The automobile industry can be well thought-out as one of the most aggressive industries that exist at present. To be competitive, production must be almost perfect; the employees should be meticulous; and the managers must be fully conscious of their products. These can be seen clearly on the epitome of Toyota Motors Corporation. Founded by Kiichiro Toyoda, it has fully grown to become a Global Company being the benchmark of different car manufacturers in terms of its production system, management culture, and public image.
Toyota’s main headquarter is located at Aichi, Nagoya, and Tokyo Japan. It employs an approximate of 316, 121 worldwide, 522 subsidiaries, revenue of $202.86 Billion, a net income of $13.93 Billion as of 2005, with product lines in automotive, biotechnology, and robotics financial services. Toyota’s legacy started as a small automobile production plant in 1934 producing passenger cars and trucks.
It was in 1937 that the company became a separate and independent corporation, helping the Japanese Imperial army to produce trucks during the World War 1. After the war, it began producing commercial vehicles with many challenges: logistics and supply chain, manufacturing process, quality control, sales and marketing. All of these were incredibly managed to excel by Toyota, not in an overnight plateau, but of careful planning and logistical implementations.
Toyota first developed the Kanban system to solve the problem of inventory handling to reduce its associated costs. In the Kanban system, the operator is given a card or a Kanban, to indicate the actual quantity of stocks required. This system provides the operator of the needed excess capacity of the machine, and with idle time to some other machine, led to the operator’s multiskilling abilities. This system also fitted in to the Just-in-Time process in manufacturing to reduce inventory to a minimum level.
Also, a big emphasis on the quality provided Toyota a control on its related costs in manufacturing and its eventual product image. What really brought Toyota to its present status is its system of management. The Toyota Way is a philosophy in management that is incorporated in the Toyota Production System. Management decisions are based on a philosophical purpose of thinking long term goals, a process or way of solving problems, by developing its people will greatly add value to the organization, and to distinguish that a continuous problem solving develops organizational wisdom.
The Lean Manufacturing system was developed, based on the 14 principles of the Toyota Production System, wherein it focuses on eliminating the seven described wastes in the production process in order to improve the quality and the overall customer worth.
The Toyota Production System, which if reflected concisely, centres on the employees development, behaviour, and way of thinking in-line with the company’s philosophy: “Toyota Motor Corporation is a company devoted to enhancing the quality of life for people around the world by providing useful and appealing products” (Toyota Motor Corporation, 1994).
Also, Toyota depends critically on technological innovations and technology. The company is being considered as one of the world’s biggest cost-reduction leader in the field of automobile-manufacturing by implementing its lean production system, unique manufacturing techniques, and sound management philosophies Technological changes plays a pivotal role for Toyota to be able to improve on its product lines to achieve growth in sales and have a considerable market share. In order to maintain in stiff competition with other car manufacturers, Toyota needs to continuously adapt new technology and innovate products in-line with the consumers’ demands and needs.
By continuously enhancing its core competencies such as Research and Development, Human Resources Management, low cost of manufacturing processes, the company will be at the forefront of the automobile industry in the next decade. Furthermore, it has to exert more focus on retailers, possible distribution channels, and long-term affiliation with highly regarded suppliers. The automobile industry is considered a fast growing market with product innovation and technological advancements. With this in mind, Toyota has a good line in maintaining its position in the automobile industry.
Answer to Questions
- Discuss why other car companies would have difficulty in replicating Toyota’s culture?
There are actually several categories or classifications of organizational culture: strong and week, process culture, power, role culture, multi directional, leadership enriched, brand congruent, and live and let live culture. Toyota’s organizational culture can be synonymous to a Brand Enriched Culture wherein people inside the company believe in the product or services of the organization. At the same time, they appreciate what the company is trying to aspire or achieve and exert tremendous cooperation to support such goal. The employees are passionate and have similar goals with the organization.
Toyota’s culture can also be described as a Leadership enriched culture wherein the people view the organization as an extension of their own self, have exceptional cooperation, aligned with the goals of the company. Leaders within this organization do not develop followers but develop other leaders. Almost everyone operates at the level of the company or of the organization.
