Solutions for Toyota Manufacturing - Coursework Example

? Table of Contents Solution 2 Solution 2 2 Solution 3 3 Solution 4 4 Solution 5 5 REFERENCES 8 Solution Toyota is manufacturing its products in Japan but it is aggressively expanding its manufacturing outside Japan so as to minimize its cost. It is the most useful technique that Toyota is following as transferring its manufacturing outside Japan as the cost of labor is cheap and Toyota faces many of the tax benefits as well. The manufacturing of Toyota is dispersed in United States, Canada and Mexico as well. The benefit of manufacturing within these countries is that these countries are the member of North American Free Trade Agreement and thus it gives relief in cost in terms of government duties and thus Toyota can move its products in larger market at a lower cost. One of the benefits also include the access to the wide market when Toyota manufactures and assembles in these countries and the access to the market is cheaper as compared to the situation where Toyota manufacture in Japan and export it. The cost effectiveness for Toyota by manufacturing and assembling outside Japan is one of the major reason as the manufacturing cost in Japan is much higher than other countries and especially from developing countries. Toyota is considering to setup the manufacturing and assembly operations in under developed countries where the costs are cheap and is much beneficial for the company. Competing against General Motors in North America and with high financial stability along with the target of covering most of the markets it is beneficial for Toyota to get advantage from every opportunity that seams feasible and cut down costs and cover most of the markets. Solution 2 Toyota has been known for its quality control that it has thrived to provide keeping low costs for its products and its target customers. Like every large company it has made efforts to expand its operations and shown the great presence in markets like US. The basic purpose of expansion is to capture the market and increase its share it has always been strategic decision for the corporates as they ample opportunities for growth. However along with the opportunities management also has to focus on the risks that they might face that would have the potential to undermine their current status. Toyota has focused on TQM (total quality management) and along with processes have been sharp that enable just in time inventory. At overseas the quality of production facility might not be as that Toyota requires along with that it is would be burden and challenge for management while in headquarters in Japan to ensure the standards of facility and production raw material that they receive. Toyota’s policy of learn local might not prevail in every region that they plan to operate as initial access would be to local markets that might not provide quality material. It’s design and technology that really matters in the automobile industry and in overseas it becomes even harder for company to ensure secrecy of its designs. Every region has different culture, requirements and most important of all government regulations that create a huge risk. Being a multinational Toyota always faces a threat regarding the foreign exchange. Solution 3 The recommended plant citation within North America is in the United States because as per the clause when 62% of the cost is covered in United States then the company shall be allowed to the free movement of its products within United States, Canada and Mexico. Toyota should consider the market conditions as to what type of facility should be considered best whether manufacturing or assembly and the demand of its products that is within the United States, Canada and Mexico as this will give Toyota the access to the markets of these three countries as they are the members of North American Free Trade Agreement. The environmental and legal laws should be considered as Toyota has to comply with the legislations of United States in order to be operative. The cost that Toyota will bear should be less than the other facilities in United States, Mexico and Canada. The labor rates and the efficiency of the labor force along with the consideration of the training of the employees should be considered. As Toyota already has plants there in United Stated then it shall be convenient for Toyota to operate another plant as it will coincide with the operations of the other plants. Entry in the North America has been done by Toyota and it needs to expand there in order to get competitive advantage the cost effectiveness and the market share should be considered. The facility should be according to the demands and the successful products that are not being marketed in that region should be introduced there and hence expansion in the product line in that region should be made so that Toyota covers maximum of the market in each category (Toyota.com. 2013) Solution 4 Expanding operations globally companies face many of the accounting issues and so does Toyota. The reporting of Toyota is in different currencies as per the requirement of the countries in which it operates. The company issues its financial reports in Japanese Yen when it report in Japan and has to face the currency translation problem. There are conflicts of accounting treatments as they vary from country to country and Toyota has to comply with all the accounting treatment so as to fulfil the reporting requirement. The translation issues that it faces when converting its unit’s cash flows into functional currency