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Toyota Corp. Analysis & Balanced Scorecard - Essay Example

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This is the "Toyota Corp. Analysis & Balanced Scorecard" essay. BSC(Balanced Scorecard) is one of the performance evaluation tools managers use to evaluate the results of executive decisions and also monitor how a team implements these pronouncements. …
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Download file to see previous pages It puts it independent of what operational teams think of the organization hence making them more focused on the bigger picture (Vedd, 2011). In this case, the evaluation is clear enough to evaluate any leads or lags and find ways to push the company towards achieving planned success. The actual implementation of a BSC analysis involves the measuring and mapping of current progress before comparing it to existing organization objectives, initiatives, or targets. This Toyota Corp. analysis & balanced scorecard essay will take a deeper gander at this. What Are Strategic Objectives? Any company doing it will first start by evaluating its financials to justify expenditures and find how it can better its profit margins. After this, the evaluation moves to the next layer that looks into customer relations and satisfaction. The goal here is to find how well the marketing and support team interacts with the buyer hence identifying ways to create more customer satisfaction that results in more sales for the organization. When a business looks into customer’s needs, it can tailor its production and customer interaction so as to meet expectations squarely. The analysis will also look into the internal process of the organization. This step helps the organization settle on what value it can add to its production to better its sales volumes. The last measurement is taken to look into how the entire working mechanism deals with change. Are they flexible enough to take on new techniques or philosophies and implement them successfully? This last step is crucial since transition can only be successful if everyone in an organization understands, adopts, and gives feedback on what works (Vedd, 2011). Conclusion A well-created scorecard can help a company measure and hit many different objectives. It can give decision-makers the information they need to pinpoint issues that either make the business thriving or are pulling it down. It can also be used to pass on critical objectives to other internal teams regardless of whether management is using it to test a new strategy or refine an already working process. It makes it a crucial tool in businesses across the globe. Executive Summary Toyota Motor Corporation (TMC) is the brainchild of Kiichiro Toyota. He started the Japanese company back in 1937. Currently, Toyota is one of the largest automotive producers in the world and continues to excel under the leadership of Kiichiro’s grandson, Akio Toyoda. Toyota has manufacturing operations in over 27 countries and sells its vehicles to over 170 countries and regions. Even though the primary brand name for its products is Toyota, it also handles production and sales of automobiles under names like Daihatsu, Hino, and Lexus (Toyota 2009). Toyotas' massive operation has seen it employ over 4,500 people in Australia and another 317,716 around the globe as of 2009. Toyotas' dedication to its employees is evident in its keenness to keep its employees amidst troubling times like the 2008 depression when most of the other companies were laying off workers to keep their profit margins. Since its inception, Toyota has been a staunch believer in delivering reliable products at affordable prices. To them, customer satisfaction at an easily achievable price tag is vital to responsibly exploiting the environment. The Corporate Strategy Toyotas' success is heavily seated in a code of operation Toyota calls The Toyota Way. It is an agglomeration of principles managers, and the rest of the team uses when approaching production challenges. This mantra consists of 14 principles that are classified into four major categories:
  • Long-Term Philosophy: These are the primary decisions the management uses to help achieve long term financial and market positions. These take into account the prevailing economic conditions, societal expectations, and evolving customer needs.
  • The Right Process Always Produces the Right Results: Toyota believes that the end product will always be perfect if everyone in the team follows the production guidelines to the latter. No corners should be cut at any point. This philosophy wields so much power to the extent that any employee has the freedom to halt production if they notice a quality issue. The idea here is to capture problems as soon as possible and avoid selling a defective product to the customer.
  • Adding Value to the Organization by Developing Your People: Toyota management believes that a satisfied and developing employee will be of better value to Toyota. Its primary goals are to teach and grow everyone who works with them.
  • Continuously Solving Root Problems Drives Organizational Learning: Toyota has always valued the power of making decisions via consensus regardless of how long it might take to reach an agreement. It has given it the ability to consider a broad range of factors instead of making short, fast, and misguided decisions that will harm its product.
