(e.

1937)

The Big “T” The Empty

Mutually beneficial Space
relationship and trust Global expansion
that is placed between “ Moving
of Toyota's Forward
the customer and the technology and
company. unlimited potential
for the future.

HIGHLIGHTS Upcoming
Toyota AA (1936) Toyota Avalon
(2011)
• Products market in more than 170 countries.
• Production on 52 facilities in 27 countries.
• Prius: - 2 years consistently voted “Top
Customer
Satisfaction Car” in the UK.
• Y 1997: - About 2m Hybrid cars sold
- 2009
• Y 2008: - World’s Largest Car Manufacturing
Company.
- World’s Fifth Largest
Company.
• Y 2006: - Innovative concept “Eco Drive”
unleashed.
• Y 2005: - Successful Lexus Brand cars was
introduced in
the Japan market.
• Y 2003: - Global Production Centre (GPC)
stategy set-up.
• Y 2002: - Innovated International Multipurpose
Vehicles
(IMV).

UoW’s MBA Summer 2010

(LSBF)
Contents Student
ID Ref. Page.
1. Value Chain Analysis
Primary Activities A4010188
2-3
Supporting Activities A4011715 3

2. Innovation in TMC A4023294

4
A4018370

3. Market-led and Product- A4021255

Upcoming
5 Toyota EV (2010)
Led Products of TMC A4014310
 4. Competitive Advantage A4010614
6

5. Intel R&D and Manufac- A4016492

7
turing process compared A4015233

Support Activities

Primary Activities

[A] Primary Activities:

(Researched by Student ID : A4010188) (Researched by Student ID : A4010188)

Inbound Logistics:
The key to success of Toyota Motor Corporation (TMC), commonly known as Toyota, the
part of Toyota Group, is consistent ‘Localisation’ alongside ‘Globalisation’. The TMC has
employed Lean Manufacturing and JIT Production techniques that has rational of
reducing wastages and costs of holding and storing the inventories. The required quality
and quantity of inventories are delivered on plant/site when they are needed to be used
on assembly line. Ultimately, this has resulted in improving value chain of TMC’s supplier
and cost base of inventories as the planning was made easy. This process was outlined
as a “Toyota Way” and as of today all production plans globally follow “Toyota Way
2001” aka “Toyota Production System (TPS)”. Many leading corporations have tried to
adopt “Toyota Way” of production processes, but, unfortunately, many failed to gain the
advantages of the system due to lack of fit with their suppliers and dealers systems.

Operations:
Toyota is a renowned international brand for innovation, quality and excellence since
more than three decades. This success is achieved due to high precision engineering of
its innovative engines and careful assembling of parts and accessories to its dynamic
range of vehicles. Toyota is found using Kaizan (continuous improvement) and Jikoda
Model to stop and prevent defects. Most of the operations are done at local sites
internationally by highly trained and skilled engineers and workers responsible for
delivering the final product. Where necessary, the TMC has affiliated/partnered its
operations with the local companies to establish and grow its market share. Toyota
believe in “doing right first time” to ensure that the product has met its highest quality
standard and to this end it provides extensive training to its employees at Global
Production Centres (GPCs) established in some international countries such as in USA
and Canada where production is in large scale.

Outbound Logistics:
Toyota has effective quality control processes in place to ensure products have met the
expected standards before it leave plant. Vehicles are then transported in fleets of 30ft
road trailers, ships and sometimes by air across the globe to Toyota’s sales office,
 dealers’ showroom or warehouse or to the retailers. Toyota ensures that their products
are easily accessible and available in the market where there is a demand and a
potential to grow.

Marketing and Sales:

TMC manage their own showrooms where they first display their products, allow
selective customers to test drive and collect the feedback before mass launch. They have
divided their marketing strategies region wise to effectively promote their products in
individual markets in North America, Europe, Asia, China and Japan. Whatever the
region is, TMC does aggressive promotion and launch of their products through direct
and indirect effective advertisements by TMC, their dealers and partners through modern
means such as TV adverts, brand/product dedicated websites, YouTube channel and by
traditional means through hoardings and standard newspapers. The products are firstly
introduced to the market through participating in international exhibitions.

