Individual Research Project: Final Report 1

Name- Gurpreet Singh

ID- 2018111157

Individual Research Project Final Report-Toyota

BUSI 2073 Management of Technology and Innovation

Professor: Ali Sher

Introduction

In this report I will discuss how the analysis of Toyota explains the organization’s design,

structure and IT challenges facing the company. Toyota Motor Corporation incorporated in 1937.

The Company's segments include Automotive and Financial Services. Toyota sells its vehicles in

approximately 190 countries and regions. Toyota's markets for its automobiles are Japan, North

America, Europe and Asia. The Company's Financial Services segment consists of providing

financing to dealers and their customers for the purchase or lease of Toyota vehicles. Toyota's

financial services also provide retail installment credit and leasing through the purchase of

installment and lease contracts originated by Toyota dealers (SWOT, 2019).

Toyota Motor Corporation started in 1933 as a division of the Toyoda Automatic Loom

Works, Ltd., a Japanese manufacturer founded by Toyoda Sakichi as noted in the (Encyclopedia

Britannica, 2019) Its first production car, the Model AA sedan, was released in 1936. The

organization structure of Toyota Motor Corporation is based upon several business operations

carried out all across the world. Toyota is one of the leading automobile manufacturers in the

world as noted by (Gregory, 2018), the company employs a hierarchical structure which supports

its business goals and strategic goals.

The effectiveness of Toyota in maintaining a strong global presence shows its ability to

use its organizational structure to maximize efficiency. The success and effectiveness of the

company in maintaining functions and achieving goals is what makes it a company that is

renowned across the world. The company has a divisional organization structure which is

strongly centralized global hierarchical in nature. Toyota maintains a global hierarchy with its

headquarters in Japan. The headquarters take the final decisions on all matters and is responsible
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for passing on guidance and direction on major issues. All business units must report to global

headquarters in Japan.

Organizational Description

The core competence of Toyota Motor Corporation is its ability to produce automobiles

of great quality at best prices by capturing information through their IT system, thereby

providing a value for money to the customers (Toyota, 2019). This quality can be attributed to its

innovative production practices. Toyota reached success in part because of its exceptional

reputation for quality and customer care. Despite the global recession and the tough economic

times that American auto companies such as General Motors and Chrysler faced in 2009, Toyota

enjoyed profits of $16.7 billion and sales growth of 6% that year as mentioned by (Newman,

2009).

One of the world’s great manufacturing success stories is the Toyota Production System

(TPS); which organizes manufacturing and logistics at Toyota, including its interaction with

suppliers and customers. Their “lean manufacturing concept” was largely created by Toyota

founder Sakichi Toyoda, his son Kiichiro Toyoda and Toyota chief engineer Taiichi Ohno. The

primary goal of TPS is to eliminate waste. While products significantly differ between factories,

the typical wastes found in manufacturing environments are quite similar. For each waste, there

is a strategy to reduce or eliminate its effect on the company, therefore improving overall

performance and quality. (Parashar, 2016).

TPS has well defined operational management process which include identifications of

existing process, data streaming, customer expectation and income statistics. These are the main

four areas which helps the company’s management to make decisions to determine areas that
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business needs to improve, retain market position, meet consumer expectations and generated

maximum profits while delivering affordable products to consumer (Ahi & Searcy, 2013).

Toyota’s process strategy for manufacturing plants:

Toyota is the largest manufacturing company which has different process strategies to

achieve its goal. These are the technological strategies which are used to solve the major

challenges and opportunities faced by the company which are as following:

1. Design of goods and services: The automotive industry is highly capital-intensive in

nature. This is the driving reason behind efforts by automakers to employ cost-effective

business strategies to minimize their costs as noted by (Banton, 2019). Moreover, this

company uses its research and development investments to ensure advanced features in

its product.

2. Pull Strategy: The Toyota Production System (or TPS) is one of the most notable

business strategies utilized by the automaker. The Just-in-Time method is an integral part

of this strategy. In this part of the series, we will explore how Toyota’s Just-in-Time

method evolved and helps the company to minimize its costs. TPS is built on the

principles of “just-in-time” production. (Banton, 2019). In other words, raw materials and

supplies are delivered to the assembly line exactly at the time they are to be assembled.

