Professional Documents
Culture Documents
Data Assignment
Data Assignment
ASSIGNMENT
ON
TOYOTA
(Submitted on April, 1st 2010)
SUBMITTED TO
RESPECTED PROF.DEVANG DESAI
FACULTY GRBS, VAPI
SUBMITTED BY
MOHAMMAD IQBAL KHAN
HARDIK SHAH
FRENI ANTALA
TOYOTA
TOYOTA
FLASHBACK OF TOYOTA
Japans Sakichi Toyota (Sakichi) diversified from traditional family business of carpentry into
handloom machinery in 1897. Toyota Automatic Loom Works (TALW) founded in 1926 for
manufacturing automatic looms. Sakichi invented a loom that stopped automatically when any of
the threads snapped. This concept (designing equipment to stop so that defects could be fixed
immediately) formed the basis of the Toyota production system (TPS) and later became a major
factor in the companys success.
In 1933, Sakichi established an automobile department within TALW and the first passenger car
prototype was developed in 1935.
Toyota established in 1937.
Kiichiro Toyoda studied the US automotive industry during visit to Ford. In Japan he customize the
Ford production system where each process in the assembly line produced only the number of
parts needed at the next step on the product line. This system was named Just-in-Time (JIT)
Toyota flourished during the second world war by selling truck and buses to the army. The company
launched its first small car (SA model) in 1947. During this period Toyota went into downsizing and
restructuring the company into separate manufacturing and sales division. In 1950 Toyota Motor
sales company Ltd was formed.
By 1952 Toyota made a turnaround. In 1957 Toyota entered in the US market.
TOYOTA PHILOSOPHY
Toyota's management philosophy has evolved from the company's origins and has been reflected in
the terms "Lean Manufacturing" and Just In Time Production, which it was instrumental in
developing.
The Toyota Way has four components:
1.
2.
3.
4.
TOYOTA
TOYOTA
TOYOTA
Its market share was still below 40% in Japan despite aggressive marketing efforts.
The above scenario was due to a host of reasons like
Excessive capacity
Choosy customers
Surplus workforce
Intensified competition within Japan.
In 1998, Japan sales accounted for mere 38% of the companys total sales compared to 52% in
1990. Also Toyotas Japan sales contributed to a very small share of its profits.
By the late 1990s young buyers accounted for 30% of the customer base as compared to
over 45% in the late 1980s. In 1998, models from rival companies such as Honda and BMW
were more popular than the ones offered by Toyota. According to reports, Japanese
youngsters felt that Toyota cars lacked attitude. Toyota realized that by losing its young
customers to other companies, it ran the risk of losing its future market as well.
Alarmed by this scenario, Toyota embarked on an aggressive restructuring exercise and started a
new company, Virtual Venture Co. to design and sell cars that appealed to the young generation.
VVC experimented with many unconventional sales strategies to improve the Toyota models to
people, It built a $83 million amusement park in April 1998, Where it displayed Toyotas visions for
future models and also allowed people to design their own cars.
Beginning in 1999, the company rolled out many new cars specifically designed for the young
Japanese buyers. These cars such as Vitz compact, FunCargo compact, and MR-S sports car, had the
distinctive looks and attitude sought by these buyers. More significantly, a majority of these were
entry-level. To keep the prices down, Toyota shared platforms with other models.
Apart from these new launches, the company also launched upgraded versions of its existing
models such as Windom (Lexus ES 300), Verossa and Brevis. To attract the young buyers, Toyota
took the risk of even de-emphasizing the Toyota brand. For instance the new car bB, which became
very popular with young buyers, had no visible signs of the Toyota name, except for a Toyota
symbol on the steering wheel.
As part of making the companys dealer outlets more appealing to young buyers, the company
renamed one of its five dealership chains Netz, and targeted it exclusively at entry-level buyers.
Toyota also undertook aggressive marketing efforts such as focused advertising of its new models
besides offering high cash rebates to buyers of its flagging models.
Toyota focused on streamlining and reducing its workforce and decided to hire contract employees
against its policy of lifetime employment. It planned to cut about $678 million in costs, employment
mainly by designing cars with fewer and simpler parts and by sharing platforms and parts among its
models.
TOYOTA
The factors that helped Toyota attain and sustain the leadership status in Japan are:
Problems the company faced in this market later on:The problem was drastically increasing its market share in the US, it was finding it difficult to
perform well in Japan. Its market share was still below 40% in Japan despite aggressive marketing
efforts. This happened because of number of reasons like:
Excessive capacity
Choosy customers,
Surplus workforce
Intensified competition
It is already mentioned regarding problem faced by Toyota and the strategy it adopted to come out
of the problem.
Over all the strategy it adopted to became leader in automobile market in Japan became the best
practices in automobile sectors.
TOYOTA
Toyotas decision to spread its operations across various geographical regions &
focus on young buyers in its core markets.
