14 Principles- Toyota Australia - Report Example

14 Principles- Toyota Australia Name of Student Name of Institution Table of Contents 14 Principles- Toyota Australia 4 Executive summary 4 Discussion of the Findings 7 1.Alignment 7 2.Distributed leadership 8 3.Integration of effort 9 4.“Out-of-front” principle 9 5.Up-Front Principle 10 6.Resourcing the medium term 10 7.Time based 11 8.Bias for action 12 9.Learning focus 12 10.Discipline 12 11.Measurement/Reporting and Publication 13 12.Customer value 13 13.Capability creation 13 14.Micro to Macro 13 Toyota internationalization strategy 14 Sustainability best practices 15 Strengths and weaknesses of Toyota Australia 17 Strengths 17 Weaknesses 18 Recommendations 18 Challenges faced 19 Lessons learnt 19 References 19 14 Principles- Toyota Australia Executive summary The alignment business operations to fit the demands of the market, positioning the brand or company at the top among the competition in the market, and institution of strategies such as diversification and alignment of the strategies in line with global expectations are core competencies of companies today (Meehan & Rigby, 2008). the best practices that characterizes a modern day robust operational effectiveness include aligning the operations to the vision, a focus towards achieving distributed leadership in the companies or organizations, integrating effort, having an out-of-front and up-front strategy on integrity and related aspects, being time based, bias for action and learning focus among others. Toyota Australia is a well-known subsidiary of Toyota Motor Corporation headquartered in Japan. Toyota has one of the most efficient global expansion strategies, expanding into different markets and customizing their products to the needs of their target market such as Australians in this case. Headquartered in Melbourne, the company also has operations in key cities like Adelaide, Sydney, Perth and Queensland. The company has been building vehicles in Australia since 1963, with its latest flagship models being Toyota Camry, Camry Hybrid and Aurion. It has a manufacturing plant at Altona and due to the immense market opportunity presented by the country, the company intends to build more plants and assembly lines in the country. The company is the largest shareholder of the Australian car market, selling over 209,610 units in 2016, up from 206,239 units the previous year. This study sought to analyze the company’s efficiency based on the 14 principles. As part of the move, we talked with Felicity Donovan who is the head of Talent & Capability Manager at Toyota Motor Corporation Australia on a fact finding mission. The findings are discussed below. Name: Felicity Donovan Contact Details (Email and Tel): https://au.linkedin.com/in/felicity-donovan-85564a13 Position: Talent & Capability Manager at Toyota Motor Corporation Australia Company: Toyota Motor Corporation Australia Not at all To a weak extent To a moderate extent To a large extent To a very large extent Principle 1: Alignment Our business has aligned employee behaviors with stated company values and direction. 1 2 3 5 Principle 2: Distributed Leadership In our business, individuals and work teams are assigned, and accept, responsibility for operational decision making and performance improvement. 1 2 3 4 Principle 3: Integration of Effort Our business is not a functional/ hierarchical organisation but a value creation/process focused organisation. 1 2 3 5 Principle 4: ‘Out-Front’ Our business takes a lead in determining industry standards and practices. 1 2 3 5 Principle 5: ‘Up-Front’ We apply high standards of integrity and openness in everything we do. 1 2 3 4 Principle 6: Resourcing the Medium Term Our business is able to effectively balance short-term and medium term issues and requirements. 1 2 3 4 Principle 7: Time Based Time is a critical organisational value in our business. 1 2 3 4 Principle 8: Bias for Action Our business is good at implementing ideas and strategies. 1 2 4 5 Principle 9: Learning Focus Everyone in our business is involved in a learning/development program. 1 2 3 5 Principle 10: Discipline We invest in policies, procedures and standards and apply a strong systems perspective in our business. 1 2 3 5 Principle 11: Measurement/Reporting and Publication Our business measures and reports to our employees, the financial and non-financial performance information needed to excel. 1 2 3 4 Principle 12: Customer Value In our business, all employees strive to enhance customer value creation. 1 2 3 5 Principle 13: Capabilities Creation Business and organisational capabilities are defined as priority areas for development and investment. 1 2 3 5 Principle 14: Micro to Macro Our employees know how their individual efforts contribute to business success. 