Case Study : Toyota's Globalization Strategies.

Summary:
Toyota Motor Corporation (TMC) or Toyota is the Japanese multinational
organization and the world largest automobile manufacturers, selling 7.5 million
models annually on all five continents. At present, it employs 70,000 people.
Like many enterprises that have made their mark in history, Toyota has been
shaped by a unique set of values and principles that have their roots in the
company's formative years in Japan.
The supply chain processes and strategies of Toyota are the fundamentals in its
daily operations. By adhering Just-In-Time (JIT) manufacturing and Toyota
Production System (TPS), Toyota emerges to be one of the world's largest
automaker.
Toyota started focusing more in young buyer because they realized that only 30
% Japanese youngster is accounted in 1990s as customer base which was 45%
in 1980s. In1998, models from rival companies such as and BMW were more
popular than the ones offered by Toyota. According to report Japanese
youngsters felt-that Toyota cars 'lacked attitude.' Toyota realized that by losing
its younger customer to other companies, it ran the risk of losing its future
market as well.

Toyota established in 1937.

Kiichiro Toyoda studied the US automotive industry during visit to Ford. In
Japan he customize the Ford production system where each process in the
assembly line produced only the number of parts needed at the next step on the
product line. This system was named Just-in-Time (JIT)
Toyota flourished during the second world war by selling truck and buses to the
army. The company launched its first small car (SA model) in 1947. During this
period Toyota went into downsizing and restructuring the company into
separate manufacturing and sales division. In 1950 Toyota Motor sales
company Ltd was formed.
By 1952 Toyota made a turnaround. In 1957 Toyota entered in the US market.

Three program adopted by Toyota was:-

New Global Business Plan(1995-1998):- Toyota spread its operation across
different geographical regions for to achieve its objective to increase its
offshore production by 2 million units by 1998. They increased production
where they were sold more.
Global Vision(1996-2005):- They has a long term goal, to assert a competive
edge in technology & asserting globalization.
Global Vision(2002-2010):-This program was aimed at achieving 15% market
share of global automotive market by 2010,exceeding the market share of global
leader, GM having 14.2% share. The of new vision was “Innovation into the
future” which focussed on four factors.
 Recycling Based Society- Be a driving force in global regeneration by
implementing the most advanced environmental technologies.
 Age of Information Technology: - Create automobile and a motorized
society in which people can live safety, securely and comfortably through
the use of advance technology.
 Development of Motorization on Global Level: -Promote the appeal of
cars throughout the world and realize the large number of increases in
Toyota fans.
 Diverse Society: -Be a truly global company which can be trusted by
people around the world.
Cho decided to focus more on localization. He believed that by doing so,
Toyota would ‘be able to provide its customers with the products they
needed, where they needed them. This was expected to help build mutually
benefiting, long-term relationships with local suppliers and fulfil Toyota's
commitments to local labour and communities.
Answers to the questions as per the case study:

Q1.) Study Toyota's evolution into a market leader in the Japanese

automobile market over the decades. What were the factors that helped
Toyota attain (and sustain) ' the leader Ship status in Japan? fiat problems
did tire company face in this market later on? Analyze and discuss the
efforts made to overcome these problems.

Several studies published in the 1980s indicated that Japanese firms, led by
Toyota, have achieved the highest levels of manufacturing efficiency in the
world automobile industry. Physical productivity, which reflects the
“throughput” speed for completing products and the amount of labour required,
has been significantly higher than in most U.S. plants (although differences vary
by company and U.S. firms have made improvements in recent years).Japanese
auto producers have also demonstrated rates of inventory turnover (sales
divided by work-in-process and finished goods, or the cost of goods sold
divided by work-in-process) several times those of U.S. firms. High
productivity and other aspects of process efficiency, such as rapid inventory
turnover, help solve a problem as old as mass production itself: that the
conventional factory tends to produce huge lots of standardized components,
while consumer markets demand a variety of products at low prices. Looking
for the reasons Japanese companies have managed this problem so well, many
authors cite the contributions of Japanese workers and Japanese culture.
However, the performance of Japanese firms in auto production depends not on
the employment of Japanese workers but on Japanese innovations in technology
and management.
The product strategy of Toyota is based on high quality, on developing new
innovative technologies, focusing on further research, creativity, but also hard
work. Toyota is a world leader in research and development of advanced
automotive technologies. Toyota develops intelligent responses to the
challenges of the automotive industry today, while assuming responsability for
future generations. Regarding the problem of pollutant emissions, Toyota
explores simultaneously a variety of solutions for designing less polutting
vehicles as well. Toyota has committed to develop hybrid systems as a basic
factor in manufacturing clean technology cars, combining different sources of
power. It has made significant progress in designing engines that use alternative
energy sources. One of the most promising approach is combining two different
sources of energy in a single system with the potential to use both. This solution
is known as hybrid technology and is the most promising way to achieve
Toyota’s green machine.

