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TOYOTA - INTRODUCTION

The Toyota Motor Company is one of the largest automobile manufacturers in the world. To date, it has

sold more than 8.8 million of its many makes and models of automobiles on five different continents

around the globe. Founded in 1937 by Kiichiro Toyoda and headquartered in Toyota, Aichi, Japan,

Toyota is a global leader in automotive technology and development. The company also makes trucks,

buses, forklifts, and other industrial equipment.

Toyota also boasts a strong presence in North America. In the continental United States, there are five

major assembly plants located in Huntsville, Alabama; Georgetown, Kentucky; Princeton, Indiana; San

Antonio, Texas; and Buffalo, West Virginia. Early Japanese imports like Toyota's Toyopet were initially

unpopular in the United States because of their smaller size, but with the energy crisis of the 1970s,

Americans began to look to imported cars for their lower price and better fuel efficiency. Today, rising

gasoline prices coupled with concerns about global warming and the environment have prompted

Toyota to design even more fuel-efficient vehicles. The company's marketing campaign, "Moving

Forward," signals just that. Its current offerings include Camry and Highlander Hybrids and the Prius,

which is also a popular gasoline-electric mid-size model.

RESOURCES

1. PHYSICAL RESOURCES

The affiliates of Toyota have over 50 manufacturing companies in 26 countries and regions, and own

170 distributors in approximately 170 countries and regions. In 2009, Toyota has 50 distributors in

Africa, 43 in Central and South America, 30 in Europe, 16 in Oceania, 15 in Middle East, 10 in Asia, 5 in

North America and 4 in China. And the financial services cover 32 countries and regions.

2. FINANCIAL RESOURCES

The revenue of Toyota is $205,295.7 million by the end of March 2009, a decrease of 21.9% compared

to that of 2008, while the net loss was $4,369.4 million in 2009 compared to net profit of $17,178.8

million in 2008. In addition, Toyota net finance profit was $0.1 trillion and decreased 7.1% compared to

2008. However, there is a feature about Toyota that if provides the pension benefits and retirement

benefit to the employees. In 2009, it paid a total of $841.4 million for retirement benefit plan.

3. HUMAN RESOURCES

Toyota totally employed 320,808 people worldwide, and sales people account the large part. In 2009,

Toyota employed 40,000 sales personnel who operate over 4,800 sales and service outlets in 290

dealers, which is helpful to maintain a large network of the customers.
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4. INTANGIBLE RESOURCES

Toyota is the leading automotive brand in the world, and its brand value reached $31.3 billion in 2009.

In addition, Toyota is the highest ranking automotive brand name in the world, and its higher than its

competitors such as Porsche, BMW and Nissan. Further, Toyota is the only automobile corporation in

the top 10 list of the Fortune 500 Global.

SWOT ANALYSIS

STRENGTHS

Global organization, with a strong international position in 170 countries worldwide. High financial strength (1997, sales turnover, 131,511 million), sales growth of 29.3% Strong brand image based on quality, environmental friendly (greener), customized range. Industry leader in manufacturing and production. Maximizes profit through efficient lean

manufacturing approaches (e.g. Total Quality Management) and JIT (Just in Time) manufacturing

and first mover in car research and development.

Excellent penetration in key markets (US, China, EMEA) and now the second largest carmanufacturer in the world, surpassing Ford.

WEAKNESS

Japanese car manufacturer - seen as a foreign importer. Production capacity. Toyota produces most of its cars in US and Japan whereas competitors may

be more strategically located worldwide to take advantage of global efficiency gains.

Some criticism has been made due to large-scale re-call made in 2005, quality issues.

OPPORTUNITIES

Innovation -first to develop commercial mass-produced hybrid gas-electric vehicles (gas andelectric), e.g. Prius model. Based on advanced technologies and R&D activity. With oil prices at

an all time high - this investment and widening of product portfolio fits consumers looking to

alternative sources of fuels away from gas guzzling cars.

To expand more aggressively into new segments of the market. The launch of Aygo model byToyota is intended to take market share in youth market.

To produce cars which are more fuel efficient, have greater performance and less impact on theenvironment.

To develop new cars which respond to social and institutional needs and wants. Thedevelopment of electric cars, hybrid fuels, and components reduces the impact on the


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environment. Toyotas Eco-Vehicle Assessment System (Eco-VAS) has helped in production,

usage, and disposal.

Continued global expansion - especially in the emerging markets e.g. China and India, Russia,where population and demand is accelerating.

THREATS

Saturation and increased competition, intense marketing campaigns increasing competitivepressures.