This system has little room for bad resources, emphasizes the importance of efficiency on

the part of employees, and minimizes wasted resources. TPS gives power to the

employees on the front lines. JIT inventory systems have several advantages over

traditional models. Production runs are short, which means that manufacturers can

quickly move from one product to another. This method reduces costs by minimizing

warehouse needs.
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3. Inventory Management: Inventory management is also one of the important areas which

also reduce the cost of the company. So, Toyota uses Just-in-time method to minimize

inventory and provide cost effectiveness to reduction in large stock as an inventory

(Lombardo, 2017).

Potential Challenges &Technology

New technologies, changing consumer demands and an increase in consumer spending

are creating growth for the global automotive manufacturing industry as mentioned in the

(SWOT Analysis, 2019). The worldwide automotive market is highly competitive. Toyota faces

strong competition from automotive manufacturers in its various markets. The competition

among various auto manufacturers is likely to increase due to continued globalization in the

worldwide automotive industry. The factors impacting competition include product quality and

features, the amount of time required for innovation and development, pricing, reliability, safety,

fuel economy, customer service and financing terms. Toyota competes primarily with global

players such as Nissan, Ford, Hyundai, Honda, Volkswagen, General Motors, Maruti Suzuki,

Mitsubishi, PSA, and Renault, among others. (SWOT Analysis, 2019).

Today’s consumers are looking to support companies that make a positive difference in

the world and enable them to live a better life. The rapid pace of technological advancement

coupled with highly competitive markets demands business innovation and brand differentiation.

As a result, companies that provide mission-driven products and services shape consumer

demand, while driving measurable social impact foster goodwill and purchases. Technology is

transforming the way we move and making the world more connected. Toyota is an excellent

example of a company combining technology along with design and purpose as mentioned by

(Mainwaring, 2018); the author continues to explain the automaker is dedicated to paving the
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road for the “future of mobility." This mission acts as a compass, influencing key strategy

decisions in branding, product innovation, partnerships and more.

Potential Solutions:

Toyota corporation has six sigma strategies to support its production system. Six sigma

strategies provide the potential solution to the company. These are as following:

1. Decreased setup times: Setup procedures are wasteful, as these procedures are not

adding any value and tie-up labour and equipment. TPS is using carts and training

employee method to carry out their own setups, it has managed to slash setup times

from month to hour and even minutes.

2. Kanban is the main Toyota supply chain management framework which helps to

locate important information that is related to existing operations which were based

on improvement of existing operation’s limitations. It’s essential to make sure every

aspect of the operation is well understood by each stake holder and their individuals’

contributions have been made towards the process thus ensuring Toyota continues

registering growth and development (Wisner, Tan & Leong, 2014)

3. Minimum Production: Manufacturing things in bulk batches sometimes may lead to

huge setup costs, capital cost, large inventories, unlimited lead times and huge defect

costs. As Toyota has found this ideal method of minimum production to make setup

inexpensive and short, now it has become possible for them to manufacture various

things in smaller quantities.

4. Workers Empowerment and Involvement: Toyota has the best policy for its

employees. It always gives training and responsibility to his employees for their
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maximum participation. As Toyota know employees are the best asset of the

company.

5. Dealers Participation: Toyota treats its dealers as company partner, as integral part

of TPS (Toyota production system). Dealers are also well familiar with ways to

decrease setup times, defects, inventories and machine breakdowns and take

responsibility to render their best possible outcomes.

6. Quality Control: The core principles behind Toyota company's quality assurance

system, including 'Customer First', 'Quality First', and 'Genchi Genbutsu (Go&see at

the scene)', were established when the company was founded. So it helps the

company to increase customer satisfaction and also increase its profit through sales.

Toyota Peer Reviews

1. The Contradictions that Drive Toyota’s Success: As Toyota is the leading company in the

present era, for its success, the company’s culture of contradictions:

TPS has two main theories followed: “Hard” & “Soft”. “Hard” concept allows the Toyota

Company to continue improving the innovation method of manufacturing the Toyota

vehicles and “Soft” concept has focus on the human resource and culture of the company.

