Toyota as One of the Biggest Car Manufacturers - Research Paper Example

College: Toyota Corporation Introduction Toyota is one of the biggest car and automobile manufacture around the globe. TheJapanese motor -corporation has its headquarters in Aichi, Japan (Magee 14). The company is large and complex and it was recently named among the top twenty largest companies globally in terms of revenues. The company manufactures about ten million automobiles every year and has distributed over two hundred million automobiles since its inception. This multinational corporation has a figure of 339,000 employees around the globe. This company was established in the year 1937 by Toyoda Kiichiro. Its first product was the Toyota AA and ever since, it has grown and incorporated other brands in its production. Such brands include Scion, Ranz, Lexus, as well as Hino. The company has also invested heavily in other automobile industry such as Isuzu, Daihatsu, Tesla, Sichuan FAW Toyota, and Fuji Corporation. History Toyota Corporation was first incepted in the year 1933. During this year, the corporation was a subsidiary of the Toyoda Automatic Corporation. The Toyoda Corporation was run by Toyoda Kiichiro. The company’s first automobiles were the A1 and G1 that were manufactured in 1935. It was after the first production of the Automobiles that Toyota Corporation moved to establish an independent company that would allow total control of the production activities of its automobiles. This establishment took place in the year 1937 under the leadership of Toyoda Kiichiro. During this time, the immediate competitors of the company were Ford and GM motors. However, in order to provide an incentive to the customers and boost sales, the company decided to sell its automobiles at a cheaper price than its immediate competitors. The sale price of the model AA was only 3,350 yens. Ford sold their first car at a more expensive price that involved paying 400 yens more. Since then, Toyota Corporation has established more than one hundred subsidiaries. External Environment Toyota has four main components that relate to its production and operational activities. These components include: 1. Provides a framework for the solving of problems and emerging issues 2. It incorporates long-term goals through objective planning and management decisions, as well as forecasting. 3. It continually develops its brand to ensure complexity of the organization. 4. The solving of root problems to ensure the operations of the company are effective and organizational learning is achieved. Culture The company recognizes five principles. They include teamwork, kaizen, challenge, respect, and ‘go and see’. The company has general guidelines called the ‘Toyota Way 2001’ that lay out various policies and guidelines in which every employee in the organization ought to follow. Planning Mission Liker (21) suggests that Toyota Corporation focuses its efforts more on addressing the importance as well as the positive experiences of owning private quality vehicles. Its mission is to provide high quality and affordable automobiles on a global scale. Importance of planning In its corporate strategy to mitigate risks, Toyota has always been upfront in adopting virtually technology-based product life cycles. Its strategy is to penetrate the market with a highly differentiated product that targets the affluent and wealthy consumers. Even though the company targets the high and middle class in the society, it is expanding its operations and moving to more big and competitive markets with lower pricing of their products. According to Toyota, any accommodation of sophisticated technology into the motor field must first undergo various optimization levels before penetrating the market at large. Goals, Plans and Operations In its value chain, Toyota is able to identify all its strengths and weaknesses associated with the activities and functions that supplement its development and marketing strategies for its products. Toyota’s value chain analysis incorporates various primary activities that relate directly to the production and support actions that supplement the primary activities involved in the daily operations. One of its primary activities in the value chain is inbound logistics (Wheelwright 70). In this activity, Toyota manufactures its significant components from within the company. There is no outsourcing of these components. This situation yields maximum benefits to the company and shortens the waiting period; in turn improving product efficiency. The other components may be delivered by one or more suppliers but in a timely basis. The situation of operations is also another activity. Toyota’s manufacturing process is technically automated and differentiated. It has sophisticated machines that can produce a maximum of 100 vehicles in a day. It is not only about the quantity but even the quality is considered. The technical machines are easily programmed in a different way to manufacture various car models. Another key primary activity is the outbound logistics. The outbound logistics play the role of creating awareness to customers on the benefits of using automobiles. It also involves the purchase of the vehicle online and delivering it to the preferred destination. Other components of the primary activity model include the marketing and sales, and the service aspect. In marketing and sales, Toyota does outsource advertising to third parties or add agencies. Toyota has a network of stores that help to bring out brand awareness. As for service, Toyota has built a free charging station for their customer and provided warranty policies to increase consumer loyalty. Importance of Uncertainty, Risks and Ambiguity Uncertainties, risks and certainties in the corporation allow the formation SWOT analysis. SWOT analysis is a documented detail of the Strengths, Weaknesses, Opportunities and Threats of an entity. It is mainly developed to analyze how to develop the market as well as products not ignoring the challenges and advantages at hand. It happens through customer analysis, competitor, risk analysis, product research. This SWOT