed in the philosophy o/ the complete elimination o/ all 1aste in every aspect o/ production# in the pursuit o/ the most e//icient methods to be used by the orani9ation. The company7s vehicle manu/acturin process# 1hich is o/ten re/erred to as the Toyota productions system (a combination o/ ;ean anu/acturin ystem and Just in Time system)# has been built over several years o/ continuous improvements as a 1ay o/ manu/acturin and deliverin the 5ind o/ cars demanded by customers in the uic5est and most e//icient 1ay. Toyota is /acin ma>or uality problems and recalls. At that time# some critics o/ Toyota pointed to the Toyota Hay or lean manu/acturin principles as causes o/ the problem. In other 1ords# bein too lean caused Toyota to someho1 create a de/ective product desin or to miss or inore the problem.
/.3./
'))#y C&ain Manae(ent
upply3chain manaement at Toyota is an element o/ companys operations stratey 1hich is thorouhly based on the Toyota Production ystem (TP). It 1as developed in the $%,+s by hieo hino and Taiichi 8hno. As Toyotas success ained 1orld31ide coverae# at 1as /ollo1ed by interest by other companies in TP# the principles o/ 1hich is e*pressed by the term o/ lean manu/acturin ;i5er (!++0# p.$=) lists /ollo1in components o/ Toyota upplier Partnerin ierarchy: mutual understandin and trust# interloc5in structures# control systems# compatible capabilities# in/ormation sharin# >oint improvement activities# and Kai9en and learnin. The uality problems and recalls 1ere mountin# the ma>ority o/ those problems almost certainly oriinated not in Toyota7s o1n /actories but in those o/ its suppliers. The automotive industry operates as a comple* 1eb. The carma5ers (5no1n as oriinal euipment manu/acturer or 8s) sit at its center. Fannin out /rom these are the 17
tier3t1o suppliers 1ho provide individual parts or assembled components either directly to the 8 or to a tier3one supplier. Toyota has identi/ied as one o/ the causes o/ unintended acceleration in some o/ its vehicles# is a tier3t1o supplier 1hose automotive business accounts /or about a third o/ its sales. 8n the outer rin o/ the 1eb are the tier3three suppliers 1ho o/ten ma5e >ust a sinle component /or several tier3t1o suppliers. Althouh there are thousands o/ tier3t1o and tier3three suppliers around the 1orld# their numbers have been culled over the past decade as the 8s and the tier3ones have 1or5ed to consolidate their supply chains by concentratin business 1ith a smaller number o/ stroner companies.
18
.0
!RA!5GY ANA"YI
.1
5va#'ation o C'rrent Position an$ e#ection o trateic O)tions
The current situation has to be analysed and assessed in order to /ormulate a ne1 stratey. H8T analysis sho1s Toyotas current position# as sho1n in Table $.
Table $: H8T Analysis# ource: Pearce II et. al. (!++')
As seen /rom H8T analysis# Toyota /aces very serious threats /rom the e*ternal environment but it has ood internal strenths. ?y usin this in/ormation to plot a Pearces H8T Analysis atri*# Toyota 1ould be in Cell !# 1hich it supports a diversi/ication stratey# as sho1n in Table !.
Table !: H8T Analysis atri*# ource: Pearce II et. al. (!++')
To dra1 more strateic options and to test the suitability o/ the diversi/ication stratey /or Toyota# the 6rand tratey atri* is used. As the mar5et ro1th is slo1 in the automobile industry and Toyota has a stron competitive position# there/ore Toyota is placed in uadrant ,. As sho1n in Table &# diversi/ication or a >oint venture could be a ood stratey /or Toyota. 19
Table &: The 6rand tratey atri*# ource: 6lu5hova (!++%)
:'a$rant )rovi$es o'r o)tions or !oyota;
$. Concentric Biversi/ication Toyota has already diversi/ied its product mi*# 1hich 1ere: 4# P4# minivans# sedans# truc5s and heavy machinery. Toyota has also coverin other customer sement# 1ith usin ;e*us line /or hih income roup. Toyota has ta5en care o/ the concentric diversi/ication stratey.
!. Conlomerate Biversi/ication Toyota has already diversi/ied its business port/olio into housin# /inancin# communication and other business. Toyota has also ta5en conlomerate diversi/ication as an option previously.
&. ori9ontal Biversi/ication ori9ontal diversi/ication includes se1in machines# /inancial services and etc.
,. Joint 4enture The last t1o options o//er 1ill help to a /ast increase in mar5et share. Toyota can really consider both options /or its /urther ro1th. 20
.2
5va#'ation o trateic O)tions
The t1o suested options 1hich are hori9ontal diversi/ication and >oint venture need to be tested on their suitability# /easibility# acceptability# consistency# business ris5 and attractiveness to sta5eholders. Table , analyses and provides conclusion that Joint 4enture is a better strateic option /or Toyota.
Table ,: valuation o/ trateic 8ption# ource: 6lu5hova (!++%)
./
Ana#ysis o C'rrent tratey an$ Pro)ose$ tratey
?ased on the evaluation as presented in Table ,# Joint 4enture is less costly and there/ore it is a better option in current economic situation. Joint 4enture is the suested ne1 stratey /or Toyota to ensure support /rom the /irms sta5eholders. Joint 4enture can be later 21
converted into erer or Acuisition i/ it is very success/ul. sin cKinseys ' /rame1or5# Table 0 hihlihts di//erences bet1een current and ne1 stratey and actions that need to be ta5en /or success/ul implementation.
