Term Paper on "Business - Management Theory: Toyota"

Term Paper 10 pages (2854 words) Sources: 8 Style: Turabian

[EXCERPT] . . . .

Business - Management Theory: Toyota Case Study

Toyota Case Study

In an increasingly globalized marketplace, many companies have been forced to reduce costs and staff, improve supply chain management techniques and generally become leaner competitors just to survive. Some companies, though, have managed to prosper in the face of these challenges to assume leadership roles in their respective industries and one such company today is Toyota Motor Corporation. According to Warner, "Toyota Motor Corporation is the largest of eleven car manufacturers in Japan, being responsible for about 40 per cent of car sales in the Japanese market. It is also now undoubtedly one of the biggest automobile manufacturers in the world." To help identify how Toyota achieved this success where others have failed, this study uses Henry Mintzberg's "Five Managerial Mindsets" management model. According to Mintzberg, "You can't create a manager in a classroom. Management is a practice that has to combine a good deal of craft, namely experience, with a certain amount of art, as vision and insight, and some science, particularly in the form of analysis and technique." According to Mintzberg, each of the components of the managerial mind has a dominant subject of its own that can be analyzed to discern valuable insights (1):

Self. For reflection, the subject is the self: There can be no insight without self-knowledge;

Relationships. Collaboration takes the subject beyond the self into the manager's network of relationships;

Organization. Analysis goes a step beyond relationships to the organization -- organizations depend on the systematic decomposition of activities that analysis is all about;

Context. Beyond the organization lies the subject of the worldly mindset, context - in other words, the worlds around the organization; and,

Change. The action mindset pulls everything together through the process of change -- in self, relationships, organization, and context.

A description of the focal organization, Toyota Motor Corporation, is provided in Section II below.

II. Description of the Focal Organization.

Toyota Motor Corporation (hereinafter "Toyota" or "the company") has three principal business segments:

Automotive Operations.

This segment engages in the design, manufacture, assembly, and sale of passenger cars, recreational and sport-utility vehicles, minivans and trucks, and related parts and accessories.

Financial Service Operations. The Financial Services Operations segment is principally engaged in the provision of finance to dealers and their customers for the purchase or lease of Toyota vehicles. This segment also provides retail financing, retail leasing, wholesale financing and insurance, credit cards, and mortgage loans.

Other Operations. The Other Operations segment is responsible for the design and manufacture of prefabricated housing and information technology related businesses, including intelligent transport systems and an e-commerce marketplace, called Gazoo.com.

The company was founded in 1933 and is headquartered in Toyota City, Japan; the company markets its vehicles in Japan, North America, Europe and Asia.

Toyota is recognized around the world for its progressive management techniques and efficient manufacturing process that have taken the best of what was available and made them uniquely their own (2). For example, the widely used just-in-time inventory approach was developed and first implemented by T. Ohno of Toyota. In fact, much of the company's current success is attributed to Toyota's ?hno; during the 1970s, he implemented a broad program of managerial experimentation and reform at Toyota. This executive graduated from the Nagoya Higher Industrial School and had been employed for more than 10 years at Toyoda Spinning and Weaving, a corporate predecessor of Toyota Motors. According to Tsuitsui, "?hno rose steadily up the corporate hierarchy -- moving from manager of Toyota's main machine shop in 1947, to general manager of the Motomachi factory in 1959, to executive vice president in 1975 -- and under his guidance what is now known as the Toyota production system was developed, systematized, and installed throughout Toyota's manufacturing operations."

Today, the company competes in the Major Auto Manufacturers industry sector; a comparison of the company with its major competitors is provided in Table 1 below.

Table 1.

Director Competitor Comparison.

Feature

Toyota

Ford

GM

Honda

Industry

Market Cap:

15.13B

16.57B

16.69B

Employees:

29.61K

Qtrly Rev Growth (yoy):

Revenue (ttm):

90.59B

Gross Margin (ttm):

EBITDA (ttm):

31.52B

8.58B

4.09B

10.40B

10.41B

Oper Margins (ttm):

Net Income (ttm):

13.58B

6.82B

9.58B

5.36B

1.10M

EPS (ttm):

P/E (ttm):

PEG (5 yr expected):

P/S (ttm):

Source: Yahoo! Finance, 2006.