Q2.) Critically examine the rationale behind Toyota’s decision to spread its
operations across various geographical regions and to focus on young
buyers in its core markets. Elaborate upon the three different program
adopted and analyze how localization of manufacturing was expected to
help the company?
For though buyers 40 to 69 years old have averaged more than twice as many
new-car buys since 1995, 25- to 34-year olds alone should pack $1.2 trillion in
buying power by the end of this year. And they'll spend $70 billion of it on
vehicles and other automotive purchases. Given that today's 18-year-old will
buy about 13 vehicles during his or her lifetime from 8.4 in 1970.
The under-35 automotive market didn't exist a half century ago. Without doubt,
entry-level buyers just out of high school and college are more image-conscious
and brand oriented than older buyers. And automakers must snag these buyers
when they don’t; it hurts their chances of getting them back later. But it's not
easy. Generally, people no longer act their age.
At Toyota, loyal but aging buyers have some observers concerned. Though the
maker has ridden the wave of young Baby-Boomers in recent decades, its
styling may not be hip enough for today's first-time buyers and new college
grads. The Echo, though priced low, didn't resonate with younger buyers, but
ended up drawing folks over 40. Under-35 buyers are "more educated than
when I was their age," says one Toyota general sales manager. "They're not
afraid of the imports like their parents might have been. They want to make sure
they're going to get something that will last them, give them good fuel
economy, and make them feel safe." Price seems less important for young
Toyota buyers, he adds.
In Europe, Toyota Motor Manufacturing France S.A.S. (TMMF) was
established in France in November 1998. It is scheduled to go into operation in
2001, with an annual production target of 150,000 units of the Yaris, a strategic
vehicle for the European market. In Asia as well, where economic stagnation
has been continuing, TMC established a supply structure in anticipation of
market recovery, starting up second plants in Thailand, Indonesia, the
Philippines, and Taiwan.

Q3)Considering the extremely competitive global market scenario, and the

nearly saturated demand in its core auto mobile markets (US and Japan),
do you think Toyota will be able to achieve its goal of attaining a l5o/o
market share by 2010?Justify your stand. Also suggest some measures that
could help the company achieve its global targets.

Global vision 2010 (2002 – 2010): In April 2002, Toyota announced another
corporate strategy to boost its globalization efforts. This initiative, termed the
'2010 Global Vision' was aimed at achieving a 15% market share (from the
prevailing 10%) of the global automobile market by early 2010, exceeding the
14.2% market share held by the leader GM. The theme of the new vision was
'Innovation into the Future,' which focused on four key components: Recycling
Based Society; Age of Information Technology; Development of Motorization
on a Global Sale; and Diverse Society.
 Considering the extremely competitive global market scenario and the nearly
saturated demand in its core automobile markets (US and Japan ). Do you think
Toyota will be able to achieve its goal of attaining a 15% market share by
2010 ? Justify your stand. Also suggest some measures that could help the
company achieve its global targets.
Toyota hopes that the 21st century will be truly prosperous for society, and aims
to grow as a company together with its stakeholders, including customers,
shareholders, business partners, and employees, through making things and
making automobiles, while seeking harmony with people, society, the global
environment and the world economy.
In order to put these management principles into practice, the "Guiding
Principles at Toyota Motor Corporation" were established as the fundamental
management policy. These principles were adopted in 1992 to codify the
business spirit handed down since the company's foundation, and revised in
1997 to add the stipulation of legal compliance. Each of the seven items is a
cornerstone of Toyota's business activities.
With 2010 as the turning point, in April 2002 Toyota adopted the Global Vision
2010 which proposes the corporate image for which Toyota should strive .
Centered on the basic theme of "Innovation into the Future — A Passion to
Create a Better Society," and with a view toward what society is expected to be
like in the medium to long term, the Vision sets the course for the multi-faceted
roles to be played by Toyota about society, people and the Earth.