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Background
Economic
Postwar conditions put Japan into a country lacking significant capital, so that
Japan had to rely mostly on producing its own technology.
Political
The Ministry of Int’l Trade and Industry (MITI) encouraged Japanese firms to
enter the automobile industry despite established competitors from the West by
imposing high tariffs discouraging imports and prohibiting foreign ownership.
Japan’s work force, under Western influence after WWII, grew more powerful
and more demanding, thus limiting producers’ efforts to reduce labor costs.
Environment (cont.)
Demographical
The domestic market was very small and un-uniform. Thus, goods had to be
very tailored to specific consumer taste. E.g. luxury cars for officials, small cars
for city residents, etc.
Technological
Commitment to innovation and improvement
Large skilled-labor pool to draw from
Social
Commitment by employees to work
Country Differences?
Western “careers” vs. Japanese “community”
2 organizational features:
“Transfer max number of task and responsibilities to those workers actually
adding value to the car on the line”
“has in place a system for detecting defects that quickly traces every problem,
once discovered, to its ultimate cause”
4 areas of importance:
Leadership: Toyota’s large-project leader w/power vs. Western coordinator
Teamwork: from many functions, ties with department, and general interest in
promoting team, not department
Communication: conflicts resolved in beginning, more people => less people
Simultaneous Development
Competitive Advantages
Reliability
Product variety
Production plants in North America build 2-3 products at a time, as opposed to
one by Western firms.
Firms keep models for an average of four years, as opposed to an average of
close to ten years by Western companies.
Western companies sell almost twice as many cars of the same model as
Japanese firms do.
Suppliers – Lean Production Supply Chain
Organized suppliers into functional tiers
First-tier suppliers: worked together in a product-development team
Second-tier: made individual parts
Lack the ability to think and act globally rather than from a narrow national
perspective
Evidence that plants that perform best are those with very strong Japanese
mgmt presence in early years of operations and those that have moved slowly
and methodically to build up their domestic supply base
Need managers and suppliers that understand lean production and are
committed to it, mostly Japanese
Financial figures
In fiscal 2003, ended March 31, 2003, Toyota’s consolidated net revenues
increased 9.2%, to ¥15.50 trillion, operating income rose 16.3%, to ¥1.27
trillion, and net income was up 34.9%, to ¥750.9