toyota

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* Views expressed in this report are those of the authors.

International Management Group Assignment

Toyota

Multinational Corporation Analysis in

United States of America and Japan

Written By: Kenneth Bell Sarah Prest

Bridget Chong

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TABLE OF CONTENTS Page Executive Summary 1 Introduction 2 Culture 2 Competition/ Trends 4 Competition 4 Industry Trends 5 Organisation Analysis 6 Internal Analysis 6 Structure 6 Strengths in Structure 6 Weakness in Structure 7 Operations 8 Design and R&D 8 Manufacturing 9 Sales and Service 9 External Analysis 10 Opportunity 10 Problems 12 Recommendations 14 Conclusion 16 References 18 Appendix 20

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EXECUTIVE SUMMARY

The following Report concerns global car maker Toyota, and its American subsidiary:

Toyota America. Inside we discover that Toyota has reached a global market share of

10%, with a goal to be the world’s best auto manufacturer ahead of General Motors

(GM), by achieving 15%. An analysis of the cultural differences between America and

Japan reveals some significant differences, most notably between the individualism in

America and collectivism in Japan. A brief examination of Toyota’s competitors and

industry trends reveals that Toyota’s recent growth has not been shared by its three

American rivals GM, Ford and Chrysler, and that any trouble for the oil industry inturn

spells trouble for the car industry. Toyota uses a geographic-area global structure, and

is decentralised. By focusing on market share instead of profits, the emphasis has

shifted towards product quality and customer satisfaction. Its key strengths include

product quality, efficiency of production, R&D, and sales satisfaction. Toyota is also

taking advantage of numerous opportunities, such as forming a close relationship with

Honda and leading the way in hybrid technology.

Despite these many strengths, Toyota is not without its share of problems. The lack of

communication and cultural understanding has caused friction between operations in the

two countries, with different attitudes towards cost estimation, the need in American

culture for horsepower, and (perhaps most importantly) the lack of improvement

suggestions by American employees relative to their Japanese counterparts. The

subsidiary’s production efficiency is inferior to that of the parent companies, as their

policy of helping customers in need of financial support is increasing the lead time for

receiving sales income; although it is great for sales satisfaction.

The report recommends that increased communication is the key to Toyota’s future

success. By unifying executive training, better understanding each other’s culture, and

standardising production methods, cost estimation, and achieving economies of scale,

Toyota and Toyota America will become closer to one another in terms of product quality

and production efficiency.

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INTRODUCTION

The subject of this International Management report is the Japanese auto maker Toyota,

and its subsidiary Toyota America. The analysis of the countries key cultural

differences is used to understand Toyota’s structure (both global and operational), also its

competitors, its strengths, weaknesses, goals and opportunities. These factors are why

Toyota is increasing its market share, becoming more dominant and is feeling less

threatened by competitors. Finally, in accordance with Toyota’s own policy of constant

improvement, there is an outline of what the companies current and potential problems

are perceived to be and recommendations of how the company can overcome them.

However, before we specifically examine Toyota we need to briefly observe the

fundamental differences between Japanese and American culture, and their impact on

management.

CULTURE

Geert Hofstede’s value dimensions for America and Japan are as follows:

Source: Geert Hofstede, 2003

There are great contrasts and the occasional similarity when analysing the two nation’s

cultures (Japan and America). Geert Hofstede’s value dimensions show America is less

accepting of power inequality than Japan. On the Power Difference Index (PDI) both

Japan and America are below the world average (W.A). Japan is also below W.A for

individualism, having a collective culture, preferring group work and group decision

making; seeking the best group outcomes (Bond, 1986). Conversely, America is ranked

the highest in the world for individualism, having great emphasis on individual decision

making and seeking positive outcomes for the individual/family.

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According to Hofstede’s study Japan is considered to be a masculine society in

comparison to Americans who have a relaxed lifestyle and show concern for others.

Japan is a male dominated society with work taking priority over personal life/families;

aiming for advancement, success and money.

Yet another significant contrast between Japan and America can be seen with Uncertainty

Avoidance. Americans prefer to take risks, being less reliant on rules/regulations and

happy to make their own decisions; in contrast to Japan who prefers rules/regulations and

less informality. However, the main discrepancy between Japanese and American

culture is Long Term Orientation. Japan prefers to plan well ahead, setting long term

goals for long term rewards; comparing to America who prefer short term planning,

rewards and goals.