1 2 4 5 Discussion of the Findings 1. Alignment Toyota Australia has to a very large extent sought to align its employee behavior with the company’s values and practices. The employees at the organization are made to fully comprehend and internalize the company’s vision, ‘Most respected and admired company’ and the company’s mission to help drive the growth of the company. the company makes it clear to the staffs of its four main values: the customer is always first and is the priority, there should be utmost respect of everyone in and out of the company especially the stakeholders, that the company has an international focus and that it believes in continuous improvements to its products and innovatively changing and defining the market landscape ("Vision and Philosophy", 2017). This has made the company attract a rich and talented human resource, build collaborations and good work ethics with everyone and encourage the staffs to work hard towards the attainment of the shared goals (Toyota Australia, 2015). The company has established a set of guiding principles that are aimed at articulating the values of the company and the expected behavior of the staffs. It is also important to appreciate that the company has one of the most diverse workforces in the country. According to the main website, the company’s human resource consists of a dynamic mix of people based on sex, age, religious beliefs and values. The human resource boasts of citizens from about 70 countries ("Vision and Philosophy", 2017). The youngest employee at the company is aged 18 while some of the oldest go up to 80 years old. The company, however, has seemingly underperformed in gender aspects, with the female population making up only 13% of the staffs. This alignment is in line with the company’s growth perspective and in protection of the fact that it is an international company. 2. Distributed leadership It is important to appreciate that the company appreciates the concept of distributed leadership. Allowing independence of the workplace teams and encouraging collaboration are critical for any innovation process and this has enabled the company to rise above what it is. The kind of leadership at the company is best summed up with the company’s workplace culture that can be summed up into “The Toyota Way.” At its core, the culture encompasses two aspects: respect for people including all the staffs, and continuous improvements ("Vision and Philosophy", 2017). The culture puts people before profits as being at the heart of the company’s agenda. From the survey, it can be deduced that the performance of the company in the context of distributed is 4 on the scale of 5. This implies that it believes in the development of its human resource and encouraging collaboration. It recognizes that the workface is an integral part of its success and that the business should strive to encourage continuous improvement, individual creativity and both collaboration and teamwork. It has sought to merge the different core divisions, that of manufacturing and purchasing, corporate services and sales and marketing headed by executives and concurrent subdivisions where the actual operations take place. Each of the divisions is handled by different teams depending on the specialization. Despite the operations being different, they all end up developing a similar product and this competence has been at the core of the company’s success. 3. Integration of effort Being a manufacturing company, the company has sought to bring together the different divisions to work together to the realization of the end product. It is also important to appreciate that it works in tandem and alongside the best practices of the mother company in Japan. The values related to product development, research and design and others relate across the board, and are borrowed from the parent company’s many years operation. It has devoted to building an integration of effort, with a hybrid structure that makes use of both the hierarchical and functional units. By relying on the hierarchical model that has guided the company since inception for decision making and other roles, the company has made advantage of the values of the founding company and this has enabled its growth. At the same time, the company relies heavily on the functional units, mainly for value creation and processes. The different developments are thus handled by the different divisions. 4. “Out-of-front” principle The company believes in being the market leader. In Australia, the operations are underpinned by the vision that the company has to be the most admired company in the world. One of the goals, ‘last car = best global car’ also underpins the company’s future perspective. The company prides itself by being the market leader in Australia, designing and making the best automobiles in the industry. Leveraging some of the best business practices and cutting edge product development practices, the company has arguably set the pace in the automobile sector in the country. 