Analysis of Toyota Company - Case Study Example

Name Lecturer Task Date Executive summary This report provides an analysis of Toyota Company. It gives its situational analysis, current performance management system, the fit between the performance management system and its strategies. The main information in aiding the research is obtained from the company. Analysis tools like SWOT (strength, weakness, opportunities and threats) analysis will be used in the situational analysis of this company. The current performance management system will be analysed and its link to the achievement of the company’s objectives and strategies will be looked-into. Recommendations towards improvement of the current PMS are also analysed. Introduction Several scholars have defined performance management but majority of them centre on the same ideas. According to Caldwell (2002) defines performance management as the active cooperation between the management and employees that aligns employees towards the goals and initiatives of the organization. Performance management in an organisation is the main activity that improves both their productivity and profitability. Toyota has adopted a good performance management system that has made it to be a very competitive company in the motor industry. Performance management activities improve the performance of the employees, (Selden & Sowa, 2011, p. 253). Situational analysis of Toyota Motor Company Toyota Motor Company is a multinational company that specialises in the production of cars, trucks, buses and robots. Its headquarters is in Toyota city, Japan. It is the largest car manufacturer in Asia and second largest producer. Its products are sold under the names Scion, Toyota and Lexus. It owns majority shares in other companies like Daihatsu and Hino and a minority share in Fuji. It has manufacturing and assembling points all over the world, (Funaru, 2011). Toyota Motor Company had revenue of around ¥18.583 trillion in the 2012 financial year while its profit was ¥283.55 billion, (Toyota Company 2012 Financial Results, 2013). The company has around 300,747 employees that distributed across its worldwide manufacturing and assembling plants. Despite the huge profits earned in the year 2012, it faces stiff competition from other motor and automotive companies. Some of its competitors include Ford Motor Co., Honda Motor Company, General Motors, Nissan Motor, Tata Motors Ltd., Volkswagen AG, Bayerische Motoren Werke AG, Chrysler Group LLC, Daimler AG and many other automotive companies, (Toyota, 2013). Despite presence of many competitors in the sector, Toyota is still one of the leading companies in the motor industry. Toyota has strengths in its operation that make it to be competitive. For instance, it has an innovative culture that allows constant innovations. This enables it to be the first in the introduction of new brands of cars. This enabled it to be the first to mass-produce and sell hybrid vehicles. Its brand reputation enables to enjoy high sales. They are known to produce safe, environmentally friendly and durable cars sold in over 180 countries. Its production of many brands of vehicles ( over 70 models) makes it to reach different customers with a wide range of tastes. Despite high strengths in its operation, Toyota still faces some weaknesses. One of the greatest weaknesses is wide scale recall of its vehicles. In the year 2009-2010, the company recalled nearly 9million vehicles and recalled 7.43 million vehicles in 2012. This increases their running costs and highly damages their image of being a quality vehicle producer. The company also has weak presence in emerging markets like China and India. The low presence in such markets makes it hard to compete with companies like Gm that has high market share in such markets. Toyota has many opportunities in the market that they can explore to increase their market share and profitability. Such include investing in “Green vehicles”, investing in low fuel consuming vehicles, monitoring changing customer taste and coming up with car models that suit them, growing its market share and profits through acquisitions and mergers among many other opportunities. Currently, Toyota faces a wide range of threats in the market and global economy. Some of which include: intense competition from rival companies, appreciating yen exchange rate, rising raw material costs thus increasing manufacturing expenses, implementation of tight emission standards among other threats that reduces its productivity and profitability. Toyota Motor Company performance management system This company has a large number of employees worldwide. The adoption of the Toyota way culture in 2001 has enabled the company to have very close culture and human resource practices across its branches worldwide, (Liker and Hoseus). Toyota Company believes in the production of quality vehicles in order to enjoy good market reputation. Denver (2013), argues that lean manufacture strategy has become the main standard of selection operation. In order to have good performance management system the company has developed measures that ensure all human resource practices starting from recruitment of workers are done perfectly. In the recruitment process, the company ensures they recruit employees with other qualities like teamwork, cooperation, enthusiastic and consistent decision makers in order reduce unnecessary costs during production processes, (Hino, 2006).. The company needs employees who can work for the