Aichi Corporation Company Analysis

Organizational and resource analysis

Company overview

Aichi Corporation is involved in selling and manufacture of “vehicles for electric utilities and telecommunications, together with other vehicles for construction, cargo handling, shipbuilding, and railroad industries” (Rohan, p. 2). The company is specifically engaged in provision of mechanized vehicles, including work building tools, digger derricks, and aerial work platforms among many other tools for various works such as “signboards, traffic lights, facilities in factories, electric work of railroads, aircraft maintenance, pole construction, laying cable lines, and line installation in homes” (Rohan, p. 2).

Works on electric power distribution is another key field that the company covers. This involves “building poles, cable-laying, equipment installation, and pole fixtures and maintenance” (Rohan 2). The company rents and sells both used and new vehicles, in addition to education and training services, as well as repair and maintenance. Aichi Corporation “was founded in 1962 and is based in Ageo-shi, Japan. Aichi Corporation is a subsidiary of Toyota Industries Corporation” (Rohan, p. 2).

Key events and timeline of the company history

Table I: Company Profile

Table II: Key events and timeline of the company history

Source: Aichi Corporation, History, 2011.

Business model of the company

A business model is basically “a working description that includes the general details about the operations of a business” (Olofsson and Rizz, p. 52). All the components of a business model touches on factors such as revenues, strategies, expenses, marketing and sales procedures, as well as anything else that relates to day to day running of a business. A business model can also be described as an architectural design of diverse key constituents of the value creation system of a company. As noted by Amit and Zott, a business model elucidates how companies create value to consumers, generate income and consequently, maintain their viability as regards a certain business environment (p. 56). As a result, a business model is usually described by agreeing on a set of constituents, which describe the model. Osterwalder’s template illustrates the significance that market differentiation, through creation of a ‘value proposition’, along with cost management, offers to the triumph of any business model (p. 7).

Aichi Corporation has managed to remain as one of the largest lift truck manufacturer due to its competitive profile. The company manufactures, designs, services, distributes and supports material handling products that have superior quality, hence providing the customers a maximum satisfaction and value. Since 1962, when the company entered the industry, it had managed to set itself apart with the competitors falling to its unique business model and product design which uses vertically integrated manufacturing. The company manufactures most of its products, which includes drive units, motors and electronic modules (Maloney, p. 56).

“To build trust and confidence with customers by delivering outstanding quality products and services which add real value to their business” (Aichi Corporation 2).

“To respect the expectations and ambitions of employees, stakeholders and suppliers through a never ending search to improve.” (Aichi Corporation 2).

“To be the first choice partner for all customers looking for materials handling solutions and to be widely recognized for our innovative products and services as well as our respect for society” (Aichi Corporation 2).

“To build trust and confidence with customers by delivering outstanding quality products and services which add real value to their business” (Aichi Corporation 2).

Aichi Corporation promises their customers after sales services as part of their marketing strategy. The company claims to provide local services that originate from a global power. It is the company’s philosophy that anything which is important to the customer should also be a central duty for them to satisfy it, and that it should be satisfied in a better way compared to anyone else (Petreycik, p. 46).

The Field Service Team

The company’s field service team is usually fully equipped and ready to serve the needs of the customers whenever they call. Full service kits are always carried by the service vans to ensure timely customer needs response. In addition, the vans can access the latest information online from any location hence making them very effective. The company’s goal is to “have all parts delivered overnight to our vans – just another way we guarantee the quickest response times” (McNees, p. 56).

The customer comes first always

The company operates under a simple philosophy which states that “the customer always comes first” (Osterwalder, p. 26). As a result, Aichi Corporation has managed to stay at the top among many other manufactures and made it possible for the company to provide the best support to its clients. Aichi has also applied the principles of TQM by putting the customers first. The company has achieved this by involving everyone in the organization and through integrated efforts to ensure the expectations of the customers are met or even surpassed. Aichi achieves this goal by first identifying the customer needs, and then meeting them accordingly (McNees, p. 23).

In this respect, the management of the company recognizes that the organizational services and products have got no value if they do not constitute of what the customer really wants. Nevertheless, identification of the customer needs is not an easy task. This is especially because the customers’ needs and preferences differ, especially considering that Aichi Corporation operates across the world making needs and preferences which are even more diverse (Ambroz, p. 20).

