Executive Summary
Toyota is a benchmark in the scope of car production and distribution. This Japanese company became the leader in the automotive industry, as American vehicle manufacturing had stopped after World War II. Toyota became the first company to implement innovations in its car production: during the stagnation of other organizations, Toyota produced unique car models. The competitiveness was fierce; after the war, Toyota decided to make medium-sized cars instead of large transport. Today, the company uses JIT and Lean approaches to remain one of the leaders in the automotive industry.
Introduction
Toyota Motor Corporation (Toyota) is a large Japanese company that produces and distributes vehicles worldwide. Moreover, it provides financial services and has several large directions in business. Toyota is one of the biggest companies in Japan; it is a multinational corporation (MNC). Toyota Motor Corporation is the essential and most significant part of the Toyota Group, which is the group of companies gathering investors, sellers, and distributors related to operations with Toyota Motor vehicles. At the same time, another organization, General Motors (GM), is a huge multinational corporation that designs, produces, and distributes cars and vehicle details worldwide. The company is one of the most successful car manufacturers, owning significant stakes in foreign brands. It is essential to determine Toyota’s historical background, financial and market opportunities, strengths, and weaknesses, offer efficient solutions to companies’ issues, and compare it to General Motors in terms of market stance.
Toyota Company
The company’s history started in 1934 when Sakichi Toyoda invented the unique weaving machine, which used an innovative principle. The engine stopped when there was a particular problem or mistaken action, which became part of an extensive system of Toyota Motors later. Then, the company owner sold the technology to a British organization, and the profits received became the initial capital for Toyota. It is essential to mention that Sakichi Toyoda’s son began to invent cars with gas engines after long traveling through the United States and Europe. It was decided to create a separate division that specialized in vehicle production. Furthermore, it is essential to mention that the Japanese government encouraged those initiatives; the company started to manufacture gas engine vehicles successfully.
Moreover, during the Second World War, Toyota produced specialized military cars. Because of the lack of proper resources, these vehicle models were simplified. Indeed, after the war, the company continued to produce cars and decided to distribute them for commercial purposes. In the 1960s, the Toyota company expanded rapidly, presenting several car models. Today, Toyota is one of the hugest Japanese companies manufacturing and distributing cars. Toyota operates in Japanese, American, European, African, and Asian global markets (Toyota, 2019). Its model line includes various vehicles that differ in price and comfortability class. For instance, the Toyota Camry and Toyota Land Cruiser are the most recognizable models of the company.
Operational Challenges
Operational level management suggests close supervision of first-line managers. It is a critical stage that links CEOs, top managers, and employees (Gardiner and Reefke, 2019). Indeed, other operational problems might include issues arising inside and outside the company, which require a proficient solution. Toyota faced several problems in 2021; for instance, there were twelve recalls for thirteen Toyota models (Car Recalls, 2021). The trouble with the fuel pump led to several recalls in Toyota Auris, Corolla, and C-HR. Another case was one of Toyota’s most numerous issues in 2021; 122,000 diesel engines were returned because of the high risk of breakage (Car Recalls, 2022). It was disturbing that the Exhaust Gas Recirculation (EGR) cooler might be broken and lead to a fire. In 1997, there was a fire at a brake factory that produced valves for Toyota that collapsed the manufacturing. It was one of the premises to use resources rationally and create a unique management system. These operational challenges touch upon the company’s budget and reputation. It is helpful to generate the fishbone diagram to understand the issues Toyota faced.
Apart from operational challenges related to car recalls, the company also suffers from a flawed organizational system. Excessive confidentiality has become one of Toyota’s most severe inner organizational problems (Chikudate, 2019). This issue is spread to employees of all levels; workers are not allowed to speak about administrative aspects outside the company. Publications of Toyota do not usually present complete information, and there is a need to do research to get specific data. Moreover, Toyota does not share the information with other organizations in the automotive industry; therefore, there is no professional feedback or mutual flow of information. Thus, the problem is insufficient corporate organization and interaction, and it might make the whole company’s structure hesitate.
One more issue in Toyota hides in its organizational management style. It is known that Toyota implemented the Lean approach, Just-in-time (JIT), and 5 Whys. These concepts became essential parts of Toyota’s production system; the Lean approach defines standard tools and patterns for organizational behavior, JIT involves accuracy in time, and 5 Whys answers the five questions to detect the primary reason. Indeed, the problem is that employees act in a particular scenario where the organizational style is highly hierarchal. People know their responsibilities, but it might slow down the flow of new ideas and informational exchange.