technique measures the functionality of the market. Through research and SWOT analysisThe SWOT analysis identifies the main challenges and issues coming from the external environment, as well as the strategic capabilities that the firm has on its development strategy. The company has had several strengths that have enabled its succession in the automotive industry. Toyota outsources secondary activities that help in the maintenance of low cost activities hence it has been established that the strengths of this product lie in its low costs of production. The lean management system has enabled employees to work in an accommodative environment as they collectively focus on the organization goals. Toyota Corporation has strategic networking and has got numerous investors from companies such as Tesla and Google, which are well established. Decision Models The development of decision models in the corporation is important as it has enabled the corporation to attain perpetual succession. Decision models have various functions to the corporation. There are various primary strategies that can be used to implement total quality. They include: (i) Assessing of quality management structures, customer utility, as well as the current culture. (ii) Identification of core values and ideologies by the management for communication. (iii) The management develops a plan and puts first customer needs by aligning the commodities offered. (iv) The management assesses the processes to meet customer needs and panels team formation. (v) Total quality is then managed by the steering committee. (vi) Managers ensure that standardization and process management is conducted. (vii) Evaluation of the progress and modification of strategies. (viii) Employee feedback and awareness is maintained. Organizing Organizational Chart Importance of Organizing Toyota Corporation and its operations as well as effectiveness depend on the macro environment, as well as micro environment. The company’s immediate associates include buyers, substitutes, suppliers, rival firms, as well as new entrants. This immediate industry and competitive environment is also surrounded by various factors such as population demographics, legislation and regulation, the aggregate economy, technology, and societal values and lifestyles. These factors above form the company’s broader external environments and are all supplemented by the level of organizing in the organization. In this analysis of the Toyota industry, the organization process seeks to understand how the industry structure deals with competition, which has a very large effect on industry profitability. The industry attractiveness is laid out and facts about the industry structure are established to determine the future inflow of profits (Spears and Bowen 102). In its competition framework, the industry competitors bring about rivalry to the existing firms. This framework incorporates various threats from the external environment. These threats include the threats of substitutes, the bargaining power of suppliers, and the potential threat of new entrants. During the organization process, the corporation has various choices and alternatives to choose from in the case of expected external and internal environment changes. Characteristics of the Organizational Vertical Structure In its support activities, the organizational infrastructure is emphasized mostly. Toyota Corporation has a vertical organizational structure in management. The executive makes all the decisions and then delegates authority to the subordinates. The vertical organizational structure is beneficial due to efficient communication process and quick decision making process. This type of structure allows efficient procurement which is a major activity in the corporation. The vertical structure also allows the effective implementation of personnel, organizational, as well as executive amendments that tend to strengthen the management structure. In most cases, the vertical structure is composed of a brief review that defines the operations and ways in which the organization makes it decisions and performs operations. The subsidiaries of the Toyota Company require overall executives and board members that ensure the company’s objectives are achieved regardless of the location and the immediate corresponding local and regional market. Organization’s Type of Departmentation Toyota Corporation departmentation involves the use of functional areas to determine the operations of the company. During the late 1980s, the company experienced a boom in sales and there were challenges that required the effective decentralization of functions. In this case, three fundamental departments contribute to the effective operation of the corporation. The three functional areas include: the Production and Inventory management department, human resource department and marketing department (Takeuchi 15). The Production and Inventory management department is responsible for the manufacture of the automobiles. The marketing and the Production and Inventory management departments works at an internal level. The manufacturing department has minimal information on consumer demand based on demand distribution and realization. The human resource department supplements and controls manufacturing plants that are used for the production process of automobiles. Through integrative processes, the human resource departments in the main corporation and subsidiaries define production problems that are only dealt effectively by adaptable, as well as skilled workers. The employee knowledge about the automobile products and processes are embedded in the routines and the social interaction patterns of the human resource department. The department allows the hiring of competent and experienced employees in the automobile industry. The marketing department is responsible for building the brand for Toyota Corporation. The marketing department is responsible for establishing markets in which Toyota Corporation can sell their diverse automobile products. The marketing department establishes global market by penetrating deep into the existing markets