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Report On Corporate Level Strategies of Toyota': Group No. 6: SYBBA B
Report On Corporate Level Strategies of Toyota': Group No. 6: SYBBA B
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Table Of Content
Sr No.
Topic
Name
Page No.
Introduction:
Vision & Mission
analysis
Surbhi Mehta
B032
Strategy:
Diversification
Abhilasha Mohan
Ram B034
Strategy:
Combination
Rohan Negi
B035
10
Strategy:
Integration
Dhawal Pasad
B037
15
SWOT Analysis
Mihir Mandrekar
B030
19
Conclusion
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INTRODUCTION
The Toyota Group ( Toyota Gurp) is a conglomerate company that
work together and mostly share the Toyota brand. Toyota Motor Corporation
abbreviated TMC, is a Japanese multinational automaker headquartered in Toyota, Aichi,
Japan. It is the third-largest automobile manufacturer in 2011 by production
behind General Motors and Volkswagen Group and the eleventh-largest company in the
world by revenue. In July 2012, the company reported it had manufactured its 200millionth vehicle.
The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's
company Toyota Industries to create automobiles. 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.
The primary companies in the group are Toyota Industries Corporation and Toyota Moto
Corporation. It is also considered by many to be a keiretsu, although it does not contain a
major bank.
A keiretsu (system, series, grouping of enterprises, order of succession) is a set
of companies with interlocking business relationships and shareholdings. It is a type of
informal business group.
The member companies own small portions of the shares in each other's companies,
centered on a core bank; this system helps insulate each company from stock market
fluctuations and takeover attempts, thus enabling long-term planning in innovative
projects. It is a key element of the automotive industry in Japan.
Majority-owned subsidiaries
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VISION
A vision statement for a company or organization focuses on the potential inherent in the
company's future, or what they intend to be. It contains references to how the company intends to
make that future into a reality, the vision statement is simply a description of the what,
meaning, what the company intends to become.
Future of Mobility
Commitment to Quality
Constant Innovation
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The Statement gives voice to who they are as a global enterprise, the values they embody, an the
good that they are striving to accomplish. Designed to inspire all Team Members to even greater
things, the Statement emphasizes Toyota's commitment to quality, innovation and respect for the
planet. At its heart is this signature statement: We aim to exceed expectations and be rewarded
with a smile.
One aspect of the vision is respect to the planet
The process for developing an Environment Action Process begins with the parent company in
Japan, Toyota Motor Corporation (TMC). Every five years, TMC develops a global five-year
environmental action plan (EAP).
Eg The ingenuity and persistence of team members at their Cambridge, Ontario plant, have
found a way to reduce annual water consumption of water by more than 13.2 million gallons
(50,000 cubic meters).
This has made their plant in Princeton, Indiana, honor as one of only two North American
recipients of the Water Champion award.
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MISSION
A mission statement is a statement of the purpose of a company, organization or person, its
reason for existing.
The mission statement should guide the actions of the organization, spell out its overall goal,
provide a path, and guide decision-making. It provides "the framework or context within which
the company's strategies are formulated."
TOYOTAS
MISSION
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.
The mission statement of Toyota Indus Motors Company Ltd, defines the organization's
purpose and primary objectives. Its prime function is to provide a safe and sound
journey.
It provides a reason for being, which is one of the most important aspect of a mission
statement. The mission statement is clear and concise and provides focus and a sense of
direction.
Toyotas focus as mentioned in the mission statement is to develop new technologies and
to conserve energy. They also seek to be environment friendly.
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Background
In 1933, Toyoda Automatic Loom Works, Ltd created a new division devoted to the
production of automobiles under the direction of the founder's son,
Kiichiro Toyoda.
Toyoda Automatic Loom Works, Ltd was encouraged to develop automobile production
by the Japanese government, which needed domestic vehicle production partly due to the
worldwide money shortage and partly due to the war with China
Toyota Motor Co. was established as an independent and separate company in 1937.
The company was eventually founded by Kiichiro Toyoda in 1937 as a spinoff from his
father's company Toyota Industries to create automobiles.
Toyota currently owns and operates Lexus and Scion brands and has a majority
shareholding stake in Daihatsu Motors, and minority shareholdings in Fuji Heavy
Industries Isuzu Motors, and Yamaha Motors.
Toyota Industries has promoted diversification and expanded the scope of its business
domains to include textile machinery, automobiles (vehicles, engines, car airconditioning compressors, etc.), and materials handling equipment, electronics, and
logistics solutions.
The company includes 522 subsidiaries.
In 1983, Toyota Financial Services became a new subsidiary of Toyota Motor
Corporation in Japan. The Toyota Financial Services brand identity was officially
launched in December 1999.