The fishbone diagram identifies primary and secondary reasons for emerging issues in Toyota. Indeed, the company has encountered various problems with car mechanisms, which has led to mass car recalls. There is a suggestion that the company could have prevented these problems by improving communication within the company and working levels. For instance, the more robust management and facilitation of better connections between all layers of workers could have enhanced the informational flow within the organization. Therefore, a considerable number of problems would be acknowledged by more employees and solved efficiently.
SWOT Analysis
SWOT analysis suggests detecting strengths, weaknesses, opportunities, and threats for the given company. It is possible to say that the strengths of Toyota company are a strong brand image, a worldwide supply chain, and fast innovation implementation (Ferguson, 2017). The brand image of Toyota has been shaped for years; the solid client base, along with the high quality of its products, made Toyota one of the most reliable car manufacturers in the world (Wada, 2020). Therefore, many people trust Toyota and are prone to buy its cars because of the best quality.
One more strength is a global supply chain; it is known that Toyota Motors distributes its vehicles worldwide. Many organizations cooperate with Toyota, and it is feasible to buy its production in almost every country. In general, Toyota is a recognizable brand, which has multiple models of cars appropriate for various customer budgets. People can afford Toyota even though they might have an average budget, as Toyota offers numerous models, from simple vehicles to luxurious ones.
Rapid innovation capability is one more strength of the company. Toyota uses its corporate culture to maximize the use of human resources; it benefits from the organizational culture to support customer problem-solving (Meyer, 2021). A careful approach to customers and organizational learning led the company to the top among other car manufacturers. It is also worth mentioning that workers of Toyota Motors are familiar with teamwork, continuous improvement, and quality (Meyer, 2021). For instance, one of the company’s principles is to utilize teamwork to share ideas and help each other achieve great results. Employees go through teambuilding programs for their involvement in the process. Moreover, constant improvement through learning is one of Toyota’s fundamental philosophies. Employees learn to solve inner corporate issues and problems with the customer, enabling the company to deliver high-quality customer service. Accordingly, quality is Toyota’s main objective; it expresses the quality of vehicles produced along with the rate of service.
There are several opportunities for the Toyota company, despite the corporation achieving success and being one of the most successful car manufacturers. For instance, Toyota might have the capacity to expand its sales in the market of developing countries. It might increase Toyota’s revenues and raise the company’s awareness to a greater extent. Furthermore, development is possible because of growing interest and demand for fuel-efficient automobiles. For instance, nowadays, people are more likely to purchase electro-cars, and it has become an excellent opportunity for Toyota to produce electro-models to raise revenue. Moreover, the company might use ERP global strategy to smoothen the U.S. market operations by integrating production and operational management. ERP facilitates financial and market operations through the particular software system, which might help Toyota to trace and expand product distribution in the U.S. market.
Many low-cost cars are appearing in the market nowadays. For instance, Volkswagen, Skoda, and Hyundai are companies manufacturing automobiles for the middle or low classes of consumers. It is possible to think about the competitiveness that threats Toyota from these automobile companies’ side. Moreover, it is also important to mention that many car manufacturers implement innovative technologies due to rapid technological growth. For instance, numerous automobile organizations enforce electro engines in their cars. It can seriously affect Toyota, as nowadays, there is a trend for ecological motions; many people stop buying cars with gas engines and switch to electric models.
Although Toyota is a huge company which already achieved success, its organizational structure is hierarchal. It means minimal flexibility within the company’s framework; moreover, it can result in poor communication between layers of employees. A significant part of ideas can be lost as the decisions are made on behalf of CEOs and top managers. Furthermore, the company’s reputation faced obstacles in 2009, when massive recalls happened (Ni and Huang, 2017). These withdrawals weakened the company because the organizational resource was directed into this process instead of creating new vehicles and distributing them.
Just-in-Time (JIT) and Lean Management in Toyota
Just-in-time (JIT) is an invention of Toyota; it is a part of the company’s philosophy. The strategy suggests using resources and tools only when there is a need for them (Toyota Blog, 2013). The objective of this strategy is to save resources and unnecessary costs for production. There were certain premises to create JIT, for instance, financial crisis and lack of cash. It led to an inability to provide savings and manage inventory resources.