3 different program adopted that how localization of manufacturing was expected
to help the company?
For though buyers 40 to 69 years old have averaged more than twice as many new-car buys since
1995, 25- to 34-year olds alone should pack $1.2 trillion in buying power by the end of this year.
And they'll spend $70 billion of it on vehicles and other automotive purchases. Given that today's
18-year-old will buy about 13 vehicles during his or her lifetime from 8.4 in 1970.
The
under-35
automotive
market
didn't
exist
a
half
century
ago.
Without doubt, entry-level buyers just out of high school and college are more image-conscious and
brand oriented than older buyers. And automakers must snag these buyers when they dont; it
hurts their chances of getting them back later. But it's not easy. Generally, people no longer act
their age.
"Over the past few years, the Jetta has been targeted at younger people, kids getting out of college.
It's made a huge impression." It doesn't hurt that it's a quality product with a popular design, he
adds. Meanwhile, in East Providence, R.I., Ford dealer Bob Tasca III sees young women going for the
Jetta
because
it's
"like
a
mini
luxury
car".
On the other hand, Tasca Ford is mainly selling supposed youth magnet Ford Focus to customers
over 45. Yet Tasca is excited about what the Focus is doing nationally: attracting younger buyers
into the brand through edgy commercials and special editions, such as the Focus Street, whose
marketing connects with the audience via techno-music. "You'll see a migration pattern," says
Focus brand manager Bob Fesmire of the long-term prospects for Focus and the Ford brand. Some
Focus owners will buy another; others those marrying and starting families will buy a different Ford,
such as the Windstar, he says.
At Toyota, loyal but aging buyers have some observers concerned. Though the maker has ridden
the wave of young Baby-Boomers in recent decades, its styling may not be hip enough for today's
first-time buyers and new college grads. The Echo, though priced low, didn't resonate with younger
buyers, but ended up drawing folks over 40. Under-35 buyers are "more educated than when I was
their age," says one Toyota general sales manager. "They're not afraid
of the imports like their parents might have been. They want to make sure they're going to get
something that will last them, give them good fuel economy, and make them feel safe." Price
seems
less
important
for
young
Toyota
buyers,
he
adds.
Young buyers who have money often make contact via the Internet, say dealers John Weinberger
and Scott Vanderbeek. "They're looking for a specific luxury car that may not be in their
hometown", says Weinberger of Continental Motors (including Acura, Audi, Bentley, Ferrari, and
Rolls-Royce), near Chicago. Buyers in their 20s are after the 3-series and get hooked, say Roseville
salesperson Candy
TOYOTA
Beck, through BMW's college grad program with terms up to 60 months for financing or leasing a
new
or
certified
used
Bimmer.
One survey indicated that 78 percent of college students look at price first. Then comes reliability
(75 percent). Also, 48 percent of students plan to buy a new car, but 52 percent intend to buy used
which may be good news for makers with robust used-car certification programs. The 34 percent
intending to buy new in the next year plan to spend less than $20,000.
Of course, dealers use some automaker incentives with young buyers. "We advertise the first-time
buyer programs," says Earnhardt Auto Centers corporate general sales manager Steve Arey, who
also does many secondary finance deals. Some college-grad incentives, such as Toyota's and Ford's,
involve $400 rebates. And, says Arey, "We deal heavily in program cars. A lot of the Hyundais are
really popular. They like that warranty." in any event, financing "is going to be the key. If they have
the program for them, they'll buy [new] cars. If not, they'll buy used."
Rationale behind Toyotas decision to spread its operation across various geographical region:
1) Early 70s prod & sales was behind from Ford and GM.
2) Domestic sale gone to decline.
3) The need to explore new markets and maintain a leading position is extremely urgent.
Without proper localization, this can hardly become reality. Due to the growing market and
increasing competition, localization is the right move forward.
TOYOTA
In Europe, Toyota Motor Manufacturing France S.A.S. (TMMF) was established in France in
November 1998. It is scheduled to go into operation in 2001, with an annual production target
of 150,000 units of the Yaris, a strategic vehicle for the European market. In Asia as well,
where economic stagnation has been continuing, TMC established a supply structure in
anticipation of market recovery, starting up second plants in Thailand, Indonesia, the
Philippines, and Taiwan.
Next, in the area of increasing imports, TMC strengthened the sales structure of the DUO
stores, which sell VW/Audi cars, expanded imports of completely built-up cars, and began
selling the Avalon, a passenger car made at TMMK, in May 1995 and the Toyota Cavalier,
made by GM, in January 1996. TMC also expanded its efforts to increase imports, including
foreign aftermarket parts, by establishing TACTI Corporation to procure and sell new brands
of aftermarket parts and by increasing the number of its directly owned "jms" car shops to 28
by March 1999.