and establishing new markets in new regions globally. Organization Structure and its influence on Operations and Environment The organizational structure enables Toyota Corporation to compete and operate on a global scale. Toyota is one of the leading automobiles brands that are established in the automobile global industry. Toyota Corporation is dependent on the global market for a number of reasons. The first reason is that its home operations are coupled with a redundant growth of the market. All the motor products are flagged with products from other companies. Very stiff competition, therefore, exists in the Asian market. There exists different quality management tactics in the market. Some of them include defining metrics, kaizen, designing quality, establishing customer expectations, as well as Six Sigma (Imai 28). Each of these tactics has its own importance and risks. These risks and importance, however, address the basic stages used to implement total quality in the manufacture and distribution of the Toyota automobiles. Leading A company needs good leadership skills in order to achieve its goals. In leading, motivation, communication, guidance and encouragement of workers is required. Good leadership skills boosts employees moral in a company and builds a good working environment with workers and employees at large. Good leadership also helps in reaching the company in reaching the goals set. Toyota Company has been able to apply different leadership skills to maintain quality of the manufactured vehicles. Cooper and Raiborn (97) also suggest that Toyota maintains its position as one of the biggest company in the manufacture and distribution of vehicles worldwide. Toyota Motor Corporation in 2010 employed more 300,000 workers globally. Importance of leadership in the organization Through primary leadership, Toyota Company has been able overcome challenges during the seven decades the company has been in operations. Toyota Company’s makes vehicles under Toyota Company principles, customer first principles and genchi genbutsu principles. Toyota company leadership skills focuses in making cars that will make people happy and does not focus on how much money the company will make or how many cars the company will sell. Toyota Company makes sure that the pricing is able to attract more customers in different regions. Advantages of using primary leadership style The use of primary leadership skills helps a company in empowering employees and making them feel meaningful. Primary leadership in Toyota Company has helped to increase job satisfaction level. The company is able to get feedback and ideas from the employees, which helps the company in understanding its staff much better. The ideas and suggestions generated by the employees help the company in improving the quality and other areas in the manufacturing of Toyota cars. The relationship created by leaders and employees makes the employees to open up and their minds, which helps the company in understanding the positive and the negative side of the company. With good leadership, the company is able to make decisions and come up with different strategies of improving the company and the employees working conditions. Disadvantages of using primary leadership styles There is always the other side of the coin. Everything good has its own disadvantages. Primary leadership style hinders the company from outsourcing ideas. If good management lacks in employees who receive too much responsibilities to handle, decision making task may be overwhelming. Productivity in the corporation may also decrease if leaders decide to perform the easy tasks and delegate the difficult tasks to junior employees. When the top managers and the junior employees enter into disagreements, disputes tend to arise and may have a negative effect on worker productivity. In most cases, disputes tend to consume valuable time that the company may utilize to enhance production in the workplace. Recently, Toyota has been experiencing challenges in product development system. There has been recalls that have been issued in which most of them relate to Toyota’s technical problem. Primary Motivational Approaches for Employees Employees’ motivation may be defined as the manner in which employees dedicate and commit their efforts and energy in the workplace. Ways on how to improve and motivate employees are necessary especially in a complex organization due to increased competition in the business environment. There are several approaches that a company integrates in the process of motivation (Tanaka 8). These approaches include family care, insurance, and provision of benefits to employees such as cars. These are but a few approaches that Toyota Corporation uses to motivate its employees. Employees require the company support to ensure they achieve maximum productivity as they also pursue their self-actualization goals. Teamwork and Employee Empowerment Empowerment helps employees in making rational decisions. Teamwork building and empowerment creates a mutual and beneficial relationship between the junior staff and the senior management. Controlling Control and its Importance Control involves the integration of policies, plans, and the operations of a company to allow the achievement of objectives and the vision of the corporation. Control provides reasonable assurance that the operations being conducted in the corporation are effective. Control is important in the organization because of the following reasons: 1. It ensures management and financial accountability 2. It promotes a framework that ensures regulations and procedures are observed 3. It ensures the production of quality services 4. Control safeguards the corporation’s resources against mismanagement and fraud Manifestation of feedback control Control allows faster execution of managerial decisions. Control systems tend to incorporate quicker execution of decisions especially in a dynamic market place. The managers gather the requisite information and allow the quick solving of problems in the workplace. Since Toyota Corporation is operating in a competitive and dynamic industry, control