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The Toyota Motor Company has always been one of the most popular auto mobile
manufacturing companies in the world. They have been in the car manufacturing
business since 1937. Kiichiro Toyoda founded the company to manufacture
automobiles. TOYOTA MOTOR COMPANY has now secured the position as one of
the largest car manufacturing companies in the world. Their success has evolved
from the implementation of the Japanese quality and efficiency. Toyota has always
designed faster and more reliable vehicles at a more economic price with the result
that now TOYOTA MOTOR COMPANY is a far more profitable automobile
manufacturer than any other company in the world. In the year 2003, TOYOTA
MOTOR COMPANY’s annual profits were $ 8.13 billion; that more than GM, Ford
and Chrysler profits combined. Toyota has invented the “Toyota Production System”
and the “Just in Time Production” which has been one of the most popular
management philosophies in the world. The company believes in continuous
improvement and has been in the practice of making significant organizational
changes from time to time. (Jeffrey K. Liker, 2005)
The main reason said to be a major factor in the TOYOTA MOTOR COMPANY’s
success is that they are continuously bringing new product and features in the
market with speed. The most basic of their vehicles is the Corolla whose overall
product development and production resulted in only 15 months. One of TOYOTA
MOTOR COMPANY’s leading strategies has been to learn from others. They take
inspirations from companies like Ford Motor Company, quality gurus and industrial
engineers. Also the factor that sets the company apart from its peers is the fact that
Toyota Motor Company enjoys cost differentiation factor. They provide the same
luxuries and benefits in their vehicle and do so at a lower cost compared to other
famous companies. (Morgan, James M. Liker, Jeffery K. 2006).
“We place the highest value on actual implementation and taking action. There are
many things one doesn’t understand and therefore, we ask them why don’t you go
ahead and take action; try to do something? You realize how little you know and you
face your own failures and you simply can correct those failures and redo it again
and at the second trial you realize another mistake or another thing that you didn’t
like so you can redo it once again. So by constant improvement, or should I say, the
improvement based upon action, one can rise to the higher level of practice and
knowledge.”
– Fujio Cho, President, Toyota Motor Corporation, 2002 (Ananth Iyer, Sridhar
Seshadri, Roy Vasher, 2009).
Some of Toyota’s company principles have been an inspiration to many companies.
Some of them are to create awareness of the problems, establish capability to solve
the problem, take action protocols, create system awareness at all levels and
encourage the ability to teach.
Significant Organizational Changes:
On 1st January 2010, Toyota announced a significant change in their organizational
structure as part of their continuous improvement policy. Toyota has been known to
make organizational changes every so often to give the company the competitive
edge in the market. These changes vary from management objectives changes to
reevaluation of hierarchies in the company. Some of the major changes announced
in 2010 are as follows:
For the purpose of increasing efficiency and utilizing company resources prudently,
the Business Development Unit and Marine Business Division shall now be renamed
to Marine and Unit Business Division. The sales functions shall also be looked after
by this unit.
The Purchasing planning department shall now be restructured into the Purchasing
Administrative Department and the Global Purchasing Promotion Division and the
Body Parts Purchasing Division shall now be updated to the Purchasing Planning
Division. The purpose is to consolidate local and foreign administrative functions and
work on future project management activities and cost efficiency strategies.
The Advertising and Marketing Division, Japan shall now come under Toyota
Marketing Japan Co. Ltd, a new addition to the Toyota Motor Corporation. The idea
is to make the market of Japan the focal point of their marketing strategies.
The Sales and Marketing Support Division shall now be incorporated to the Sales
Enhancement Department to reinforce marketing strategies and actions.
The Strategic Production Planning Division shall now come under the head of
Customer Services Operations Division to strengthen TOYOTA MOTOR
COMPANY’s customer services and assure quality benchmarks.
The Tokyo Design Division shall now be called Advanced Design Division to focus
more on future technological growths. This division has always been one of the main
success factors for TOYOTA MOTOR COMPANY. Toyota has always been known
for their new and improved technological initiative at a comparatively lower cost.
(Toyota, 2009)
Internal and External Drivers:
Every change is driven by certain factors that encourage that change. Some of the
internal and external drivers that encouraged this change are as follows:
Resource shortage:
Due to recession, there has been a significant shortage in the resources available.
