Research Report on Toyota

Motors

Submitted By:

Saad Khan

MBA-2131150
Submitted To:

Maam Mehreen
Ashraf

National College of Business

Administration & Economics

Contents

Introduction & History:

TMC is an abbreviation of Toyota Motors Corporation, it is a Japanese multinational
automaker headquartered in Toyota, Aichi, Japan. The company was founded by Kiichiro Toyoda
in 1937 as a spinoff from his father's company Toyota Industries to create automobiles. Three
years earlier, in 1934, while still a department of Toyota Industries, it created its first product, the
Type A engine, and, in 1936, its first passenger car, the Toyota AA. Toyota Motor Corporation
group companies are Toyota (including the Scion brand), Lexus, Daihatsu, and Hino Motors,
along with several "nonautomotive" companies. TMC is part of the Toyota Group, one of the
largest conglomerates in the world. Kiichiro Toyoda had traveled to Europe and the United States
in 1929 to investigate automobile production and had begun researching gasoline-powered
engines in 1930. Toyoda Automatic Loom Works was encouraged to develop automobile
production by the Japanese government, which needed domestic vehicle production, due to the
war with China. Although the Toyota Group is best known today for its cars, it is still in the
textile business and still makes automatic looms, which are now computerized, and electric
sewing machines which are available worldwide.
Toyota Motor Corporation is one of the worlds leading automakers, offering a full range
of models, from mini vehicles to large trucks. Global sales of its Toyota and Lexus brands,
combined with those of Daihatsu and Hino, totaled 6.78 million units in CY2003. Besides its
own 12 plants and 11 manufacturing subsidiaries and affiliates in Japan, Toyota has 45
manufacturing companies in 26countries/locations, which produce Lexus- and Toyota-brand
vehicles and components. As of March 2003, Toyota employs 264,000 people worldwide (on a
consolidated basis), and markets vehicles in more than 140 countries. Automotive business,
including sales finance, accounts for more than 90% of the company's total sales. Diversified
operations include telecommunications, prefabricated housing and leisure boats.
Mission Statement:
To provide safe & sound journey. Toyota is developing various new technologies from
the perspective of energy saving and diversifying energy sources. Environment has been first and
most important issue in priorities of Toyota and working toward creating a prosperous society
and clean world.

Vision:
To be the most respected and successful enterprise, delighting customers with a wide
range of products and solutions in the automobile industry with the best people and the best
technology.

The most respected

Delighting customers

Wide range of products

The best People

The best technology

Strategies:
Consistent with the overall corporate goals, Toyota Motor Corporation has adopted
several strategies in order to implement the objectives above. These include:
a unique management system-focused on prompt decision-making and speeding up operations
a range of in-house committees a system that emphasizes problem-solving and preventative
measures-done by immediately flagging problems and sharing them with the people in the
organization.
Policies:
Although realization of Toyota's goals are of the high importance, TMC
recognizes the importance of increasing their feasibility by instituting an underlying set
of policies and principles that must be considered in all activities in order to meet the
objectives. The first is a set of Guiding Principles that outline the policies and
philosophy by which all transactions should take place. The second is a set of behavioral
guidelines, known as The Toyoda Precepts, which dictate the manner in which all
transactions should occur. Both of these are summarized below;
Guiding Principles:
1. Honor the language and spirit of the law of every nation
2. Respect the culture and customs of every nation and contribute to economic and social
communities

3. Provide clean and safe products

4. Create and develop advanced technologies
5. Foster a corporate culture that enhances individual creativity and teamwork value
6. Pursue growth in harmony with the global community through innovative management.
7. Achieve long-term growth open to new partnerships
The Toyoda Precepts
1. Be contributive to the development and welfare of the country by working together
2. Be at the vanguard of the times through endless creativity & inquisitiveness
3. Be practical and avoid frivolity
4. Be kind and generous
5. Be reverent and show gratitude

Key Players:
Some of main names of TMC are following;

The Toyota Motor Corporation has several key members some of them are included
below;

Founding President and Board Member: Katsuaki WatanabeFujio Cho

Chairman, Katshuhiro Nakagawa, Vice Chairman, as well as several Senior Managing

Directors

Takeshi Suzuki of the Finance and Accounting Group

Chairman: Shoichiro Toyoda

Hiroshi Okuda as a Senior Advisor and Member of the Board.