Using a select few of Trompenaars’s Value Dimensions further exemplifies the

differences between the American and Japanese cultures. Japan is a neutral culture,

showing little (if any) emotion in business discussions; in comparison America has an

affective culture, with body contact and emotional expression the norm. Furthermore,

America is said to be a specific-orientated culture, opting to separate their work and

private life, whereas in Japan the two are linked, being a diffuse-orientated society.

America is also known to be universalistic, as it applies one standard, placing more

emphasis on contracts. In contrast Japan is a particularistic as they are based on

relationships and interpersonal trust; friendship comes before the contract. Japan is also

known as an ascription society where people are rewarded not on individual task, but on

their background; compared with America where emphasis is placed on individual

achievement.

Finally, the differences in negotiating culture between Japan and America shown in

Salacuse’s 1998 study show some surprising results. Japan and America (55% and 54%)

both consider the ultimate goal of negotiation to be a contract. Both (allegedly) have a

high time sensitivity (91% and 85%), and believe in top-down agreement building (45%

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and 47%). Differences in the negotiating cultures include Japan’s indirect (high context)

communication, as opposed to America’s direct (low context), Japan’s belief in win-win

negotiation conflicts with America’s emphasis on win-lose, and Japan’s preference for

formal negotiating styles rather than the informal approach preferred by their American

counterparts.

Competition/Trends

Competition

The major players in the global automotive manufacturing industry are known as the

Japanese and American big three. The American big three consist of GM, Ford, and

Chrysler, while the Japanese big three are Toyota, Honda and Nissan. All six companies

compete in the lucrative American market, with a general trend swinging away from the

American big three, towards the Japanese automakers (Garsten, 2005).

Source: Autodata 2005, Garsten.

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General Motors: A long established American manufacturer with a declining share in the

domestic market from 35.5% in 1999 to 27.3% in 2004. In an attempt to increase

profitability, GM has fired or made redundant roughly 25,000 workers in America in

recent years, and blames employee health benefits and pensions, among other things for

its slump in profits (The Economist, 2005).

Ford: Like GM, has been losing market share steadily, from 23.9% in 1990, to 18.3% in

2004. Strength lies in its SUVs (eg Explorer), and its F-150 Pickup, and Ford Focus

(Edmunds, 2002).

Chrysler: The smallest of the big three, had an American domestic market share of just

13% in 2004 with risk of soon being surpassed by Toyota (12.2% share). Their strength

lies in their Four Wheel drive Jeeps and Pickups. However, of America’s big three,

Chrysler is the only one to increase its market share over the past decade.

Nissan: Has undergone a recent turnaround, dubbed miraculous by many. Attributed to

CEO Carlos Ghosn, who took control of the company in 1999, when Nissan was on the

brink of bankruptcy (CNN, 2005). Its key strength is its operating margins (the best in the

world). The company is 36.8% owned by Renault, and has a 5.8% share of the U.S

domestic market.

Honda: Has an 8.2% share of the American market, increasing from 6.2% in 1990. The

Honda Civic has lost ground to the Ford Focus recently, yet the Acura and Pilot continue

to sell well (Garsten, 2005).

Industry Trends

Automotive design is increasingly geared towards the electronic components, with

Multimedia systems, GPS, cental locking, ‘thinking brakes’ engines controlled by

powerful CPUs becoming almost standard. Vehicle electronics now account for roughly

22% of a vehicle’s production costs (Altera, 2001).

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Currently the fortunes of the automotive industry lie with the international oil market.

With numerous political threats facing the major oil producing regions (Middle-East and

Africa), and the possibility of war with Iran, the price of oil per barrel has been increasing

(and thus the affordability and appeal of automobiles decreasing). This has negatively

affected the sales of high fuel consumption vehicles, such as SUVs and 4WD’s. One

relatively new trend in the automobile industry designed to combat this is the

development of cars and trucks with superior fuel economy, hybrid technology, and

millions of dollars of research being spent on the development of fuel cells (The

Economist, 2005).

There is also an increased trend towards production efficiency and the elimination of

waste. This follows Toyota’s success with their production method, which has increased

profitability immensely. In an attempt to increase their own profitability in turn,

American manufacturers GM and Ford, have in recent years, opted to layoff tens of

thousands of workers, and have fought to reduce employee health benefits, which they

claim adds $1,500 to the production cost per car (Levin, 2001).