The wisest move for any company is to effectively and efficiently utilize the existing
resources instead of bearing the expense and risk of going after new ones. That has
also been a major driver in this change. Many companies have also had to let go of a
few of their employees to compensate for the lack of production and sales. TOYOTA
MOTOR COMPANY made the decision to keep a tight leash on their resources
instead and utilize them prudently so that the production and sales side do not have
to suffer.
Internal drivers:
Along with the external, there are also many internal drivers that motivate change in
the organization. TOYOTA MOTOR COMPANY has been a company that has
always believed in the Kaizen principle that is the continuous change principle. That
has resulted in change in their organizational structure and goals frequently.
TOYOTA MOTOR COMPANY is always looking for ways through which they can
improve themselves. Their inspirations have also come from other successful
manufacturing companies like Ford and the aggression to be the best in the world.
Change in technology:
Technology has always been a competition driven field. Every day there are major
innovations that change the world of technology and those affected by it forever. For
every business den pendent on technology, it is extremely important to keep the
process of innovation and progression continuous. For any auto mobile company as
well, to enjoy competitive edge in technology is very important, but it is also a difficult
task. Toyota Motors Company has surrounded itself with innovative engineers and
designers to keep that competitive edge alive. The main internal driver for this
change has been to reinforce that aggression towards technological knowledge and
aptitude.
Company Growth:
Growth is the desired outcome for all companies. Strategies’ are developed, goals
are set and action plans are created for this reason only. For any company to grow,
change is important. It has been the usual practice of TOYOTA MOTOR COMPANY
to change their strategies and development plans every so often to keep the
executives, employees and even the customers on their toes. Positive change brings
growth for a company. (Jean Phillips, Stanley M. Gully. 2011).
To utilize the company resources more efficiently and effectively: in this day and age,
where the world is suffering from the aftermaths of recession, there has also been a
significant change in the buying patterns of the customers. And because of this, the
sales side is affected. Because of that labor rates and resource management of the
company have to be rethought and re-strategized. In this time of economic trench, it
is important for any company to use their existing resources with prudence. This was
one of the main objectives for the change.
Keep customer satisfaction as the top priority of the company: Additional focus was
given to quality services for customer satisfaction. To achieve that objective a
separate division for customer services was developed.
Focus on long term strategic planning activities: the focus was also to develop future
strategies’ for growth of the company. This was also one of the main objectives for
the change.
Focus on cost reduction strategies: due to the fact that there have been a lot of
changes in customer buying behavior and decisions, cost reduction strategies were
promoted keeping in mind the effectiveness and efficiency of the product.
More authority given to the executives to make on the spot decisions: TOYOTA
MOTOR COMPANY has also bestowed their employees with ample authority to
make major decisions on their own according to the situations requirement. That has
always been one of their main factors for success. This strategy has also gained the
employee trust in the company.
Areas for improvement were identified: The first step in planning for objectives is to
identify the areas that need to be improved. These areas can be identified by
following past trend and looking for weaknesses. In the previous year, what were the
areas that needed attention and improvement? Those are the ideal areas to start
from. Another way to identify is to conduct a survey of the market and the company
itself and compare results. It will give the manager a very clear idea as to what areas
the company is lacking in.
Stretch goals were set for excellence: after the areas where improvement is
requirement are identified, goals are set. These are not normal target but stretch
goals. Stretch goals are practical yet highly ambitious goals that are clear,
compelling and competitive. A company needs to be highly capable and confident to
be able to fulfill their stretch goals. TOYOTA MOTOR COMPANY plans their goals
on an annual basis and monitors and evaluates them throughout the year.
Performance Dashboards were used: Performance can only be measured if it is
continuously monitored and progressed is gauged. Performance Dashboards are
management tools used to evaluate the company’s performance and progress on a
frequent level. The overall organizational strategies till the level of quality service that
is provided to the customers, this all can be gauged by performance dashboards.
The reason for its popularity is that they are easy to design and can be implemented
with efficiency. More and more companies nowadays are going for performance
dashboard with the number increasing every day. a way to ensure the performance
dashboards success is to develop it using three simple principles in mind, that is,
simplicity, support of senior executives and use of proper measuring metrics that
should be constant throughout the whole company.