in accordance with the exchange rates and exchange gain or loss should be recorded and reported according to the local accounting requirement (Ifrs.org. 2013) Toyota is required to follow the accounting principles as per the international account standards and generally accepted accounting principles so as to fulfil the requirements of the countries that it operates in. Segmental reporting needs is also required from Toyota where the financial reports of each segment is accounted and then it is required to issue combined report accumulated from all the segments thus the accounting treatments become complex in such situations. The explanations of the accounting treatments and the notes regarding the disclosure of the accounting treatment needs to be made in order to facilitate the user of the reports to understand the complex operations and accounting treatments followed. It is the global expansion of Toyota that raises the complex accounting issues as it needs to follow many of the accounting requirements from different parts of the world which follow the same principle but differ in treatment and disclosure requirements (Fasb.org. 2013). Solution 5 Ichijo and Kohlbacher (2008) discuss the strategies and operations of Toyota that they have used not only nationally but define their success in global markets. Toyota has been very much focus of academic research and business studies as it serves a role model for management techniques and strategies that they have used in their global markets. Toyota today has international presence and shares the idea “Learn local, act global” it’s not only an idea but the strategy that Toyota has been following for its international business development, success in global markets and long-term stability Top of Form . The initial idea of the strategy focuses on learning and knowledge and other part is converting the ideas into the actions. Thus the intellectual capital in the 21st century has proven to be the greatest strength that the corporate can acquire it is its intellectual capital that would define its competitive position not only in local but international markets as well. Toyota guides and shares knowledge its success in global markets has been knowledge-based it has closely examined information about its target market, customers, supplies and suppliers. It has focused on knowledge creation that has allowed to it shape its management approach whether it be its supply chain management or customer relationship management they always reflect different and knowledge based approach. It is intense knowledge creation that has allowed Toyota to be innovative as per the requirements in different markets that it operates and has been able to fulfil market demands. Thus strategic knowledge creation and sharing within organization has been critical factor of success for Toyota in its global operations (Liker, 2004). . Qi (2008) explains in this literature that globalization is an increasing phenomenon that is changing business environment and even effecting economies around the world. It is the multinational that play a critical role in today’s economy and heavily contribute to globalization. This phenomenon basically focuses on unifying the economies, allowing the free trade and removing the barriers so that inflow and outflow of resources is easy. Multinationals always focus on expansion and international presence provides the growth that cannot be achieved staying local. MNEs target potential markets and design effective strategies that would be operative and ensure sustainability globally. However research reveals that it is often witnessed that more than 50% of revenues of MNEs are from their local regions thus it reveals that they are more national than global. It’s very difficult for MNEs to design a common structure and strategy that would prevail throughout all the regions that they are operating. Level of competition is in every region is different, laws and regulations, environmental requirements and culture they all differ thus all these factors require extra knowledge and that exerts pressure over corporate leaders or management. The example of Wal-Mart can be taken its 90% stores are in NAFTA region and only 10% can be called truly international (Qi, 2008). Thus it can be concluded that it is intellectual capital that creates a major issue for MNEs to become as successful in global markets and economies are not truly free that exert multiple barriers for MNEs to become truly global. REFERENCES Top of Form Top of Form Fasb.org. 2013. International Convergence of Accounting Standards—Overview. [online] Available at: http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156245663 [Accessed: 12 Nov 2013]. ICHIJO, K., & KOHLBACHER, F. (2008). Tapping tacit local knowledge in emerging markets - the Toyota way. Knowledge Management Research \& Practice. 6, 173-186. Ifrs.org. 2013. IFRS - Jurisdiction profiles. [online] Available at: http://www.ifrs.org/Use-around-the-world/Pages/Jurisdiction-profiles.aspx [Accessed: 12 Nov 2013]. Liker, J. K. (2004). The Toyota way: 14 management principles from the world's greatest manufacturer. New York, McGraw-Hill. Qi, Z. 2008. The Model of Expansion from Local Enterprises to Multinational Enterprises. International Journal of Business and Management, 3 (8), p. P141. Available from: doi: 10.5539/ijbm.v3n8P141 [Accessed: 12 Nov 2013]. Toyota.com. 2013. Other operations in North America. [online] Available at: http://www.toyota.com/about/our_business/operations_map_usa/north_america.html [Accessed: 12 Nov 2013 Read More