ORGANISATION ANALYSIS

Internal Analysis

The internal analysis identifies and develops the organisation’s resources, focusing on

current and potential strengths and weaknesses (Wheelen & Hunger, 2004). This

information can be used to the organisation’s strategic advantage, especially in

comparison to its competitors (Deresky, 2006). This section analyses the strengths and

weaknesses of the organisational structure and operations of Toyota America.

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Structure

Strengths in Structure

Toyota has a global geographic structure, grouping the organisation activities; including

management, by geographic regions (Deresky, 2006). This structure benefits the

organisation by focusing on activities in local American market conditions, showing

concern for local customers’ needs (Aghazadeh, 2003). Competitive advantage may

arise from the production or sale of a product adapted to a particular country (Deresky

2006).

The result is relatively flat hierarchy and management tends to be decentralised,

compared with Ford having a centralised structure (Fang & Kleiner, 2003). However,

strong management support is crucial a centralised structure, as demonstrated by Ford,

who are having industrial relations problems (Professional Engineering, 1999). As

Toyota employs a bottom-up approach, employees participate in new product

development, product modification and share decision making. This method is most

frequently used in their Research and Development department.

Toyota America personnel (whether staff or management) have the same uniform,

car-park and cafeteria; whilst engaging in company songs, ceremonies and social

gatherings as one (Fang & Kleiner, 2003). This builds and sustains Toyota’s strong

culture. Fang & Kleiner (2003, p.118) explains “management and labour share a

common oneness in an effort to minimise the differences”, further strengthening Toyota

America. This wellbeing corporatism gave rise to employee empowerment, job

security, job enrichment and led to employee commitment and achievement of Toyota’s

overall goal (Jacobs & Herbig, 1998).

Toyota’s competitor’s GM and Ford have reduced their employee compensation benefits

severely, as it reduces their production costs per car by $1,500US. In contrast, Toyota

maintains a good employee relationship by sharing concerned for their total welfare and

uses this to motivating employees. Benefits at Toyota include skill improvement

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workshops, low interest rate loans, housing subsidies, access to recreational facilities and

retirement allowance (Fang & Kleiner, 2003).

Weaknesses in Structure

As mentioned above, drawbacks occur because of differences in the national and business

cultures of Japan and America. The national culture of American is highly individualist,

compared with the Japanese collective culture. The business culture in Toyota insists on

equality, thus taking time for American employees to adapt to a Japanese organisation

(Aghazadeh, 2003).

Toyota’s top management play a key strategic role in the development of new products,

however, management fail to give out specific and detailed work plans on these new

products to employees (Fang & Kleiner, 2003). A level of ambiguity is considered

healthy generating creative and innovative ideas, whilst leaving room for discussion by

top management and staff. Thus, strong guidance from top management is necessary to

avoid a potential weakness if top management and staff do not interact or work together

effectively and efficiently (Jacobs & Herbig, 1998).

Operations

This section analyses the strengths and weakness of Toyota’s three main operations.

Design and R&D

The vehicle production in Toyota America meet local tastes and standards, being one of

their strengths as designers and engineers are locally employed (Toyota Motor Sales

USA, 2006). It also creates local jobs and fulfils their social responsibility as a

multinational corporation (Taylor, 2004). Toyota is environmentally friendly; recycling

as much as possible to reduce waste and harm to the environment.

Toyota’s Calty Design Research Inc. in California and Toyota Technical Centre (R&D)

in Michigan, provide an opportunity for American employees to experience and fit into

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the Toyota corporate culture (Fang & Kleiner, 2003). However, when the parent

company gives autonomy to its American subsidiary it risks problems arising from the

divergence of the organisations overall goals (Aghazadeh, 2003). Consequently, with

Toyota America using a global geographic structure, losses in efficiency and economies

of scales are experienced (Aghazadeh, 2003).

Manufacturing

Toyota America has twelve successful manufacturing plants across America, adhere to

Toyota production system (TPS) which continues to be the world benchmark in quality

and has less workers needed to produce each car than its competitors (Deresky, 2006).

TPS efficiently utilize resources to produce materials using a repetitive and reliable

system eliminating waste (Fang & Kleiner, 2003). Under TPS, the annual factory

capacity increases by 260,000 vehicles. The time spent manufacturing each vehicle is

21.63 hours, being much more efficient than Ford and GM, taking 24.87 and 32.58 hours

respectively (Deresky, 2006).

Just-in-time (JIT) provided great opportunities for Toyota to strive above its competitors

and the big three in Ford, GM and Chrysler as they had not improved their operations for

some years (Strategic Direction, 2005). Toyota’s JIT system improved productivity

along with quality (Shimokawa, 1994).

