TOYOTA

Presented by:

Prannoy K.K

Nandakumar

MBA 2010-12

Aloysius Institute of Management & Information Technology

INTRODUCTION• Founded in 1937

• Headquarters: Toyota City, Tokyo, Japan.

• Toyota has annual sales of $130 Billion

• Produces : 6.78 million vehicles per year

• Has 53 overseas manufacturing companies, in 27 countries/regions

• Employees :3,16,000 people

• 2nd largest automobile manufacturer

WORLD WIDE OPERATIONS• Toyota conducts its business worldwide with 56 overseas

manufacturing companies in 27 countries and regions. Toyota's vehicles are sold in more than 170 countries and regions.

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Toyota operations

American Samoa India Saipan

Australia Indonesia Samoa

Bahrain Israel Saudi Arabia

Brunei Darussalam Philippines Singapore

China Kiribati Solomon Islands

Fiji Kuwait Sri Lanka

Guam Malaysia Tahiti

Hong Kong, China Nepal Taiwan

New Caledonia Thailand

New Zealand Tonga

Oman United Arab Emirates

Pakistan Vanuatu  Papua New Guinea Viet Nam

• Toyota and not Kiichiro Toyoda• 1966, Toyota acquired Hino• Toyota acquired Daihatsu • Manufacturing or assembly plants: United

States, Australia, Canada, Indonesia, Poland, South Africa, Turkey, the United Kingdom, France, Brazil, India, Argentina and Czech Republic.

• Denso was spun off

• Toyota acquired additional ownerships in: Toyota Auto Body Corporation, Kanto Auto Works LTD, Central Motor CO., LTD, and P.T. Toyota Motor Manufacturing Indonesia.

TOYOTA & ENVIRONMENT

• Contribution towards a prosperous 21st century - zero emissions

• Pursuit of environmental technologies• Voluntary actions - environmental issues • Working in co-operation with society - Build close

and cooperative relationships

Toyota Production SystemKey Main Concepts

• Jidoka– Detects unacceptable quality during the process of

production. • JIT

– Just In Time manufacturing– Small batches which reduced inventory costs, tightened

relationship with suppliers and improved quality control• “5 Whys” Quality

– Asking “Why?” 5 times to locate source of problems– Stopping the production line whenever there are quality

problems to ensure they are not repeated• Low cost supplier

– Long term supplier relationships• Kaizen

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How does Toyota do it?

• Engineer it (Chrysler) test and try to break

• Inspect (Mercedes system)

• Build it into the assembly process

GENERIC STRATEGIES

• Cost Leadership

• Differentiation

SWOT AnalysisStrengths: Weaknesses:

•Diversified product range, highly targeted marketing and a commitment to lean manufacturing and quality.•JIT •TQM•Product Line•Toyota’s culture

•Trade union issues•Higher Lead Time•Company needs to cautiously keep producing cars in order to retain its operational efficiency

Opportunities: Threats:

•Toyota has also sold on its technology to other motor manufacturers, for example Ford has bought into the technology for its new Explorer SUV Hybrid

•Toyota is to target the 'urban youth' market.

•Toyota faces tremendous competitive rivalry in the car market.

•Economic instability

PEST

• POLITICAL FACTORS:– change in duty tariff

• ECONOMICAL FACTORS:– Inflation rate

• SOCIAL FACTORS:– Toyota is a symbol of reliability, comfort, luxury

and trust.• TECHNOLOGICAL FACTORS:

– Technological shift

BCG Matrix STARS ?

Cash Cow Dogs

Toyota in Australia

• Designed with state of the art telecommunications, but also has storm water recycling, external solar shades, double and triple glazing, zoned and filtered air conditioning, and an air reticulation system to reduce energy usage

• Award for the best contribution to sustainable development

• Carpets are made with recycled materials, supplied all over the world.

Toyota in china

• Considering China is an immature auto market, the company has adopted a three-stage development plan – First to establish a local sales network and

launch brand promotions, then – To build auto parts manufacturing bases, and,– To establish joint ventures (JVs) with local

players and produce automobiles.

Customization in Europe

• 1997 launched Prius a gasoline electric car

• April 1998 new small car in Europe market – Yaris

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Europe

• Yaris launched for targeting European market.• Engage European designers to design more

cars• Started the French Riviera Design Center• Increase manufacturing capacity in Europe • Local procurement, locally produced units• Entered into partnerships with other automobile

companies• Partnered with PSA Peugeot

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TOYOTA - INDIA

• In India, Toyota Motor Corporation entered in a joint venture

with Kirloskar Group.

