Study - Can Anything Stop Toyota

1. Marketing a) Diversification - Toyota not only rounded out its product lines in the US, with sport-utility vehicles, trucks, and a hit minivan, but it also has seized the psychological advantage in the market with the Prius and eco-friendly gasoline-electric car. b) Location redesign - Toyota created an integrated, flexible, global manufacturing system.

They redesign the plants around the world. Plants from Indonesia and Argentina will be designed both customize car for local market and to shift production quickly satisfy any surges in demand from market worldwide. Its South Africa plant to meet a need in Europe. Toyota can save about $1 billion normally needed to build a new factory.

c) Cost cutting and redesign chop out billions in expenses. That kept margins strong and free up cash to develop new models and technologies, such as Prius, to invest in global manufacturing, and to invade market such as Europe and China. d) Increasing the range of target customer - Toyota doesn’t always get it right. Its early attempts at youth market, minivans, and big trucks all disappointed. It remains dependent on the US business for some 70% of earnings. e) However, Toyota is vigorously attacking the youth market with 14,500 Scion xB impact.

Since Scion’s US launch in California, Toyota sold nearly 7,700 of them, 30% better than forecast. Scion is evidence that Toyota’s growing cash cushion gives it the means to revamp it lackluster design.

f) Building new facilities - Toyota building an $800 million plant in San Antonio, Tex., that allows it to more than double its Tundra output, to some 250,000 trucks a year by 2006, with rigs powerful and roomy enough to go head to head with Detroit’s biggest models. g) Design – Initially, Toyotas were designed with Japanese consumers in mind and then export. Some worked; some flopped.

They recognized that buyers want to feel like they have some level of style. For example, Yaris, was designed by a Greek, and then imported successfully to Japan because of its “European look”. The re-design of Solara sports coupe is getting high grades, too.

2. Production a) Speed - The combination of speed and flexibility is world class. Some of Toyota plants are able to make as many as eight different models one same production line, instead of six separate car models as normal. b) Facilities - In Takaoka plant, car doors flow by on a conveyor belt that descends to floor level and drops off the right door in the correct color for each vehicle. This efficiency means the workers can build a car in just 20 hours.

c) Joint Program - Toyota lunched a joint program with its suppliers to radically cut the number of steps needed to make a car and car parts. This saved $2.6 billion out of its $113 billion in manufacturing costs without any plants closure or layoffs. They expected to cut an additional 2 billion out of its base in the same year. d) Financial Scheme - CCC21 (Construction of Cost Competitiveness for 21st Century) – taps into the company’s strengths across the board to build cars more efficiency. It’s also turning many operations inside out.

e) Set Target - With CCC21, Toyota set a bold target of slashing prices on all key components for new models by 30%, which meant working with suppliers and Toyota’s own staff to ferret out excess. f) In implementing CCC21, no detail is too small. For example, they managed to cut the number of parts in the handles to five from 34, which helped cut procurement cost by 40%. As a plus, the change slashed the time needed for installation by 75%. g) CCC21 make Toyota getting far more out of suppliers; and make its workers vastly more productive.

3. Technology a) Improvement - Toyota always moved steadily forward, they created the doctrine of Kaizen (continuous improvement). They methodically study the problem, and then solve them. “They find a hole, and they plug it.” b) The Kaizen Team of particularly productive employee works in barracks-like structure.

The group sole job is coming up with ways to save time and money. c) Exchange of Technology - Toyota can meet its own highest standards of excellence anywhere in its system. It was once company doctrine that Lexus could only be made in Japan. If Canadian hands can deliver the same quality as their Japanese counterparts, Toyota will be able to chop shipping costs by shipping Lexus production to the markets.

Therefore 700 workers were trained in 12 weeks. The Canadians managed to beat Japanese teams in quality assessment on a mock Lexus line. The plants introduced “Circle L” stations where working must double- and triple-check parts that customer have complained about. d) Cambridge workers are aided by a radical piece of manufacturing technology being rolled out to Toyota plants worldwide. The system, called the Global Body Line, holds vehicle frames in place while they're being welded, using just one master brace instead of the dozens of separate braces required in a standard factory.

This make the system is half as expensive to install, Toyota can save 75% of the cost of refitting a production line to build a different car, and it's key to Toyota's ability to make multiple models on a single line. e) The brace increases the rigidity of the car early in production, which boosts the accuracy of welds and makes for a more stable vehicle. The end results are improved quality shortened welding lines, reduced capital investment, and less time to launch new vehicles. f) The President insists to work face to face instead of by teleconferencing and e-mails. This cut the time to response and improvement.

4. Competition a) Toyota combines the size, financial clout, and manufacturing excellence needed to dominate the global car industry. b) In USA, GM is bigger. Even both Nissan and Honda have flexible assembly lines, no car company as strong as Toyota in so many areas. Toyota became the third-biggest carmaker in the US. Its US share rising steadily (approx. 12%) c) Toyota had a puny 4% share in 1990’s; it owns nearly 12% of that high-margin segment with eight models ranging from $19,000 RAV4 to the $65,000 Lexus LX 470.

5. Finance (a) Toyota has broken then Japanese curse of running companies simply for sales gains, not profit. a) It’s operating margin of 8%-plus (vs. 2% in 2003). Even strong impact of yen, the estimate profit of 2003 was doubled of 1999’s level. b) However, as for the continuous strong impact of yen, the pretax profits would be shrunk. c) Since starting US production in 1986, Toyota has invested nearly $14 billion there. In 2002, Toyota’s purchases of parts and materials from 500 North American suppliers came to $19 billion. The US investment is an enormous natural hedge against the yen. “About 60% of what we sold here, we built here.”

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Something after 2003’ that article not mentioned…

There are 65,551 Toyota workers until March, 2003; including all related companies, reached 264,096 workers. Toyota became the biggest company in Japan and third-biggest worldwide.

In first season of 2008, Toyota made 2.41 million vehicles; they replaced GM that made 2.25 vehicles and became the biggest automotive company in the world. However, as for the financial tsunami in 2009, Toyota announced the lost since Financial Report 2008.

In 2009, traffic accidence occurred in California and discovered the problem on the accelerator pedal and car floor mat. Eight models of Toyota cars sold in US, including Prius and Lexus, have to been recalled in 2010. It is about 2.4 million vehicles in total. The defect of accelerator pedal outbreak in January 2010; more than 7.9 million vehicles have been recalled. Brake failure of Prius outbreak in February the same year. This is the worst of the year in the history of Toyota.

Previously, such as the Corolla, Prius and other popular cars have problems recalled. The main reason is because the intense competition in Japanese domestic car market. In order to win the war sales, Toyota jointed with their parts suppliers are plan to cut costs while enhancing productivity. They no longer to develop and use of specific models designed for specific parts, replaced by common parts for all cars. As the result, the common parts and automobile occurred exclusion situations, thus a substantial increase in recycling.

Eventually, 2010, the world's 100 largest companies ranked by the 2009, Toyota slipped from eighth to the tenth one. But they still the leading automotive industry, Mercedes Benz close behind.