Toyota America often purchases it parts and materials from minority and women-owned

businesses locally, recognising social responsibility and directly creating over 45,000

local jobs (Toyota Motor Sales, USA 2006). In addition, purchasing local materials

reduces the transportation cost and overcomes the North America Free Trade Agreement

(NAFTA) Barriers. Conversely, the production costs increase as the company forgoes

taking advantages on bulk buying, with benefits such as significant discounts, longer

payment terms and pay early discount.

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Sales and Service

Toyota America creates excellent relationships with its dealers, which provide great local

distribution channels for Toyota vehicles (Toyota Motor Sales USA, 2006). This

constitutes an outstanding strength in sales for Toyota America, whose profit margins

have been increasing every year since 1997, becoming the second largest auto

manufacturer worldwide after GM (Deresky, 2006).

A high emphasis on customer satisfaction is one of Toyota America’s strengths, as it

continually surveys its product users to target new ideas or recognise problems (Toyota

Motor Sales USA, 2006). Toyota America therefore determines customer satisfaction

with its products and makes improvement based on these suggestions (Jacobs & Hergig,

1998).

Toyota Financial Services (TFS) enhances sales for Toyota America, since it has several

programs such as leasing vehicles, and payment schemes for customers; which encourage

vehicle purchases from all levels of society (Toyota Motor Sales USA, 2006).

However, using these programs, it is evident that sales profits have a longer lead time

which may lead to increase bad debts, potentially affecting the credit rating of Toyota

America. Also, in order to increase sales, a huge amount of capital’s need to invest in

training salespeople to adapt to different cultures (Taylor, 2004).

External Analysis

Toyota has a global geographic structure with subsidiaries and plants all over the world.

Toyota’s external environment relates to “major forces outside the organisation with

potential to influence significantly their products and services” (Bartol, Martin, Tein and

Matthews, 2001, p.64). Toyota America will be analysed in terms of the opportunities

and problems they are currently facing and their likely contributing factors.

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Opportunity

International management opportunities for Toyota America stem directly or indirectly

from its parent company in Japan. Toyota has a decentralised global geographical

structure providing diverse opportunities for the American subsidiary (Deresky, 2006).

Toyota’s Head Quarters in Japan delegate the final decision-making to the countries

executives, in America it is President Jim Press (Herbig & Jacobs, 1998). Toyota has

undergone dramatic growth spurts in global markets over the past four years, and has

equity strategic alliances with suppliers, sub-assemblers and distributors, implementing

the best deal in these global markets (Deresky, 2006; Shimokawa, 1994).

Toyota has formed a close relationship with another large automotive manufacturer,

Honda. Information is shared intensively but also selectively, to enable them to conduct

joint improvement activities and turn supplier rivalry into opportunity (Strategic

Direction, 2005). Toyota can therefore expand their opportunities by obtaining

relationships with other companies willing to give information. The key contributing

factor is worth more than the American big three put together in terms of market

capitalisation and greater than Nissan and Honda in Japan; all of which make Toyota a

very attractive company to invest in (Shimokawa, 1994).

Toyota operates in foreign markets bringing it many opportunities for industrial

expansion into certain products or services, as well as increased efficiency of information

flow between countries (Weihrich, 1999; Hartel & Lloyd, 2004). Organisations

competing on a global scale (in foreign markets) are miles above the rest. Toyota’s

contributing factors would be pure global dominance (Hartel & Lloyd, 2004).

Toyota America has grown to be the third largest auto producer and the fifth largest

industrial company in the world (Fang & Kleiner, 2003). Toyota sets the standard in

efficiency, productivity and quality in the auto manufacturing industry; and is the envy of

rivals such as Ford, GM and Chrysler (Fang & Kleiner, 2003). Industry work has

named Toyota one of the world’s 100 best managed companies. The recognition of

being one of the world’s 100 best managed global companies provides a lot of positive

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opportunities for Toyota, as did their joint venture internationally with GM. The joint

venture yielded valuable lessons in labour-management cooperation and gave GM access

to Toyota’s manufacturing expertise and provided Toyota with a manufacturing base in

America (Fang & Kleiner, 2003; Deresky, 2006).