TFS is a service mark that acts as an umbrella brand name used to market the products of
Toyota Motor Credit Corporation (TMCC) and Toyota Motor Insurance Services, Inc.
(TMIS). TMCC was incorporated in California on October 4, 1982, and commenced
operations in May 1983 by approving a finance contract for a used Toyota Corolla in
Denver, Colorado.
TFS provides retail and wholesale financing, retail leasing, vehicle protection plans and
certain other financial services to authorized Toyota, Lexus and Scion dealers, Toyota
forklift and Hino dealers as well as Toyota Material Handling, U.S.A. dealers, affiliates,
and their customers in the United States.
http://www.toyotafinancial.com, http://www.toyota.com
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Analysis
Toyota Industries: Sales by Business Segment (FY 2012, Consolidated Basis)
"FY 2012" refers to the fiscal year ended March 31, 2012, and other fiscal years are referred to in a
corresponding manner.
http://www.toyota-industries.com/corporateinfo/corpdata/
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3.
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Background
Toyotas initial attempt to export compact cars to the U.S. in 1958 had failed because of
poor Quality and styling. After redesigning their automobiles and improving quality, they
made a Second, and successful, entry into the American market.
The oil crises of 1973 and 1978-79 greatly increased U.S. demand for compact and subcompact cars as gasoline shortages and sharp price increases occurred. Toyota and several
other Japanese manufacturers were well positioned to supply this growing market with
their high quality, fuel-efficient vehicles.
The U.S. companies were not able to produce, in the United States, small cars at as low a
price or as high in quality as those made in Japan. Thus, at the time of the oil crises,
American manufacturers were not in a position to compete effectively in the small car
market.
When the American industrys marketing and manufacturing efforts failed to recapture the
sub-compact market from the Japanese, the Reagan Administration convinced the Japanese
government to impose a limit on its exports --- a Voluntary Restraint Agreement (VRA) --in 1981.
The Japanese manufacturers still desired to increase market share in the U.S. beyond what
the VRA would permit. Honda thus started manufacturing automobiles in a plant in
Marysville, Ohio in 1982 and Nissan began production in Smyrna, Tennessee in 1983.
Toyota preferred to manufacture only in Japan and export their cars to world markets. With
the VRA, and Honda and Nissan now producing cars in the U.S., Toyota felt that it also
had to establish manufacturing facilities there.
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Analysis
1. How did the Joint Venture begin?
NUMMI was established at the site of a former General Motors Fremont Assembly
site that had been closed two years earlier in 1982 (GM plant since 1960).
GM and Toyota reopened the factory as a joint venture in 1984 to manufacture
vehicles to be sold under both brands.
Roger Smiths GM provided the land and buildings as its contribution to NUMMI
and Toyota pumped in at least $100M cash money, along with manufacturing
know-how.
Toyota held 50% of the company and GM the rest, with management largely from
Toyota.
2. Reason for JV?
The idea of reopening the plant emerged out of the need that GM had to build highquality and profitable small cars and the need Toyota had to start building cars in
the United States, a requirement due to the possibility of import restrictions by the
U.S. Congress.
A joint venture was viewed as an approach that would lower the risk while
providing help in overcoming difficult potential problems.
Toyota stated that it wanted to:
i. Gain experience with American unionized labor
ii. Gain experience with American suppliers
Toyota grew up with its own semi-captive set of keiretsu suppliers.
Working with new suppliers was always a serious matter for Toyota.
iii. Help diffuse the trade issue between the United States and Japan.
NUMMI would act as an opportunity for General Motors to learn Toyotas
i. Lean manufacturing- It is a production practice that considers the
expenditure of resources for any goal other than the creation of value for
the end customer to be wasteful, and thus a target for elimination.
ii. Toyota production system- comprises its management philosophy and
practices. The TPS organizes manufacturing and logistics for the
automobile manufacturer, including interaction with suppliers and
customers.
iii. To obtain high quality vehicles for its Chevrolet division.
iv. GM hoped to apply what it learned from NUMMI to its other plants.
On the other hand, Toyota was already trailing Honda Motor Co. Ltd & Nissan
Motor Co., which was by then building cars in the US.
Also, GM had previously tried to compete with Japanese competition in compact
car manufacturing but met with a failure.
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3. Approach Taken:
In the original division of responsibilities for the joint venture, Toyota was to be
responsible for manufacturing while General Motors was to market all of the
output. The only car to be produced was the Chevrolet Nova.
Key factors in Toyotas approaches, however, were:
i. Developing cooperative management-labor relations;
ii. Careful selection and extensive training of workers;
iii. Stressing teamwork and responsibility of the individual to the work group;
iv. Putting safety and quality first, assigning the responsibility for safety and
quality to each worker, and giving them the authority to assure it.