In addition, it is not easy to meet customer expectations since many of them exhibits different levels of expectations. To counteract these challenges, Aichi persistently draws together information which helps the company remain at par with the customer wants. This is achieved through data collection methods such as market surveys, focus groups and customer interviews just to mention but a few. Aichi is guided by the principle that they are in business because of their customers and, as such, they must focus on their interests and ensure that they are satisfied (Ambroz, p. 20).

“To respect the expectations and ambitions of employees, stakeholders and suppliers through a never ending search to improve.” (Aichi Corporation 2).

Aichi Corporation is guided by five basic principles which define its core values and beliefs, as shared by the entire Toyota group. All Toyota team members are expected to practice these values, at all the levels and always as they undertake their duties (Design Teams, p. 31).

Challenge

All the involved parties are supposed to realize this vision whose aim is to “maintain long-term vision and meet all challenges with courage and creativity” (McGaffigan, p. 50).

Kaizen

Kaizen entails continuous improvement of business processes. Continuous improvement remains a center focus on Aichi Corporation strategies. This is contrary to the traditional systems that assumed that a company which is successful and have achieved a certain level of quality does not need further improvements. Ambroz used an analogy to describe this concept when he maintained that the Japanese “believe that it is better to take frequent small doses of medicine than none at all” (p. 149).

Continuous improvement which was referred to as Kaizen by the Japanese requires that “the company continually strive to be better through learning and problem solving” (Babbar and Dire 56). Although the management of Aichi Corporation believes that the company cannot achieve perfection, they take measures to ensure that the performance is evaluated and improvements made where necessary. To ensure a continuous improvement, Aichi Corporation pursues two approaches. That is, bench marking and the plan-do-study-act (PDSA) cycle.

The Plan–Do–Study–Act Cycle

In order to achieve a continuous improvement in Aichi’s operations, a Plan–Do–Study–Act Cycle needs is used to show the activities that the company should put in place so as to achieve the intended goals. The fact that the process is continuous and never ending is portrayed by the circular nature as shown in figure III. The cycle starts by planning. The managers of Aichi engage in evaluation of the processes of the company with the aim of identifying any potential problems (Rohan 28).

A plan is generated after an extensive collection of data together with the study of the current process and problems. After gathering the information, plans are developed and evaluation measures put in place. Some of the problems that may be identified in Aichi Corporation include poor sales in certain regions. For example, data that can give insights into the reasons for the sales decline can be gathered through surveys, customer interviews, focus groups and so on.

The second cycle entails the implementation of the plans which is denoted by (do) in the figure above. In this stage, the managers are engaged in the documentation of the changes that have been realized, while at the same time collecting data to be used to establish whether the goals have been achieved. The data that has already been collected is analyzed during the third stage, which is the study stage. Finally, the managers use the results of the whole process to take an appropriate action during the act phase. This is achieved through communicating the outcome to all the involved parties in the organization, who in this case may include the company’s staff and managers for respective departments. If successful, the procedures are implemented and the cycle repeated over again (Godfrey, p. 97).

Benchmarking

Aichi Corporation also ensures continuous improvement by identifying specific companies which are considered to have very good practices, and then study it for the purposes of benchmarking. The company simply identifies a successful company from any industry with a specific practice that is admirable and uses it as a benchmark to measure and evaluate its own performance. For example, it may use Honda Company to benchmark customer care relations (Godfrey, p. 19).

Genchi Genbutsu

This philosophy states that “Going to the source to find the facts to make correct decisions build consensus and achieve goals” (Godfrey, p. 29).

Respect

Aichi Corporation “respects others, makes every effort to understand others, accepts responsibility and does its best to build mutual trust” (Godfrey, p. 29).

Teamwork

Aichi Corporation inspires professional and personal growth, maximizes team and individual performance and shares opportunities in a manner that enhances teamwork.

“To be the first choice partner for all customers looking for materials handling solutions and to be widely recognized for our innovative products and services as well as our respect for society” (Aichi Corporation 2)

Aichi and the environment

The company upholds corporate and environmental responsibility, in particular to the environment under which it operates. It is also the company’s corporate duty to ensure a sound environment for the posterity. “Aichi promotes long-term efforts to meet the challenges of reducing global warming and pollution. These initiatives contain waste-free production processes and end-of-life recycling” (Murphy, p. 22). A program of social commitment is also an integral part of the company’s social corporate responsibility.

