Toyota Corporation Organizational Analysis - Research Paper Example

Toyota Corporation Toyota Corporation Introduction and Corporations overview Toyota is a Japanese company that ventures in production of automobiles. Toyota Motor Corporation is headquartered in Toyota Japan. It has employed some 71,000 people across the globe. For many decades, Toyota has been successful in transacting its business locally and internationally beating its rival companies from Europe and America. It is the largest automobile maker by production and sales. The company was founded in 1937 by Kiichiro Toyoda .The production system of Toyota is based on lean philosophy which implies that production considers the way they spent resources for any objective other than making value targeting the customers which in turn may be wasteful. The philosophy of lean aimed at preserving value with less work done. This philosophy has been driving the Toyota Company for decades. Lean manufacturing emphasizes on efficiency by optimizing the flow of work, ensuring that there is minimum waste and use of intuition to make decisions rather than accepting the idea that existed before (Jeffery, 2004). Strategic history of the organization Historically, there were changes that took place in Japan which forced the Toyota Company to restructure its operation and management systems in order to meet the needs of its customers. Towards the end of 1949, a collapse in sales made Toyota to layoff part of its workforce. Toyota engineers came to a conclusion that Taylor’s scientific management theory of mass production was not effective and efficient. From this conclusion, they came up with Toyota production system that emphasized on quality control and aggressively sought to eliminate waste and other causes of production defects. Japan had just lost the world war two, so Toyota president aimed at competing at the same level with America in terms of production and quality within three years. The principle of just in time was applied so that there was continuous flow process; the right parts needed in assembling hall reach the destination at the right time and only in amount needed. The other principle is automation which meant that there was dramatic improvement in productivity in that whenever a defect product was detected, the machine stopped automatically to shield the operation from producing more defects. Also, in the Toyotas assembly, assembly lines pulled liens were introduced which allowed operators to detect a problem whenever it occurred thus making everyone in the assembly hall aware of the problem (Jeffery, 2004). The success of Toyota Company in the market has been attributed to lean production system. The basic concepts that lean production emphasized was respect to the labor and elimination of waste. These two factors when fused, they cause effective leadership. The lean system operates on principles that firms should use lean manufacturing tools in their notion and look at factors that involve mangers to with leadership and culture issues. Successful application of lean management system helped Toyota to establish a strong foundation and was very profitable during the period of economic slowdown. The use of lean manufacturing tools has helped improve the competitiveness of the company. Toyota has good techniques and technologies that enable it to improve on its performance. The roots to Toyota success can be traced back in early 1890s when an inventor known as Sakiichi Toyoda made and designed manually manipulated loom that stopped the machine automatically when the thread or waver detached. This improved production of workers and avoided defective cloths from being produced. As an impact of this, goals and objectives of Toyotas early management roles had been featured as ones that aimed at producing effective products while eliminating waste. Organizational Mission statement Mission statement of Toyota Corporation is based on a global vision that aims on how to move people globally in a better manner. Due to this, Toyota mission statement is called a global vision. The company has become one of the most successful automobile corporations and brand in America since it has been able to live up to the desires of people and its own mission statement. Toyota is looking forward to leading the way to the future of mobility, enriching people globally with the safest and most efficient ways of moving people. In addition, Toyota is committed to quality, respect for humanity and constant innovation that aims to improve lives across the world (Liker, 2003). Innovation of the Company Toyota is innovative so as to reduce costs, guard and sustain competitive advantage. The company has implemented lean manufacturing, internet marketing, and production technology and customer relationship so as to be ahead of the game. Toyota Company spent millions of dollars on research and development so as to be ahead of the game than their competitors like the general motors. This has made them come up with good cars that are economical and environment friendly. Research and development helped them to drive automobile markets. Toyota wants to be in market for the next 100 years. To materialize this goal, it started working on Prius in 1991 which is their hybrid car because they knew that at one time, the world will run out of oil they emphasized on long lasting return rather than quick returns from investment. The main theme of kaizen which refer to continuous improvement in the process and product manufacture is to produce high quality products that are liked by people from all corners of the world. These products are available for less money as compared to their competitors who manufacture expensive cars. For Toyota, building more effective cars did not necessarily mean harnessing more profits but to them it is better make savings in the assembly lines by making customers pay less (Liker, 2003). The company’s innovative ability is credible since it is focused on producing quality cars that are economical and friendly to the environment. Strategic History of the Company Toyota established several steps that were used in lean manufacturing which led to intra and inter organizational capacity building and improvement on time. The Company’s competitiveness depended on the correct use of lean philosophy, automation, just