Shifts in the exchange rates affecting profits and cost of raw materials. Predictions of a downturn in the economy e.g. recession, will affect car purchases (especially

new cars). As household budgets tighten - this could lead a decline in new car sales and possible

rationalization of dealerships.

Changing demographics e.g. number of large families is declining. Undermining the demand forlarge family cars.

Changing usage - families using the car less for taking children to schools. Home deliveries.Businesses - restricting business travel (tele-conferencing). Governments encouraging

alternative forms of transport - cycling and incentives to use public transport across Europe.

Rising oil prices (fuel costs) and the costs of maintaining cars. Increase in families who havechosen not to own a car, or decided to use their car less.

AN EVALUATION OF TOYOTA MOTOR COMPANY (TMC) INFORMATION SYSTEMS

Toyota's global operations are also moving forward in information systems technologies as well. In April

2001, Toyota Material Handling USA (TMHU), which is responsible for all aspects of sales and marketingfor Toyota's industrial equipment line, became a stand-alone company after many years as a division of

Toyota Motor Sales USA. The company is a top seller of industrial lift trucks in the United States and 99

percent of its lift trucks sold in the country are also manufactured domestically in North America. TMHU

faced challenges of inefficiencies associated with the existing information system that was not

specifically designed for the industrial equipment business. Many of the large corporate customers

wanted to work with TMHU online and the present system was not web-enabled. The situation implored

the company to build an individual site for each customer, a timely and expensive project.

Recognizing the need for change, Toyota executives chose to use a third-party consulting firm to

evaluate software systems and implemented SAP software based on its recommendation in 2003.Thanks to the industry-specific software, TMHU can track each individual vehicle throughout its entire

life using integrated vehicle, warranty, and financial information. The preconfigured software required

little modification and has yielded significant results that include increased efficiency and better decision

making. One of the biggest benefits has been its reduced operating costs. According to the SAP article

online, by moving its dealers to an Internet-based network, the company has been able to save about $1


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million a year in network costs alone. The SAP platform has also reduced turn around times from two

days to two hours and strengthened the relationships between customers and dealers.

Historically, the Toyota Company has been a leader in emerging technologies. As its business needs

change, the SAP software will allow THMU in particular to evolve and adapt quickly. It can monitor

changes made to product specifications that allow it to better understand customer demand and ensurethat it has the right components and offering available (Toyota Material, 2004).

The information systems for the Toyota Motor Company (TMC) can clearly be evaluated by using SWOT

analysis (Strengths, Weaknesses, Opportunities, and Threats). The biggest strength of Toyota's

information systems is their ability to integrate their company goals globally by using their systems

effectively. For example, Toyota reaches its customers in different markets by using different online web

systems for different world regions. Although, there are multiple websites and systems for each of the

world regions, such as North America and Europe, the systems all link back to a worldwide website.

A major weakness of Toyota's information systems is likely the language barrier that the Japanese basedcompany has with its international employees and customers. Sharing and using information across

language barriers on the international scene poses a significant hurdle to using information systems

effectively. Toyota mainly uses the English language internationally but their company is primarily based

in Japan and therefore Japanese is still a significant part of the sharing of information.

Toyota has created new opportunities by developing their Transportation Systems. Toyota is working

globally with partners and governments to improve the ease of transportation. To accomplish this,

Toyota is seeking to research current transportation systems using their customers as well as

information from other companies. Pursuing these improvements to transportation systems is a

significant opportunity for Toyota, because they can increase their customer base and the satisfaction ofcurrent customers. The use of information systems and networking could be a key to helping Toyota

have success in improving Transportation Systems.

One of the threats for the development of Toyota's information systems includes resistance to

information sharing between companies. To further advance their information systems, Toyota needs to

integrate and share ideas with other companies such as Ford and Honda. In a competitive market,

companies are less likely to share information and research with competitors. This poses a direct

weakness to Toyota because the advancement of systems like their Transportation System initiative

depends on the sharing of global information through the use of networks and information systems

databases.

Another great way to evaluate the information systems for Toyota Motor Company is to examine the

Porter Five Forces Model for competitive advantages. In examining this model as it pertains to Toyota,

it's important to examine (1) rivalry among existing competitors, (2) the threat of new entrants, (3) the

threat of substitute products, (4) the bargaining power of buyers, and (5) the bargaining power of
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suppliers. Toyota has strategically placed themselves into position to gain a competitive advantage by

considering several of the Porter factors.

