Toyota Case Study Analysis

Toyota Motor Manufacturing (TMM), USA Inc. is formed by Toyota Motor Corp (TMC) in 1985 by investing $800 million to build a Plant at Kentucky, USA which will starts production in 1988 of around 200,000 units of Camry Sedan car. The purpose of building a plant is to compete in US market in midsize car which is comprise of one third of total US car market. TMM producing the cars on the same philosophy, methodology and technology, which TMC used to produce cars at their best quality and lowest cost in Japan.

The company’s superiority in the global market share was exhibited by overtaking Ford to become the second largest automobile company in the world. Therefore, those spending immense resources have valid reasons to do so (Hino 2006). However, a person wonders why the companies that study Toyota have not been in a position to replicate its performance. The reason behind this scenario is that those who study Toyota tend to focus on mere tools and tactics such as; the company’s basic operating principles, production cells and cords. However, these observers fail to study one of the main areas that leads to this company being outstanding which regular training and learning, which enables them to do their works better.

As Taiichi Ohno rightly says – “People don’t go to Toyota to ‘work’, they go there to think”. “where there is no standard, there can be no kaizen”, and “Improvement is endless and

“Lean means creating more value for customers with less” (Krejewski, L., Ritzman, L.P., & Malhotra, M.K., 2013). Implementing this into a project can make the project very successful at a lower rate of cost and time. There are five steps in allowing the lean process to work successfully. This process is easy to remember but not always easy to achieve. Specifying the value from the customer’s point of view of the product that the customer is interested in purchasing is the first step. Identifying all the steps of value for the product the customer wants to purchase and eliminating the steps that are unnecessary is the second step. Creating a sequence of steps that flow in a consistent fashion and will flow smoothly toward the customer is the third step. Introducing the flow of the product that the customer is interested in purchasing and allowing the customer to pull value from the product is the fourth step. The fifth and final step in the lean technique process is “as value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste” (Lean Enterprises Institute, 2015).

Lean is an approach that can be used in every organization to increase customer satisfaction, decrease costs, improve quality, and increase the output, by eliminating waste and creating value (Manos & Vincent, 2012, p.1).

Toyota uses processes that are both implicit and explicit. Toyota’s operations are enormously flexible and responsive to customer demand. According to ASHP Foundation (2007). Many credit Toyota’s success to aspects of the Toyota Production System, established by Taïchi Ohno and Shigeo Shingo from the late 1950s through 1970 (when it gained the name). It includes aspects of Jidoka, just-in-time production, and kaizen, reducing both inventories and defects. The system is used worldwide, but is only one of the reasons for Toyota’s success. The very rigidity of the operations that makes the flexibility possible. That’s because the company’s operations can be seen as a continuous series of controlled tests.

The main topic of the case was the problems caused by defective or damaged seats. TMM USA's seat problem was threefold. The first was the actual defects with the hooks and the damaged caused by cross threading by employees when installing the seats. This problem led to the second problem, which was the departure from the Toyota Production System (TPS) when dealing with the seat problem. Rather than fix the problem with the seat when it happened, they continued with the car's production and worried about the seat afterwards. And this led to the third problem, a build up of cars with seat problems in the off-line operation area.

Toyota Motor Manufacturing, U.S.A. (TMM) is deviating from the standard assembly line principle of jidoka in an attempt to avoid expenses incurred from stopping the production line for seat quality defects. This deviation has contributed to the inability to identify the root cause of the problem, which has led to decreased run ratios on the line and an excess of defective automobiles in the overflow lot for multiple days. If this problem isn’t fixed quickly, an increased amount of waste will continue to be incurred and customer value will be threatened.

