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Contents

1.0 Introduction Company Background...............................................................2


1.1 Strategic grid................................................................................................ 2
1.2 Porters Five Forces....................................................................................... 4
1.3 Transformation Graph................................................................................... 7
2.0 Recommended system.................................................................................. 10
2.1: Solution: Toyotas intelligent speed limiter................................................10
2.2 Acquisition method..................................................................................... 10
3.0 Conclusion..................................................................................................... 11
4.0 References..................................................................................................... 11
5.0 Appendix........................................................................................................ 12

1.0 Introduction Company Background


Toyota motors corporation is a Japan-based company where its core business function is to
manufacture automobiles. The company has become the largest vehicle manufacturer in
Japan over 40% market shares. Toyota produces and sells passengers cars, minivans, and
commercial vehicles like trucks. Toyotas cars can be divided into a two categories:
conventional engine and hybrid vehicles. On the other hand, Toyota Motor Credit
Corporation provides a range of financial services including retail financing, retail leasing,
wholesale financing and insurance. Toyota production system (TPS) believes in total
elimination of waste, have high quality of vehicles and provide work satisfaction to
employees with unbiased treatments. Just in time approach was pioneered by Toyota which
is gaining global recognition for its outcomes. It is a method where a production is triggered
in response to customer order which helps in eliminating wastages in production.

1.1 Strategic grid

Figure 1 : McFarlan and McKenney Strategic Grid


Strategic grid role is to evaluate the IT position in a company to understand how it supports
the operational and strategic interest of the firm. The case study falls under strategic quadrant.
Support involves the applications in the organization which cannot be considered to give a
critical impact in the organization for its current and future business process. Therefore, the
organization would manage it without considering the fact of investing to improve its
features. For an example, its the payroll processing system has little impact as the removal of
it would not provide a lot of difference to an organization.

Factory affects the company heavily and is essential in keeping their core operations running
smoothly. (Martin, 2007) explains that factory is essential for the day-to-day operations and
its maintained to keep the system running. Cass system is not in this category because it has
features like business intelligence for the future business operations when the organisation
invoice processing becomes more complex.
Strategic quadrant is an indicator of how the applications can provide high business value and
has a critical position in the current and future operations of the company. The case study
suggesting that the Cass system is able to manage the logistical expenses fall under this
category. Firstly, the system has a better business processing approach since Toyota has
centralized data storage for its invoices which allow better auditing results. (Cass, 2014) has
stated that Toyotas carriers have a through-put to almost 95% which signifies a high critical
impact to the business. Besides that, it can used in the future also since the system has
business intelligence feature which provide interpretation of data points, identifying key
issues and the ability to suggest solutions to the issues highlighted.
Turnaround is used for systems that can provide strategic implications to the company but not
for the current operations. Therefore, such systems are needed in the future, like an expert
system. Such a system is able to emulate and behave like a human expert because of the
domain of knowledge contained in a particular field.

1.2 Porters Five Forces

Porters Five Forces

Figure 2: This diagram shows Porter Five Forces


Bargaining power of buyers: High
Since there are numerous competitors among the automotive industry like Ford Motor and
Honda, the buying power of Toyota became high. Due to this, customers have access to
wider options of brands while selecting a car. Another supporting factor for high buyer
power is because it does not cost much for customers to switch to another brand. Due to stiff
competition, (Thembani, 2013) explains that buyers are price sensitive and their decision is
often based on how the value of the car.

Bargaining power Supplier power: Low

The supplier bargaining power is low since there are numerous suppliers for Toyota. In U.S
alone, there are around 63,000 suppliers jobs across 38 states from across North America.
Therefore, this is essential since it foster long-term relationships and a reliable supplier is
able to add value to the goods being manufactured. Therefore, suppliers are accessed by
Toyota to meet their requirements to be a reliable supplier. For an example, suppliers need to
practice lean management in their business operations to eliminate waste. Suppliers and
Toyota should experience mutual benefits from the partnership.
Another reason why the bargaining power of suppliers is low because Toyota Production
System (TPS) has designed a system to ensure that suppliers supply goods on time and of
high quality.
Threat of New Entrants: Weak
A new entrant would require huge capital, brand building, high quality assurance and
customers loyalty to remain competitive in the automotive industry. It takes a lot of years
before a company gains customer acceptance and with value cost vehicles. (Thembian, 2013)
explains that (Thembian, 2013) it is very hard to achieve economies of scale for small
companies. Therefore, the new entrants are low since there are big players like Toyota who
has been leader in the automotive industry for so many years. (Thembani, 2013) states that
Toyota has strong market position across the world and has an extensive distribution network.
This signifies that Toyota is able to acquire a strong competitive edge over its new threats
since it a distinguished brand in the market.
Threat of substitutes: Medium
Firstly, there are many alternatives to substitute cars bicycles, motorcycles, trains, buses, or
planes. However, the role and the convenience of a car exceed other transportation modes.
Public transportation could be a threat if it is well connected and has a distributed network
across different locations in a country. For an example, subway in New York City and the San
Francisco buses provide more convenient to users. The fact is that many countries are still
improving the public transportation features. Therefore, the demand of cars is still available.