First, Toyota Motor Company exists mainly in the automotive markets which house a significant number

of competitors. For example, Ford, Chevrolet, Honda, and GM are a few of their major competitors. This

competition in an industry with high entry and exit costs has led Toyota to seek a competitive advantagein their information systems. One major example of an information systems competitive advantage for

Toyota is their new Hybrid Synergy Drive. As the automotive industry has suffered from high gasoline

and crude oil costs, Toyota has developed a computerized engine system, HSD, that monitors engine

performance and makes energy usage in the automobile as efficient as possible. Toyota has currently

employed this system in their Prius and Camry sedan models, which leads the market in hybrid vehicles.

The Hybrid Synergy Drive also must be evaluated using Porter's model factor for threat of substitute

products. Other companies could potentially enter the hybrid market by developing a similar drive and

neutralizing Toyota's advantage. In fact, Nissan and Honda have developed similar technologies for their

sedan models. However, Toyota continues to dominate the market for hybrid vehicles because Hondaand Nissan do not have a significant impact on the market yet. In the future, Toyota may lose their

competitive advantage if hybrid vehicles take a bigger market share in the automotive industry.

However, currently Toyota is adding Sport Utility Vehicles (Toyota Highlander) to their line of vehicles

using the HSD. By being the first to add SUV's to the hybrid market, they have currently protected their

competitive advantage from substitute products.

Porter's five forces model also considers Toyota from the vantage point of bargaining power of their

suppliers. Suppliers can exert influence on a company by using pricing of key components. If large

suppliers raise prices, Toyota may suffer as a result, so to stay competitive they must have strategy. To

stay competitive in this area, Toyota keeps a large database of small business suppliers for their

operations in North America9. Via this database, Toyota puts an emphasis on using smaller businesses

for suppliers in order to gain a competitive advantage.

Overall, Toyota has done an excellent job following Porter's five forces model for gaining a competitive

advantage. By using is Hybrid Synergy Drive in their revolutionary hybrid vehicles, they have cornered

the market on hybrids and gained a significant advantage that boosts sales. Also, Toyota's addition of

the Highlander SUV to the hybrid drive market has successfully maintained their advantage. Moreover,

the use of smaller businesses as suppliers allows Toyota to protect themselves from pricing shifts. These

factors have all led to Toyota successfully using their information systems to gain a competitive

advantage.

Toyota has a unique business model and the way it approaches the automobile production, with its

inherent quality controls, revolutionized the industry. Toyota's "just-in-time" supply-chain concept has

become a model for manufacturers around the world, and not just for automakers. The Toyota

Production System (TPS) calls for the end product to be pulled through the system. This means the right

parts reach the assembly line at the right place, just as they are needed, and with no excess. This
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approach represented a radical departure from conventional manufacturing systems, which require

large inventories in order to push as much product as possible through production lines, regardless of

actual demand. The idea of TPS, on the contrary, is to produce only the products required in the precise

quantities desired at a given point in time. This creates a 'pull' production system as opposed to a 'push'

system. By basing production on demand rather than simply on capacity, Toyota manages to keep

inventories, of both parts and of finished goods, to a strict minimum. But this is only one of the more

obvious advantages of Toyota's unconventional approach.

By focusing on smaller production lots and producing only what customers require when they require it,

Toyota has developed a flexibility and responsiveness that continues to set the standard for the

industry. Because of its Attention to continuous improvement, Toyota has attained die-changeover and

machine-set times that are a fraction of its competitors'. Thus its capacity for reacting quickly to new

market trends makes TPS an ideal system in today's rapidly changing global business environment.

Toyota believes that it is important in ensuring quality control, and the delivery of reliable and

dependable products to customers.

If a problem arises at any stage of production, Toyota's automatic error detection system, called

"Jidoka", flags the defect and enables line employees to take the necessary steps to resolve it on the

spot even if that means bringing production to a halt. By calling attention to the equipment when an

error first occurs, the Toyota system makes it easier to identify the source of the problem and prevents

defects from progressing to subsequent stages of production. Only a system as agile and quality-

oriented as TPS could make such measures economically possible. This approach not only helps

eliminate waste, which makes TPS more respectful of the environment, it also means that customers

can rest assured that Toyota products will conform to the highest standards of quality, reliability and

durability.

By taking this unconventional approach, Toyota is rising from the ashes of industrial upheaval in post-

war Japan, becoming the largest vehicle manufacturer in its home country, gaining more than 40% of

the national market. By 1980 Toyota in Japan had rolled out its 30 millionth car, and by the turn of the

century the figure had risen to 100 million. Outside of Japan, Toyota first started making inroads into

foreign markets in the late 1950's. The first Toyota Crown models arrived in the USA in 1957, and by

1965, with cars like the Toyota Corolla, the company had steadily built both a reputation for customer

service and satisfaction and sales figures to rival those of domestic automakers. In 2004, annual Toyota

car sales in the U.S. surpassed the 2 million mark, with 1.4 million vehicles and almost 1.3 million

engines manufactured in the U.S. In due course, the Toyota Production System, with its emphasis on

continuous improvement, the value of employee commitment and superior quality, would be

recognized as a true benchmark in the eyes of the global automotive industry.