Because of this, Toyota’s culture will be hard to replicate by other companies car companies such as Ford, GM, since it requires continuous modifications, adjustments, and evaluation to reach that level of organizational structure.
- Discuss the importance of centralized management training, such as that provided at Toyota University, for building a common culture. What are the strengths and weaknesses of such approach?
Centralized management training, such as that of Toyota University, is a very important management practice that can be related to the principle of “Kaizen”, which means continuous improvement. It is a Japanese philosophy that concerns on the process, activities, or methods to continually improve all of the aspects of the company from the manufacturing side up to the management and employees. By continuously improving and standardizing processes and activities, Kaizen will help minimizing or eliminating the “wastes” described in the Toyota Production System. I order for Kaizen to be more effective three principles should be considered: always consider the process and result; develop systematic thinking of the whole process; non-judgmental, non-blaming, and a learning approach should be practiced.
This will also ensure that there will be a common level of standards within the organization. Every employee will be trained and developed accordingly to the management philosophies of the Company. The strength is eminent to the fact that there will be unison of standards, procedures, processes, and vision. The weakness may be seen on the form of rigidity and autocratic means with less emphasis on the changes and influences.
- What difficulties and benefits would a strong culture, such as that at Toyota, present to an organizational change program?
A strong culture can be described as a response of the employees to a stimulus because of their alignment to the values of the organization. Having a strong culture helps the company to operate on a high level with less deviance from the organizations procedures. Since if there will such an organizational change, in a strong culture environment like that of Toyota, the only point to consider is “groupthink”. In simple terms, a groupthink is a consensus of what should be the reaction of the members is considering that it is a strong-culture environment. The reaction will be aligned to all of the members.
The difficulty and benefit that may be encountered if there will be an organizational change inside a strong- cultured organization can be both ways: there can be a strong opposition to change or a strong support towards change. It is a matter on how it will be implemented, its effects on the employees, as well as to the organization. A change in the culture can bring tensions between individual interests and to the organization. Though it inevitable, a culture change or innovations allows the introduction of new concepts that can be of big relevance to the growth of the company. In the case of Toyota, though it is a strong-culture organization, a change is relevant especially in order to be more competitive.
- The origins of an organization’s problems lie in the organization’s successes. Drawing upon the Toyota case, and other sources which you feel are relevant, evaluate this statement.
I think problem and success works in both ways in the sense that problems arises because there is a need for development and improvement. If these are taken to considerations and related solutions are implemented, the probability of a success is eminent. In every organization, success will not be achieved if there are no problems arising. Since in every production processes, management decisions, employees concerns, there arises different problems that must be addressed. Again the success of defying these problems will depend on how strong the organization’s culture and adherence to its philosophy.
- What is innovation? What are the three most important factors in the Case Study, which contribute to innovation in Toyota? How do these factors make Toyota more innovative and competitive in global markets?
Innovation is the process or act of introducing something innovative or new. The three most important factors that contribute to the innovation in Toyota are: the problem in storage and inventory handling that resulted in the development of the Kanban system along with the Just-in-Time system; the concern on production costs that leads to a strong commitment to quality; the morphing of cost and quality resulting to the development of the Toyota Production System. These factors served as the building block of Toyota’s production system, management style, and Company philosophy. Adherence to this system makes –up a strong organizational culture with a vision, “Toyota Motor Corporation is a company devoted to enhancing the quality of life for people around the world by providing useful and appealing products”.
Atrill. McLaney.,Harvey.,jenner.(2003) Accounting: An Introduction(2nd ed.), prentice hall, NSW.
Grant, R.M., & Neupert, K.E. (2003). Cases in Contemporary Strategy Analysis (3rd ed.), Blackwell Publishing, Oxford.
Genetic Re-Engineering: new technology is pushing the evolutionary envelope – automobile product developments, 2001. Web.
Modern Automobile Manufacturing, 2004, from business and economic research adviser. Web.
Thompson, A. A. & Strickland, A. J. (1995). Strategic Management: Concept and Cases,(8th ed.), Richard B Irwin, USA.
Toyota annual report, 2004. Web.