Services:
Toyota is well known for its high service standards through which it attract and retains
customers worldwide. It has dedicated sales, distribution and service centres for its high
value individual brands and products such as Toyota, Lexus, Hino and Daihatsu
throughout the globe to reach and satisfy the quality expectations of the customers. In
past nine months Toyota has recalled 8 million cars and trucks in caution of possible
safety hazard and customer defaults dictate that it highly value after sales service.

[B] Support Activities:

(Researched by Student ID : A4011715)

Firm Infrastructure:
` TMC has largest manufacturing facilities in USA and total of approximately 7.5m sq.ft. of
factory floor worldwide. In 2008 TMC became the world largest car manufacturer
beating its close competitor GM Motors. The management has developed new ways of
production, training and distribution to face the challenges of the modern automobile
industry which is currently going through crisis. TMC is using industry renowned
information technology solution to evaluate and improve its business processes that
helps them to reduce wastages, operate efficiently without holding inventory and
produce for huge market such as USA. The financial aid is provided and supported by a
special purpose company setup by TMC. Continental innovation, production, distribution,
marketing and sales are managed by local companies under control of TMC, Japan.

Human Resource Management:

Toyota’s objective is development of its workforce with the perception that trained
labour can produce consistent quality of vehicles. TMC provides knowledge and language
skills training to its production employees and for other qualified employees a systematic
in-house training course is structured. TMC believes in adding value to the society and to
this respect it has opened higher education technical institutes. From many campus
interviews employees are chosen to work for TMC. TMC also provides a direct career
channel to apply for work via their websites. Once, employed, TMC takes utmost care
that their workforce is frequently and adequately trained to sustain the quality
standards, pays sufficiently to motivate and retain employees and has effective policy for
benefits and compensation. This all efforts are to generate creative ideas from
employees that could be implemented to achieve competitive advantage.

Technology Development:
Toyota understands and highly value technology as an important element to gain a
competitive advantage. Being a consistent innovator in bringing and using new ideas and
technology, TMC has gained a cutting edge and a leading success in the automobile
industry where many of its competitors are currently struggling in the industry crisis.
Apart from safety of its workforce and customers, Toyota has focused upon safety of
pedestrians and has concentrated its efforts to produce vehicles with Omni Directional
Compatibility giving a 1900 rear view on a screen installed in a vehicle. Continuous
research is carried on high safety of prospective drivers and passengers of TMC vehicles
for death caused by head, chest or leg injuries.

Procurement:
TMC’s procurement is mainly required for production, operations other service provisions
and property/site management. TMC make it purchases from its standard supplier with
whom it has created and maintained good relationships through negotiations and
contracts. TMC believes and practice fair competition, mutual growth based upon mutual
trust and contribute its global community through local procurement and production.

(Researched by Student ID : A4023294 & A4018370 )

The most significant thing to keep in mind is that the Toyota has a philosophical way of
thinking and it is not just about a series of processes or incentives or targets. TMC has a
distinctive approach which defines innovation as an incremental process, in which
objective is not to make huge sudden leaps, rather, to make things better on a daily
basis (Known as Kaizan costing in Japan which means continuous improvement).So
innovation is taken as an everyday task for which everyone is held responsible and
trained to fashion it at a grass root level. Innovations such as Hybrid Synergy Drive,
Toyota iQ and Toyota Optimal Drive has put Toyota in a strong position to lead the
market.