Furthermore, TMC implemented various steps to promote the "Toyota Global Optimum
Purchasing System"and has made steady progress, e.g., facilitating access for prospective
overseas suppliers by publishing the contents of its Supplier's Guide on the Internet (in
November 1997), and constructing a Suppliers Center (in April 1998) which can be used for
exhibiting new parts, etc
Although the New Global Business Plan has come to a close, TMC plans to continue expanding
its business operations aggressively on a global scale in the future.
10
TOYOTA
In 1998 production at TMMK was about 480,000 units (1994 results were about
290,000 units). Expansion of production capacity to 500,000 units per year has been
achieved as outlined in the plan.
The line-off ceremony for the Tundra was held in December 1998 at TMMI. Massproduction started in February 1999 and plans call for production of 100,000
units/year. Production of a new Tundra-based SUV is planned to begin in the fall of
2000. Total production capacity will reach 150,000 units.
Assembly of Corolla engines began in November 1998 at TMMWV, with a planned
initial production level of 300,000 units per year. Production of about 200,000 V6
engines per year will begin in summer 1999. As a result, annual production capacity
will reach 500,000 units in summer 1999. Coupled with the above increases, Bodine
Aluminum, Inc. plans to expand its production of cast aluminum parts for V6 engines
from the current level of 180,000 units per year to 380,000 units per year from early
2000. Beginning in the spring of 2001, moreover, TMMWV will start producing
automatic transmissions for the Camry (at an annual production rate of 360,000 units).
In 1998 actual production at TMMC in Canada was about 170,000 units (1994 result
was about 90,000 units). Expansion of production capacity to 200,000 units per year
was achieved in 1997. Production of the new Solara model began in June 1998.
Total exports of vehicles from the U.S. amounted to 36,000 units. (The cumulative
total for 1995 through 1998 was about 240,000 units.)
11
TOYOTA
2. Europe
European production capacity expanded to 220,000 units by the end of 1998. Toyota Motor
Manufacturing (UK) Ltd. (TMUK)'s second assembly plant started building Corolla lift-back
models in September 1998. Total European production capacity will reach 350 - 400,000 units
in 2001, when the French plant goes into production.
In 1998 vehicle production result at TMUK was about 170,000 units (1994 result was about
90,000 units).
In 1998 engine production at TMUK was about 110,000 units (1994 actual production
was about 80,000 units). TMUK's engine production capacity will increase from the
current level of 150,000 units/year to 200,000 units/year by the end of 1999, and to
between 350,000 and 400,000 units/year in 2001. A casting process will also be added
to the engine production process (with the start of production planned for 2000).
The new production company, Toyota Motor Manufacturing France S.A.S., established
in Valenciennes, France, in October 1998 is proceeding with plant construction with
the goal of starting production by early 2001 (at the rate of 150,000 units per year).
In order to support Toyota's European manufacturing operations, Toyota Motor
Europe Manufacturing (TMEM) was formed in Brussels, Belgium, in October 1998.
In July 1998, TMC established a design center in the Cote d'Azur, France (with the start
of operations planned for early 2000).
Exports of TMUK-produced cars to countries outside the EU, which began in 1996,
reached about 7,000 units in 1998. (The cumulative total for 1996 through 1998 was
about 18,000 units.) Exports of engines to Turkey reached about 8,000 units in 1998.
(The cumulative total for 1996 through 1998 was 45,000 units.)
12
TOYOTA
In 1998 vehicle production in Taiwan was about 73,000 units (1994 actual production
was about 65,000 units).
In 1998 vehicle production in the Philippines was about 11,000 units (1994 actual
production was about 30,000 units). Production of constant-velocity joints was about
57,000 units. In addition, transmission exports to Japan began in March 1998.
In 1998 vehicle production in Thailand was about 35,000 units (1994 actual production
was about 110,000 units). Production of engine blocks was about 100,000 units (1994
actual production was about 53,000 units). In April 1998, the export to South Africa
began of Hilux production parts made in Thailand. In July 1998, the export of Corolla
bumpers to Brazil began. In August 1998, the export of Hilux made in Thailand to
Australia began.
In 1998 vehicle production result in Indonesia was about 17,000 units (1994 actual
production was about 80,000 units). In February 1998, production began at P.T.
Toyota-Astra Motor's (TAM) second plant (Karawang Plant). 1998 engine production at
TAM was about 36,000 units (1994 actual production was about 70,000 units).
In China, Toyota continues to build our parts production network. In June 1998, the
line-off ceremony for a constant velocity joint production joint venture was held. In
July 1998, the line-off ceremony for a engine production joint venture was held. In
January 1999, the line-off ceremony for a forged parts manufacturer was held. As for
vehicle production, in November 1998, a manufacturer of compact buses was set up.
TMC is also undertaking negotiations with the Chinese government on a small car
project. In addition TMC has been providing support for increasing production capacity
to 150,000 units/year targeting sales of 100,000 units per year for the Tianjin Charade.
