The origin and evolution of Toyota Motors
Toyota Motor Company traces its origin from Toyoda Automatic Loom Company incorporated to manufacture loom. Toyoda Sakichi who was a carpenter’s son founded it. Although the initial idea was not to manufacture automobiles, Sakichi managed to convince his son to look into the possibility of manufacturing vehicles in Japan. The idea did not pick up easily as some executives of the company were opposed to it (Hill, 2009).
Much of the success achieved at the early stages can be attributed to fate working in favor of the company. First, Japan’s invasion of Manchuria created the necessity to establish an automobile industry in the country. This led to the passage into law of the Automobile manufacturing law in the year 1936. The government played a critical role in the development of this industry by imposing heavy duties and tariffs on imported cars. This served to create a conducive environment for Toyota to thrive.
Even though Toyota was determined to achieve milestones in this industry, many factors hindered it. First, the Japanese market was considered too small to allow for mass production of vehicles. There was also lack of adequate capital from the domestic investors to allow large-scale investment. The company also faced stiff competition from other firms in both America and Europe. Ohno Taiichi considered the aspect of mass production inefficient for automobile manufacturing. Taiichi felt that this method drastically increased the company’s operation costs. (Ohno, 1988).
In the years that followed, Toyota underwent numerous improvements, all geared towards achieving efficiency. Mass production was abolished as it proved to be costly and prone to errors. The Kanban system was also developed which ensured that components were delivered on the production site only when needed. Outsourcing of majority of the components used was also introduced.
The company continued to achieve tremendous growth over the years. However, this success was greatly affected by the economic recession of 2008. This saw the company’s sales reduce by around 41% and the company registered a quarterly loss for the first time in 70 years (Hill, 2009). Given the company’s strong financial position, it was able to weather the storm and emerged stronger than before.
SWOT ANALYSIS
Over the years, Toyota Motors Company has developed and integrated various policies and programs. Some of them have seen the company attain remarkable success while a few have not been as successful. The following is a brief insight into the company’s strengths, weaknesses, opportunities as well as threats.
Strengths
Being in the automobile industry and achieving remarkable success is not an easy feat. However, Toyota Motors has managed to beat all the large manufactures and emerge as the world’s leading in both the number of vehicle produced yearly, and quality. Toyota Motors’ systems are the most efficient in the world. This has been achieved because of many years of investment in development of their products.
One of the strengths of Toyota motors is its talented workforce. The company has had a pool of some of the best CEOs and engineers in the world who have been very vital to its growth. Right from Toyoda Sakichi, the people who have taken the mantle as leaders have been visionary about the company’s growth potential. In addition to that, the company has a pool of professional and motivated workforce. The better part of the motivation comes from the job security offered by the company. The company has come up with a policy of employment for life whereby the company retains employees.
Toyota Company has also focused on constant improvement of its operations since inception. Over the years, the company has introduced policies aimed towards achieving greater success. Maintaining proper relations with suppliers has been one of the critical points for growth. Given that the company relies mostly on outsourced components, it has had to establish and maintain proper relations with suppliers.
In addition to that, establishing good relations with customers has helped the company grow to its current level. It has actively been involved in putting customers’ suggestions into operation. Customers are required to air their concerns that are acted upon, and these include issues of color, prices and models of vehicles among other issues.
Weaknesses
The major weakness that has faced the company is that of maintaining a large portfolio of vehicles. The company manufactures different models of vehicles and this has a negative impact on quality of the vehicles produced.
In addition to that, the company lacked a global orientation at first. It only concentrated on making vehicles suitable for Japanese roads. The consequence of this was a poor performance of its vehicles in other countries such as the U.S.
Opportunities
The company has a wide range of opportunities it can explore for future growth. First, there is the market for low fuel-consumption vehicles. Given the current global position, it is turning out that oil will be a rare commodity in the days to come. The gas prices also keep soaring and this tends to reduce demand. People are therefore shifting their preferences to low fuel consumption vehicles.
The market for vehicles that appeal to the younger generation also remains unexplored. For Toyota, the average age for their customers is 41 years. This implies that much could be achieved by producing vehicles for the youth.
Threats
The greatest threat that faces Toyota Motors Company today is competition. Multinational Corporations such as Ford Motors and the General Motors remain to be the biggest competitors.
Economic recessions such as the one experienced in 2008 also threaten the company’s performance. It was during this recession that the company reported its first quarterly loss in 70 years.
The following are some of the things that Toyota has managed to do well:
Establishing lasting relationships with suppliers and customers. This helps create loyalty which helps the company predict and plan its future operations.
Choosing to outsource majority of the components used in the automobile manufacture. This helps it to concentrate on important issues to the company.
Establishing manufacturing plants in other countries such as the United States. This helps it to produce vehicles, which are custom made to fit that specific market hence improved sales.
However, the company’s initial decision to engage in mass production did not work well. This is because producing large quantities always comes with associated costs. An example of this is that of increased defects. The storage costs are increased and this reduces the overall profitability.
Recommendations
It is highly recommended that the company should continue with its plan of outsourcing majority of its components. This allows it to concentrate on issues of ensuring that its products meet the requisite quality standards.
Secondly, the company should invest more in the manufacture of cheaper car models. This is because majority of car shoppers are first timers. They do not wish to spend too much on their first car and prefer to go for cheaper models. This will also enable it counter competition from the likes of Ford that offer cheaper models.
Another important issue is that of reducing the number of car models manufactured. The company should rather concentrate its efforts on not so many models. This will have the advantage of ensuring that issues of quality are resolved.
References
Borowski, A. (2010). Report on Toyota Company. Munchen: GRIN Verlag GmbH.
Hill, C. W. L. (2009). Toyota in 2009: the origin and evolution of the world’s leading
automobile manufacture. Washington: University of Washington.
Hino, S. (2006). Inside the mind of Toyota: management principles for enduring growth. New
York: Productivity press.
Ohno, T. (1988). Toyota production system: beyond large-scale production. Cambridge:
Productivity Press.