Four Core Values of Toyota Motors:

Toyota Motors four core values are;

1. Customer First

2. Respect for People

3. International Focus

4. Continuous Improvement and Innovation

Competition:

Honda
Suzuki
Ford
Volkswagen AG
Nissan Motor Co. Ltd.
Peugeot S.A.
Mitsubishi

Customers:
Toyota Motors are manufacturing different class of cars for different class of people.
They have cheap and expensive cars, people can buy them according to their purchasing power.

Organizational Structure:

CEO
Executive
Vice
Presidents
CFO

CIO

MDO

PAO

Segment's
Senior
Officers

Segment's
Senior
Officers

Segment's
Senior
Officers

Segment's
Senior
Officers

Team
Leaders

Team
Leaders

Team
Leaders

Team
Leaders

Globalization:
Interaction and integration between people across the world is getting closer and closer
day by day. As the technology advances, distances decrease. For this reason a company needs to
keep up with the latest trends of globalization. The societies are now becoming even more
integrated with each other through business and communication. This is the reason why many of

TMCs divisions which were previously operating on a national level were developed to look
after global strategies and developments. This is a difficult task as the consumers of each region
are different and have different buying patterns. The task of the company would be to analyze
those patterns of each of those companies and then offer product accordingly.

Decision Making Process:

If any problem rises at Toyota Motors they adopt the following process to resolve the
issue. Issues at Toyota are mostly identified by the feedback of the customers and employees of
the Toyota Motors who are working on the field and interacting with the people.

Frame the Problem

Choose the People
The Best Process
Create the Alternatives
Define the Values

Employee Empowerment:
Employee engagement literally means that all employees participate in
activities to achieve the company`s goals. But it may not be as easy as it
sounds. When a company loses its flexibility and vision, each department
may stop considering the company`s interests as a whole. They may think
that even if their company loses its competitiveness, it`s all right as long as
their own department is fine. This narrow-mindedness or sectionalism can
emerge in any organization.
Toyota motivates their employees, by involving them in team work.
The better their team does, the more they are rewarded by improvements to
their work environment. They have an extensive training team that all of
their employees work with. Therefore, the motivation comes within each
individual based on the improvement of their work conditions.
As a company, Toyota seek to instil in each employee the desire to be more, and to achieve more.
TMC strive to create an environment in which this enthusiasm is nurtured and encouraged, in
which people are rewarded for their efforts.
It begins at the very start of an employees career at the company with fundamental training
about The Toyota Way. Training courses are offered to office workers, as well as employees in
production, retailers and the after sales network.
Part of these fundamentals is a specific problem solving methodology, coined Toyota Business
Practices, which is taught via the development and assessment of an employee-nominated
workplace project and on-the-job training.

SWOT Analysis:

Strength

Weakness

Oppurtunity

Threats

Strong Brand
Image

Absence of
Small Cars

Innovation

Competition

Production
System

Production
Capacity

Green
Vehicles

Inreasing Oil
Prices

Weak
Presence in
Emerging
Markets

Inernational
Expansion

Changing
Customer
Needs

Growth
through
Acquistions

WorldWide
Politics

Diversified

Product
Portfolio

Global

Organization

Industry
Leader in
Manufacturing

Research and Design:

Toyota Motor Corporation's most dominant research objective is to "search for the means
to produce the ultimate Eco Car". In addition to translating this vision into a reality, they also
strive to enhance and improve the present vehicle designs they manufacture, as well as the
quality and efficacy of the components that comprise them. Overall, the majority of their
research involves developing from the perspective of achieving energy security and diversifying
energy sources.