Finally, in February 1998 ToyotaTechnicalCenter (China), Ltd. was established to
provide production and development support, with operations scheduled to begin in
April 1999.
In 1998 vehicle production result in Malaysia was about 6,000 units (1994 actual
production was about 17,000 units). 1998 production result of power steering units at
T & K AutopartsSdn. Bhd. was about 27,000 units. 1998 actual production of lower ball
joints was about 12,000 units.
In 1998 vehicle production result in Vietnam was about 2,000 units.
In 1998 vehicle production result in Australia was about 100,000 units (1994 actual
production was about 78,000 units). 1998 exports of Australian-made Camrys totaled
about 30,000 units. (The cumulative total for 1996 through 1998 was about 70,000
units.)
In 1998 vehicle production result in New Zealandwas about 4,000 units (1994 actual
production was about 15,000 units).
13
TOYOTA
4. Other regions
TMC is also moving forward with projects in the following regions, which were not included in
the original plan:
In August 1998, Corolla production began in Indaiatuba, Sao Paulo, Brazil, with a
production capacity of 15,000 units per year.
In India, TMC is preparing to start production of family type diesel passenger vehicles
exclusively designed for the Indian market by the end of 1999. The plant building was
completed in February 1999
As a result of the foregoing activities, the percentage of worldwide sales (excluding Japan)
accounted for by overseas-produced vehicles reached 52% in 1998 (percentage in 1994 was
48%).
5. Parts related
For major parts, such as engines and stamped parts, as well as facilities and materials,
TMC is making steady progress in localization, with local procurement being the rule.
In July 1996, TMC published the "Supplier's Guide" to foster understanding by new
suppliers of TMC's procurement activities and sales approach procedures, as well as to
help current suppliers understand better TMC's procurement policy and procedures. In
November 1997, TMC published the contents of its Supplier's Guide on the Internet to
facilitate access for prospective suppliers.
The "Global Optimum Purchasing System" is already in operation in North America and Europe,
and preparations are underway to establish the same system in Asia and Oceania. The following
three main pillars of this system are being enhanced:
New Supplier & New Technology Cultivation Program To cultivate new suppliers,
TMC has been holding new parts exhibits, JAMA/CLEPA business talks (in
November 1997), JAMA/MEMA business talks (in November 1998), theme
exhibits such as "New manufacturing methods exhibition" and "World No. 1
activities exhibition," etc. TMC is aggressively promoting new parts exhibits for
global suppliers.
Current Supplier Improvement Support Program As part of this program, an
expected value system is being implemented in 11 countries worldwide. A system
has been established in each region to spell out the expected values and to
recognize those suppliers who meet them. In February 1999, a procurement
policy explanation meeting was held in Japan with global suppliers in attendance.
International Price Comparison System This system went into full operation in
August 1995, and is being promoted as a system for updating/adding price data
and for applying such data to new products.
14
TOYOTA
Sales result of VW/Audi cars through DUO dealers were about 29,000 units. (The
cumulative total for 1995 through 1998 was about 119,000 units.) At the end of 1998,
the nationwide sales network consisted of 144 sales outlets.
Sales results of the Toyota Cavalier were about 7,000 units. (The cumulative total for
1996 through 1998 was about 28,000 units.)
Sales results of the Avalon made at TMMK were 4,000 units. (The cumulative total for
1995 through 1998, including the Scepter, was about 59,000 units.)
In April 1998, to further facilitate sales by suppliers, TMC opened a SuppliersCenter (in
ToyotaCity, AichiPrefecture) that can be used for exhibiting new parts, etc.
For the importation of originally equipped parts, TMC is promoting:
In April 1996, TMC established TACTI Corporation to procure and sell new brands of
aftermarket parts. In November 1996, TMC began the operation of its directly owned
"jms" car shops, and increased their number to 28 shops by the end of March 1999.
The locations include: Sapporo (3), Kushiro, Hakodate, Hachinohe, Morioka, Sendai,
Mito, Kooriyama, Utsunomiya (2), Chiba, Tokyo, Kanagawa (2), Aichi (2), Gifu, Kobe (2),
Okayama, Takamatsu, Hiroshima (2), Fukuoka, Oita, and Kumamoto.
Cooperation with TACTI has significantly bolstered the lineup of imported products
handled by TMC parts distributors. As part of a plan to increase the sales of TACTI
products, efforts to increase sales are continuing.
15
TOYOTA
TMC established an internal "contact point" in July 1995 to deal with inquiries related
to handling foreign cars, and informed interested parties through visits and
announcements. So far, there have been contacts from several foreign makers.