CORPORATE RESOURCES

MARKETING


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Toyota Motor Corporation is presently pursuing several new marketing goals. While two of these target

markets are geographically oriented, the third uniquely focuses on the environmentally aware

demographic. Pertaining to these segments, the first objective is to continue their expansion into

foreign territories, broadening their overall global capacity. On a more domestic level, TMC is taking

advantage of the challenges presently faced by their fiercest competitors, in order to close the market

gap and become the dominant auto manufacturer in America. Lastly, they are striving to corner the new

and upcoming market segment of environmentally aware individuals with the production of their latest

innovations in hybrid designs.

In terms of market performance, Toyota has been excelling in selection of the product they produce, its

selling price, promotion and placement. They have done this through the marketing strategies and

techniques discussed above, in addition to their strategy of matching specific products within a certain

market segment to an even more refined sub-segment. It is all of these marketing techniques, and the

success they have yielded, that has demonstrated an enhanced knowledge of marketing and its

application within TMC. This particular aspect of marketing allows them to construct a consumer profile

for each of their models, identifying the needs of a specific consumer group and targeting them as thepreferred market for a selected vehicle that fits those needs.

FINANCE

Toyota's increasing financial success is certainly a function of the successful execution of its objectives,

missions, strategies and policies. Not only are all aspects of the organization consistent with the ultimate

goal of positive fiscal realization, but this consistency creates an environment conducive to growth and

profit. Quite simply, the complementary nature of all facets of the corporation has been responsible for

TMC's growing "bottom line". The meticulous attention paid to the interdependence of all company

areas, has created an overall smooth flowing process that yields consistently positive results, especially

in a financial sense.

The most telling indicator of TMC's success is the numerous additional business ventures it is continuing

to support and develop. Certainly, a company that was not enjoying a significant amount of financial

success would not be in a position that would allow such a variety of projects of a varying scope. These

include endeavors in the areas of biotechnology, energy, the environment, wellness, marine related

projects, aerospace and entrepreneurial promotion.

While each of these is an indicator of TMC's financial success, they also support causes that the

corporation proposed to contribute to, while confirming their intentions of contributing internationally

to a better world and the people in it.

RESEARCH AND DESIGN

Toyota Motor Corporation's most dominant research objective is to "search for the means to produce

the ultimate EcoCar". In addition to translating this vision into a reality, they also strive to enhance and

improve the present vehicle designs they manufacture, as well as the quality and efficacy of the

components that comprise them. Overall, the majority of their research involves developing from the


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"perspective of achieving energy security and diversifying energy sources, which is necessitated by the

dwindling supply of petroleum" .

With an annual Research and Design Budget of 1,528 Billion in 2006, the 2007 fiscal year has been

designated an increased budget of $1550 Billion (TMC, 2006). This aspect of the corporation budget has

been consistently increasing for the past decade, reflecting the emphasis TMC is putting on their R & Dsegment of the company. Consistent with company objectives and their mission, this is partially due to

the meticulous research going into the improvement of presently existing models, in order to assure an

absolutely superior standard of quality and safety.

The role of technology in the R & D department is tantamount to none, utilizing only the most advanced

means to create a second generation of selected models. Some of these include the Celica, which is now

known as the Privia, the Soarer (which is identified in the states as The Lexus), as well as a new and

improved Tacoma, Prius and Solara

While the role of research and design managers is to act as a liaison between upper management and

the workforce, one of their most significant responsibilities is to work as part of a team, ensuring that

the research and design efforts are consistent with the other goals of the corporation. The improved

designs should include the variable of increased cost-efficiency for both the consumer and corporation,

as well as take into consideration the feedback from buyers and dealers, as is reflected by sales and

marketing surveys. This inventory of criteria is demonstrative of the cross-functionality of all R & D goals,

as well as the amount of cross-functional teamwork that is necessary to facilitate such objectives. The

table below reflects TMC's present research and design projects and goals.

OPERATIONS

Consistent with Toyota's philosophy-oriented environment the corporation has established anoperations system for production that is tailored to not only their goals, but the strategy and awareness

by which they conduct all business.It is primarily based on two principles: Jidoka and "Just in Time"

manufacturing.