Rivalry among competitors: High

Firstly, there are a moderate number of competitors. (Thembian, 2013) has identified the
major brands in the automotive industry like Toyota (10.2%), Volkswagen (9.6%), General
Motors (6.9%), Ford (5.6%), and others (67.7%). But each company is visioning to be a
market leader by delivering innovative cars with the latest technology and they try to offer
low prices. Each company has to gain competitive edge because, if a firm plans to leave an
industry, it can result in either bankruptcy or stays in the automotive industry for the lifetime.

1.3 Transformation Graph

Figure 3: Scott Morton proposal on the transformation graph.


1. Localized exploitation :(Gamayanto, 2004) has stated it is within the business functions and
the primary objectives addressed are mainly focused on its effectiveness.
2. Internal integration: It is usually between different systems and applications which shall have
a common IT platform. Corporation and coordination within the enterprise is enhanced. Cass
BRO is able to improve the efficiency in auditing and managing the invoices. The main
problem is that each carrier has a different format on the rates and terms, therefore, the
solution would allow the paper formats to be replaced by Electronic Data interchange (EDI)
so that it can be effectively analysed using the Cass once submitted via EDI. (Cass, 2014)
has stated that with the system a warehouse of valuable of standardized invoices are available
on the various suppliers, routes and contract terms. Also, it has been integrated with business
intelligence aspect to provide recommendations to problems highlighted and has easy search
of invoices across Toyota outlets. In this manner, the system has provided effectiveness to the
company since it is able to save time to categorise the problems and implement business rules
to accommodate them.
3. Business process redesign: It involves re-evaluation of the enterprise value-chain and the
production process. In other words, how an information system has change the internal
approach especially the enterprise value chain which involves manufacturing the product till
the delivery to the customers. Toyota production system incorporates just-in-time concept and
lean management principles. This is essential to avoid waste and have a better control of the
inventory level.

(Tsutomu, 2006) has stated that Fujitsu Applications, Ltf (FAP) was responsible to develop
full-scale application software for Toyota Production System (TPS). The system was
designed to improve the supply chain management activities and start production where there
is a trigger of demand from customers. It is understood, that the fastest reform was the
mobile systems products manufacturing plant. As a result, (Yuchii, 2007) explained that a
few comparisons could be made with the TPS-developed model in 2005 compared to 2003.
For an instance, 55% reduction in direct operations and 48% reduction in manufacturing lead
time. This signifies that the TPS developed system is able to add value to the organization
value chain.

4. Business network design: This aspect involves the reconfiguration of the scope and tasks of
the business network associated in the production and delivery of goods and services. This
stage highlights on how does the system communicates with external sources like suppliers.
( Monde,1993) has identified that Van, a network system is used to communicate between
Toyota and other major suppliers like Nippon Denso, Toyota Fabric and others. The system
aids in forecasting the demand of the parts and has a sequenced production schedule to be
submitted through the computer system.
Apart from that, (Monde, 1993 ) has also described on how Toyota built an online network to
communicate with external automobile body makers like Toyota Body, Kanto Auto and
Daihatsu Motor. This network allowed Toyota and external body makers to submit the parts
requirements real time information to the parts manufacturer.
Furthermore, Toyota Network System (TNS) is made up of six different subsystems as shown
in the diagram below.

Figure: It illustrates on the six subsystems that Toyota has.

The importance of having this network is that Toyota is able to adapt to the market demand to
a group of organizations involving Toyota (automaker), dealers and body makers. The
information flow would to provide more transparency to Toyotas supply chain management
activities and is able to respond effectively to the changes in market demand. In this Toyota
has a greater control over its quality control for each stage of development sales,
manufacturing, and purchasing.
5. Business scope redefinition: It involves the movement of functions across the enterprises
boundaries. At this stage, the company shall implement new products and change its core
business functions. Currently, Toyota is planning to strengthen its position in the automotive
industry by increasing customer satisfaction, and no suitable information system was found to
accommodate this phase.