Global vision 2005 (1996 2005): Cho decided to focus more on localization - he believed that by
doing so, Toyota would be able to provide its customers with the products they needed, where they
needed them. This was expected to help build mutually benefiting, long-term relationships with
local suppliers and fulfill Toyota's commitments to local labor and communities. Cho defined
globalization as 'global localization.' Therefore, besides focusing on increasing the number of
manufacturing centers and expanding the sales networks worldwide, Toyota also focused on
localizing design, development and purchasing in every region and country.
Its implemented Kaizen and many philosophies. A new concept of just in time (JIT) also innovated.
Also they adopted few western management practices in addition to the traditional Japanese ones.
All practices gave ample of improvement as its Kentucky plant won four Gold plant quality award
from JD power and Association.
Global vision 2010 (2002 2010): In April 2002, Toyota announced another corporate strategy to
boost
its
globalization
efforts.
This initiative, termed the '2010 Global Vision' was aimed at achieving a 15% market share (from
the prevailing 10%) of the global automobile market by early 2010, exceeding the 14.2% market
share
held
by
the
leader
GM.
The theme of the new vision was 'Innovation into the Future,' which focused on four key
components: Recycling Based Society; Age of Information Technology; Development of
Motorization on a Global Sale; and Diverse Society.
16
TOYOTA
Considering the extremely competitive global market scenario and the nearly
saturated demand in its core automobile markets (US and Japan ) &measures that
could help the company achieve its global targets.
Toyota hopes that the 21st century will be truly prosperous for society, and aims to grow as a
company together with its stakeholders, including customers, shareholders, business partners, and
employees, through making things and making automobiles, while seeking harmony with people,
society, the global environment and the world economy.
In order to put these management principles into practice, the "Guiding Principles at Toyota Motor
Corporation" were established as the fundamental management policy. These principles were
adopted in 1992 to codify the business spirit handed down since the company's foundation, and
revised in 1997 to add the stipulation of legal compliance. Each of the seven items is a cornerstone
of Toyota's business activities.
With 2010 as the turning point, in April 2002 Toyota adopted the Global Vision 2010 which
proposes the corporate image for which Toyota should strive . Centered on the basic theme of
"Innovation into the Future A Passion to Create a Better Society," and with a view toward what
society is expected to be like in the medium to long term, the Vision sets the course for the multifaceted roles to be played by Toyota about society, people and the Earth.
The fundamental thinking for Global Vision 2010 has three elements:
1) To step beyond "harmonious growth" and demonstrate our responsibilities as a world leader;.
2) To benefit society through monozukuri (manufacture of value-added products) and
"technological innovation"; and
3) To share prosperity with our employees.
In order for each employee to realize the image that Toyota is striving to achieve in the future,
without complacency, it is important to undertake a paradigm change from the following three
perspectives:
(1) Technology development / Product development;
(2) Management; and
(3)Profit structures.
In June 2003, Toyota introduced a new management system that features, among other
enhancements, a streamlined board of directors and the new position of non-board managing
officer, aimed at speeding up operations by making the decision-making structure less vertical. At
the same time, the system hopes to strengthen corporate auditing efforts by increasing the number
of outside corporate auditors. With global competition growing evermore severe, Toyota is striving
to achieve the objectives outlined in Global Vision 2010 by boosting its competitiveness.
But it is very tough to achieve the goal of attain its 15% market share. The reasons behind it are as
follows17
TOYOTA
Under previous presidents, Toyota Motor Corp. had set a goal of reaching 15 per cent global market
share in global vehicle sales sometime after 2010. Until last year's financial crisis, which sent sales
crashing, it had been steadily expanding production toward that goal.
The executive, who spoke on condition of anonymity because he spoke to select reporters, said the
automaker will still use numbers in their business plans, but "the vision" had changed under
President Akio Toyoda.
Toyoda, who took office in June, wasn't comfortable with racing toward numbers, and instead
wanted to return to the old-fashioned "Toyota Way" of understanding customer needs and
developing products to fill them, the executive said.
"Our president doesn't like numbers or documents," he said.
But the executive made clear Toyota remains bullish on sales, especially in emerging markets,
which now make up half of the global auto market.
A recovery in the U.S. auto market must come with bigger sales in China, South America, the Middle
East and other emerging markets to work as the "two engines" of growth for a recovery, he said.
Toyota is hoping to sell more than 2 million vehicles in emerging markets this year, which will make
up about a third of its overall vehicle sales, the executive said.
Earlier this week, Toyota raised its vehicle sales forecast for the fiscal year through March 2010, to
6.6 million vehicles from its initial forecast for 6.5 million vehicles.
The appointment of Toyoda, the grandson of Toyota's founder, has been viewed as a morale boost
for workers, dealers and suppliers as the maker of the Prius hybrid and Lexus luxury car fights for a
recovery.
Toyota racked up its worst loss in its seven-decade history for the fiscal year ended March, and is
expecting to stay in the red for the fiscal year through March 2010.
