Toyotas Efficiency and the Management System of the Organization - Essay Example

An introduction to Toyota Motor Corporation Introduction Toyota Motor Corporation has set up its brand as the world’s leading manufacturer of automobiles. The company had a strong market position in the economy and has been successful creating a lot of brand awareness in the economy and among the customers in the automobile market (Cusumano, 2011). The company has gained a strong market position in the economy and is willing to expand further. However, it was seen that the company has used a competitive strategy and captured around 5% of the China’s automobile market in 2013 (Fujimoto, 2012). The researcher has the aim to study the company’s progress in the economy and how well the company has managed to overcome the natural disaster like Tsunami. The research offers the researcher a scope to analyze the company’s efficiency level to set up its business in the international markets. Assessment of the performance by Toyota Motor Corporation in the global market According to a researcher, Toyota Motor Corporation has attained a great deal of success within the economy and has captured the Chinese automobile market (Lander and Liker, 2007). The company’s production has been rising significantly with the economy and by 2012 it reached a level when it was the only company to produce ten million vehicles over twelve month period (Piotrowski and Guyette, 2010). The company was known for its quality products in the economy. The managers and the employees within the firm are efficient enough in running the business successfully. According to the researcher, it is considered as the world’s largest multinational automobile producing company. The company has been highly successful in gaining brand loyalty from the customers in the automobile market. It has gained competitiveness in the fuel efficiency as well as the designs that are highly favourable to the customers. Researchers say that Toyota’s efficiency has been due to the efficient production process applied by the company (Choi, Dooley and Rungtusanatham, 2001). The continuous improvement in the company’s technological process has been due to the horizontal and vertical integration in the production process. The researcher say that unlike the other multinational companies, Toyota’s focus have been on the quality of the vehicles that it produces and whether the company is efficient in producing as per the demands of the customers (Rajasekera, 2013). The company follows certain principles in order to carry out its business as the company launched a new program known as the ‘Toyota Way’ that depicts the culture within the economy (Rajasekera, 2013). The company follows the five principles that are necessary for carrying out a safe business in the economy. The principles state that the employees and the managers within the organization have to be faithful to their organization (Wu, et al., 2010). The managers need to be efficient and creative in order to invent new technologies within the economy. The employees within the company need to be practical and maintain a healthy work culture in the organization. They should not encourage controversies within the economy. The main objective of the company is to maintain a work culture that motivates the employees to perform well within the organization (Rajasekera, 2013). The organization has developed a work culture that encourages the program ‘learning by doing’. This refers to the fact that the employees gain knowledge and develop experience regarding the work process by participating in the productive activities. They gain knowledge regarding the various strategies used by the organization in order to overcome the challenges within the economy (Lander and Liker, 2007). One of the major challenges within the organization is that of meeting the desires of the customers and the stakeholders who are considered as important for the reputation of the company. The ‘Toyota Way’ program has focused on the company’s access to innovation in the automobile market (Rajasekera, 2013). It has contributed to the improvements in the conventional technologies that have led to the further development of its business. Toyota has got its own safe business policies within the economy in order to maintain the work ethics and culture within the organization. It aims at conducting its business by offering its customers with the quality demanded by them (Rajasekera, 2013). The managers within the organization are efficient enough to utilize the new technologies and serve huge customer base within the economy. The company encourages creativity among the managers in order to promote the new products that the company launches in the international markets. The new technologies would help the company to increase their production levels in the economy and facilitate the growth of the organization (The BBC, 2010). The company plans to conduct their business through partnership with other automobile producing industry in order to gain a larger share in the market. However, in 2009 Toyota suffered a huge loss. Despite having strong management and workforce, the company was on the verge of getting bankrupt. The company was suffering from the quality issues related to the vehicles manufactured by it (Wilhelm, 2011). There were a lot of customer complaints that the managers had to deal with. The management had failed to meet the demands of the customers related to high quality products at low costs. Impact of Tsunami on Toyota’s supply chain and the initiatives taken to overcome the situation A disruption in the supply chain of a company deals with the breakdown of production as well as distribution channels of the organization. Natural disasters often play a key role in causing these disturbances within the company’s supply chain management system. The natural disasters lead to a huge damage in the company’s production processes by reducing the availability of the raw materials (Wilhelm, 