Toyota

04/15/2023 1

Strategic management

Toyota automobile manufacturer

Presented By,

Rashmi Ranjan MoharanaJr. M.Sc. (Ag.) Ag.Ma.Co.

PALB-4128

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• Introduction

• Mission

• Vision

• Goal

• SWOT Analysis

• Porter's five forces analysis for Toyota

• Operation Strategies

• Conclusion

Contents

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• Toyota is a Japanese multinational automobile makers, headquartered in Aichi, Japan.

• It produces an estimated eight million vehicles per year, about a million fewer than the number produced by General Motors.

• Japanese market share : 40% of all new cars registered in 2004 being Toyotas

Founders:

• Sakichi Toyoda

• Kiichiro Toyoda

• Eiji Toyoda

Current Chairman :

Takeshi Uchiyamada

Current CEO :

• Akio Toyoda

Introduction

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History :

• Began as a Automated Loom production company in 1926

• In 1933 an automobile department was established with Toyoda automatic loom works

• In 1937 Toyota motor co. was established as an independent company

• The Golden Period :

• Becomes a major supplier of trucks to the imperial Army during WWII

• Plants were scheduled to be destroyed by allies, but the war ended first

• Launching first car :

• launched first car in 1947

• Toyota production system formed in 1950 based on JIT principle

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Mission:

• “To attract and attain customers with high-valued products and services and the most satisfying ownership experience”

Vision:

• “Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people.”

Goal:

• "Always better Cars." We continually reinvent ourselves , introduce new technologies and stay ahead of our competition.

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Automobiles

Luxury vehicles

Commercial vehicles

Engines

Motorcycles

Products:

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• International Position in 170 countries worldwide

• Second largest manufacturer automobile

• It is best know for durability, reliability and value for money and convenient.

• its brand image in market is based on quality and environmental friendly

• Presently maintains 16% of US market share

Strengths

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• It is criticized as foreign importer by Japanese cars producers

• In may 2009 they reported a record yearly net loss of 4.2 billion $

• It was badly hit by 2008 financial crises and declared its first annual loss in 70 years history

• In 2005 faced criticism because of large scale recall and quality issues

• Production capacity which produces most of its cars in US and Japan where with that competitors might take advantage of global efficiency gains

Weaknesses

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• Toyota produces Fuel efficient , higher quality and smaller automobile that can attract consumers

• With fuel price increasing every time they can produce hybrid gas electric vehicles which are both fuel and environmental effective

• Toyota keeps on producing the new models of vehicles so attract all the segment in population

• They continued global expansion especially in emerging markets that is China, India and Russia where population and demand are accelerating

Opportunities

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• Increased competition , force full marketing campaigns and raising competitive pressures

• Increasing maintenance cost of vehicles , rising fuel price and changing customer preferences are challenging threats

• Adverse impact of fluctuations in foreign currency conversion rates

• Economic slow down

Threats

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• Porter five forces analysis is a framework to analyze level of competition within an industry and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of an Industry.

• Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment.

• They consist of those forces close to a company that affect its ability to serve its customers and make a profit.

• A change in any of the forces normally requires a business unit to re-assess the marketplace given the overall change in industry information. 

Porter’s Five forces Analysis: WHY ??

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• the threat of new entrants is low.

• Toyota has established brand image and reputation

Threat of new entrants :

bargaining power of buyers:

• the bargaining power of buyers is moderately high in automotive industry

• the buyers have low switching cost

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• bargaining power of supplier is low.

• the suppliers do not own the power to change the price

Bargaining power of supplier :

Threats of substitutes :

• threat from two wheelers

• alternative types of transportation almost cost less and sometimes are more environment friendly

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• competition between existing players is likely high

• there is not much differentiation between players and their products

Degree of rivalry :

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Toyota’s Way

Toyota’s Way

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• 1. Toyota Production System (TPS)

• 2. Re-engineering

• 3. Superior Technology & Quality

Operation strategies

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• Lean Manufacturing

• Just-In-Time (JIT)

• Kaizen

• Jikoda

• Kanban

• Andan

• Pull System

Toyota Production System (TPS)

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• aimed at the elimination of waste in every area of production including customer relations, product design, supplier networks and factory management.

• incorporate less human effort, less inventory, less time to develop products, and less space

• become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible.

• Some principles:

• Zero waiting time

• Zero inventory

• Cut actual process times

• Saves turnover expenses

• Reduces set-up times

Lean Manufacturing

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• philosophy pioneered by Toyota in 1970s

• It's a method of waste elimination by which the inventory levels are minimized.

• The heart of JIT is Kanban, Japanese word for signal.

• JIT implementations include:

• Inventory reduction

• Smaller production lots and batch sizes

• Quality control

• Complexity reduction and transparency

• Waste minimization

Just-in-Time

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• lean manufacturing term for continuous improvement

• Kaizen describes an environment where companies and individuals proactively work to improve the manufacturing process

• Employing Kaizen means the following:

• Proactively improve production

• Reduce manufacturing waste

• Increase employee involvement

• Increase customer satisfaction

Kaizen

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• meaning "automation with a human touch“

• It is a quality control process

• applies the following four principles:

• Detect the abnormality

• Stop

• Fix or correct the immediate condition

• Investigate the root cause and install a countermeasure

Jikoda

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• Meaning "signal“

• It signals a cycle of replenishment for production and materials.

• It maintains an orderly and efficient flow of materials throughout the entire manufacturing process

• It is usually a printed card that contains:

• Instruction for production and conveyance

• Visual control tool to check for over production and to detect irregular processing speeds

• Tool to perform kaizen

Kanban

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• production line is stopped if there is a problem somewhere in the line.

• very employee is empowered to stop the production on finding a defect.

• This is done to prevent the defective items from passing to the next stage

• Andan electric boards will highlight the location where the defective part is located, and hence, can be attended.

Andan

Pull System

• 'pull' system asks the worker to use his or her head to come up with a manufacturing process

• where he or she alone must decide what needs to be made and how quickly it needs to be made.

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Re-engineering• Major factor for the success of Toyota.

• Consider a Toyota model, which is newly introduced in the market, failed to impress the market.

• The next Toyota strategy will be to re-engineer the model.

• This method is not practiced at General Motors and Ford.

• the whole manufacturing facility for manufacturing the model is scrapped and the employees are often pushed out of the company.

• This results in loosing the knowledge gained at great cost.

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• Toyota production facilities are flexible , could easily add / switch new models or ramp-up production of existing models within a short period

• Robots are used widely in mass production. By allowing the choice of either people or robots depending upon profitability, the production line offers the flexibility to handle everything from low-volume to mass production

• Toyota's quality control during production ensures that the correct materials and parts are used and fitted with precision and accuracy.

• General Motors takes 34 hours for producing a vehicle while Toyota does it in 27 hours, shows the technical superiority of Toyota.

• Awards & Recognitions

Superior Technology & Quality

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• with superior technology and best industry practices, Japanese auto major is giving a run for the auto industry.

• All credits to the production prowess and the technical innovation, which made the Japanese sail through the rough waters, a journey that started in 1933 and is still continuing.

Conclusion

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Thank you