According to Everett and Strach, a number of Japanese multinational corporations enjoy leadership positions in their respective markets; for example, Toyota passed Chrysler's U.S. monthly sales, the first time one of Detroit's Big Three had fallen to fourth place in the U.S. Today, the company remains a leader in the difficult field of new product and manufacturing process development, and they.".. successfully preserve the 'spirit' of their companies through special human resource management approaches." While the company lags behind General Motors (the world's largest automobile manufacturer) and Daimlerchrysler AG in the international market, its sales in the North American market continue to experience increasingly rapid growth as shown in Table 2 and Figure 1 below.

Table 2.

Major Automobile Manufacturers Ranked by International Sales.

Company

Price

Change

Market Cap

P/E

General Motors Corporation

16.57B

Daimlerchrysler AG

59.16B

Toyota Motor Corp.

Ford Motor Co.

15.13B

Honda Motor Co. Ltd.

Source: Yahoo! Finance, 2006 as of December 1, 2006.

The company's sales of vehicles in North America have grown rapidly over the past 15 years as shown in Figure 1 below.

Figure 1. Toyota Sales of Vehicles in North America: 1990-2005.

Source: Based on data in About Toyota, 2006.

In fact, Toyota sold more vehicles in the U.S. In November 2006 than Ford Motor Co., only the second time in history that the No. 2 domestic automaker was surpassed in sales by this Japanese competitor. According to Altman, "Ford reported that its U.S. auto sales dropped 9.7% in November compared with the same period a year ago. Toyota sold 196,695 vehicles in November, a 15.9% increase over November 2005, compared with Ford's 181,111." Finally, the company's net income for the period 2004 to 2006 is shown in Figure 2 below.

Figure 2. Toyota Net Income: 2004-2006.

Source: Based on data in Yahoo! Finance, 2006.

III. Assessment and Analysis the Focal Organization Using Mintzberg's Five Managerial Mindsets.

The five managerial mindsets developed by Mintzberg and his colleagues (reflective [about self]; worldly [about context]; analytical [about organization], collaborative [about relationships]; and, action [about change]) for use in analyzing the forces at play in a given situation are applied to the company in Table 3 below.

Table 3.

Assessment and Analysis the Focal Organization Using Mintzberg's Five Managerial Mindsets.

Mindset

Application to Toyota

Reflective (about self)

As a member of the "seven samurai" of leading Japanese industries, the current leadership at Toyota regards the company from this perspective. The corporate culture at Toyota is based on the founders' value systems, attitudes, beliefs, philosophy, and likes and dislikes. A company's founders, for example, might have placed emphasis on hard work, honesty and punctuality, and believe in caring for employees and being responsive to their customers' needs; such founders bring these values and beliefs with them to the organizations they establish and a number of internationally recognized multinational companies such as Toyota owe much of their current culture and philosophy to their original owners. Besides the company's founders' values and beliefs, organizational culture as a dynamic environment also reflects the learning and retention that have occurred over time, solutions to problems which have worked well enough to be considered valid and therefore to be taught to new members as the correct way to perceive, think and feel in relation to those problems.

Worldly (about context)

Over the past three decades or so, Japanese production management techniques have been regarded as the best practices model for improving manufacturing processes in the U.S.; however, for most of the 20th century, it was the Japanese that looked to the United States for inspiration in factory management. In fact, Japanese auto manufacturers imported mass production techniques from Detroit in the 1930s, and various management techniques from the U.S. In subsequent years until further management refinements that were uniquely Japanese were introduced during the 1980s. For example, as Tsuitsui notes, "From the start of automobile production at Toyota in the mid-1930s, the company's managers and engineers looked to the assembly lines of Detroit for inspiration. Like the vast majority of prewar Japanese observers, however, the Toyota personnel -- while awed by the Fordist achievement -- were dubious that the American model of mass production could be replicated in Japan." Likewise, "There are some characteristics that Toyota has which betray its 'Japaneseness': harmonious industrial relations, company-based trades unions, quality circles, just-in-time and so forth."

Analytical (about organization)

Some analysts suggest that in recent years, all industrialized countries regardless of the type of capitalist system involved have experienced an increasing divergence between companies and the countries in which they are headquartered; this trend indicates that the outcomes of a country's companies, particularly those with international interests and activities, are independent of their country of origins. As an example, Tayeb… READ MORE

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