Hybrid Synergy drive:

At Toyota, they just do not talk about eco friendly cars, but instead they work to develop
technologies aimed at Zero Co2 emissions. Such Hybrid cars first came into the scene in
1997 in the shape of Toyota Prius. Hybrid means two sources of power which are an
electric motor & combustion engine. In Conventional engines most of the energy is
wasted particularly when applying breaks, but in Toyota hybrid cars, most of the energy
is recovered and stored in battery later reused at most appropriate time through an
electric motor. As of today, more than 2.3 million Toyota cars are sold worldwide that
uses this hybrid technology giving Toyota competitive edge over its competitors.

Toyota iQ:

Toyota iQ is the world’s smallest four seater car and is based on six degrees of
innovation which made possible a creation of less than 3 meter long car yet with the
space for four seats. These innovations were focused upon:

• The front Mounted Differential,

• The centre take off steering gear,
• The flat under tank fuel,
• Space saving air conditioning unit,
• Asymmetrical dash board and
• The ultra slim seat design.

Toyota optimal drive:

Toyota Optimal Drive is an entire range of new engines. This innovative piece of
engineering design allows transmissions to bring a step change in fuel economy and
emissions across the Toyota range. Some of these new innovations are:

• Enhancing performance without compromise on carbon footprint,

• Stop and save engines that saves fuel in urban traffic conditions,
• Reduced weight and lower internal friction engines to provide optimised value control,
• New 6 speed manual transmission and
• Gearshift timing indicators.

By making such innovation on a daily basis, they have introduced a new philosophy ‘The
Toyota way’ to their entire overseas basis. It has resulted in a common conversation
amongst business analysts that ‘what can we learn from Toyota’. By introducing
environmentally friendly cars, Toyota showed its social responsibility all over the world
and succeeded huge market share.

(Researched by Student ID : A4021255 & A4014310)

Toyota has outlined in Y 2010 announcements that it is to provide new range of safe,
environmental friendly and high quality cars at affordable prices in coming years. This
statement suggests that Toyota is market conscious and pro active in terms of meeting
ever changing customers’ expectations. It does thorough market research before
designing or offering a product. This enables TMC to sustain their competitive
advantage.

For example, as part of Toyota’s regional activities, they intend to increase local
production of International Multi-purpose Vehicles (IMV) in emerging markets such as
China and India that are experiencing strong growth and mass demand for Toyota
products. TMC’s increasing activities will enable them to respond to local demand in a
timely manner and with a wide range of products.

Also, the announcement delivered the intent of product-led approach, in which Toyota
produce products or service is developed before Toyota can reasonably determine its
market. This approach generally is to be used for entirely new product categories. It is
like holding the keys and then looking for locks to open.

Toyota has successfully unveiled concept “compact hybrid” that is price effective and fuel
efficient than current models which has successfully attracted and satisfied younger and
less affluent buyers. Hybrid vehicles are cost effective as it consumes lesser fuel and
produce extremely low level of pollution leaving positive carbon footprints. High fuel
costs and environmental concerns have created the ideal set of conditions for
strengthening hybrid sales. Toyota also plans to introduce a battery-powered urban
minicar in 2012. These all examples suggest that Toyota’s approach for marketing is
both product-led and market-led.

Toyota Operations Map in the USA

 (Researched by Student ID : A4010614 )

TMC’s global competitive advantage is based upon a corporate philosophy known as

“Toyota Production System (TPS)” aka “Toyota Way”. The system depends in part on a
human resources management policy that stimulates employee creativity and loyalty but
also on a highly efficient network of suppliers and component manufacturer. Toyota’s
suppliers and component manufacturer highly contributed their part in Toyota’s success
by aligning their systems and interests to that of Toyota’s.

Toyota has created a culture where its competitive advantage lies in the hands of its
workforce. Toyota has an intelligent and integrated human resources strategy that
cannot be bought or copied overnight. For competitors seeking to duplicate a well-
trained, motivated and committed workforce will take almost a decade if not impossible.

Employee Empowerment in Toyota:

• More than 700,000 improvement suggestions were made by its employees.

• Which makes an average of 10 improvement suggestions per employee a year?
• Over 99% of suggestions were implemented.