Companies in today’s world are ever-changing, and therefore Toyota needs to change

their strategies and (accordingly) their structure when necessary. Toyota’s latest future

plans are to expand worldwide and to engage in manufacturing overseas; enhancing

growth and opportunities (Deresky, 2006). This could be done by forming operations in

third-world countries with manufacturing done there, as it substantially reduces costs

through labour. Toyota Japan now sells German Audi’s and Volkswagon’s in its

dealership (Weihrich, 1999). Toyota America could also consider doing this with cars

that would suit their consumers (Weihrich, 1999).

Toyota America is committed to an open trade ideology, importing nearly thirteen times

more cars than they export (Anderson, Altshuler, Jones, Roos and Womack, 1985).

America should take leads from Japan’s 23% market share in their country, and have

substantial market share in other countries to obtain opportunities from, if financially

beneficial (Anderson et al, 1985). Toyota America is financially and legally separate

from its parent company, being independent and able to make its own decisions

(Anderson et al, 1985). Top management therefore have the opportunity to make global

and national decisions to expand operations and reap benefits world-wide (Chandler,

1964).

Further, Toyota America is leading the way in hybrid electrics en route to ‘full scale

fuel-cell electric cars’ is Toyota America (Weihrich, 1999). With high fuel prices,

Toyota has driven its consumers to purchase Japanese imported Toyota cars that are high

quality and fuel economic (Shimokawa, 1994).

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Problems

Toyota America, being a global company are so diverse and financially viable, that their

problems are limited. Problems result as a form of threat from companies or industries

that Toyota deal with in terms of competition (Weihrich, 1999). They also result from

international managements perspectives of the companies operations in different

geographical locations across countries (Herbig & Jacobs, 1998).

Problems arise at Toyota between American Executives and Japanese Engineers. The

constant tension results because America wants larger engines with more horsepower,

appealing to American consumers; where as Japan wants smaller engines that consume

minimal fuel, appealing to their consumers (Taylor, 2004). Japanese Engineers consider

the impact of the car design on costs or manufacturability; whereas American Engineers

want to know from their perspective whether it can be manufactured (Herbig & Jacobs,

1998). Americans instead of designing a product and then determining its costs, design

their product on target costs based on what the market place will bear (Herbig & Jacobs,

1998).

Another problem in Toyota America is product time and the companies’ vision.

Japanese Toyota believes they can release new products to the market in half the time the

Americans can (Herbig and Jacobs, 1998). Contributing factors to this problem are that

they need to engage in overseas manufacturing to enhance their growth and opportunities,

and to decrease the production time (Deresky, 2006; Herbig & Jacobs, 1998). In Japan,

Toyota employees themselves take initiative to study the task at hand, rather than relying

on engineers; this just does not happen in America. Toyota Japan has a vision for the

next decade, in comparison to Toyota America being for the next quarter (Herbig and

Jacobs, 1998).

American President of Toyota, Jim Press seized 13% of the American market for Toyota

automobiles. He did have a valid point, being that hybrids have more growth potential,

therefore allowed space for this model in their market. Press however, should not have

seized other production until he was certain hybrids would be financially successful,

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being proactive, rather than reactive. The car maker’s policy is “slow and steady”,

which displays negative publicity globally as they are not exactly a luxury car like

BMW’s or Audi’s (Halliday, 2005).

America also has a problem of effectiveness in their formal suggestion program.

Suggestions are “not mandatory for Toyota personnel, but workers who do not contribute

are criticised and may receive smaller bonuses” (Herbig & Jacobs, 1998, p.146).

Toyota suggestion program is very effective in Japan as 65-70% of all employees’

submitted suggestions for increase in efficiency, reduction in costs or improving morale.

On the other hand, Toyota America received 8% of employees lodging suggestions.

The contributing factor is that Japanese companies accept 80% of employee suggestions,

compared to only 25% adoption in America (Herbig & Jacobs, 1998). This is

something the top management need to review and rectify.

Toyota executives in America admit there is a problem with customer service, but believe

they are dealing with it (Taylor, 2004). The main contributing factor is that Toyota

dealers have grown too fast, as they have the highest sales per outlet in the country

(Taylor, 2004). Toyota America is also known to spend minimal time planning new

products, and suffers development setbacks in a larger proportion due to lack of planning

(Herbig and Jacobs, 1998). They are also behind Ford and GM, as Toyota has a less

structured policy dealing with integration and production (Chandler, 1964).

RECOMMENDATIONS

Toyota America has issues and problems that were identified in the internal and external

analysis based on structure, operations and international management problems in the

organisation. Toyota is a global operation, being one of the largest and most recognised

automotive producers in the world, and will only benefit from realistic solutions and

recommendations to the analysis of its issues and problems.