2.0 Recommended system


2.1: Solution: Toyotas intelligent speed limiter

Toyota is already a household name in the automobile industry. However, in order for Toyota
to keep up with its competitors, it has to bring innovation to its car models. It is essential to
build new features for the cars in order to be commercial in the market. (Marsh, 2015) has
explained that cost pressure on innovation can be categorised into four different factors:
customers, legislation, risks and industry dynamic. The author focus is on the legislation
aspect where there is a need for companies to create a system to obey speed limits on the road
for the safety of the passengers and drivers. The recommended information system that
Toyota should implement is Toyotas intelligent speed limiter. It is a system where the car is
steered to obey speed limits to ensure road safety and avoid paying fines. (Bill, 2015) said
that the intelligent speed limiter shall incorporate the functionality of two Ford technologies:
adjustable speed limiter (enables drivers to set the speed manually) and has traffic sign
recognition (the drivers are able to detect to speed limit overtaking restrictions with an
instrument cluster display). The driver can set the limit and the car is able to recognize the
changes on speed sings accordingly. Also, the drivers can install GPS to allow the car to read
the ma data for more accuracy on the speed limit in certain areas. The car wont apply the
brakes but instead limit the fuel being fed to the engine.
2.2 Acquisition method

Method: In-house development


The author has decided to choose in-house as an acquisition method. The internal
organization should do more research and study to create that technology. Also, employees
would relate the technology to the business strategy and vision. In this manner, the company
would gain a competitive edge over other companies in the automobile industry. (William,
2000 ) explains that the firm can invest in research and development department to create
new models with innovative technology. Therefore, Toyota can lower the price of the car
when it is mass-produced in the market. Also, (William, 2000) has illustrated that Toyota has
invested in an on-board computer. This mini-computer can be used to manage all aspects of
the car. In relation, this mini-computer can be applied to limit the fuel being fed to the engine
when the car has identified the speed limit.

3.0 Conclusion
Toyota has a strong presence globally. In order to strive in a competitive business
environment, it is essential to investigate the information system that it has to align its
business activities and operations. In this manner, the author can interpret on how critical the
system is and the potential business benefits it is able to deliver to the company. On another
note, innovation is the key to have a competitive edge, the research and development should
be invested more to create new models with technology that could provide convenience,
safety, environmentally friendly and it is able to have good economic value proposition in the
market.

4.0 References
1. Cassinfo.com,. 'Business Processing Outsourcing Accounts Payable'. Web. 24 July
2015.
2. Cassinfo.com,. 'Freight Audit & Payment | Best Practice Solutions From Cass'. Web.
22 July 2015.
3. Corboy, Martin. Strategic Planning Models. 1st ed. 2007. Web. 20 July 2015.
4. Howard, Bill. 'Ford Intelligent Speed Limiter Reads Signs, Sets Cruise Control But
Only 5 Mph Over | Extremetech'. ExtremeTech. N.p., 2015. Web. 27 July 2015.
5. Monden, Yasuhiro. 'Toyota Production System : An Integrated Approach To Just-InTime'. Google Books. N.p., 1993. Web. 26 July 2015.
6. Nkomo, Thembani. Analysis Of Toyota Motor Corporation. 1st ed. Web. 22 July
2015.
7. Sekimura, Tsutomo, and Tomiko Maruyama. Development Of Enterprise Business
Application Software By Introducing Toyota Production System. 1st ed. 2006. Web. 23
July 2015.
8. Strategic Opportunities And Information System Management. 1st ed. Cranfiled:
Cranfiled Institute of Technology, 2015. Web. 31 July 2015.

9. Threefoldvictory.wikispaces.com,. 'Threefoldvictory - Mcfarlan Strategic Grid'. N.p.,


2015. Web. 16 July 2015.
10. Toyota Australia,. 'Toyota Production System'. Web. 31 July 2015.
11. V.App, William. Automobiles: Toyota Motor Corporation. 1st ed. 2015. Web. 16 July
2015.
12. Wyman, Oliver. A Comprehensive Study On Innovation In The Automotive Industry.
1st ed. 2015. Web. 20 July 2015.

5.0 Appendix