JIDOKA

Jidoka is a concept that highlights the visualization of problems and identifies them before

manufacturing is completed. Utilizing state of the art equipment, this technology identifies a

malfunction or a defective part immediately at its time of production. The machine involved is

programmed to recognize this deficiency and automatically stop, forcing the operators to address the

problem. "As a result, only products satisfying the quality standards will be passd on to the nextprocess on the production line.

JUST-IN-TIME

The second concept inherent in the Toyota manufacturing system is that of "Just-in-Time"

manufacturing, which declares that products or vehicles are produced only as consumer orders and

demand require. It is this system that has, in part, allowed Toyota to evade the issues of excess capacity


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that Ford and GM have encountered. By adhering to such a system, costs can be kept at a minimum,

while profit can still be maximized avoiding the necessity of selling at a loss just to move aging product.

HUMAN RESOURCES

Human Resources at Toyota Motor Corporation serves to meet the needs of all employees, as well as

create an environment that is both productive and conducive to employee satisfaction. Toyota's HR

department is fully aware that happy employees translate into better job performance. This equates to

the kind of increased production and quality that renders satisfied customers. Ultimately, how well

Human Resources addresses the needs of the employee population and how well they maintain an

emotionally intelligent workplace environment directly correlates to Toyota's "bottom line" and overall

financial success. This involves several areas of the employee experience that Human Resource

Managers must attend to. These include: hiring quality individuals that possess characteristics consistent

with company standards, continued training of existing employees, promotion of diversity, resolution of

disputes, maintenance of an overall system of positive reinforcement, executing standards of evaluating

job performance, and all other issues pertaining to maintaining satisfied employees and an environment

conducive to this goal. Some of the major functions of this department are outlined and evaluated

below.

THE TOYOTA INSTITUTE

In 2002, the Toyota Institute was established as one of TMC's training tools. Its purpose is to "reinforce

the organic integration of global Toytoa companies by way of sharing the Toyota Way as well as to

promote self-sufficiency" (TMC, 2006). More specifically, it serves to promote trueglobalizationand the

core values that are inherent throughout the corporation, outlined in the Guiding Principles and set

forth in the Toyoda Precepts. A business within the business, its president since inception has been Fujio

Cho, with the assistance of 16 full-time associates managing the operation, as well.

Within the Toyota Institute, two major programs of study exist: The

Global Leadership Program and the Management Development School. An integral portion of the

training is specifically aimed towards middle-management employees, who are the "go betweens" of

the operation, aiding the communication flow between higher executives and hands-on/divisional

employees. The purpose for instituted a company-wide, all encompassing educational program for

overseas, as well as domestic operations, is to ensure consistency and that all middle-management

personnel understand the full concepts of The Toyota Way, best practice sharing and drafting of action

plans that are consistent among all TMC affiliates.

FUTURE CHALLENGES

Despite these most recent accomplishments, Toyota, like any company, has not been without its

disadvantages. One significant weakness of the corporation is its prior litigious issues and the claims of

inadequate safety standards brought against them. Quite impressively, Toyota has undoubtedly turned

this weakness into a lesson learned and implemented a standard of quality and safety that is now hard

to match. However, the memory of the public is often unforgiving and opinionated, making it difficult

for Toyota to overcome the preconception of negativity that such prior publicity may have instilled in
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some consumers. TMC must also work diligently to promote sustainability within The States, despite the

current trend reflected by the mantra "Buy American".

Toyota may also face future challenges as a function of its diverse expansion. Seemingly enjoying

exploration into areas other than the auto industry, TMC must be cautious not to spread itself too thin.

This is the downfall of many a corporation who enjoy success, seize the opportunity to expand intobroader areas, and then lose sight of their fundamental area of expertise. However, in light of TMC's

continual growth, it appears that this would not be an issue at this time or any time in the near future.

Lastly, Toyota has the unique opportunity to play a role in the overall advancement of culture. Not only

does it possess the ability to make fiscal gains, but also the potential to actually change the future of

mobility. Through its continued emphasis on environmentally-friendly research and alternative designs,

TMC will continue to be a pioneer in the realm of improved transportation. While the corporation has

already proven themselves with their Prius, the first mass-marketed hybrid vehicle, their present

technological projects will certainly set future trends. In light of the information presented in this report,

as well as the historical patterns of TMC, itself, it is fairly safe to assume that the results of their researchand design team will not only set trends, but more possibly set the standard by which all future

manufacturers will follow. In consideration of Toyota Motor Corporation's continued growth, the

manner in which it executes its business, the value it places on human resources and the technological

advances that are not only conducive to, but aimed at the improvement of culture, as a whole, it is

hereby a safe assumption that Toyota will be the driving force in the auto industry before long--a force

with the sustainability and feasibility to drive both American and international culture into the next era

of mobility and convenience.

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