2011). The location of the firms in the disaster prone zones also poses threat to the firms of getting damaged due to the natural calamity. Further, the offshore activities of the firm create interdependence among the trading partners and hence the damage in the supply chain management may affect the entire production process. The researcher has examined the impact of a natural disaster that took place in Japan that had a huge impact on the largest automobile industry, Toyota. In 2011, the devastating earthquake in north-east part of Japan was followed by the powerful sea waves named Tsunami (Wilhelm, 2011). The natural calamity had damaged the infrastructure of the organization and disrupted the power supply within the Chinese economy. The production within the company was stagnated for a longer period of time due to the damage in infrastructure caused by Tsunami (Shah and Ward, 2007). It also affected the roads and transportation system within the country which in turn affected Toyota’s productivity. The labour markets and the human capital were severely affected and it also reduced the labour productivity of the company. Due to low production, the company was incurring huge losses and was on the path of getting bankrupt (Wilhelm, 2011). The natural disaster had also damaged the company’s inventory and it had no means to raise its production levels. It took much longer time for the company to set up its business in Japan and thereby raise its production levels. The disaster has posed serious threat to the company’s long term growth prospect and the labour market productivity (Wilhelm, 2011). As a result, the gap between the labour demand and supply within the company rose due to low availability of labour. The situation within the automobile market clearly highlighted the fact that the automobile business in Japan was losing its position in competing with the other countries. Toyota started losing its stocks and the market share that it had gained over the years. The fall in automobile market in Japan resulted in manufacturing of small sized cars in the world market (Choi, Dooley and Rungtusanatham, 2001). There was a spill over effect that led to the reduction in automobile production in the US and Europe which depends on the supply of vehicular parts from Japan. As a result, the other rival automobile producing industries gained larger market share (Wilhelm, 2011). However, Toyota was successful in setting up its business and gaining back its reputation in the automobile market in Japan. It considered the trade-off between disaster risk management and supply chain efficiency for the company and working accordingly to plan out strategies to overcome the disasters (Wilhelm, 2011). It can diversify its supply chain and acquire raw materials from various sources. The managers within the organization should be efficient enough to plan out the initiatives that are to be undertaken after the disaster. The managers analyzed the total cost that would be needed to set up the disaster management system within the organization. The managers are skilled enough to train the workers as to set up the business again and focus on the damaged segments of the organization (Shah and Ward, 2007). Toyota decided to join with the other strong competitors from the automobile market in order to gain some support and rebuild the damaged parts and set up its position again in the international markets. Nonetheless, there were other damages that had hampered the production level of Toyota. The researcher indicated that around two-thirds of the suppliers of Toyota from the north-eastern region of Japan have not been recovered yet. The north-eastern region of Japan was highly affected by Tsunami, and therefore caused huge damages to the raw materials (Shah and Ward, 2007). Due to low supply of raw materials, there was a heavy pressure imposed on the Toyota’s manufacturing sectors which had reduced the production capacity of the company. Further, the damage caused by the Tsunami on the Japanese sea ports have affected the company’s import and export of raw materials and finished products (Shah and Ward, 2007). However, the Japanese government has taken initiatives to repair the sea ports, and the company has been successful in exporting its newly launched vehicles to other parts of the world. The company has been successful in creating brand awareness in the global automobile market and it intends to give a healthy competition to other automobile businesses in the economy. Proper training of the employees was carried out in the organization and the managers were responsible for supervising the works and motivating them to perform better (Piotrowski and Guyette, 2010). The employees were considered as the important assets of the organization and hence feedback was taken from these employees regarding the management process and the work culture within the organization. The employees are trained so that they become ready to handle any future disasters. Thus, Tsunami has made the company aware of the damages that these natural calamities cause and the proper initiatives that the company can take to overcome these after effects. Analysis of Toyota’s approach to managing its operations Toyota comprises of efficient management system within the organization which is necessary to maintain the company’s status in the automobile market. The managers are capable of understanding the requirements of the clients and they train the employees such that they perform well in order to maintain the company’s reputation (Piotrowski and Guyette, 2010). The company is committed to produce quality automobiles as per the desires of the customers in order to gain brand loyalty within the economy. The management in Toyota is well efficient to check for any defective products going out in the market for sale. According to the company producing quality products was considered as the most important factor and customer satisfaction was their main motive (Lander and Liker, 