5. Up-Front Principle For a long time, the company has not been embroiled in an integrity issue. This is because the company believes in the need for integrity in its entire product cycle and in the presentation of its results. The company has adhered to making promises that it can deliver to the clients and complying with all the requirements ranging from state requirements to others. One of the ways in which the company’s integrity has been seen in the recent times is when the company announced downsizing process by setting the stage for the closure of the Altona production plant in Melbourne. The company made open the problem at hand, and even had the chairman of the mother company, Akio Toyoda travel to Melbourne to personally inform the staffs. Besides that, the company chose to formulate an exit plan that involved strategies like retraining and repositioning in the job market, unlike other companies that would just retrench and forget. In another instance in 2012, the CEO made it straight to a section of retrenched employees that the core reason for their retrenchment was underperformance and not staying in line with the company’s expectations, with no sugarcoating. This level of openness is what has been critical to the organizations success. The staffs are aware of what is expected from them from the beginning. 6. Resourcing the medium term The company invests in the market, both for the short term and long term. It has defined blueprints and goals that it works hard to achieve. As indicated above, the company has a global expansion strategy in place that will see it grow to become a global market leader with a majority market share. Toyota Australia’s operations are in tandem with the parent company’s which is to hit a global production and sale of at least 6 million vehicle units. 7. Time based Time is a critical resource in product development and other operations in the company and the company has strived to ensure high levels of efficiency. The company’s production process ensures fast production of high quality vehicles to meet the rising demands of the market. This has included the reduction of production cycle time. The ‘Just in Time’ approach to production in the company was first coined by engineering teams at the parent company and has application in the Australian context. The demand for vehicles by customers stimulates the production of the needed units. The production stimulates the production and delivery processes and subsequent processes. In the end, the right vehicle parts are manufactures in the exact specification needed. Using the ‘Just in Time’ mechanism, the final goal is satisfy the customer. Creating realistic timelines is thus imperative. The company makes use of Takt time, the device used to measure the speed or pace of sales and the market with the rate of manufacture of new units (Toyota Production System, 2017). The focus is on optimizing the takt time. In a case, supposing in a given fiscal year, the manufacture plant operates 24 hours per day, producing 400 units per day, the Takt time will be 3.6 minutes. Another way that proper time management has been achieved especially in the production units is the use of Jidoka. The Japanese term means ‘automation’ and implies that the manufacturing plant has sought to boost production while reducing the hands-on processes at the plants, which has translated to a higher ROI. 8. Bias for action As noted, the company is based on the principle of producing value and hence there is the bias for action 9. Learning focus The company has implemented a system dubbed “Kaizen” that it borrowed from the parent company that entails continuous improvement of the human resource (Samson, 2016). Kaizen is at the heart of the company’s production engine, largely due to the expectation that all tasks done at the company, whether human or mechanical, that they be defined according to the highest level of standard and quality (Toyota Production System, 2017). Continuous improvements in the knowledge and skill and understanding of the philosophy implies that the efficiency of the company will be improved. The employees are expected to follow the set guidelines and standards while continuously seeking to improve the quality of service. 10. Discipline As discussed above, the company has strived to ensure that there is discipline in the company. This has been achieved by marrying the company’s vision, the seven guiding principles, the mission, the ‘just in time’ and other taglines, and through the linking with the workplace ethics and overall operations. 11. Measurement/Reporting and Publication The company ensures a high level measurement and presentation of the different aspects of the company. This includes releases, financial statements and other releases. This has ensured a high level efficiency at the organization. 12. Customer value From the above discussion, it can be noted that the customer value is of immense value to the organization. The company places customer satisfaction at the top level, implying that the investments in both the plants and human resource are driven towards ensuring high levels of safety, ease of use and meeting the needs of the market. By ensuring a high Return on Investment for the customer funds, this has enabled the company to increase sales. 13. Capability creation The company has laid emphasis on creation and sustenance of its core competencies mainly value creation to the system. Innovation and a robust brand are some of its greatest capabilities which the company leverages on and seeks to sustain. Having carved one of the largest market shares, the company’s other capabilities include development of robust and cost-effective vehicles. 