Toyota: Origins, Evolution, and Current Prospects

Toyota: Origins, Evolution, and Current Prospects

Overview-History

Toyoda Sakichi originated the idea of the Toyota Motor Company, and in 1926 he established the Toyoda Automatic Loom in order to manufacture products. At that time the Japanese automobile market was dominated by GM and Ford, but the Toyota took on great lead towards growth and has become the great success story throughout the last half century of Japanese industry. In 1974, Toyota was little known as the domestic manufacturer, but eventually in 2004, the company marked a historical record of 7.48 million vehicles, comfortably leading the market ahead of GM as well as Ford. Moving further, the company increased its targets in 2006, and as the company accomplishes its established targets, Toyota has become one of the most leading vehicle manufacturers across the globe.

Mission & Vision Statement

Vision

“To become the most respected and successful company” (Breyfogle, 2008).

Mission

“To sustain profitable growth by providing the best customer experience and dealer support” (Breyfogle, 2008).

Objectives/Strategies

Objectives

To decrease costs

To increase quality

To control production process more tightly

Strategies

Changing design to reduce cost

Kaizen approach

Kanban system

Cellular layout arrangement of plant machinery

Close supplier relationships

JIT systems

Industry & Sub-Industry Analysis

In 1931, the Japanese industry felt that it was strategically important to have its own truck - automobile industry. So, new opportunities were found, but eventually, in 1950 the new government of Japanese forbid DFI in the automobile industry as well as imposed high tariffs on importing foreign cars, which created challenge for Toyota. But Toyota compared to industry average showed best rate of problems per car i.e. 19 problems less per car. Thus, industry was attractive, but also has some issues that were faced and resolved by the company.

Industry Attractiveness

High need for truck manufacturers

Attraction of outside investors

High demand for vehicles as demonstrated by leading automakers GM and Ford

Five Forces Analysis

Porter's five forces analysis holds significance value at it provides an overall industry analysis regarding main aspects including substitutes; new entrants; competition; suppliers; as well as buyers (Hill & Jones, 2009).

Threat of New Entrants: Low threat of new entrants because of huge capital and cutting-edge technology

Threat of Substitute: Substitute are moderately strong

Competitive Rivalry: High intensity of rivalry

Supplier Power: Weak suppliers because cannot easily forward integrate

Buyer Power: Buyers are weak due to high switching cost

Key Success Factors

Less setup-time

Efficient organization of suppliers

Kanban system

Worldwide expansion

SWOT Analysis

SWOT analysis is one of the most vital tools for evaluating internal as well as external environment of the business, including strengths; weaknesses; opportunities; and threats. Strengths and weaknesses are refers to internal factors, while threats and opportunities refer to external forces that affects the company (Boag, 2012).

Strength: Efficient operations and supply chain, improved quality, and sound systems like JIT.

Weaknesses: Japanese market was too small to support mass production, and the economy was starved of capital.

Opportunity: High demand for vehicles, initially trucks.

Threats: Large auto makers eager to establish in Japan, and changing production systems as well as technology.

Competitive Strategies

Economically manufacturing auto body parts in small batches

Reduced setup time

Grouping work force into teams

Vertical integration

Large scale overseas ...