Speaking on the New United Motor Manufacturing Inc., or NUMMI, plant in Fremont, California, a
joint venture with U.S. automaker General Motors Corp., the executive said Toyota will make a
decision by the end of August. Details on what to do must be worked out, he said without
elaborating.
So this situation shows that it is the tough time for Toyota and tough to attain the15% market
share.
18
TOYOTA
If we see the financial report of Toyota then we find in 2009 financial year Toyota beared the loss
of 437 billion yen. It only happens when any company could not sell up to that volume in which that
company take out its costs of production and other cost which is related to production and final
sales.
By above report of Toyotas consolidated financial summary, We can analyze that the condition of
Toyota in market will not be good because as they have projected for 2010, they will have to bear
the loss next year also, according to the FY2010 forecast report.
So its tough to attain the 15% market share till 2010.
19
TOYOTA
Focus on flexibility
By basing production on demand rather than simply on capacity, Toyota manages to keep
inventories, both of parts and of finished goods, to a strict minimum. But this is only one of the
more obvious advantages of Toyotas unconventional approach. By focusing on smaller production
lots and producing only what customers require when they require it, Toyota has developed a
flexibility and responsiveness that continues to set the standard for the industry.
With its Attention to continuous improvement (Kaizen), Toyota has attained die-changeover and
machine-set times that are a fraction of its competitors'.Thus its capacity for reacting quickly to
new market trends makes TPS an ideal system in todays rapidly changing global business
environment.
Just as important is ensuring quality control, and the delivery of reliable and dependable products
to customers. If a problem arises at any stage of production, Toyotas automatic error detection
system, called Jidoka, flags the defect and enables line employees to take the necessary steps to
resolve it on the spot even if that means bringing production to a halt.
By calling attention to the equipment when an error first occurs, the Toyota system makes it easier
to identify the source of the problem and prevents defects from progressing to subsequent stages
of production. Only a system as agile and quality-oriented as TPS could make such measures
economically possible.
This approach not only helps eliminate waste, which makes TPS more respectful of the
environment, it also means that customers can rest assured that Toyota products will conform to
the highest standards of quality, reliability and durability.
20
TOYOTA
PRIMARY ACTIVITIES
Inbound Logistics:
Here goods are received from a company's suppliers. They are stored until they are needed on the
production/assembly line. Goods are moved around the organization. Toyota motors purchase their
raw material from all around the world. In order to maximize their availability of raw material
Toyota motors maintain good relationship with their suppliers. Toyota use JIT (Just In Time)
approach for handling of raw material.
Operations:
This is where goods are manufactured or assembled. Individual operations could include organizing
the parts to make new cars & the final tune for a new car's engine. Toyota motors are known for
their reliability which comes from efficient operations.
Outbound Logistics:
The goods are now finished, and they need to be sent along the supply chain to wholesalers,
retailers or the final consumer. Toyota motors manage their own Show rooms in different
countries. Toyota motors make their product easily assessable.
Marketing and Sales:
In true customer orientated fashion, at this stage the Toyota motors prepares the offering to meet
the needs of targeted customers. This area focuses strongly upon marketing communications and
the promotions mix.
Service:
This includes all areas of service such as final checking, after-sales service, complaints handling,
training and so on. Toyota value their customers.
21
TOYOTA
SUPPORT ACTIVITIES
Procurement:
This function is responsible for all purchasing of goods, services and materials. The aim is to secure
the lowest possible price for purchases of the highest possible quality. Toyota motors will be
responsible for outsourcing (components or operations that would normally be done in-house are
done by other organizations), and e-Purchasing (using IT and web-based technologies to achieve
procurement aims).
Technology Development:
Technology is an important source of competitive advantage. Companies need to innovate to
reduce costs and to protect and sustain competitive advantage. Toyota motors implemented
production technology, Internet marketing activities, lean manufacturing, Customer Relationship
Management (CRM), and many other technological developments.
Human Resource Management (HRM):
Employees are an expensive and vital resource. Toyota motors manage recruitment and s election,
training and development, and rewards and remuneration. Toyota motors consider their
employees as HUMAN CAPITAL. The mission and objectives of the Toyota motor is the driving force
behind the HRM strategy.
Toyota motors uses following techniques to retain their employes:
Recruitment
Selection
Training and development
Compensation
Maintenance
Firm Infrastructure:
This activity includes and is driven by corporate or strategic planning. Toyota motors implemented
Management Information System (MIS), and other mechanisms for planning and control in
different departments.