The aspect of the corporation budget has been consistently increasing for the past decade,
reflecting the emphasis TMC is putting on their R & D segment of the company. Consistent with
company objectives and their mission, this is partially due to the meticulous research going into
the improvement of presently existing models, in order to assure an absolutely superior standard
of quality and safety. This is undoubtedly a function of the previous litigious issues TMC has had
to deal with regarding safety standards. The other objective of the R & D operation simply deals
with improvement of old models and the creation of new and innovative vehicles. This is
consistent with the corporation's marketing objectives to become the dominant auto manufacturer
world-wide and to corner all aspects of the market. This includes targeting the environmentally
aware consumer, as well as the cost-challenged consumer who can benefit from the purchase of a
vehicle that uses alternative fuels, avoiding the necessity of falling prey to rising gas prices.
The role of technology in the R & D department is tantamount to none, utilizing only the
most advanced means to create a second generation of selected models. Some of these include
the Celica, which is now known as the Privia, the Soarer (which is identified in the states as The
Lexus), as well as a new and improved Tacoma, Prius and Solara. In addition, a large aspect of
this upgrading includes development of interior and exterior designs that are more suitable to
customer preferences, as well as functional. Lastly, a great deal of improving pre-existing models
entails the testing of products and parts manufactured in the United States in an attempt to ensure
consistent quality and build on it. More effective emissions systems are a present focus regarding
improving the components of vehicles.
While the role of research and design managers is to act as a liaison between
upper management and the workforce, one of their most significant responsibilities is to
work as part of a team, ensuring that the research and design efforts are consistent with
the other goals of the corporation. For example, the design implementations should
move towards vehicles and components that are more environmentally friendly. In
addition to this, improved designs should include the variable of increased costefficiency for both the consumer and corporation, as well as take into consideration the
feedback from buyers and dealers, as is reflected by sales and marketing surveys. This
inventory of criteria is demonstrative of the cross-functionality of all R & D goals, as well
as the amount of cross-functional teamwork that is necessary to facilitate such

objectives. The table below reflects TMC's present research and design projects and
goals.
PRESENT RESEARCH AND DESIGN PROJECTS
Development of Lean Burn Gas Engines
Development of Common Rail-Direct Diesel Engines
Development of Modified Engines that run on Alternative Fuel
(such as compressed natural gas)
Development of electric vehicles
Development of Improved Hybrid Vehicles & Fuel Cell Hybrid Vehicles
Creation of Enhanced Exterior and Interior Designs
Testing of Products and Part from The United States
(including Emissions)
Creation of Improved "Second Generation" Vehicles
Modification of Japanese Base Models to reflect Tastes of Each of the Five Major Selling
Markets
In addition to the objectives and projects listed above, Toyota Motor Corporation is
presently working on its next generation hybrid vehicle with the installation of the THS II. The
THS is an acronym for the Toyota Hybrid System, which was already mass marketed in the
Toyota Prius. With the production of the Prius, Toyota outperformed all other companies in this
aspect, including the "Big Three". At the time, no other car company had yet manufactured or
developed such a beneficial alternative system and certainly none were close to mass marketing
such a product. This was a huge feat for TMC, truly confirming its future in the forefront of the
industry. Now, while other companies are still challenged to create such an engine, Toyota is
already developing its second generation hybrid system, appropriately named the THS-II.
Toyota's dedication to its hybrid research, as well as its other ventures, is demonstrative of the
cross-functionality of the Research and Design projects and their dedication to the numerous
issues TMC has claimed to support. These include the environment and alternatives to rising fuel
costs.
Race Car Development
One last and final endeavor of the Research and Design teams at Toyota Motor
Corporation is that of developing race cars. Specializing in the production of the Formula 1,
TMC works to create a better performing race car. They are presently becoming increasingly
involved in the race circuit.

Financial Controls:
TMCs financial services operations are primarily handled by Toyota Financial Services
Corporation, which has overall control of TMCs financial services subsidiaries worldwide.
Toyota Financial Services provides financial services primarily for vehicle purchases and leases
to approximately 8.5 million customers in 33 countries and regions worldwide.
Operating activities during the period under review included enhancing our relationships
with distributors by providing financial products and services that met various national and
regional customer characteristics among regional strategies.
In Japan, in addition to automotive financing, Toyota Financial Services broadens
customer relationships through the provision of credit cards, home loans and other sound
financial services designed to closely match the needs of our customers.
Operational Controls
Consistent with Toyota's philosophy-oriented environment the corporation has
established an operations system for production that is tailored to not only their goals, but the
strategy and awareness by which they conduct all business. It is a "system that is steeped in the
philosophy of the complete organization and imbues all aspects of production, it has come to be
well known and studied worldwide. It is primarily based on two principles: Jidoka and "Just in
Time" manufacturing.
Jidoka
Jidoka is a concept that highlights the visualization of problems and identifies them
before manufacturing is completed. Utilizing state of the art equipment, this technology
identifies a malfunction or a defective part immediately at its time of production. The machine
involved is programmed to recognize this deficiency and automatically stop, forcing the
operators to address the problem. As a result, only products satisfying the quality standards will
be passed on to the next process on the production line. Such a process promotes cost efficiency
within the corporation, while ensuring an absolute standard of quality at all times. Undoubtedly,
this is also a response to TMC's earlier litigious problems resulting from safety defects,
providing an example of the company's pursuit to address a prior weakness and transform it into
a positive strength. This process also exemplifies the corporation's ability to adapt, conforming to
requirements not previously met and changing to better the entire operation.