4. Results
The NUMMI plant facility quickly became 40% more productive than the average
American car manufacturing facility.
Researchers at MIT estimated in 1988 that productivity at the NUMMI plant
exceeded that of all American-owned U.S. automobile plants, except Fords Taurus
facility with which it was approximately equal.
The cars produced have won numerous awards.
5. Divestment( End of the Joint Venture):
On June 29, 2009, General Motors announced that they would discontinue the joint
venture with Toyota leaving Toyota to single-handedly continue operations at the
plant.
Initially, Toyota offered GM a version of their hybrid car, Prius, to be sold under
GMs label but an agreement could not be reached.
On July 10, 2009, General Motors emerged from government backed Chapter 11
reorganization after an initial filing on June 8, 2009. Two brands, Hummer and
Saab were sold, and two, Pontiac and Saturn were closed.
GM later filed for bankruptcy.
On August 27, 2009, Toyota announced that it would discontinue its production
contract with NUMMI. Toyota chose to do so as it already had excess production
capacity from other plants.
Production by NUMMI currently accounts for about 20 percent of Toyotas overall
car output in North America
The NUMMI plant ceased operations on April 1, 2010 ending the Toyota-GM joint
venture. California's last automobile manufacturing plant saw its last car, a Corolla,
roll off the assembly line
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7. Pitfalls
NUMMI has only turned a profit in one year, 1992. But, Bloomberg fails to
mention that the internal transfer pricing games are routinely played by large
companies in order to recognize profits only in the most tax advantaged
jurisdictions. So, outside of the bean counters at Toyota and GM, nobody really
knows the profitability of NUMMI.
Its United Auto Workers contract guaranteed workers $28 an hour compared with
$24 an hour in other Toyota plants.
Higher electric rates in California one of the factors leading to an increase in costs.
Throw in shipping costs to get parts from the Midwest and to send finished Toyota
Tacoma pickups and Corolla compacts across the U.S
It was one of the Japanese giants most expensive factories, if not the most
expensive
References:
http://userwww.sfsu.edu/ibec/papers/9.pdf
http://www.lean.org/shook/displayobject.cfm?o=1133
http://www.thetruthaboutcars.com/2009/07/nummi-not-so-nice-for-toyota/
http://www.businessweek.com/autos/autobeat/archives/2009/08/nummi_to_close.html
http://www.japantimes.co.jp/news/2009/07/12/business/toyota-mulling-liquidation-of-fremontnummi-venture/#.UTxJaDe_T3M
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OVERVIEW
I.
Toyoda Gosei engages in Research, development, manufacture and sales of: Parts for
automobiles, conveyors, ships and various other transportation equipment; rubber, plastic and
urethane component
II. Corporate Timeline:
1. 1949
Toyota Motor Industry Co., Ltd. incorporates rubber research operations as Nagoya
Rubber Co., Ltd.
2. 1973
Changes name to Toyoda Gosei Co., Ltd.
3. 1990-1991
Establishes Meigi Logistics Center (logistics sector) Establishes Toyoda Gosei Kyushu
Co., Ltd. in Takeo, Saga Prefecture (rubber and plastic sector)
Establishes TG Technical Center (U.S.A.) Corporation in Michigan (now TG North
America Corporation) (design and technological development)
4. 1994
Establishes TG Pongpara Co., Ltd. in Chonburi, Thailand (plastic and urethane sector)
5. 1997
Establishes TG Kentucky Corporation (rubber and plastic sector)
Puts acoustic material using recycled PET fiber into practical use
Develops new recycling technology for rubber
Earns ISO 9001 certification for major products in Bisai, Inazawa, Heiwacho, and
Moricho Plants
Begins manufacturing and marketing green LEDs
6. 1998-1999
Increases equity holding in TG Pongpara and changes company's name to Toyoda Gosei
(Thailand) Co., Ltd.
Begins manufacturing and marketing New LEDs, "TG Blue" and "TG Green"
Earns ISO 14001 certification for Heiwacho Plant
Establishes TG Kirloskar Automotive Ltd.
Earns ISO 14001 certification for environmental management.
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7. Shareholders Information
Major shareholders (ten from the top)
Shareholder's name
55,459
42.65
7,752
5.96
6,158
4.73
5,049
3.88
2,291
1.76
1,714
1.31
1.15
1.14
Mitsui Sumitomo
Limited
1,162
0.89
0.80
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Insurance
Company,
ratio
ANALYSIS
1. How did the Integration begin?
Toyota Motors was established in 1937 & within 10 years of inception was a big
player in the Japanese market.
Despite this, production wasnt high as the country was recuperating from the losses
of World War II & also because of the lack of availability of suppliers supplying
good quality parts & the expensive nature of products due to material shortages.