Table 0: cKinseys ' Frame1or5 Analysis# ource: ;ynch (!++=)
22
3.0
R5COMM5NDA!ION
In eneral perspective# in order /or Toyotas to ro1 1ithin this dynamic and hihly competitive company# Toyota should have instead >oint venture 1ith other Chinese automobile manu/acturers. 2o1adays# the /ast ro1in mar5et in China is an attractive opportunity. Toyota needs to choose an established China domestic partner to introduce its products to the mass mar5et. Japanese technoloy is more sophisticated than China and there/ore 1ould reuire trainin and the upradin o/ employees s5ills and 5no1lede as 1ell as introduction o/ technoloies and trainin on its usae.
3.1
*#o- o I()#e(entation
Toyota should /irst revie1 the /irms business and corporate strateies to determine synery 1ith the ob>ectives o/ a >oint venture. In this process# manaers can apply a rane o/ stratey methodoloies such as H8T Porters Five Forces# sta5eholder analysis# and the value chain to assess the /irms stratey and /uture vision. Top manaement may then determine that the >oint venture is not the most optimal orani9ational /orm /or achievin the /irms ob>ectives# and that another /orm# such as a lon3term contract# may o//er a better strateic /it. 8ne o/ the ood e*amples is Chery otors /rom China.
The second step involvin Toyota assessin the suitability o/ the potential >oint venture partner /or /it 1ith the /irms stratey and compatibility durin the li/e o/ the >oint venture. Identi/yin the 5ey problems o/ Chery otor overall mission 1ould help ease the selection process.
I/ Toyota arees 1ith the terms o/ Chery otors# the parties 1ill set out >oint venture terms in a 1ritten areement 1hich addresses structure ob>ectives# /inancial and other resource contributions. nderstandin these areements help Toyota optimi9e their resources as to 1hich production 1ould be outsourced or 1hat ne1 pro>ects should be handled by either company. Throuh this implementation# Toyota 1ill be able to produce their o1n oods 1ithin their o1n time /rame# 1hile also capable o/ e//ectively uses idled employee to help out 1ith the ne1 pro>ects.
23
Throuh this stratey# Toyota is li5ely to e*pand their mar5et share to a bier scale to the Asian mar5et. Idled resources 1ill be put to use e//ectively# 1hile maintainin the normal production o/ the automobiles. Cost o/ production /or the ne1 pro>ects 1ill also remain minimal# as the amount o/ investment reuired is shared amon companies. I/ the pro>ect turns out to be not bene/icial in the /uture# Toyota 1ould only su//er minimal loss or no loss in shares and brand euity.
24
R5*5R5NC5
Flynn# . (!+$!). Toyota: 77 Years, 200 Million Vehicles .
6lu5hova# 8. (!++%). Toyota Motor Company !apan"# niversity o/ ?rad/ord.
ill# T.# L Hestbroo5# <. ($%%'). $%&T analysis: it's time (or a pro)uct recall# *on+ an+e -lannin+ # &+($)# ,=30!.
;i5er# JK. (!++0)# The Toyota %ay an) $upply Chain Mana+ement # Presentation /or 8A ;ean to urvive Proram# The niversity o/ ichian.
;ynch# <. (!++=)# Corporate $trate+y# ,th edition# nland: Prentice all Pearson ducation.
aee# B. (!++')# Ho. Toyota /ecame 1 *ea)ership *essons (rom the %orl)3s 4reatest Car Company # Port/olio ardcover# I?2 %'"3$30%$",3$'%3$.
Pearce# II J.A. L
ill Ii1hi.
trott# . (!++%). 8Toyota Takes $ales Cro.n (rom 4M @. 2 oney#
/rom
http:MMarticles.moneycentral.msn.comMInvestinMBispatchMToyota3ta5es3
sales3cro1n3/rom36.
Toyota otor Corporation Annual
25
APP5NDI<
!AB"5 O* CON!5N!
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C8PA2- ?ACK6<82B........................................................................................$
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istory.........................................................................................................................$
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ain Activities............................................................................................................&
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I2BT<- A2A;-I.................................................................................................0
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Tools sed To Bescribe the Industry...........................................................................0
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Key Competitor..........................................................................................................."
!.&
Competitors Pro/ile...................................................................................................."
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Competitors Competitive 8//erin.............................................................................%
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Competitors trateies..............................................................................................$+
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Competitors Future trateies and 6oals.................................................................$$
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FI< P<8BCTI82 A2B 8P
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Internal Analysis o/ Firms trenth and Hea5ness..................................................$&
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The Industrys trenth and Hea5ness (Automobile Industry).................................$,
&.&
Toyotas trenth and Hea5ness aainst the Industrys trenth and Hea5ness......$,
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The Advantae and Bisadvantae o/ Toyota aainst Automobile Industry..............$0
&.0
Current Production# 8perations and upply Chain Problems...................................$0
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Production..........................................................................................................$0
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8peration............................................................................................................$=
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upply Chain anaement................................................................................$=
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valuation o/ Current Position and election o/ trateic 8ptions..........................$"
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valuation o/ trateic 8ptions.................................................................................!+
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Analysis o/ Current tratey and Proposed tratey................................................ !+
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<C82BATI82.................................................................................................!! Flo1 o/ Implementation............................................................................................!!
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