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Toyota mini-case


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The Toyota Way to No. 1 was not necessarily an easy one for the Japan-based corporation. The trend line that took Toyota past General Motors in worldwide sales globally in 2007 is very likely to hold up over the coming years. The company is not accepting the lead position comfortably, however, which is often the case for a lead runner. The No. 2 position is often more comfortable because of the ability to benchmark efforts, progress, and success against the company in the lead. By being No. 1 in an industry, the company is now in the position to set the standards. Key to maintaining the lead is continuing to exemplify “the Toyota Way”—a philosophy of consistent, constant improvement.
In addition to constant improvement, teamwork is a hallmark of both the Japanese Way and the Toyota Way. Trust is more important than price for Toyota, because at the heart of great teamwork is trust: trust in team members, trust in oneself, and trust in the system. Trust is the basis of long-lasting relationships, infusing the teamwork that Toyota has with its suppliers, and it leads to win–win outcomes for all concerned. One supplier of axles for Toyota pickup trucks, for example, was flabbergasted when there was no mention of price during the negotiations. Toyota’s entire focus during the negotiations was on the supplier’s processes and quality and whether they were acceptable.
Much has been made of an uneven playing field between Toyota and General Motors, with key comparisons focussing on the cost structures. General Motors workers have enjoyed some of the best retirement and medical benefits in the North American workforce—which drives up the cost of General Motors cars. On the other hand, Toyota has had its own serious challenges in overcoming cultural barriers to understanding North Americans and their needs. For example, the very popular Camry has as its chief engineer a Japanese man, and the car does not sell well in Japan. The Camry sells very well in North America because the chief engineer and his team tried to understand North American customers and cater to them.
James E. Press became the first non-Japanese member of Toyota’s board of directors at age 60, while serving as president of Toyota’s North American operations. The North American market is a large and important part of Toyota’s overall business; about 34 percent of the corporation's overall sales volume and 43 percent of its operating profit come from North America. In addition, Toyota exported about 50 percent of the cars it manufactures in Japan during 2007, compared to 38 percent in 2005. While the Japanese domestic car market has remained flat and is small in comparison to the North American market, Toyota has enjoyed rising sales here thanks to increasing demand for fuel-efficient cars. However, in 2010, Toyota faced serious challenges to its quality claims as it recalled or suspended the sale of many of its brands for safety concerns.
There has been a deeper trend in diversity within Toyota that is reflected in Press’ board appointment. There are North Americans who hold top positions in Toyota divisions, such as plant management and product development. There are thousands of foreign employees within the company: so many that the company opened a Toyota Institute outside Toyota City in order to teach the many foreign employees its corporate values. This initiative aims at establishing norms of behaviour and building cohesion throughout the workforce. Four foreigners held key managing-officer positions by 2007, which are just below the board level at the company.
Toyota had been publicly criticized for not having a non-Japanese executive on its 25-member board. The appearance was one of a glass ceiling for foreign employees, similar to the glass ceiling which many women encounter within North American companies and corporations. Toyota is doing some top management team shuffling and is expanding its board from 25 to 30 members, opening opportunities for other senior level executives. Diversity within this key top-level team affords Toyota some distinct opportunities, advantages, and insights, because it brings more direct and personal insight into its important North American operations from a fellow board member. The key to taking advantage of this strategic opportunity is the way in which fellow board members relate to their new and first non-Japanese member.

Quiz Questions
1. Trust is a key issue for Toyota in its working relationships, second only in importance to price.


2. Teamwork is a hallmark of the Toyota Way, and this concept of teamwork extends to the company's relationship with its suppliers as well as its customers.


3. One area in which Toyota refuses to change is in the lack of diversity it has within its top management team, insisting that it is in the company’s best interest to be helmed entirely by Japanese managers and board members.


4. Diversity within a group may increase the uncertainty, complexity, and inherent confusion in group processes, making it more difficult to achieve full productivity. This is one reason why the company opened the Toyota Institute—to establish norms of behaviour and build cohesion throughout the workforce.


5. The disadvantages of allowing culturally diverse groups within Toyota include the risk of groupthink.


  • SubjectBusiness
  • TopicBusiness Management
  • Difficulty LevelCollege/University
  • Answer has attachmentsNo
Answered by

Lorraine Green
Rating: A
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