supplements fair competition and development of customer-oriented services. The communication pattern in this system proves to be more effective especially in a decentralized system. Mutual consent between the department about the production and distribution of Toyota products avoid fluctuations in inventory production and distribution as every department’s activity corresponds to the rest. Budgetary Control Tanaka’s article Toyota’s cost-control system under TQC suggests that the budgeting control system is an integral part in ensuring the company achieves Total Quality Control (56). The budgeting system is based on cost control, as well as target costing. In this budgetary system, the management is responsible for ensuring budget centers are effective and profit is realized. The budgetary system also sets the goals for employees and eliminates the existence of biased performance evaluations. Financial Control Approach The existence of a decentralized system in the Toyota Corporation allows various effective processes that supplement the existence of a central accounting system (Hill, Jones, and Schilling 37). The centralization of finance evaluation gradually results to intensive management. All the costs and revenues are closely monitored and appropriate actions are taken. If the demand is greater than the supply of automobiles, then under cast sales will occur and vice versa. Centralized financial system also solves the high inventory level problem experienced by most automobile companies. Every functional area is forced to analyze and integrate the financial information provided by the finance department. A quick analysis of the financial information will enable the departments establish the optimum level for sales. The functional areas will, therefore, achieve efficiency and develop standards for production according to the market efficiency. The centralization of the financial structure is, however, detrimental as departmental accountability may decrease. Financial irregularities may result leading to ineffectiveness of the company. Total Quality Management Techniques The corporation applies various techniques to ensure quality is maintained and controlled. Such techniques include metrics, customer expectations, Kaizen, and designing qualities. Metrics are parameters used in measurement to assess quantitatively, compare and keep track of the production progress. Metrics are important in allowing the comparison of automobile firms and their productivity regardless of the industry. They also allow different companies to advice each other on financial issues and obligations. Customer expectations may be defined as the perceived values or benefits that consumers look for from a specified product. These values tend to differ from one customer to another. The benefits include; projection of increased sales and customers tend to establish loyalty as they refer more people enabling expansion of business. Kaizen helps in making the work surrounding more effective and efficient. It also helps create a teamwork environment, ensures employee contentment and improves the day to day procedures. Designing quality is important in ensuring Toyota automobiles incorporate the clients’ requirements and ensure consumer satisfaction. It also supplements the degree of precision of conditions, as well as automobile catalogues. Conclusion The management plays an important role in ensuring Toyota Corporation and its operations are a success. Even though there are different quality management tactics, each tactic has its own significance as well as associated risks. It is important to consider the risks to ensure realization of a company’s objectives and its sustained existence. By taking into consideration the various factors that subsist in their immediate environment, Toyota formulates important objectives regarding their operations. Their main aim is to increase by a large number, their vehicle products to middle class consumers. The company is set to achieve this by the sale of vehicles through websites as well as showrooms, sale of automobile components to the partnered automakers in the motor industry. The company also seeks to act as a promoter to the rest of the automakers. Toyota invests their resources in markets that are less competitive since the overall growth of the motor market is similar and depends on the population growth of people using motor products. Toyota Corporation also uses direct vending as its way of reaching out to the consumers and selling their products. Their distribution system could incorporate a lot of challenges in the developed market. In an effort to maintain the market share, Toyota Corporation develops certain strategies that will enable its penetration into the global market in large scale. These general strategies and tools are applied effectively to ensure competition is low from other established motor brands such as KIA, Ford, Mitsubishi, and Chevrolet among others. The vertical structure in the Toyota Company proves to be beneficial as it allows the achievement of sustained growth and healthy competition in relation to other automobile industries. In this structure, any executive amendments that occur in the corporation tend to involve partial changes to the board committee. The structure allows the existence of a business-unit corporation that clarifies and delegates responsibilities to the different significant departments. Works Cited Cooper, R. and C. A. Raiborn. Finding the missing pieces in Japanese cost management systems. Advances in Management Accounting, 4(1995): 87-102. Hill, C., Jones, G. and Schilling, M. Strategic management: Theory & Cases: An Integrated Approach. 11th ed. Cengage Learning. (2014). Imai, M. Kaizen: The Key to Japans Competitive Success. New York: McGraw-Hill Publishing Company. 1986. Liker, J. The Toyota way. New York: McGraw-Hill. MacKenzie, A. (2013). Magee, David. How Toyota Became #1: Leadership Lessons from the Worlds Greatest Car Company. New York: Portfolio, 2007. Spear, S. and Bowen. H., K. Decoding the DNA of the Toyota production system. 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