• 89% stake is owned by Toyota and the remainder by India's

Kirloskar group.

• Toyota Kirloskar Motor Private Limited (TKM) has 2 units

one solely handling manufacturing and the other focused on

marketing, distribution and sales

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Vision and Mission• Vision is to be the most respected and successful

enterprise, delighting customers with a wide range of products and solutions in the automobile industry with the best people and the best technology.

• Mission of Toyota is to provide safe & sound journey. • Toyota is developing various new technologies from the

perspective of energy saving and diversifying energy sources. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world.

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Core Values

– World class product quality.– Achieving the ultimate goal of complete

customer satisfaction.– Fostering the spirit of Teamwork.– Inculcating ethical and honest practices.

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PRODUCT LIFE CYCLE

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TKM IS IN BETWEEN THE GROWTH AND MATURITY STAGE .Toyota decided to replace Qualis because of two reasons.

Qualis was a major success among the tour operator segment but was not popular at the individual/home segment.

Second reason was the increased competition from Chevrolet Tavera which was perceived to be a more refined upmarket SUV.

Toyota also wanted to bring in the latest products in the Indian market. Qualis was only a test product.

Further, Toyota wanted to appeal to the individual/home users rather than the commercial segment.

DISTRIBUTION NETWORK

Penetration

Four key components for Toyota

These are linked to the pursuit of a new global image with :• being kind to the earth,• providing comfort of life, • excitement for the world, • and respect for all people.

The encompassing motto of Toyota"innovation into the future" is "working with passion and dedication to create a prosperous society."

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LOGO “Three ellipses depicting the heart of the customer, the

heart of the product, and the ever-expanding

technological advancements and boundless opportunities

that lie ahead.”

Pricing StrategyPricing Strategy

• Optional-Feature Pricing : e.g. an Innova customer can order

mud flaps, side steppers or other accessories.

• Promotional Pricing :

– Low Interest financing : This technique is for short period

and is mainly used in festive seasons.

– Longer Payment Terms : The company stretches loans over

longer periods and thus lowers the monthly payments.

• Warranties and Service contracts : The company provides 3 year or 1 lak Km (whichever earlier) warranty on all repairs using Toyota genuine parts.

• Differentiated Pricing : Location Pricing : Toyota cars are priced differently

in different states. Car cost remains the same across the country but the road tax and insurance rates differ in different states.

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Innovation

• Toyota has introduced new ideas & technologies which enable them to lead the innovation among others competitors.

Example 1. Hybrid gas-electric vehicles.2. Advanced Parking Guidance System.3. Eight-speed automatic transmission. 4. Four-speed electronically controlled automatic with buttons

for power and economy shifting.

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-Promotion –INNOVA" All you desire "

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CSR StrategyToyota company contributed to public relation’s inthe following manner :

1. It contributed to Tsunami.

2. Toyota Kirloskar signs MOU with Bangalore University for promotion of Japanese language.

3. Toyota observes earth day by supporting local schools.

Globalization

• Aggressive Globalization efforts that began in mid 1990s

• 3 Globalization programs

• New Global business plan (1955-1998)

• Global vision 2005 (1996 –2005)

• Global vision 2010 (2002 – 2010)

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2010 Global Vision

• Toward a recycle-oriented society• Toward the age of IT and ubiquitous networks • Toward a mature society (the decline of nationalism

and war) • Toward motorization on a global scale (societies with

little private transport gaining more)

Global Vision 2005

• 1995 Hiroshi Okuda became President

• To improve domestic sales – focus on dealer network

• Incentives to increase sales to dealers

• Aggressive means to attract youngsters to its products

• Functional discrepancies among the dealers

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• Heavy investments in advertising

• Okuda decided to focus on improving global sales performance

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Early Globalization Efforts:

• June 1995 Toyota announced “New Global Business Plan” aimed at localization of production and increasing imports over a 3 yr period

• Localization was the focus• Apart from this short –term global

business plan Toyota also came up with a long-term global vision in June 1996

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Globalization Efforts:

Increasing production of automobiles byimprovement in three core areas:

• Upgrading its R&D• Developing new line of products• Replaced engines of its Lexus range of

cars with stronger models & made design changes as per customer feedback

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• Toyota's corporate goal is to achieve continuous growth and enhance its corporate value by contributing to society and gaining customers' enduring trust through global operations and through products reflecting Toyota's advanced technology that target the local demand in each market

• The automotive industry is intensely competitive across the globe and is expected to transform significantly in the future. In order to respond to changes in environment and attain further growth, Toyota will come together as a group and pursue the following agenda

• Attractive Product Lineup Responding to Consumer Preferences in Each Region

• Next-Generation Eco-cars Centered on Hybrid Models

• Annual Unit Sales of Hybrid Models Globally ex:• Year Ended March 31, 2008 2009

2010(in thousands)• Total Unit Sales 444 385 644

• Models Targeted to Resource-rich and Emerging Markets

• Global Models (IMV, Vitz/Yaris, Camry and Corolla/Auris

• Premium Brand Models (Lexus).

• Localize Global Operations with Targeted Regional Strategies

• Japan as the Center of the Global Operations

Promote Key Initiatives Globally

• Maintain Leadership in Research and Development

• Improve Efficiency• Strengthening Finance

Operations for Sales• Maintain Financial Strength• Focus on Shareholder Value• Markets, Sales and Competition

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK• Foreign Currency Exchange Rate

Risk

• Interest Rate Risk

• Commodity Price Risk

• Equity Price Risk

• Based on its assessment of market needs and prospects. To respond flexibly to fluctuations in demand in each of its production operations throughout the world

• TPS starts with the customer, by asking, "What value are we adding from the customer's perspective?" Because the only thing that adds value in any type of process- be it in manufacturing, marketing, or a development process-is the physical or information transformation of that product, service, or activity into something the customer wants.

Quality

• Toyota's philosophy is to identify defects when they occur and automatically stop production so that the problem can be fixed before the defect continues downstream.

• Go and see.• Analyze the situation.• Use one-piece flow and andon to surface

problems.• Ask "Why?" five times.

Standardization• Toyota believes standardized work is the basis for empowering

workers and innovation in the work placeThe 5S• Sort-Sort through items and keep only what is needed while

disposing of what is not.

• Straighten (orderliness}- A place for everything and everything in its place.

• Shine (cleanliness)- The cleaning process often acts as a form of inspection that exposes abnormal and pre-failure conditions that could hurt quality or cause machine failure.

• Standardize (create rules}-Develop systems and procedures to maintain and monitor the first three S's.

• Sustain (self-discipline}-Maintaining a stabilized workplace is an ongoing process of continuous improvement.

 

Technology• Toyota introduces new technology only after it

is proven through direct experimentation with the involvement of a broad cross-section of people

Leadership• Throughout Toyota's history, key leaders have

'been found within the company, at the right time, to shape the next step in Toyota's evolution.

• Toyota's leaders are home grown. Leaders must live and thoroughly understand the company's culture day by day.

• Leaders must demonstrate this ability and understand how work gets done at a shop floor level. Toyota believes that, a superficial impression of a situation will lead to ineffective decision-making and leadership.

Managing peopleStage 1: Orientation. The group needs strong direction

from the leader and must understand the basic mission, rules of engagement, and tools the members will use

Stage 2: Dissatisfaction. After going to work, the members discover it is harder than they thought to work as a team. In this stage, they continue to need strong direction (structure) from the leader but also need a lot of social support to get through the tough social dynamics they do not understand.

Stage 3: Integration. The group starts to develop a clearer picture of the roles of various team members and begins to exert control over team processes. The leader does not have to provide much task direction, but the team still needs a lot of social support.

Stage 4: Production. The group becomes a high-performing team, no longer dependent on the leader.

Performance measurementThere are at least three types of measures at Toyota:1.Global performance measures-how is the company

doing? At this level, Toyota uses financial, quality, and safety measures very similar to those used by other companies

2.Operational performance measures-how is the plant or department doing? Toyota's measurements are timelier and better maintained than at other companies. The people at the work group level or the project manager's level painstakingly track progress on key metrics and compare them with aggressive targets. The metrics tend to be specific to a process.

• 3. Stretch improvement metrics-how is the business unit or work group doing? Toyota sets stretch goals for the corporation, which are translated into stretch goals for every business unit and ultimately every work group. Tracking progress toward these goals is central to Toyota's learning process.