Lean is defines the manufacturing philosophy that reduces the time between the shipping and customer demand, which based on the systematic method by eliminating waste, that means giving the customer what they want when they want it, and don 't waste whatever. Rahmana, Sharif and Esa (2013) suggested lean production is mentioned to improve the company 's performance from the philosophy in reducing waste in order. That means, lean system destination is the decrease cost by removing the non-value activities, which they are applying a category of tools and techniques for checking and eliminating defective in the production process. In the Evenort Company should emulate the five overriding principles of lean thinking in terms of implementing lean that there is guarantee the company has been driving correctly in the lean manufacturing (Cardiff 2015) as can show in table 1.

Ouchi wrote a book called Theory Z How American Business Can Meet the Japanese Challenge (1981), in this book; Ouchi shows how American corporations can meet the Japanese challenges with a highly effective management style that promises to transform business in the 1980’s. The secret to Japanese success, according to Ouchi, is not technology, but a special way of managing people. “This is a managing style that focuses on a strong company philosophy, a distinct corporate culture, long-range staff development, and consensus decision-making”(Ouchi, 1981). Ouchi shows that the results show lower turn-over, increased job commitment, and dramatically higher productivity.

We will start the external analysis with the PESTEL analysis of the automotive sector followed by the Porter’s five forces analysis and we will end by having a look at the key competitors and competitor pricing.

Over the years, Toyota has established itself among the leading car manufacturing companies all over the world. This aspect has been enabled by a very effective and efficient management style adopted by the organization. Toyota’s management style has paved way to the establishment of successful marketing strategies. A lot of factors have contributed to the company’s ability to emerge as a market leader in this niche. The organization’s market structure cannot be stated with precision. Some tend to consider it as a monopoly while others view it as an oligopoly (Spear, 2006). The monopoly aspect arises due to the company’s dominance in exportation. Going with the differentiation strategy, the organization has been able to establish seemingly monopolistic presence in many developing countries. The essence of oligopoly has been brought about by the presence of other key players like General Motors and Ford. These companies are believed to collude on various strategies deployed in different markets that they operate in (Wells, 2010). The collusion is always aimed at giving each player a share of the profits in the market, without having to undergo unfair competition. This usually happens when new brands are being introduced in the market, and their success is not known. Toyota has been up to the task on all the activities that its competitors are undertaking. The management team that has been devised takes a good look at what other companies in the industry are

Toyota also has a strong portfolio of prestigious brands such as Prius, Camry, Toyota, Lexus, Corolla, Land cruiser, Hilux and other brands. In fact, the annual Brands Top 100 ranked Toyota a leading brand. This strong branding and market position allows Toyota to market its product with premium prices and high profit margins.

Toyota 's Culture contemplate that every worker, from executive to shop floor, can have the possibility to use its initiative and creativity to experiment and learn. Each team member is a quality inspector, at any during the production process any of them who spot a problem can stop by pulling the “Andon Cord”, which stops the entire assembly line. They try to work with endlless creativity, inquisitiveness and pursuit of improvement, to be practical and avoid frivolity. They strongly believe in the concept of “Kaizen”, the importance of change and improvement, as well as “Keiretsu”, the japanese concept of keeping a close knit network of vendors that continuously learn, improve and

Toyota Motor Corporation is a Japan-based company and expands quickly around the world. It has overtaken General Motors Corporation and ranked the first in the automobile industry since 2008 (Towill 2010). Toyota entered into Australia in 1958 and was perceived as one of the most significant parts of the Australian export market. However, it is in a dilemma and facing unprecedented pressure due to a series of internal and external reasons. Toyota utilises a balanced business model and pursue an export-oriented strategy to overcome the insufficient domestic demand. While this strategy might address the high-cost problem, it is highly reliant on the import, which is likely to restrict Toyota’s development and lose competitive advantages in the long term. Additionally, Toyota Australia suffers from the external environment, resulting in adverse situations and manufacturing losses. First and foremost, it is limited by political issues. For instance, the liberal trade policies and unbalanced trading environment could discourage the importation of the Australian cars. Secondly, the change of market structure, such as increasing demand for small fuel-efficient cars, might be counter to the types of cars manufactured by Toyota.