The company’s approach to both product development and distribution is very consumer
friendly and market driven.

Although many car manufacturers have earned a reputation for building high quality car,
they have been unable to overcome Toyota’s advantage in human resource
management, supplier networks and distribution systems in the highly competitive
automobile industry.

Examples:

1. Hybrid Synergy Drive (The world’s most

advanced automobile technology):
The system offers a remarkably effective combination of petrol and electric power.
Hence, offering more power and performance, yet, it strengthens its position as most
 economical, innovative and ecologically responsible car in its clan.
• Prius is the only car of its kind you can drive on electric power alone i.e. zero
emission.
• It can travel up to 72 miles per gallon - thanks to Toyota Technology that has
outperformed other cars of its kinds anywhere.
• The prius does not need an electric supply to change its high
capacity battery. It simply charge by itself when it is driven.
• EV mode: i.e. using electric power only Which means
1. Zero emission
2. Zero fuel
3. Zero engine noise
4. Can drive up to 31mph and for 1.2miles electric only.

2. Solar powered ventilation (cooled by sun another Toyota first):

Solar panel on the sunroof powers an electric fan that starts cooling the interior of
the vehicle 10 minutes after parking. So, in hot weather, a refreshing cool car waits
for your return.

3. 5-Star Euro NCAP Safety:

• Prius won the NCAP 5-star rating because of the highest standard of safety is
throughout making it the UK’s customer favourite as well.
• Prius remarkably achieved 83% for overall protection performance.

Manufacturing:
(Researched by Student ID : A4015233 )

Although the operating outcome of the TMC and Intel is totally different, one is motor
vehicle, the other is tiny little chip, the manufacturing processes of the two have some
similarities. TMC can certainly adopt many Intel’s manufacturing strategy and can apply
them into their worldwide operation systems.

Looking at TMC’s manufacturing stream, all the processes are divided into independent
international operational unit (IOU) with overall control and organisational cultural flow
from the Head Office. From the rolled steel to a stunning modern vehicle, the IOU can be
located in different parts of the country likewise of Intel’s manufacturing plants around
the world. This enables the operations enjoying the advantage of different level of skilled
workers in relevant different technical areas.

Another applicable process of the Intel manufacturing operations idea that could be
applied is the methodology of ‘copy exactly’. The TMC can discover and implement the
process rigorously as it has highly trained intelligent workforce. Implementation at grass
root level can find it way easily as Toyota has access to huge financial resources that it
can invest in training and standardising international production line/IOU. This will also
make transfer of employees, know-how and skills from one IOU to the other as a simple
transition.

By utilising its full capacity through ‘copy exactly’ processes, the standardised and mass
quantities of products can be manufactured quickly and launched to meet the increasing
demands of the large market. Especially, for vehicles manufacturer identifying, defining,
creating and satisfying the market demands is the key guidance for future product
development and these could be done quickly by adopting Intel’s approach to
manufacturing.
Research and Development:
(Researched by Student ID : A4016492)

Likewise Intel, Toyota came up with the innovative and better range of its vehicles
through use of their intensive research and technology. This has helped Toyota to
sustain competitive advantage and grow up to a extent where no one can outperform
them in the ever changing automobile industry.

Their research involved developing new sophisticated vehicles for different segments
globally considering what market needs and what best it can provide at the affordable
price. Toyota does thorough research before detailed development of new products is
considered.

Similar to Intel, Toyota has research facilities, including homeland Japan across
continents that does focused research to meet the geographical demands in USA,
Europe, China and Asia Pacific. Toyota works in partnership with it dealers, suppliers and
component manufacturer for its product and market development. Toyota continuously
improves itself in regards of safety standards, environmental concerns, energy and
resource efficient through research and development.

However, I strongly believe that Toyota has achieved success and a leading position in
automobiles industry because of its own innovative ideas and strongly established values
and systems that give them a cutting competitive edge that are not required to be
change unless their strategy and operations model becomes obsolete.