14. Micro to Macro From the company philosophy, the company has ensured that each employee understands his/her role and knows that the individual efforts contributes to the whole success of the system. Toyota internationalization strategy It is important to appreciate that the company has a clear focus of expanding into other markets and diversifying their revenue streams. By 2011, the parent company’s sales from emerging markets made up approximately 45% of the entire revenue. Australia is a critical market and the company has sought to expand its dominance in the market to its current status as holders of the largest market share in the country. It is important to appreciate that the internationalization has resulted into the growth in the company. As part of the agenda, the company has sought to either build the motor vehicles locally or import them, depending on the market. The manufacturing plant in Australia has been driven majorly by the satisfying economy and the high ROI. The company has a well-developed localization strategy. The outsourcing of the production works close to the consumers like in the case of Australia implies that it brings production closer and reduces the overhead costs. As part of this strategy, it is important to appreciate that the company has strived to maintain the quality of the products developed. One of the core problems that face modern localization and globalization of production is quality assurance. The aspect of quality assurance has made the company to focus on ensuring that irrespective of where the vehicles are designed or developed in the world, they must maintain the same high level of quality (Toyota Corporation, 2012). This is particularly significant considering the fact that the company does not put tags or labels on their vehicles saying “Made in Australia,” “Made in Japan” or “made in China.” The company rather focuses on placing the label, “Made by Toyota.” This puts emphasis on upholding the integrity of the brand by ensuring that the values of its philosophy—“The Toyota Way” are adhered to on a global scope. These values are well applied in the context of production in Australia and other markets, and the local subsidiary has ensured that they are translated in the local operations. As part of adhering and maintaining the quality of production, the company has adopted an education and skill development strategy. This has been done by adopting the use of the Toyota Institute and other mechanisms to ensure that the staffs have a firm appreciation of what is expected of them. The parent company has further sought to minimize the support it has from the parent company in Japan. Developing a practice of self-reliance in the companies is critical as it allows for plants such as those in Melbourne to adjust to the local market conditions and customize the products fully to the local tastes while still keeping the values and practices of the parent company at heart. Overly, Toyota has positioned itself as a truly global company and the guiding principles of the company and a formidable common coporate culture have been critical in realizing the success in international markets such as Australia. The Toyota Australia subsidiary is at the heart of the internationalization processes. The export program of the company led to over 64,381 vehicles being imported to the Middle East, the South Pacific Islands and the neighboring New Zealand. Other export destinations served by the company include Thailand and Iraq. Sustainability best practices Being a manufacturing company, environmental consciousness has been one of the competencies of Toyota Australia. The automotive industry makes use of a lot of key resources that are at risk of depletion. The company’s operations also have a lot of impact on the surroundings. The company has developed the Toyota Earth Charter and a comprehensive statement on environmental responsibility. The company has sought to use these strategies to make a positive contribution to the immediate communities where the company operates, and effectively seek to minimize the impact on the environment ("Toyota Environment & Sustainability - John Madill Toyota", 2015). The company’s environmental compliance approaches focuses on three main competencies: compliance, reduction of risks and use of best practices. As part of the compliance mechanisms, the focus has been mainly on prevention. This approach involves cultivating good relations with the community in which they operate in. the company cooperates and collaborates with the community and this strategy has meant that it resolves potential problems in time, with minimal need for legislative or regulatory force. The company’s environmental plan is spearheaded by an entity called Toyota Australia Environmental Management System (TEMS) which helps the company manage issues like environmental risk, compliance with legal and regulatory requirements and promotion of continuous improvements in the company ("Toyota Environment & Sustainability - John Madill Toyota", 2015). In a bid to comply to international standards such as the EU standards where some of the vehicles may be traded, the company has invested in intense risk minimization