22
TOYOTA
Austria
Belgium
Bosnia Herzegovina
Bulgaria
Canary Islands
Croatia
Cyprus
Czech Republic
Denmark
Eire
Estonia
Finland
France
Germany
Gibraltar
Great Britain
Greece
Sweden
Switzerland
Turkey
Ukraine
Toyota Japan
Toyota US
Hungary
Iceland
Israel
Italy
Kazakhstan
Latvia
Lithuania
Luxembourg
Macedonia
Malta
Moldova
Monaco
Netherlands
Norway
Poland
Portugal
Romania
Russia
Serbia and Montenegro
Slovakia
Slovenia
Spain
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BRRANDS :
CARS
TRUCKS
TACOMA
TUNDRA
HILUX (VIGO)
YARIS
COROLLA
MATRIX
CAMRY
CAMRY SOLARA
PRIUS
VENZA
AVALON
HYBRIDS
RAV4
FJ CRUISER
HIGHLANDER
SEQUORIA
4 RUNNER
LANS CRUISER
SIENNA
PRIUS
CAMRY HYBRID
HIGHLANDER HYBRID
Ford
Holden
BMW
AUDI
Honda
Jaguover
Lexusar
Land
Mazda
Mercedes
Nissan
Peugeot
Proton
Daihatsu
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PESTEL Analysis
Political
Laws and government regulations have affected this industry since the 1960's. Almost all of
the regulations come from consumers increasing concerns for the environment and the
concern for safer automobiles. The first safety act passed by Congress was in 1966 and was
called the National Traffic and Motor Vehicle Safety Act (Gale, 2004). This act forced
manufacturers to improve the safety for the passengers, the driver visibility, and the braking
of the car. It also stated that manufacturers had to inform the public when it had a recall on
the cars.
The motivation for the passing of this safety act was Ralph Nadar's 1965 novel Unsafe at
Any Speed: The Designed-in Dangers of the American Automobile. (Gale, 2004) Safety
concerns were not the only concerns during this period. There was also growing concern for
the environment even before the oil crisis. According to the article "Motor Vehicles and
Passenger Car Bodies", Congress passed acts in 1965 and in the 1970's. The Vehicle Air
Pollution and Control Act was passed in 1965. This was the first act to set standards for
automobile pollution. Then in the 1970's, Congress passed the Clean Air Act that demanded
a 90% decrease in automobile emission within the next six years (Gale, 2004).
In the 1970's the oil crisis caused another act to be passed. The Energy Policy and
Conservation Act of 1975 stated that all automobiles must meet a certain mileage per
gallon. The act demanded that all automobiles had to meet a standard of 20mpg by the
1980 model and then 27.5 mpg for the 1985 model. Then in 1992, the Intermodal Surface
Transportation Act required the installation of front airbags. (Motor Vehicles and Passenger
Car Bodies, 2004)
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Demographics
For many years now, the baby boomers generation has been the main target market for just
about every product. As their generation is getting ready to retire and spend less money,
the automakers are looking at the younger generations. Right now, the focus is starting to
turn towards the baby boomers children (Generation X) who are in their mid 20's and 30's
and Generation Y(Winter, 2002). GenYer's are now hitting the age where they are able to
buy cars. According to Drew Winter, "Analysts say that five years from now Gen X and Gen Y
combined will account for at least 40% of vehicle sales."
Americans today are choosing to purchase larger vehicles over passenger size vehicles.
Today's generations are still buying the trucks, minivan and especially the SUV's, even with
the ridiculous gas prices. It is not only the younger generations either; the boomers who are
all reaching the retirement age are more interested in the bigger vehicles (Fetto, 2001).
There activities after retirement are way more active then their parents. They are not just
sitting around and playing golf or going on vacations. They are still working in some ways
and being more active in their grandchildren's lives. Since the boomers are still active, they
want to drive the same vehicles that their children drive in order to make life that much
easier. Studies show that trucks, minivans and SUV's report increased sales nearly every
year (Fetto, 2001).
The manufactures target the sales of their cars to certain people and their geographic
location. Convertibles are not marketed toward people who live in parts of the world that
are cold all year round. A good example of targeting markets is in Paris. A new is trying to be
passed that SUVs are not allowed inside the city. They are taking up to much room and the
vehicles use a lot of fuel. If this law is passed then SUV's will not be marketed toward people
who live in Paris. Another example is that minivans are mainly marketed toward "soccer
moms". They are marketed toward the moms because they are perceived, as needed a lot
of room to haul kids around and the easy access the minivans provide.
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Economic
The automobile industry has a huge impact on the U.S. economy. The University of Michigan
and the Center for Automotive Research stated that this industry is the major user of
computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber.
(Gale, 2004) The study also showed that for every autoworker there are seven other jobs
created in other industries (Gale, 2004). These industries include anything from the
aluminums to lead to vinyl. In 2001, the total sales of automobiles were 3.7% of the nation's
gross domestic product. This percentage works out to be $375 billion dollars in sales.