Just-in-Time
The second concept inherent in the Toyota manufacturing system is that of "Just-in-Time"
manufacturing, which declares that products or vehicles are produced only as consumer orders
and demand require. It is this system that has, in part, allowed Toyota to evade the issues of
excess capacity that Ford and GM have encountered. By adhering to such a system, costs can be
kept at a minimum, while profit can still be maximized avoiding the necessity of selling at a loss
just to move aging product.
The combination of Jidoka and "Just in Time" production is often attributed as the cause
of the financial troubles that have fallen on domestic dealers. Technology plays a vastly
significant role in TMC's manufacturing operations, immensely cutting down on lag time or time
wasted from the slower pace of total human production. This is in contrast to TMC's American
opponents, who still engage in predominantly human labor. Toyota does, however, still engage a
large percentage of industry employees-- enough to truly make an impact on the economy of any
locality where they set up an establishment.

Social Contributions:
Environment:
Toyota not only acquires know-how through activities and tests in the Forest of Toyota
project and uses it in environmental education, but also delves deep into the background of
environmental issues. The company implements forestry activities, human development, the
activities grant program and employee volunteer activities while emphasizing cooperation with
communities.
Traffic Safety:

With the ultimate goal of completely eliminating traffic casualties, Toyota promotes
initiatives to improve traffic c safety, viewing people, vehicles and the traffic c environment as
an integrated whole. As one part of the trinity, Toyota has promoted enlightenment programs that
urge people to be more conscious of traffic safety. These programs started in the 1960s and
continue today, even at overseas affiliates.
Education:
Toyotas philosophy says manufacturing begins with educating people. We believe that
philosophy will help us contribute to building an affluent and sustainable society, and for that
reason, we promote programs that help people get work and help students go to school.
Volunteer:
Companies and employees need to take an active part in developing local communities to
promote sustainable growth. Toyota supports employee volunteer activities to develop
communities where everyone respects and supports each other.
Innovations:
TMC can apply the following innovative systems in their cars,

Conclusion:
Overall, Toyota Motor Corporation is a corporation that has the potential to become the
front-runner of the auto manufacturing industry. In addition, it has the sustainability to remain a
dominant entity and not just a periodic success. Of the many qualities that are favorable to
making such an accomplishment possible, there are a few that seem to have the most significant
impact in this area. The first of these strengths is TMC's all surrounding emphasis on the value of
humans and the necessity of instilling within them a sense of value. Through the Guiding
Principles, the Toyoda Precepts, and the manner in which management is executed, employees at
Toyota are aware of their unique, and appreciated, position within the company. Unlike many
American based companies, Toyota recognizes the value in valuing employees. For, in the end, it

is their performance and motivation that can "make or break" the production and financial
success of any corporation.
Ironically, another of TMC's strengths is in its application of technology and the
utilization of machinery to aid in the manufacturing process. One of the first to execute such a
system, their unique concepts of Jidoka and Just-in-Time have allowed them the speed and
precision in manufacturing vehicles that has afforded them the opportunity to increase
production profits and close the gap between themselves.
Toyota may also face future challenges as a function of its diverse expansion. Seemingly
enjoying exploration into areas other than the auto industry, TMC must be cautious not to spread
itself too thin. This is the downfall of many a corporation who enjoy success, seize the
opportunity to expand into broader areas, and then lose sight of their fundamental area of
expertise. However, in light of TMC's continual growth, it appears that this would not be an issue
at this time or any time in the near future.