This company know the importance of its manufacturing process and its employee’s hard

work that gives them long success. According to this review, the author gives us six

forces that cause contradiction inside the Toyota culture. From these six first three forces

are impossible goals of explanations, local customization, and experimentation. These

forces make the organisation decision more complicated, which gives results of quick
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technology and working process changes. This is good for expansion as new technology

improves but also bring many challenges that threaten Toyota’s control system. To

handle these situation Toyota has different three forces of integrations those are “up-and-

in” people management, the founders’ values, and open communications. According to

these forces the employees are always ready for upcoming challenges. Company always

focusses on simply language communication which helps every employee what exactly

company has it polices and rules. Moreover, with open communication employee gives

ideas which make the company more innovative (Takeuchi, Osono, and Shimizu, 2008).

2. Lessons from Toyota’s Long Drive: Toyota is known as top automobile company for

providing better quality, reliability, and durability. In 2006, this company has to face

many problems which threatened the company’s reputation. In that Time Company has to

face challenge with rapid expansion in technology with increasing demand in product

which gives it problem to maintain its quality vision. Their vision is “being the best in the

world in term of quality”. So, the company start making new long-term strategy which

mainly focus on make the product with Just-in-time method and also try to reduce the

wastage during production. If the company still face problems then it made all the

problem visible so that his employees will help the company by providing innovative

solutions for that problems (Stewart, Raman, 2007).

3. Toyota Employee Evaluation: Employees are very important aspect for the Toyota

Company as they come under “soft” method of the company. So, Toyota Company firstly

evaluate its employees on annual basis with old method which was not so effective. But
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in the present employees are evaluate by grouping them into two groups. Groups one is

evaluate with the aspect of Genba, Kaizen, Quality where employees are judged by their

physical skills on the shop floor, leadership, and quality on the shop floor and on the

other hand second group has aspects such as performance and behaviour. Jointly, this

evaluation helps the company to make teamwork among the workers and also get new

ideas of innovation (Roser, 2017).

4. Toyota Reliability Issues and solutions: The second important vision of the company is

reliability. All the models of the Toyota are very reliable but still few of them has

problems Such as:

a. Heavy oil Consumptions

b. Lack of power

c. Air conditioning failures

But the company success fully solves these problems in upcoming new models by improving

these short coming. Reliability is maintaining by the company through continue innovation in

technology (OSV, 2021).

5. Toyota Quality problems in new models: In 2009 Toyota launch its first series regarding

publicized vehicles in the United States. Most of the user made complaint that floor mats

under driver’s seat could lead to uncontrolled acceleration in a range of models. It arise

question on its quality. But the company use new methods to remove those errors and

make new strategy with update technology to make sure the quality ( Cole, 2011).
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Conclusion

In the end it can be concluded that Toyota is the largest car manufacturing company, which

produce quality cars at affordable prices and take care of environment. This company truly use

all fundamental of operational management and supply-chain management. Moreover, This

company has to face many challenges specially changing of technology but this company still

maintain its primary vision of selling quality product to its customers. Toyota also introduced

new methods such as Just-in-time, Kanban which helps it to reduce cost and waste inventory and

increase its profits.

References

Banton, C. (2019). Just in Time (JIT). Investopedia. Retrieved from

https://www.investopedia.com/terms/j/jit.asp

Encyclopaedia Britannica. (2019). Toyota Motor Corporation. Britannica. Retrieved from

https://www.britannica.com/topic/Toyota-Motor-Corporation

Gregory, L. (2018). Toyota’s Organizational Structure: An Analysis. Panmore Institute.

Retrieved from http://panmore.com/toyota-organizational-structure-analysis

Mainwaring, S. (2018). Purpose At Work: How Toyota Is Driving Growth, Innovation And
Impact. Forbes. Retrieved from

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Parashar, J. (2016). 27 Why Toyota’s Just-in-Time Method Is Critical to Its Success. Market
Realist. Retrieved from

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Individual Research Project: Final Report 12

Takeuchi, H., Osono, E., and Shimizu, N. (June 2008). The Contradictions That Drive Toyota’s

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that-drive-toyotas-success

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Review. Retrieved from: https://hbr.org/2007/07/lessons-from-toyotas-long-drive

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Retrieved from: https://www.allaboutlean.com/toyota-employee-evaluation/

OSV, (2021). Is Toyota Reliable? An unbiased Look at the Car Manufacturer. Retrieved from:

https://www.osv.ltd.uk/are-toyota-reliable/

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Retrieved from: https://sloanreview.mit.edu/article/what-really-happened-to-toyota/

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balanced approach. Cengage Learning