Technology
The internet has affected just about every industry in the world and has also had a huge
impact on the automobile industry. A study was conducted by J.D. Power and Associates in
2002 and involved more 27,000 new vehicle buyers. The study showed that 60% of the
buyers referred to the internet before making their purchases and out of that 60%, 88%
went to the auto websites before going and taking a test drive. Business-to-business
marketplaces have given the industry many opportunities because of the internet, such as
more efficiency and lower cost. Ford, GM, and Daimler Chrysler announced in 2000 their
plans to create a global online exchange for suppliers and the original equipment
manufacturers. The exchange was originally called NewCo, and then it was changed to
Convisint. According to Motor Vehicles and Passenger Car bodies, "In August 2002 General
Motors announced it was about to begin sending requests for quotes to suppliers through
Covisint using a tool called Quote Manager."
Concerns for the economy and global warming have caused the automobile industry to
develop alternate fuel vehicles. In the beginning, automakers did not want to look into the
development because of the high cost and the many risks involved. Because of new
legislation, they had no choice but to come up with the technology to make the fuelefficient cars. The automakers decided that electric cars would be the best way to meet the
legislation demands. "Early models were unpopular because of slow cruising speeds and lack
of performance, but by the end of the century, electric car production began to be
practical."(Motor Vehicles) At the end of the 1990's manufacturers was coming up with the
technology to produce internal combustion engine with an electric motor. Toyota and
Honda were both selling the hybrid vehicles at retail value in 2001.
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Global
General Motors, Ford Motor Company, Daimler Chrysler, BMW, Volkswagen, Volvo, Toyota,
Mazda, and Nissan Motor Company come together to create a new trade association
created the Alliance of Automobile Manufacturers (Gale, 2004). The organization was to
replace the American Automobile Manufactures Association that only consisted of American
manufacturers, the goals of the associations "were to work together on public policy
matters of common interest to provide credible industry information and data, and seek
consistent global regulatory standards (Gale, 2004). The manufacturers also started merging
in the late 1990's. American companies started buying foreign manufacturers created some
of the largest foreign takeovers. In 19998 Daimler-Benz A.G. merged with Chrysler
Cooperation to form DaimlerChryler A.G (Gale, 2004). Some other big mergers were Ford
with Volvo, and General Motors and Saab (Gale, 2004).
Sociocultural
Today's society judges people on the type of car you drive. Society does not like to admit to
this but it is very true. Manufactures know this happens and targets their markets by these
thoughts. For example, anyone who drives a mini van is perceived as a soccer mom. This is
because the manufactures target mini vans to mothers. Anyone who drives a nice vehicle is
thought to be wealthy. No one wants to be seen driving an unattractive piece of junk
because of what other people will think of him or her. Consumers also just feel better when
they are driving a nice or new car, if makes them feel better about themselves.
Another aspect of the sociocultural is the environmental concerns for the need of fuelefficient vehicles. Many environmentalists are worried about the impact that the gas cars
have on the environment. There is even legislation that requires cars to average a certain
miles per gallon.
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The buyers do not have the ability to integrate backwards into the industry. If they want a car then
they have to purchase it from a dealership.
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SWOT ANALYSIS
STRENGTH
Brand image
Market Leadership
Easy availability of spare parts
Dealership network
Suitable for rural area
WEAKNESS
Always charge the premium price
Management Control by local partner
OPPORTUNITY
Switching diesel market toward petrol and CNG market
Failure of competitor model
Unacceptability of competitor model
Price increase in 1000cc
THREAT
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4 Ps of Toyota
PRODUCT is anything that can be offered to the market to satisfy a want or need
That includes
Physical goods
Services
Experiences
Events
Person
Organization
Information and ideas
DEMOGRAPHIC SEGMENTATION
FAMILY SIZE:
Large family size as in india would increase opportunities for growth in sales of Innova or Fortuner.
INCOME:
People falling in category of upper middle high income group and who have ability and willingness
to buy,would go in for Toyota cars like land cruiser,prado,camry,etc.
PRICING STRATEGY
OPTIONAL-FEATURE PRICING: e.g. an Innova customer can order mud flaps,side steppers or other
accessories.
PROMOTINAL PRICING:
1. Low Interest Financing: This technique is for short period and is mainly used in festive
seasons.
2. Longer Payment Terms: The company stretchers loans over longer period and thus lower
the monthly payments.
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PRODUCT MIX:
SEDAN
1. COROLLA ALTIS
2. COROLLA ALTIS SPORT
3. CAMRY
SUV/MUV
1. TOYOTA INNOVA
2. FORTUNER
3. PRADO
4. LAND CRUISER
PROMOTION:
PSYCHOLOGIACAL SEGMENTATION:
SOCIAL CLASS:
People who belong to upper middle class and higher social status would opt for SUVs/MUVs or
sedan likecamry etc.
PERSONALITY:
People who are in sporty attitude having unique style statement would settle for Toyota Altis sport
model or Fortuner which would exhilarate their senses.
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MARKETING DEPARTMENT
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