Toyota Motors Co. Ltd felt the need to expand the scope of its business, to bring
down the cost of production.
This led to the establishment of Toyoda Gosei Co. Ltd, which would supply Toyota
Motors with various car parts.
This can be seen as a move back in value chain as Toyota, which initially
manufactured cars, will now be making parts for its car rather than relying on
outsiders.
This can be seen as backward integration as with establishment of this industry, they
got closer to raw materials that are rubber and plastic parts.
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Net Sales
(millions of Yen)
292,883
303,093
344,842
396,983
435,539
498,428
593,454
662,497
546,380
495,002
516,982
504,518
Net Income
(millions of Yen)
4,058
4,058
17,258
12,679
10,585
10,787
15,943
30,802
3,951
14,255
17,116
8,971
SWOT ANALYSIS
By: Mihir Mandrekar B-030
SWOT is an acronym for the internal strengths and weaknesses of a firm and the
environmental opportunities and threats facing that firm.
SWOT analysis can be done using a simple grid.
It is a widely used technique through which managers create a quick overview of the
companys strategic situation. The technique assumes that an effective strategy derives
from a sound fit between the companys internal sources (strengths and weaknesses)
and external environment (opportunities and threats).
The main aim of the technique is to maximize the strengths and opportunities and
minimize the weaknesses and threats. Accurately applied, this simple technique can be
used to derive successful strategies.
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A. STRENGTHS:
i.
ii.
New Investments:
a. New investment by Toyota in factories in the US and China saw profits rise, against
the worldwide motor industry trend which was suffering heavy losses. Net profits
rose 0.8% to 1.17 trillion yen ($11bn; 5.85bn), while sales were 7.3% higher at
18.55 trillion yen.
b. ANALYSIS : The company had the right mix of products for the markets that it served.
USA believes in living life king size and is obsessed with bigger cars.
Toyota primarily sold bigger cars like Fortuner and Qualis in the American
market and this was a great success.
China on the other hand prefers fuel-efficient sedans. Toyota in China
marketed and sold cars like Prius, Corolla and Camry.
This was possible because of much focused segmentation, targeting and
positioning of their products.
Manufacturing:
a. In 2003 Toyota knocked its rivals Ford into third spot, to become the World's second
largest carmaker with 6.78 million units. The company is still behind rivals General
Motors with 8.59 million units in the same period.
b. ANALYSIS : Its strong industry position is based upon a number of factors including a
diversified product range, highly targeted marketing and a commitment to
lean manufacturing and quality.
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B. WEAKNESSES
i.
ii.
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C. OPPORTUNITIES
i.
ii.
iii.
Global Expansion :
a) Toyota is expanding its market share and operations in emerging economies like
India and China. Toyotas emerging market sales ratio reached 45% in 2011, an
increase of 10% in the three years since we achieved 35% in 2008. The Toyota
Global Vision calls for an emerging-market sales ratio of 50% by 2015.
b) ANALYSIS : Emerging economies have a huge demand for cars. Toyota must make
sure it increases its market share in the developing economies in order to
survive and compete in the global scenario.
By increasing localization and strengthening the supply chain system,
Toyota is slowly expanding into emerging markets.
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D. THREATS:
i.
Competition :
a) Toyota faces tremendous competitive rivalry in the car market. Competition is
increasing almost daily, with new entrants coming into the market from China,
South Korea and new plants in Eastern Europe.
Volkswagen group is strongly growing and GM steps up after its reorganization to
become more competitive than ever.
b) ANALYSIS : There is nothing much that can be done to curb the rising competition.
But, competition can be fought by introducing new products, slashing
prices, increasing market segments and innovation.
Toyota has introduced the Yaris which is a very cheap car and has also
sliced the costs of older versions of Corolla. The Aygo and Prius are
examples of innovative products by Toyota.
ii.
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Conclusion
Toyota Industries has promoted diversification through continuous innovation all through its life
and expanded the scope of its business domains to include textile machinery, automobiles
(vehicles, engines, car air-conditioning compressors, etc.), and materials handling equipment,
electronics, and logistics solutions.
All these Expansion Strategies adopted by Toyota has resulted in making Toyota one of the
largest Conglomerates.
Toyota Motors in itself has 522 Subsidiaries some of which are individually present in Forbes
Fortune 500 list
Today Toyota is the largest carmaker in the world leading General motors and the top selling
automaker. The Japanese company has sold 9.7million cars and trucks in 2012 leaving GM in
second place with 9.29million cars.
The backbone of their success being their sharp, well thought out and excellently implemented
strategies. It yielded excellent result over the years it brought them to the No. 1 position and if
maintained, there is no doubt about the fact that theyll maintain their position for years to come.
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