An intelligence team was deployed: the kind of market a company lives in; it has to
face many kinds of turmoil and disorders. They may be political, economic or natural.
But they need to be addressed. After the performance dashboards are set, an
intelligence team is deployed to foresee the turmoil and uncertainties in the
strategies and how they would be affecting the company. This is a very important
step for the company as these surprise changes have a very strong affect on the
overall performance of the organization and can influence all the departments from
the sales of the company to the customer services that they are providing.
Action plan was developed: The last step is to develop an action plan that is based
on all of the above factors. This action plan is then broken down to task based
activity that is more of the precise goal as to what is expected of each of the
individual or department in the company. (Daft, Richards. Marcic, Dorothy. 2003)
Additional techniques
Employees input:
A successful not understated idea is to take the employees input and ideas for
organizational change. Employees are the base level workers who can give the
management a very clear idea of the operations of the company. Taking the
employees input will not only result in their trust and loyalty in the company but it can
also give the management a new perspective or vision for the company. The
management doesn’t have to cater all the employees’ suggestions and they should
not be making any commitment in that regard as well but it is always a good
organizational move to empower all levels of the employees to increase their
productivity and commitment to the company. (Mary B. Holihan 2006)
“There was a gap between the time that our U.S. colleagues realized that this was
an urgent situation and the time we realized here in Japan that there was an urgent
situation going on in US. It took three months for us to recognize that this had turned
into a crisis. In Japan, unfortunately, until the middle of January we did not think that
this was really a crisis.” (Morgan, James M. Liker, Jeffery K.2006)
According to the CNN Business Edition (2011), their Net Income fell from US $ 1.87
billion Dollars to 1.1 Billion Dollars which is a 38.9 percent drop as compared to their
performance last year. In the defense of the TOYOTA MOTOR COMPANY
executives, they blamed the green cars for their failure and the fact that the
government policies had encouraged the manufacture of hybrid cars in the market,
resulting in the sharp drop in the sales of other cars.
(CNN -2011)
Need for Further Changes in the future:
There are still a lot of areas that Toyota Motor Company can work on to improve the
company. Two of them are mentioned below.
Additional Focus on the Manufacture of the Cars:
TOYOTA MOTOR COMPANY needs to pay extra attention to the manufacturing side
of the company in the future. Special Quality team should be introduced to make
sure that the car manufacturing process goes through an extensive examination of
the parts before the car is assembled. A special testing team should also be
introduced to test the car parts so that TOYOTA MOTOR COMPANY does not have
to face the same situation again. TOYOTA MOTOR COMPANY is a highly reputable
company but the recent tragedies have affected the customers trust in the brand.
TOYOTA MOTOR COMPANY will need to put in extra effort to revive their brand
goodwill once again.
CONCLUSION:
Despite everything that TOYOTA MOTOR COMPANY has endured during the year,
there is still a lot of aggression and talent in the company and it will not take them
long to bounce to the top of the automobile industry once again. Even now they are
in the process of taking new initiative to make sure that they do not have to face the
same situation in the future. In my opinion, the market might be able to forgive
Toyota Motor Company if they have two bad years in the row. But they might not be
so forgiving if the trend continues. If the Toyota Motor Company wants to regain the
customers trust and recapture the market, they will certainly have to come up with
new organizational strategies to make that possible otherwise, they might even wash
away all the hard work in their past too.
Microsoft’s President Bill Gate’s key note address to COMDEX in Las Vegas in
November 2000 included the following observation:
“I keep near my hand a copy of My Years with General Motors by Alfred Sloan, the
great leader who made GM the world’s famous automaker. The important thing here
is how to make organizations endure once the genius entrepreneurs who built them
have passed on. In Japan there are two companies that serve as suitable examples:
Toyota Motors and Sony. I’m not surprised when a company grows rapidly in the
span of five years, but I’m extremely interested in companies that consistently
generate superlative results over a twenty or thirty year period. Do they have
embedded in them some mechanism for permanence? If they do, then a
generational handoff won’t wipe out their talent and their vitality.”
(Hino, Satoshi, 2005)
The case is extracted from:
UKEssays. November 2018. Significant organizational change at Toyota Motor Company. [online].
Available from: https://www.ukessays.com/essays/business/significant-organizational-change-toyota-
motor-company-business-essay.php?vref=1 [Accessed 1 September 2019].