The company overview

The company overview

Toyota Motor Corporation is a Japanese-based multinational company engaging in the manufacturing, assembling, designing, and selling of automotive. The corporation was established in 1937 by Kiichiro Toyoda, and its headquarter is in Aichi, Japan. The company originated from the first company owned by Sakichi Toyoda, who invented the first Type A engine in 1934. The corporation is depicted to operate around four notable brands, including Hino, Lexus, Toyota, and Daihatsu. Additionally, Toyota is a global firm that holds a considerable stake in other significant automobiles, including 5.5% in Mazda Corporation, 5.9% in Isuzu, and 17% in Subaru Multinational Company. The company also engages in joint ventures in various countries, including India and the Czech Republic, along with other multiple non-automobile organizations.

As a global organization, Toyota is substantially listed in New York Stock Exchange, Tokyo Stock Exchange, and London Stock Exchange, as well. Therefore, Toyota is a competitive corporation, which has enjoyed considerable success in the last few ages. Currently, the corporation is running over 53 subsidiaries operating in more than 28 countries around the globe. However, the corporation’s automobiles are sold in over 172 countries and regions globally. Although the company had been affected by the 2008 fuel crisis in the US that made them experience a 15% drop in gross revenue, the demand made its revenue growth to hike. However, the world is changing, and technology is becoming more vibrant, making the company experience numerous dynamics.

Current dynamics

As a global corporation, Toyota is facing multiple global dynamics related to consolidation, production, growth, and expansion. With the increased acceleration of the coronavirus epidemic, Toyota Company has opted to suspend all production and sales activities in European regions. The measures to discontinue the company operations in Europe are in line with the health recommendations aiming to prevent the spread of the COVID-19 epidemic. The lock-down in most Europe and other vital regions has dramatically affected the company’s supply chain. Since the time frame of the pandemic is unknown, the impact will immensely affect the company’s financial year target. The epidemic has also made the company latent since expansion and globalization strategies are not applicable. Interestingly, the company’s delay in establishing eco-friendly automobiles is restricting Toyota’s growth in the industry.

In modern society, people are more concerned with environmental conservation and technological advancements. This has subjected Toyota to dynamics related to product complexity. The government is imposing stricter rules concerning the safety of vehicles, fuel consumption, and cost, as well. People are also demanding more advanced cars in the context of reliability, speed, and other luxurious features. The company now considers vehicles to be sophisticated in terms of manufacturing and designs. For instance, a typical Toyota design sold in various regions in Europe and the United States incorporates more than 10 million computerized codes and more than seventy electronic controls. The technology used to manufacture such vehicles is complicated, and therefore expanding it to all its subsidiaries imposes a tremendous burden on their financial dashboard.

Competitors of Toyota and its ranking in the industry

Even though Toyota is a competitive multinational corporation, it faces severe competition from other major automobile manufacturers operating in the same industry. The world economy is gradually recovering, but the competition attributed to the automotive industry is intense. In most cases, this competition is associated with various features, including automobile quality, reliability, safety, customer service, pricing, the time required to invent and manufacture, fuel economy and financing terms, among others. Toyota can respond adequately to various changes in the automotive market, and therefore able to maintain its competitiveness, even in new global markets. Toyota’s major competitors in the modern global market include Ford, General Motors, Volkswagen, and Honda.

In 2018, Toyota reported $272 billion as net income, which emanated from the sale of over 8.9 million vehicles, with over 5.4 sold in America. This is higher than Ford, which sold 5.5 million vehicles the same year. The general motors sold 8.3 million cars while Honda sold 5.2 million automobiles. Concerning their annual income, Honda reported $138.25 Billion; General Motors reported $147,049 billion, and Ford made $155.9 billion. The significant gap in both sales and annual revenue implies Toyota has a significant competitive advantage. Immense investment in research and development has enabled Toyota Corporation to gain a substantial edge, becoming the largest automotive manufacturers. Based on the global market statistics, Toyota Corporation is ranked as the most significant automotive designer and manufacturers in the world.

Toyota segments-trucks and pick-ups

In Toyota Corporation, product and market segmentation is considered a substantial element that constitute to their overall success. Toyota has various segments that focus on the higher income earners, including Land Cruiser, Fortuner, and the Toyota Altis. The company also takes care of low-income earners by providing affordable models such as Vitz, Fielder, Probox, and Toyota Raum, among others. Toyota is currently focusing on establishing numerous vehicles that will fulfill the customers’ demands in all its operational segments. The product range of Toyota corporation includes compact cars, medium segment cars, SUVs, large segments, pick-up segments, truck segments, and bus segment, among others. In this context, I will expound more on both truck segment and bus segments.

To begin with the truck segment, Toyota Corporation is surpassing its vital competitors because of its innovation concerning interior amenities, active safety, and the overall performance. Even when the driver becomes rough on the vehicle, its established undependability provides substantial confidence that the truck will complete the task effectively. Based on market research, Toyota trucks are depicted to attract great resale prices during the disposal period. With the rising competition in the truck segment, Toyota has recently established a Toyota Tacoma truck, with the newest model being made in the United States. The truck is considered affordable and reliable but is more likely to suffer engine problems in the long-run compared to other Truck models from Ford. The performance of Toyota trucks recommendable, but is surpassed by Ford Ranger performance because it has more torque engine that is more powerful.

