Toyota (target costing)

Better Essays
Harvard Business School


rP os t

May 30, 1997

Toyota Motor Corporation: Target Costing System

op yo If Toyota does one thing better than other automakers, it is cost management. After earning a reputation for quality and fuel efficiency in the “economy models,” we moved successfully into upscale models, like the Lexus line. But we still pride ourselves in the cost competitiveness of our products in every price stratum. The history of Toyota is a story of unceasing efforts to reduce costs.
Toyota Motor Corporation 1992 Annual Report


Toyota Motor Corporation started as a subsidiary of the Toyota Automatic Loom Works, Ltd.
It was founded in 1937 as the Toyota Motor Company, Ltd. It changed its name
…show more content…
Altogether, Toyota vehicles were either manufactured or assembled in more than 20 nations. These local manufacturing facilities provided jobs for nationals and business for local supplier firms. The relative importance of the international supplier business to Toyota was increasing. In 1992, for example, Toyota purchased locally approximately 70% of its parts requirements (or $5 billion) for its North American operations. The other 30% was imported from
Japan, but this percentage was expected to decrease over time. By 1994, Toyota expected to purchase
$6.3 billion of parts from local suppliers worldwide and import $2.9 billion for domestic use.

Supplier Relationships

op yo Product design was also international in scope. Calty Research, Inc., a Toyota subsidiary formed in California in October 1973, was responsible for the body styling and interiors of new models scheduled for production in North America. The design styling for European markets was coordinated from the firm 's design and technical centers located in Brussels.

Third-party suppliers were responsible for approximately 70% of Toyota’s parts and materials. In particular, the cost and quality of third-party supplied parts was considered critical to the firm’s success. In recent years, Toyota’s expansion into international production had required increased interaction with non-Japanese suppliers to raise their efficiency and quality to the same
Get Access