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Management of Toyota
Toyota production system success
Management of Toyota
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Recommended: Management of Toyota
Creating Sustainable Competitive Advantage: The Toyota Philosophy and Its Effects
What is Toyota Philosophy
Toyota is Japan's biggest car company and the second largest in the world after General Motors. The fundamental reason for Toyota's success in the global marketplace comes from their corporate philosophy, the set of rules and attitudes that govern the use of its resources. The Toyota philosophy is often called as the Toyota Production System. The system depends in part on a human resources management policy that stimulates employee creativity and loyalty but also, on a highly efficient network of suppliers and components manufacturers. Much of Toyota's success in the world markets can be attributed directly to the synergistic performance of its policies in human resources management and supply-chain networks.
Toyota philosophy in Human Resources
Although many other Asian automobile manufactures 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 evolution of Toyota's advanced human resource management can be traced to the period immediately following the Second World War when the economic outlook was uncertain and human, natural and capital resources were in limited supply. The company developed a highly efficient production system, called lean production to utilize human resource more efficiently. Today, Toyota's philosophy of empowering its workers is the core of a human resources management system. It grows creativity and innovation by encouraging employee participation, and brings high levels of employee loyalty.
Toyota Philosophy in Supply chain management
In-house production has been decreasing for a number of years. Among US car makers, General Motors continues to manufacture a high percentage of components in-house, while DaimlerChrysler outsources more than any other firm. Volkswagen, a German brand, produces on average less than 50 per cent of its automotive components in Germany.
Outsourcing is increasing the importance for car makers because 85 percent of the direct cost of car production comes from engineering and component fabrication. The companies try to externalize many of these direct costs and minimize market risk. They also can receive the benefits of using specialized suppliers.
In Japan, supply chain relationships of Toyota are based on a complex system of co-operation and equity interests. Co-operation and asset concentration are encouraged, and antitrust prohibitions are far less restrictive than in the US.
It is also important to understand that both government and culture play a major role in Asian manufacturing and distribution practices.
The company that the author has chosen to compare his own organization with is the Toyota motor company. The Toyota Company has become a renowned leader in the area of quality management. Toyota’s theory of “keep it lean” has kept the company running at a level that eclipses the industry standards.
The development and implementation of Toyota’s lean production system has set a benchmark in the automobile industry and inspired many other companies in the automobile industry and other industries as well to adopt it.
Toyota- focused differentiation, medium pricing, breadth of product line is low. Company is known for quality products, and nice styling.
Generally, a superior supply Chain is an important and unique source of competitive advantage. Its importance is especially illuminated in Multinational companies such as Toyota. Putting this into consideration, the question that now begs for an answer is whether Toyota’s supply chain is effectively serving the organization. Without a doubt, Toyota ha...
According to Toyota, they have undertaken a manufacturing revolution that has fundamentally changed established practices; all the way back to the product development and design. They have done this by integrating four areas: design, production engineering, procurement, and component supply. They have achieved higher quality at lower costs by creating standardized, multipurpose components. Also the reduction in cost has heightened the value and fortifies the competitiveness of product. To do this, Toyota has required intensive coordination with its suppliers. Another factor of their Integrated Low Cost is that Toyota steadily feeds cost improvements back into the product to raise their value along with the fact that four Toyota’s seven corporate auditors are outside corporate auditors.
Toyota Motor Corporation is a Japan based company, whose headquarters are located in Aichi Prefecture. The company was founded by Kiichiri Toyoda in 1937. Currently the company’s CEO is Akio Toyoda. Toyota is basically into cars and it is one of the top players in the world in this industry. Toyota also owns two other brands namely Lexus and Scion, which gives the company a lot of advantage over it’s other competitors. Toyota manufactures sedans, saloons, suvs, muvs, pick-up trucks and buses. During the year 2013 Toyota had approximately 333,498 employees, who were working globally. In March 2013, Toyota was ranked as the thirteenth biggest organization globally in terms of its revenue. In the following table we can see the financial report of Toyota Motor Corporation in the year 2013-
(5) Liker, Jeffrey K. The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. New York: McGraw-Hill, 2004. Print.
Toyota’s uses both differentiation and low cost as generic strategies to try and gain a competitive advantage over their competitors in the automotive industry. The market scope that Toyota uses is a broad one that encompasses nearly every type of customer that is in the market to purchase an automobile. Toyota is able to target such a large market because they have something for everyone. Toyota has four wheel drive trucks and SUVs for the outdoor types or those who live in areas that face severe weather conditions, hybrid models like the Prius for the eco-friendly customers that are interested in saving the environment, along with the standard cars for general, everyday use. Additionally, Toyota provides vehicles for all price ranges.
Toyota has adopted an expansion strategy aimed at increasing the company’s market share through sustainable growth. This will be done based on the delivery of high quality, and safe cars, at an affordable price. As the company seeks to expand to new markets, focus will be on maintaining an organizational culture that allows optimum efficiency in the ever dynamic global market.
Outsourcing labor and materials in a global market can significantly stretch the supply chain structure. This can have both positive and negative effects. Looking to different countries provides the opportunity to access different markets and find the lowest possible manufacturing costs. Many companies also embraced the Toyota Motor Corp. model of just-in-time inventory and other lean manufacturing techniques that emphasized speed and cost reduction (Bosman, 2006...
Toyota Motor Corporation is one of the largest automakers in the world. At its annual conference in Tokyo on May 8, 2008, the company announced that activities through March 2008 generated a sales figure of $252.7 billion, a new record for the company. However, the company is lowering expectations for the coming year due to a stronger yen, a slowing American economy, and the rising cost of raw materials (Rowley, 2008). If Toyota is to continue increasing its revenue, it must examine its business practice and determine on a course of action to maximize its profit.
Toyota Motor Corporation operates globally with the automobile industry, which includes 522 worldwide subsidiaries (Toyota, 2010) (Sagepub, n.d.). Toyota's mission is aligned with the needs of their stakeholders to a degree. Toyota's mission is in line with long-standing philosophies; they have designed their mission to supersede short-range decisions. Toyota's philosophical principle is to "work, grow, and align" the enterprise in the direction of a universal rationale, which the Toyota Motor Corporation states is "bigger than making money" (Toyota, 2010).
Nonmanufacturing companies can learn and apply Toyota’s philosophy and practices as listed below. i) Learn to think. In the 1950s, Toyota developed lean thinking. The Toyota Production System aspires to minimize waste and increase efficiency while at the same time enhancing its product quality.
In the 1980’s successful Japanese firms proved to be leaders in modern management techniques with strong relationships with suppliers, allowing them to produce products of a higher quality and a faster rate than their American and European counterparts. (Ehret, 2004) Their business model focused on economies of scope, as opposed to economies of scale. Industrial firms realised they needed to manage buyer-seller relationships in order to manage cross-functional and cross-organisational processes that would allow them to become more flexible.
The automotive industry is involved in the manufacturing and distributing of cars and specific car parts such as car bodies, drivetrains, engines and transmissions. Car companies in the industry manufacture these cars in their factories often using parts purchased from specialized companies (ex: company only producing transmissions) or parts produced in their own factories. These cars are then purchased by car dealerships (independent franchises selling cars to consumers) for display, test-driving and ultimately for consumer purchase. Today several extremely large firms dominate the automotive industry, each with footprints in almost every market around the world. Each car company typically owns several other subsidiaries