Creation of recycling society testifies Aichi’s commitment to growth in harmony with the environment. The recycling rate for the company’s forklift had reached 99% by 2010, in addition to manufacturing of equipment that can be recycled easily. Also, Aichi’s products are possibly manufactured to last relatively long so as to benefit both the environment and the customers (Environmental Protection Agency, p. 56). The company ensures that every product and services plays a part in protection of the environment as well as regeneration. “Along with preventing pollution and other overt damage to the environment, we develop production systems that preserve resources by using materials and energy efficiently.” (Design Management Institute Case Study, p. 45).The group has been recognized for its protectionist efforts through awards such as ISO 14001 which came from Swedish and French production plant (Winn, 1992).

Competitive positioning

Aichi has dealt with material handling equipment for a long time. This makes small and new firms to face difficulty in entry despite the fact that their marginal cost can be lower than the production cost. By gaining brand loyalty, Aichi is able to remain in the competition since establishing loyalty in material handling products is very difficult. The fact that Aichi and other big companies enjoy economies of scale limits new competitors from entry in the market. The material handling industry has developed rapidly for the past few decades. The development of this industry has especially been as a result of technological developments which have seen the improvement of service quality. Nevertheless, as the industry expands, the competition continues to heighten while at the same time the need for quality improvement becomes more critical (Walton, 2006).

However, Aichi faces rivalry from big companies that are already established in material handling industry. This brings about price fixing, product designing and intensive advertising in order to outdo the competitors. Aichi does this by maintaining a brand image and production of quality products that are desired by customers. The buyers bargaining power hardly affects Aichi Company due to moderate demand. This enables Aichi Company to fix prices as desired. Since Aichi’s products are more expensive than other material handling company’s substitute products, they become a threat to Aichi products. In spite of this, Aichi remains a formidable competitor in the market as it sells itself with superior products.

Aichi Corporation has managed to remain one of the largest lift truck manufacturers due to its competitive profile. The company manufactures, designs, services, distributes and supports material handling products that have superior quality, hence providing the customers a maximum satisfaction and value. Since its inception, Aichi has managed to set itself apart from the competitors, following its unique business model and product design which uses vertically integrated manufacturing. The company manufactures most of its products, which includes drive units, motors and electronic modules (Murphy and shlomo, p. 32).

Aichi Company remains very competitive in the material handling industry. However, there is increased competition from other companies who strive to edge the Company products from the market. It is therefore important for the company to continue carrying out intensive market research. Marketing and advertisements are also beneficial to the company in expanding its operations (Schoening, p. 23).

New products and Entry approach

Despite the massive competition that many domestic manufactures faced from the overseas competitors, 85 percent of Aichi’s products were produced from home. This policy was actually more than patriotism. According to Martin, Aichi preferred “vertical integration so that the company can maintain the fidelity to its manufacturing quality and designs”(Dicke, p. 12). Rather than outsourcing, “the company accomplished virtually everything, from forming sheet metal and plastic parts to designing and manufacturing circuit boards for electronic controls, in its own plants” (Dicke, p. 12). As such, “a factory was built in Ohio, New Knoxvilleto manufacture electric motors” (Dicke, p. 12). Indeed, the merger and acquisition trend that was circulating around forklift industry during those times could not deter them.

To counter the competitors who had established roots in the domestic market lift truck industry, Aichi entered the foreign market by establishing sales operations, distribution and manufacturing in foreign countries. A great growth of the sales was noticed in 1992, 1993 and 1994 as it was a matter of the first and of the highest demand that gave it a noticeably increased popularity. Apparently, Aichi remained strong and healthy during 1990s, seemingly as a result of the company’s emphasis on vertical integration, forward-looking design, and globalization (Ang et al, p. 26).

The main purpose of Aichi during 1960s and 1970s was the material holders and its abilities, the increasing of the range of the capacity. Internal combustion engines were superior over the lift truck industry. Nonetheless, Aichi focused on production of electric vehicles. “It is during this time that the company entered into rider trucks which included the first industry’s side-stance model” (Basic et al. 12). As a result of this innovation, the company earned its first national account.

Narrow-aisle reach trucks were introduced during 1980s. These products were developed by Smith/Richardson. The developers had reduced the distance that the equipment had to make between shelves in a factory by a third. The entry of TSP series of turret stockpickers resulted into expansion of this line. Consequently, with the help of Narrow isles, the customers could be able to “squeeze more rows of shelves in their storage facilities, and higher reaches meant those shelves could tower ever higher, effecting more efficient use of space and cost savings for Aichi clients” (Avery, p. 5).

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