Crucial Factors that Shape Toyotas Success So far, many people attribute the reigning company success to its dedication to the rules outlined in ‘The Toyota Way.’ This code was introduced by management in 2001 and has since been the guiding principle for all its employees across the world. According to Akio Toyoda, Toyota’s principal goal is to contribute to society positively. It means that any executive decisions from management should look beyond the mere profit they will result in and also evaluate the impact they will have on society. An excellent example of this management philosophy in action was during the 2008 recession. Toyota did not make a profit for an entire year. During this time of lack, Toyota kept its employees and even managed to forge a better future for themselves. Other than this, Toyota has all its research and development values deeply entrenched in coming up with something that offers excellent value for money, is durable, reliable, and convenient. It is why Toyotas have a reputation for keeping rolling long after their estimated lifespan. Another way the company decided to add value to consumers was by launching a car with one of the most fantastic fuel consumption of its time when people were having to make do with reducing income and increasing pump prices. The Toyota Prius was the first massive hybrid car that rose in popularity at the height of the economic crisis. This perfect timing saw Toyotas sales balloon at a time when other auto manufacturers were counting their losses. The other success factor came from the lean manufacturing concept that allowed them to cut costs without affecting the quality of their products. Competitive Advantages within the Industry Currently, Toyota has the fastest automobile production system in the world. It is how they have managed to saturate markets with their brand living true to the slogan ‘The car ahead is always a Toyota.’ It takes the Toyota design team less than a year to come up with a new concept for a vehicle. It is marvelous compared to the two to three years other companies take to achieve this. Despite the speed, management ensures they still churn out cars that are a hit to the market. Their speed is based on the Toyota Production System (TPS), a philosophy that Toyota created after emerging from the throes of WW2. Toyota decided to take a different path from Ford and GM’s mass-production approach. Toyota management chose to keep their production small and instead focus on customer satisfaction. It led to TPS, a system that focuses on meeting varied customer requirements at affordable price points. Instead of churning out tons of cars, TPS waits until there is the demand for something before producing it. The use of pull production over mass push manufacture in the system means there will never be oversupply and inventory build-up. The other thing that gave birth to the balanced production efforts at Toyota lies in how the company management shares knowledge across its supply chain. This dissemination of information and the manufacture of access to service vehicles means that consumers don’t fear to take on new products since they know they will always find someone experienced enough to support them. The same organizational learning has helped Toyota come up with ideas that give it a competitive edge in the market. They even partner with other industry stakeholders to share and gain knowledge that goes a long way into growing their status in the market. The Balanced Scorecard Toyota management implements its scorecard using ‘Hoshin Kanri’ (implementation and the execution of strategic goals) (Witcher and Chau, 2007). In this philosophy, higher management sets the main objectives for each of the four broad categories in The Toyota Way before overseeing the implementation and actualization of these goals. All along, senior management plays the leading role by overseeing the entire workflow. They use cross-functional management, giving them the ability to evaluate cost, quality, delivery, and people skills in Toyota. By successfully implementing ‘Hoshin Kanri’, Toyota has successfully integrated and streamline everything from production to supply and post-purchase services to its customers. BSC Implementation Flow Chart After analyzing the scorecard, the management team came up with three main measuring points:
  • Vision, mission and production system values
  • Balanced objectives and measures
  • Core capabilities and competences
After this, the team used the Hoshnin Kanri section of the flow chart to formulate strategic goals. Once they had them, they could then implement them while focusing on alignment, integration, and review. Toyota management teams had to do this analysis depending on the goal terms. It could be each day, after a month, quarterly or after each year elapsed. In resonance with the company driven attention to detail, management ensured that the company was set to follow the flow chart to the latter. Periodic reviews went over production lines to ensure that targets are being met while also identifying ways to make the line better. This effort lasted for years, but the product was improved efficiency and a well-balanced supply chain that always could meet demand despite its not keeping products in the warehouse. It was at the very core of the reasons why Toyota surpassed automotive giants like Ford and GM on its path to being a leader in the field. My Recommendations Toyota has managed to successfully integrate the four pillars of its scorecard into its management plan. Despite this, research and development remain an essential determinant of its future production system success in this highly competitive market. As such, the company is heavily invested in new construction and acquisition of supply chains that will make it a giant in the future of automotive. A good example is its efforts to integrate a battery-making company into its production system. Over time, Toyotas production system will become better if it keeps implementing the process shown in the flow chart hence making it a more successful player in the industry. Conclusion In the past decades, Toyota has grown its production system and sales market share to surpass GM and other major market players, thanks to its revolutionary TPS. Despite this success, Toyota’s senior management still has to keep looking for a system or ways to make the company better over time if they are to retain this position in the market. The most significant recommendation seen in the recommendation section is how they should create a better R&D effort and keenly venture into systems that will move the company into electric vehicles as oil prices keep going up. Toyotas team should also consider looking into Motorcycles and other small transportation system platforms. ...Download file to see next pages Read More
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