Furthermore, after World War II, there was a high level of unemployment among citizens, so companies could not afford to manage large warehouses and stockrooms, as they required human labor. Along with JIT, Toyota implied a Lean management system; it assumed reasonable usage of resources to avoid waste. As a result, Toyota improved its logistics and management to certain benefits, such as stable manufacturing, a moderate economy of sources, and fast installation of mechanisms.
Implementation of Lean Management in Oracle System
Oracle management system belongs to ERP-based platforms, which are responsible for automatizing a company’s business processes. Lean management is a strategy of reasonable resource usage developed by Toyota. These concepts can be used together to simplify Toyota’s operations in the market. For instance, lean management might help reduce unnecessary expenses, and the connection to Oracle might be helpful to track deliveries in real time. The company will avoid excessive purchases and thus will save a vast part of human and financial resources. Moreover, the combination can improve the supply chain efficiency due to increased interaction productivity through Oracle.
General Motors & Toyota
The history of General Motors started in the 1950s; the company emerged as a result of uniting the two organizations. It is a huge multinational company that designs and produces cars and vehicle details globally. The history of Toyota starts relatively in a similar period; therefore, the companies emerge almost simultaneously. GM uses “Three Box” as a business strategy that helps find creative ways to seek efficient solutions (Barabba, 2019). Indeed, Toyota uses the philosophy of proper resource management and 5 Whys to comprehend different issues. Although, both GM and Toyota possess a hierarchal organizational structure to communicate between levels of employees. The problem-solving methods of GM and Toyota differ; for instance, GM faced certain obstacles during the beginning of the twenty-first century. General Motors encountered difficulties in 2007, and it led to bankruptcy in 2009; the CEO of the company had to appeal for financial support. In 2009, GM had to announce bankruptcy; indeed, the company had to accept a considerable debt. General Motors decided to solve this issue by excluding multiple models of their vehicles, closing factories, and firing many employees. Oppositely, in times of crisis, Toyota did not decide to reduce the number of employees. In turn, the company implied a reasonable economy of resources and began to simplify its car models.
Indeed, if to consider the problem-solving methods of the two companies, it is possible to foresee some challenges that can arise in implementing solutions. For instance, GM seemed to spoil its reputation by allowing massive workers’ strikes (Euronews, 2018). Moreover, in 2007, Toyota produced more vehicles than General Motors for the first time in Toyota Company’s history. GM held the position of the largest car manufacturer globally; indeed, it suffered a crisis and had to reduce its production. It is expected that the methods of GM might be severe for workers. Oppositely, Toyota has been manifested as a highly productive and responsive company for years, and it is possible to assume the proper usage of resources in times of crisis. Indeed, if Toyota lacks the appropriate communication methods today, it should improve its management style and strategy to withstand the problems successfully.
Recommendations
Toyota managed to achieve enormous success in the automotive industry. It was seen how the company overcame the crisis and other difficulties, saving the position of the leader. Indeed, it is necessary to solve the issue with organizational structure. It might be an excellent solution to shift to a corporate management structure to make all layers of employees more visible. Because there is a certain lack of communication with other companies, it might be fair to suggest that Toyota focused on its production, not cooperation. Therefore, interaction with companies in the automotive industry will eliminate the problem of excessive confidentiality and facilitate the flow of ideas. Moreover, these methods might help Toyota expand the distribution of vehicles in the global market. Furthermore, it is feasible to suggest that GM can learn a patient and accurate business model from Toyota, making decisions reasonably.
Conclusion
Overall, it was researched that Toyota is a company with a rich history, and it has specific points for improvement. Although Toyota is a benchmark in the automotive industry, it should facilitate communication channels within and outside the organization. Moreover, the company was compared to General Motors in their sizes, strategies, and problem-solving models. There are several opportunities to develop the company’s growth globally, such as expanding their business in developing countries and inventing contemporary electro-cars. Additionally, Toyota might produce a more significant number of low-cost cars to boost its middle- or low-income customer base sales.
Reference List
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Chikudate, N. (2019). ‘Corporate wrongdoing and reputational risk: a genealogical analysis of Toyota’s recall crisis in 2010’, Responsible People, pp. 259–277. Web.
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Meyer, P. (2021). Toyota’s organizational culture characteristics: an analysis. Web.
Ni, J., and Huang, X. (2017). ‘Discovery-to-recall in the automotive industry: a Problem-Solving perspective on investigation of quality failures’, Journal of Supply Chain Management, 54(2), pp. 71–95. Web.
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