Toyota has also focused on the bus segment to meet the increased demand for busses in the public transport sector. Currently, Toyota is considered the leading manufacturers of 14-passengers vehicles. According to recent company statistics, trucks and busses are attributed to 40% of the overall Toyota deal. However, Toyota is not considered the best manufacturer of vehicles in the world based on reliability and size. Ford pick-up trucks are considered more substantial because of speed, stability, reliability, and durability. However, Toyota can secure its competitive advantages by providing a variety of trucks, including Tacoma, Tundra, and Toyota Hilux.

Part Two

Toyota production system

The Toyota Production System (TPS) is considered a socio-technical structure established by the corporation, incorporating Toyota management practices and philosophy. The system is efficient because it effectively organizes logistics and manufacturing, by fostering interaction between customers and suppliers to eliminate wastage and other related costs. The system was established by Japanese engineers Taiichi and Eiji Toyoda, between 1948 and 1976. TPS has made Toyota the leading automobile manufacturers in the world, and other upcoming companies are using the approach in their fashion. The system led to the development of modern methods such as lean manufacturing that is today attributed to Toyota. The system upholds the philosophy of working intelligently to avoid wastage, and therefore fewer inventories will be consumed.

A brief history of TPS

Toyota developed the TPS a few years after WWII, while General Motors and Ford were utilizing other concepts of mass production, big equipment, and mass production to increase their production and lower the costs. To cope with the competition, Toyota had to establish more vehicles into the market to meet customers’ expectations. Focusing on the production lines and making the lead time short made, Toyota Corporation to comprehend they would provide high quality model, better productivity, and effective use of available space and equipment. The system has challenged the mass production notion that ‘machine downtime is waste.’ The concepts behind TPS are commitment, investing immensely in people, and fostering a culture that will facilitate continuous improvement.

The concept of TPS

In Toyota Corporation, TPS is based on the notion of Jidoka; implying workers should identify all faults and rectify them immediately in any stage of the production cycle. The processing machine will stop after detecting an error, for adjustment and other necessary inspection to be made. After changes are made, the information will be displayed on the ‘andon’ board, and the worker continues to work on a different machine. This will reduce the likelihood of problem recurring while maintaining high productivity and quality, as well. Toyota embraces the Just-in-Time (JIT) approach that ensures the workforce produce only the needed products, and when they are required. This makes the company have consistent quality, production flow, and reduced wastage. Before the production process begins, the JIT requires the organization production line to be fed with appropriate parts, in the rights proportion and correct sequence.

As parts get used, others are stocked in the right quantities to ensure no interruptions in the production process. In the long-run, the system is considered essential in eliminating over seven wastes in a production process. Since TPS facilitates the creation of a product when it is required, it eliminates wastes associated with overproduction. Besides, inventory required must be stored, transported, and packaged, subjecting the company to unnecessary expense. Using the TPS approach, inventory will be purchased based on the customers’ orders, therefore, no probability of overproduction. Since the required stock is replaced effectively depending on the demand, sufficient flow is facilitated because there is no waste of waiting.

Toyota production System Rules

The TPS was established to help Toyota compete with other giant companies, primarily the Ford. With numerous approaches to try and error, the company realized that JIT would enable them to eliminate waste and shorten the overall production flow. Since then, the company is depicted to provide high quality vehicles to its customers in a timely manner and at an affordable cost. This makes it possible for the company to respond adequately to market changes and earn profit through cost-reduction practices. Nevertheless, the tactical knowledge surrounding the TPS can be framed into four fundamental rules. Firstly, all works should be specified based on the sequence, content, outcome, and the right timing. The second rule depicts that all customer-supplier connections should be direct, and ambiguity should be eliminated when responding to them. Thirdly, the product pathway should be straightforward and manageable, and lastly, all improvement should be upheld based on scientific methodologies. These rules are considered essential because they guide the operation, design, and improvement of all activities in the production process.

Rule four-Continuous improvement

The continuous improvement approach focuses on establishing new and better ways of doing things regularly. Leaders in the company should effectively utilize scientific strategies to initiate improvements in the organization. Besides, most of the improvement ideas should originate from individuals undertaking the task. Toyota Corporation has established Rule-in-Use as a substantial principle in the production system. To effectively uphold the continuous improvement rule in the Toyota Company, workers must be conversant with the current work and the processes available. The company leader will teach the workforce how to frame a problem and establish a significant hypothesis for change. Allowing the employee to identify the problem and potential remedies helps the company to improve continuously. For instance, employees in the Toyota Corporation are depicted to generate more than a million ideas concerning how various processes can be improved. This motivates employees because more than 80% of these ideas are implemented, and the behavior rewarded.