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There are drawbacks due to cultural differences when comparing America to Japan.

Japan (being the parent company) needs to have some sort of training in their country for

American executives, so they can understand the collective culture of Japan in

comparison to America’s individualistic approach according to Hofstede’s study (Bond,

1986). America also needs to train the Japanese management to be aware of its culture

and the differences between the two countries. Time devoted to educating and training

managers on cultural differences will be well spot.

Management also need to communicate and be more specific with employees when

giving out work plans on new products. They must ensure that employees know what

new products are coming out and have specific plans on their manufacturing and

production. Top management must also ensure they remain in close contact with

employees to build their morale and achieve the most efficient and effective relationships

possible (Fang & Kleiner, 2003).

As Toyota is using a global geographic structure, management must ensure that

efficiency and economies of scale are met. A solution to this current weakness would

be to have top management/executive meet electronically with all plants globally, to

ensure that common goals and targets are set. Also to set the same level of efficiency

required for each stage of production and the achievement of economies of scale; to

ensure all plants are expected to do the same work per worker, and to manage Toyota

globally.

Implementation of a transnational strategy that is locally responsive and cost effective is

a consideration Toyota should be aware of. Vertical differentiation consists of a mixture

of centralisation and decentralisation, which is a good structure for Toyota’s massive

enterprise. Perhaps the horizontal differentiation of a matrix design should be

implemented to bring in more coordination at Toyota, through communication amongst

head managers, division managers and employees forming relationships (Deresky, 2006).

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The minority and women-owned businesses are supported by Toyota, forgoing their

discount for bulk buying and early payments. This shows the public their compassion

and concern, but financially costs Toyota a substantial amount. Toyota could rectify

this by purchasing only from bulk buyers to increase savings on their purchases. Toyota

also has programs to support customers who need financial assistance. Whilst this

service also portrays a positive message to the public, it consequently disadvantages

Toyota. This system needs reviewing, as the sales may have increased but the lead time

of receiving money for sales has increased also. Toyota may need to put a time limit on

payment to ensure they receive the money and decrease their bad debts. They also need

to review each customer asking for this service to ensure they can pay it back in the near

future. If they receive a negative response then they should not allow these customers

such a loan.

Toyota has problems externally which are limited considering their size and diversity.

Again there are great differences between executives in Japan and America. They have

completely different ideas when it comes to design, cost and process of manufacturing of

automobiles. These problems need to be rectified if Toyota is going to maintain its

strong corporate culture and common consensus across the globe (Herbig & Johns, 1998).

To do this they could have electronic meetings to discuss ideas and come up with a

common design, cost and process for all automobiles. They could also have Japanese

engineers visit the American plant to show them their design, learn their ways, and what

needs to change for Toyota to remain consistent with Japan.

They need to review their production times, also as Japan’s production is substantially

faster. Toyota may need to engage in overseas manufacturing to enhance their growth

opportunities and decrease production time. They also need to encourage employees to

show more initiative and desire towards studying the tasks, as Japan employees take a lot

of initiative. Toyota also need to reconsider their policy of “slow and steady”, as they

are a medium car company in terms of quality, and are hardly producing BMW’s or

Porsche’s (Herbig & Jacobs, 1998). Perhaps they should have a slogan that relates more

directly to their operations – like “efficient and effective”.

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Finally, Toyota needs to review is their suggestion program in America, as only 8% of

employees lodge suggestions (Herbig & Jacobs, 1998). This could be achieved by staff

meetings with each department and their manager, whereby employees are why they do

not make recommendations and what would encourage them to do so. Management

then need to look at implementing these recommendations, to promote them with staff.

CONCLUSION

In Conclusion, Toyota is leading the world in auto manufacturing efficiency, but still has

room for improvement. A lack of adequate communication between the American and

Japanese departments is not only causing friction, but affecting the development of

economies of scale. With the company having a decentralised geographical-area

structure, conflict between the two regions will always be a possibility. By increasing

communication between parent and subsidiary, and by standardising executive training

across both nations, over time a degree of consistency can be achieved across Toyota’s

management. By better understanding cultural norms and values, problems and

misunderstandings (such as Japanese engineers not understanding the importance of

horsepower to Americans) will occur less frequently. The differences in culture which

have in the past served as obstacles should instead be embraced, with the ultimate aim to

learn from each other, in the hope of improving both operations. If all this can be

achieved, Toyota’s goal of a 15% world market share could soon become a reality.

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