whole company and be part of it. Its strict and multi-layered recruitment process takes into consideration of ability, techniques and characteristics of workers (http://wenku.baidu.com/view/3aaf002a3169a4517723a3f4.html). Toyota is interested in hiring from differs nature and having a strong work ethic. Prefers people familiar with hard work and motivation necessary to perform assigned work, (Liker and Meier, 2007, p14). Managers and team leaders are chosen among those who understand and know all the jobs in their departments in order to help their followers in training to perform those tasks. The biggest area in their performance management system is the provision of training and development to their employees. Training exceptional people is their number one philosophy. They conduct systematic company-wide and division training and development and assignments for such purposes with more emphasis on on-the-job training (OJT) to ensure workers can fully utilize their abilities, (Rother, 2010). Company-wide training is mainly conducted based on employee qualifications in addition to training for individual divisions, special knowledge, language training and skill training. The development of Toyota Institute in 2002 has greatly assisted in training and development of its human resource in equipping technical and managerial skills. In addition, they have opened regional training centres called Global Production Centres to supplement the training of its workforce in order to improve their productivity. In its performance appraisal, they focus mainly on total system efficiency rather than individual efficiency. Liker and Meier (2007) argue that it is more crucial to look beyond individual’s performance in the evaluation of standardised work and include the examination of the total workplace picture. Variations in terms of value addition teams are included in its workplace to ensure the team improves its quality. The appraisals enables the HR department to understands its employees and be able to implement necessary measures of improving their productivity. The fit between Toyota PMS and its strategy Toyota’s strategy is enhancing its corporate value by maintaining its position of market leader in automotive industry, promoting advanced use of technology and continuing its growth to target local demand, (Toyota, 2013). There is a clear link between their strategy and its performance management system. Performance management main objective is to link the organisations’ objectives and strategies and workers performance, (Seiden and Sowa, 2011). The promotion of general appraisal of their employees is crucial in their realisation of maintaining their corporate image. This is because their total quality productivity is improved instead of just concentrating on individual performance. Quality recruitment and selection of their employees enables the company to have very efficient workforce that gives room for innovation, use of technology thus improving brand types and quality. Training of employees is necessary to the achievement of the company’s corporate image. The training and development offered to workers enables the workers to be innovative, creative, improves their work-rate and their general productivity thus helping the company achieve its strategy. Recommended changes to Toyota’s performance management system Toyota puts much emphasis on collective measurement of performance standards of workers at the departmental level. There is need for individual level appraisal to be adopted in order to take care of analysing workers at this level. This will enable the elimination of underperforming workers or development of specific training to aid in improving their performance. Over the last, few years there have been high recall of its vehicles after noticing some defects. Toyota Company should come up with additional customer appraisal means whereby the customers are given a chance to taste their brands for a certain period before they start massive production and distribution of new brands of tasted brands. This will thus reduce additional resulting costs due to recalls and the will aid in maintaining their highly valued corporate image. Conclusion Toyota Company has a good corporate image and is very competitive in the automotive industry. Situational analysis of this company shows it has strengths, weaknesses, opportunities and threats in its operation. It should maximise on ripping from its strengths and opportunities while trying to overcome its weaknesses and threats in the market. Performance management system of this company has enabled it to achieve a lot since its formation. Currently the company practices good training and development practices, selection and recruitment practices, appraisals among others that improves their productivity. Improvements need to be undertaken in its appraisals and tasting of brands before marketing. Reference Caldwell, C. M. 2002. Performance Management: EBook. AMACOM: A Division of American Management Association. . Denver, J. 2013. Toyota & its management practice. Toyota HR process – The right process will produce right result. Funaru, M. 2011. Toyota's Business Strategies In International Markets (F. o. E. a. B. Administration, Trans.). Romania: University of Braşov. Hino, S. 2006. Inside the mind of Toyota: management principles for enduring growth. New York, N.Y., Productivity Press. . http://wenku.baidu.com/view/3aaf002a3169a4517723a3f4.html). Toyota Strategy.Retrieved on 16th December from Read More