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The high import tax that the US Government imposed on all imports of cars - thus making
their cars as expensive as the US locally made cars.
Within a few years, Toyota had managed to establish production plants on US soil, thus
eliminating the need to pay any import taxes. At first, US car makers weren't all that
worried. Surely by having to move production to the US, the production costs for the
Japanese car makers would rise up to be roughly the same as those of the local car makers.
But that didn't happen. Toyota continued to output cars (now made locally on US soil) for
significantly cheaper than US companies could. Their finely honed production processes
were so efficient and lean that they were able to beat US car makers.
4. What does this teach you about the nature of the strategy?
Toyota spent years studying the production lines of American car makers such as Ford. They
knew that the US car industry was more advanced and more efficient than the Japanese one.
So they waited. They studied their competitors and tried to copy what the Americans did so
well. They blended these processes with the strengths of their own, and came up with
something even better.
Toyota proved that knowing their own weaknesses can be the key to success - and be one of
the best business strategies you can ever deploy.