A Case Study of Toyota.

University Degree Business and Administrative studies

Melanie Osowski February 5, 2006

MLR 465 Management Strategy & Development

Case Study #1 – Toyota

A Case Study

Presented by:

Melanie Osowski

MLR 465

Professor: John Reece

February 6, 2006

Toyota is a name that is synonymous with a quality product. Their enormous growth in the last half of the 20th century is sincerely note worthy. Toyota grew from a modest textiles manufacturer to one of the world’s largest automobile manufacturers. The two areas that helped Toyota to grow and excel was their ability to trim the excess costs off their operations and offer a competitive product to satisfy many needs of the public, not only in their own native land, but in the United State and also in Europe.

Toyota was originally a textile operation. The creator and inventor was Toyoda Sakichi. His modest beginnings did not hinder his abilities to be creative and allowed him to generate enough wealth to provide well for his family and employees of the automated loom company that he developed. Toyoda eventually came to pass, and on his death bed convinced his son to continue making attempts to break into the automobile industry. Even before he had ever tried to make automobiles on a commercial level, Toyoda knew that this could be a success, as he possessed the vision of a true entrepreneur and believed that this task could be accomplished allowing enormous growth for the company. Although reluctant, Toyoda’s son Kiichiro with great effort in 1930 was allowed to set up an automobile department at the textile facility. Its original set up was more of a skilled craft rather than assembly line production that later became the model for mass production.

Toyota over the years faced several barriers in order to be the leader in the auto industry that they are now. One of the original hurtles was the Japanese government. The government forced automobile manufacturers in Japan to produce trucks for the military after they discovered how useful the American trucks were in moving men and equipment, and this forced Toyota and other manufacturers to limit or cease production of the low end economy car that they originally intended on producing for the market. Once the management of the company realized how profitable that could be, Toyota’s direction changed from predominantly textile production to auto production.

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After WW II another major player came into the Toyota picture – an engineer, Ohno Taiichi. After being absorbed into the automobile side of their company, he was quickly promoted and managed the auto assembly and the machine shops, where he quickly advanced to a company director. Ohno’s claim to fame would be his amazing ability to use logic and common sense along with a business sensibility that many engineers, from my experience, tend to fall short. After visiting American facilities, he returned to Japan to develop processes that would make them more efficient. He perfected the reduction of set up times for equipment, empowered his employers to take charge in quality measures, and began to organize the workplace to be the most efficient for the employees, the company and its facility. He also implemented the task of brining outside vendors into their quality circle, assisting with training and development of systems in order to produce a quality product and smaller inventory batches to manage with less cost to both the supplier and Toyota.

Another great name in the tales of Toyota is Kaymiya Shotaro. He was responsible for developing quality relationships with their dealerships and strived to gain long-term relationships with the customer. It was then that Marketing, Planning and Production really began to work closely together. Marketing would gather information about the customer and their wants and needs. The Planning department then began the design of these products, and the Production department implemented the set up and process development for these production processes for each model.

Toyota is still currently using these methods for mass production and is still holding the forefront on providing more variety in models, with little to no impact on cost to the customer. They continue to grow as the operations have spread world-wide and have become a giant in the automobile manufacturing industry.

Although Toyota has had their fair share of hurtles from the government regulation of operations to import and export tariffs from both side of the ocean, they have been able to find ample opportunities and paths around the obstacles to remain a strong competitor in their market.

Toyota has many new concepts in the works, a personal mobility vehicle, which I would equate to an enclosed motorcycle, the Fine-S concept vehicle that uses hydrogen fuel cells for a lower center of gravity to give the car better control, and my personal favorite, the future developments of the Welcab. It has a minivan look, but makes it easily accessible for wheelchair bound riders. This is just one example of how Toyota researched their market to find what the customer really wants or needs. The Welcab generates from a need from the wheelchair bound market. Currently, most vehicles designed for the handicap is customized and very costly. Toyota is making the attempt to provide something in the market that is useful, fits their needs, and most importantly, affordable to those with the need.

Toyota is not only improving their model types, but the operation of their vehicle, security features and the most up to date luxury features to fit all tastes for various markets. Toyota continues to develop models to fit as many markets as they can to increase sales with little to painless transition between set up rounds. They have been smart enough to realize that their production and success relies on the efforts of a team. A team that consists of trained and empowered employees for quality, trained and consistent suppliers that have not only learned how to manage their own inventories, but assist Toyota with their by using a “Just in Time” inventory process, and an overall management structure with vision and drive to created an empowered model that all the pieces of the puzzle are important in order for the whole to succeed.

Toyota has also diversified into other services such as finance and car rentals and are always looking for new ways to grow their business and offer more services to their patronage. Toyota’s future will continue to be bright as long as they continue to manufacture automobiles and lead the industry into the future with their advances in production process, as well as future technological developments and product cost control.

Bibliography

Strategic Management, An Integrated Approach, Hill & Jones, p. c212-c222