2007). In order to ensure that there are no defects in the company’s production, it has set up quality management system within the company. Due to the efficiency of the management system, the company gained its reputation in the international market as the most trusted brand and the vehicles produced by Toyota are on a high demand in the automobile markets. Due to the brand awareness that the company has created in the international markets, it has gained huge customer support who demand more quality products from the company (Lander and Liker, 2007). In order to gain a larger market share, the company has betrayed its loyal customers. The quality of vehicles produced by Toyota had deteriorated and the managers had to put in a great deal effort to gain back its reputation in the market. The managers had to supervise each and every process within the company and ensure that good quality products are delivered to the customers. Further, the managers take into consideration the customer feedback and work hard to produce goods according to their desires. Toyota management system had once failed to produce quality goods and the company had to face legal issues that had a major impact on the company’s reputation. Around ten million vehicles were found to have major technical faults within the economy (Lander and Liker, 2007). However, the company tried to keep the information away from media in order to avoid publicity. The company was losing its loyal customers due to the unethical behaviour that prevailed in Toyota’s management system. Initially, the management within the organization did not admit to the situation but later on, they had to face strong obligations that affected the company’s high position in the market (Lander and Liker, 2007). Conclusion The research has been carried out by the researcher to analyze Toyota’s efficiency and the management system of the organization. Toyota has set up a brand name in Japan as the largest automobile producing industry serving huge customer base. The company had its main objective to set up its business in the international markets and provide quality products to its customers. However, the company had faced serious challenges due to the growing demands of the customers for innovative products in the automobile markets. The company was unable to deliver good quality products to its customers and thereby lost its brand loyalty. Nonetheless, the managers were efficient enough to handle the situation and regained its position in the market. The researcher also studied the efficacy of the company in dealing with natural calamities like Tsunami. In 2011, Japan was badly hit by the most devastating flood and earthquake that had affected the company’s supply chain and the production process. The company had to set up natural disaster management system in order to be ready for any future disaster that may ruin the production process within the organization. The operation management within the company was well trained to handle any sort of challenges and was ambitious in expansion of its business in the global markets. Recommendation The managers within the organization are capable of handling various challenges but the company had to face quality issues due to the high demand of the customers. The organization had a huge customer base and it had gained brand loyalty by serving quality products to its customers. Therefore it is highly recommended for the company to hire efficient managers who can plan out new strategies in order to help the company expand its business. It can train its employees to make them accustomed to the new technologies and to perform under pressure. The managers need to be efficient to understand the demands of the clients and design new products accordingly in order to compete with the rival firms in the international automobile market. Further, Japan is prone to the natural disasters like earthquakes and floods as it was hit by the most devastating Tsunami. The managers need to take some initiative such that the company does not lose its production channels due to the natural calamities affecting companies supply chain. Quality management and good ethical work culture are the other important factors that are highly recommended for the company to run its business smoothly and efficiently. Reference List Choi, T. Y., Dooley, K. J. and Rungtusanatham, M., 2001. Supply networks and complex adaptive systems: control versus emergence. Journal of operations management. 19(3), pp. 351-366. Cusumano, M. A., 2011 ‘Technology Strategy and Management: Reflections on the Toyota Debacle’. Communications of the ACM, 54 (1), pp. 33-35. Fujimoto, T., 2012. The Evolution of Production Systems: Exploring the Sources of Toyota’s Competitiveness. Annals of Business Administrative Science. 11, pp. 25-44 Lander, E. and Liker, J. K., 2007. The Toyota Production System and art: making highly customized and creative products the Toyota way. International Journal of Production Research. 45(16), pp. 3681-3698. Piotrowski, C. and Guyette, R. W., 2010. Toyota Recall Crisis: Public attitudes on leadership and ethics. Organisational Development Journal. 28(2), pp. 89-97. Rajasekera, J., 2013. Challenges to Toyota Caused by Recall Problems, Social Networks and Digitisation. Asian Academy of Management Journal. 18 (1), pp. 1 –17. Shah, R. and Ward, P. T., 2007. Defining and developing measures of lean production. Journal of operations management. 25(4), pp. 785-805. The BBC., 2010. Toyota to recall over a million cars in US and Japan. [online] Available at: [accessed 29 April 2015] Wilhelm, M. M., 2011. Managing coopetition through horizontal supply chain relations: Linking dyadic and network levels of analysis. Journal of Operations Management. 29(7), pp. 663-676. Wu, S., Blos, M. F., Wee, H. M. and Chen, Y-L., 2010. ‘Can the Toyota Way Overcome the Recent Toyota Setback? – A Case Study on the Theory of Constraints’. Journal of Advanced Manufacturing Systems. 9(2), pp. 145–156. Read More