in time, supporting tools and processes that were structured as part of the company’s strategy to outperform others. These methods of operation enabled the company to remove all factors and activities that were not adding value to company’s productivity. This was achieved in the following ways: i. Innovation and invention in that, more materials and products were vested on hand than the needs of the customer. ii. Emphasized on over production in that the company aimed at producing more than the needs of customers. iii. Transportation whereby products that products that had no value were moved. iv. Knowledge in the sense that the workforce had no confidence about the best way to do tasks Toyota Company came up with strategies that helped to add more time on production and eliminating non value activities. The company was well familiarized with the lean tools and culture. This in turn led to good relationship between the Management and Workers. Management of Toyota Company had the idea of identifying excess manpower and made use of it effectively in their continuous improvement program. This helped the company to be well established in production field in that there was maximum utilization of labor while it avoided wastage leading to increased production of high quality automobiles. The top management also the knowledge of eliminating all the waste from the production field to offices this led to efficient management and control of resources in the firm. Value Chain management It is important to identify and analyze the origins of competitive advantage of Toyota Corporation. In order to achieve this, it is vital to look at the activities that the company has engaged in for over the years. Toyota has better competitive advantage due to its domination in foreign markets (Lainer, 2010). Toyota focused on developing its international strategy as a way to enhance its competitive position in the business. Initially, the company focused on developing strategy that aimed at recovering its competitive advantage in home country which was vital for its survival. Several sustainability challenges set the context for value chain activities of Toyota Corporation. These factors include gender equality, population growth, child mortality, ecosystem services and urbanization. All these factors are handled by Toyota Corporation with the efforts to maintain and sustain competitive advantage via preserving good image that their customers expect. Financial analysis Toyota Corporation is known for its famous brand, environmental friendly and fuel efficiency cars. The company trades around the world and it has biggest market in the U.S. It is estimated that Toyota has a current market capital of $ 225 billion while average industry market capital is $ 17.5 billion. It is important to note that the P/E ration of Toyota Corporation is 14.83 which imply that investors can receive total investment in about 14 years. The net income for Toyota Corporation is growing at a high rate in that in the financial year ending 2006, the company’s income was $ 11,681,000,000. The main reason why the company has strong financial income is because of high potential for growth and flexibility (Lainer, 2010). Core capabilities and distinctive competencies Core competencies are specific strengths relative to other corporations in the business which offer fundamental basis for provision of added value. Competencies involve how the company is able to coordinate diverse production skills, techniques and merge several streams of technologies and innovation. The corporation has some core competencies which it could use to further attain advantage over their competitors (Lainer, 2010). For instance, one of the core competencies is management of the brand this is because their brand is known even in parts where cars are not common means of transport. Also, the company has strong supply chain management, which associates to their potential to maintain and sustain a steady stream of raw materials streaming in for production. In addition, the company is focused on development of its technology under a single-product-information-management program via incorporating and standardizing them. SWOT analysis of Toyota Strengths New investment in factories in the U.S and China. It knocked its competitors to become second car marker in the world because of its diverse products and marketing strategy. Strong financial performance Production system of the company Weakness The car is facing the problem of over-supply without noting that some models they supply to the market are not needed. The company should continue producing cars so as to make sure that it retains its operational efficiency. If the company faces down turn, it could see over capacity which means it takes time to accommodate to changes. Expenses incurred due to post retirement benefits for employees Opportunities The company is well known for production of environmentally friendly and economical cars based upon advanced technologies. The company targets urban youth market which captures urban culture New models Threats Product recalls due to faulty in acceleration pedals and suspension system Stiff competition from other car makers such as General Motors Economic slowdown Organizational Culture and structure The company has a strong positive corporate image in that it assists people from all corners of the world in that it work with universities, schools and colleges to support programs that help people. It has employed workers all over the world with diverse cultures that help run the company. Organizational structure is organized in the sense that there is delegation of decisions to innovation work force which ensures that innovation decision are made on time thus avoiding delays and enhancing fast innovation (Albrecht, 2004). References Albrecht, R. (2004). Corporate cultures and global brands. London: World scientific Publishing Company. Jeffery, L. (2004). The Toyota way: 14 management principles from the world’s greatest manufacture. New York: McGraw Hill. Liker, J. (2003). The Toyota way. New York: McGraw Hill, December 2003. Management Journal, 2, Vol. 4, 473-496. Lainer, M. (2010). Product liability and personal injury in the wake of Toyota: understanding the impact of the Toyota recall legislation. New York: Thompson west. Read More