strategies. The company’s Altona Plant has put in place environmental governance measures aimed at building vehicles that meet the strict overseas criteria such as the use of only those chemicals that are acceptable in the international markets. The last pillar of the sustainability policy adopted by the company is the use of best practices in the use of resources. The use of different chemicals energy, water and the released wastes is closely managed, checked, monitored and controlled to ensure a balance. One of the way in which the company has built best practices is in the reduction of energy consumption and a commitment to reduce global emissions. The company’s Altona plant boasts of the largest solar panel system in the city of Victoria. The system comprises of over 10,000 square meters of roof space. At its completion, the system was expected to produce enough energy to reduce the reliance of the plant on energy from the national grid. The roofing on the facility would at the same time reduce the carbon footprint in the region ("Toyota Environment & Sustainability - John Madill Toyota", 2015). The company uses a 0.5 MW solar photovoltaic system to harness the solar power and that this will be instrumental in saving the plant at least 2,631 GJ of electric power in a year. This will mean that the system saves the company an estimated $110,000 per annum in energy costs and also an equivalent of 890 tons of carbon (IV) oxide. Strengths and weaknesses of Toyota Australia Strengths The company has one of the best corporate cultures in the country The company is the market leader in the automotive industry in the country The use of the values and philosophies and values of the parent company have helped it grow. Weaknesses As seen in the case above, despite having one of the best corporate culures, the company has one of the poorest gender distributions, with female workers taking a paltry 13% of the total workforce. Recommendations From the above case, it can be appreciated that Toyota Australia has strived to be a market leader in all facets. This report recommends that it upholds the best practices from the production units to the customer satisfaction that have increased the position of the company and lead it to being the market leader that it is. Some of the best practices that apply best to the entire automotive industry and which the company should uphold include: The continual reliance on innovation as a growth driver, especially accustoming the cars to the specific needs of the market. The cultivation and reliance on a robust workplace culture in order to boost the productivity of the staffs Use of the various values and best practices adopted from the parent company (Toyota Japan) in order to aid in goal replacement To rely on industry standards in the industry and other environmental standards and best practices in order to ensure that the industry in sustainable (Toyota Australia, 2015). Challenges faced The core challenge faced was ensuring that the respondent was as truthful as possible. This problem was eliminated through instilling enough confidence in them, promising to ensure that the findings will be as anonymous as possible and that they there were no ill intentions. Lessons learnt Good corporate culture is critical for the success of any organizations Alignment of a company’s objectives with the 14 principles mentioned above is of great significance and can lead to the organization gaining competence in all the possible facets. References Dowling, J. (2014). Melbourne shielded from latest Toyota cuts. Heraldsun.com.au. Retrieved 13 February 2017, from http://www.heraldsun.com.au/news/victoria/toyota-australia-to-close-sydney-office-keep-melbourne-once-camry-factory-shuts/news-story/4d3137683ce053c681f1793a0befc45e Meehan, P. & Rigby, D. (2008). Creating and Sustaining a Winning Culture. Harvard Business Review. Retrieved 13 February 2017, from https://hbr.org/2008/02/creating-and-sustaining-a-winn-1 Samson, D. (2016). The Japanese word at the heart of 'The Toyota Way'. Leadershipmatters.com.au. Retrieved 13 February 2017, from http://leadershipmatters.com.au/leadership-in-action/2016/august/the-toyota-way-principles-kaizen-and-putting-people-before-profits/ Toyota Australia,. (2015). Toyota Strategy and Governance:. Melbourne. Retrieved from http://www.toyota.com.au/toyota/sustainability/cms/download/2015/Toyota_Governance.pdf Toyota Corporation,. (2012). Toyota Global Site | Globalizing and Localizing Manufacturing. Toyota Motor Corporation Global Website. Retrieved 13 February 2017, from http://www.toyota-global.com/company/vision_philosophy/globalizing_and_localizing_manufacturing/ Toyota Environment & Sustainability - John Madill Toyota. (2015). Johnmadilltoyota.com.au. Retrieved 13 February 2017, from http://johnmadilltoyota.com.au/environment.html Toyota Production System,. (2017). Toyota Production System. Toyota Australia. Retrieved 13 February 2017, from http://www.toyota.com.au/toyota/company/operations/toyota-production-system Vision and Philosophy. (2017). Toyota Australia. Retrieved 13 February 2017, from http://www.toyota.com.au/toyota/company/vision-and-philosophy Read More