Managing International Supply Chain EXECUTIVE SUMMARY This work is centred on the adoption of green strategy in the overall operations of Toyota Motor Corporation. It highlights how these strategies are practically adopted by Toyota, how it affects cost, quality and services, the challenges Toyota are facing while adopting these strategies, the long term benefits associated with these strategies and recommendation given. Tp015764 Page 1
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Managing International Supply Chain
EXECUTIVE SUMMARY
This work is centred on the adoption of green strategy in the overall operations of Toyota
Motor Corporation. It highlights how these strategies are practically adopted by Toyota, how
it affects cost, quality and services, the challenges Toyota are facing while adopting these
strategies, the long term benefits associated with these strategies and recommendation given.
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INTRODUCTION
Reducing carbon emission is one of the most discussed and highlighted issues presently
across the globe, because of its effect on our environment and entire ecosystem. The
accumulation of carbon dioxide in the environment is recognised as a major contributor to the
global warming problem. Many governments across the globe including the leaders of the
developed countries like United States, Germany, Japan, whose economies are driven by
massive industrialisation, and leaders of emerging economies like China, India, Brazil whose
economies are also driven by massive industrialisation have now shown great commitment to
the issue of reducing carbon emission.
In his report DuPont 2009, highlighted that the answer to solving the potential disaster of
global warming is to control the amount of carbon dioxide that is being emitted from
automobiles, fossil fuel, power plants and industries.
Toyota Corporation
Toyota is the world’s leading automotive manufacturer; it was established in 1937 in Japan.
With 53 manufacturing companies in 27 countries and regions outside Japan, it registered 152
billion Euros net revenue in financial year 2006 (UNEP 2008).
Guided by a clear vision of a sustainable future, Toyota has developed a wide range of
vehicles powered by excellent new petrol and diesel engines. The company is also an
acknowledged leader in environmental technologies, such as hybrid (petrol/electric), clean
diesel and fuel-cell drive systems. Toyota is committed to sustainable development and seeks
to address the challenges of global warming and urban pollution by developing a number of
innovative environmental technologies and vehicles.
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Figure 1: pathway to eco car
Toyota marketed the world first mass-produced hybrid car, the Prius which combines the
power of a petrol engine with the clean, efficient energy of an electric motor, of which over
1, 295,300 of the hybrid vehicles has been sold by the end of 2007(UNEP 2008).
Toyota’s guiding principles are –
a. To contribute to the development of a prosperous society through the manufacturing
of automobiles, and
b. To contribute to global sustainable development its focused activities centres on
environmental preservation through corporate activities, technology Innovation, and
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people which all will lead to a prospering low carbon society by creation of a dream
Despite the attraction of electricity as a power source for transportation a number of issues
and challenges remain like the energy density of batteries, infrastructure issues such as
recharging facilities. The presently used battery in Toyota’s hybrid car lithium-ion battery has
the tendency to overheat, to build a plug in hybrid car that would only run on battery power
for 40 miles a battery powerful enough to achieve that task the size will fill the trunk of the
car.
d. Customers Acceptance
With infrastructures for plug in to be recharged not yet readily available, management of
Toyota are concerned that customers might not accept a plug-in hybrid electric car to be
recharged every day, rather customers may want to continue using the normal conventional
fuel already available.
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3. Long term advantages
There are many long-term advantages for Toyota by adopting green technology.
a. Boost of the image of the company to the public.
The image of Toyota as a highly innovating, environmental friendly company has been
already been established because of the great effort they have put in place across all their
operations to be green compliant. This good image will continue to attract ethical consumers
who are concerned about products that pollute the environment, and also consumers who
value great innovation and quality. Already a poll taken puts Toyota as the
b. Attract good employees
It will enable the company to attract employees who care about the environment, and want to
impact the world through green compliance. Since Toyota is building towards a sustainable
future, attracting these types of employees will aid and boost their operations positively.
c. Lower Carbon Emission
Adopting green compliance in their operations will reduce carbon emissions, thereby saving
the environment from disasters associated with pollution. The Earth will be better for it in the
long run.
d. Saving Cost
Adopting green compliance will also reduce cost of production, procurement cost, logistic
costs, thereby adding profit to the balance sheet of the company. This will be favourable to
the shareholders who will have better profits, employees who will receive better pay and
customers who will be able to purchase cheaper. Therefore every person is affected
positively.
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Recommendation
Having gone through all the ways Toyota Motor Corporation are practically adopting green
strategies in their operations, it can be said that the level of attention they have paid to this
issue is very great. But still there are some areas that need improvement.
a. The issue concerning safety and reliability
Toyota already has good quality reputation, but where they have not done well is in the area
of safety and reliability. The issue of safety and reliability was highlighted more during the
case of recalling of a lot of Toyota vehicle models including the green compliant Prius. This
safety issue might do a lot of damage to the reputation they have built over the years.
Therefore the management should ensure that safety and reliability of their vehicles must go
hand in hand with green compliant strategy and models.
b. Synergy among the subsidiaries
Having looked at different information from different subsidiaries of Toyota, it can be noted
that the Japanese headquarters, North American subsidiary and Asian subsidiaries like
Thailand was more green compliant than the Subsidiary in Europe. Therefore the
management should ensure that Toyota as a group have one common focus towards green
compliance in its entire operations.
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Conclusion
This work has been able to show the need for adoption of environmental friendly strategies in
the operations of any organisation, by learning from the ways Toyota Motor Corporation has
been able to implement the right green strategies. It is also important that all organisations
that have not been serious about the issue raised in this write up become, because for the
earth to become safer, all hands must be on deck to reduce and totally remove all forms of
pollution that contributes to global warming.
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References
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