Presented by:

Prannoy K.K
Nandakumar
MBA 2010-12
Aloysius Institute of Management & Information Technology

TOYOTA

INTRODUCTION
Founded in 1937
Headquarters: Toyota City, Tokyo, Japan.
Toyota has annual sales of $130 Billion
Produces : 6.78 million vehicles per year
Has 53 overseas manufacturing companies, in 27 countries/regions
Employees :3,16,000 people
2nd largest automobile manufacturer

WORLD WIDE OPERATIONS

Toyota conducts its business worldwide with 56 overseas
manufacturing companies in 27 countries and regions. Toyota's
vehicles are sold in more than 170 countries and regions.

Toyota operations

American Samoa
Australia
Bahrain
Brunei Darussalam
China
Fiji
Guam
Hong Kong, China

India
Indonesia
Israel
Philippines
Kiribati
Kuwait
Malaysia
Nepal
New Caledonia
New Zealand
Oman
Pakistan
Papua New Guinea

Saipan
Samoa
Saudi Arabia
Singapore
Solomon Islands
Sri Lanka
Tahiti
Taiwan
Thailand
Tonga
United Arab Emirates
Vanuatu
Viet Nam

Toyota and not Kiichiro Toyoda

1966, Toyota acquired Hino
Toyota acquired Daihatsu
Manufacturing or assembly plants: United
States, Australia, Canada, Indonesia, Poland,
South Africa, Turkey, the United Kingdom,
France, Brazil, India, Argentina and Czech
Republic.
Denso was spun off

 Toyota acquired additional ownerships in:

Toyota Auto Body Corporation, Kanto Auto
Works LTD, Central Motor CO., LTD, and P.T.
Toyota Motor Manufacturing Indonesia.

TOYOTA &
ENVIRONMENT

Contribution towards a prosperous 21st century - zero

emissions
Pursuit of environmental technologies
Voluntary actions - environmental issues
Working in co-operation with society - Build close
and cooperative relationships

Toyota Production System

Key Main Concepts
Jidoka
Detects unacceptable quality during the process of
production.
JIT
Just In Time manufacturing
Small batches which reduced inventory costs, tightened
relationship with suppliers and improved quality control
5 Whys Quality
Asking Why? 5 times to locate source of problems
Stopping the production line whenever there are quality
problems to ensure they are not repeated
Low cost supplier
Long term supplier relationships
Kaizen
8

How does Toyota do it?

Engineer it (Chrysler) test and try to
break
Inspect (Mercedes system)
Build it into the assembly process

GENERIC STRATEGIES
Cost Leadership
Differentiation

SWOT Analysis
Strengths:

Weaknesses:

Diversified product range, highly targeted Trade union issues

marketing and a commitment to lean Higher Lead Time
manufacturing and quality.
Company needs to cautiously keep
JIT
producing cars in order to retain its
TQM
operational efficiency
Product Line
Toyotas culture

Opportunities:

Threats:

Toyota has also sold on its technology to Toyota faces tremendous competitive
other motor manufacturers, for example rivalry in the car market.
Ford has bought into the technology for its
new Explorer SUV Hybrid
Economic instability
Toyota is to target the 'urban youth' market.

PEST
POLITICAL FACTORS:
change in duty tariff
ECONOMICAL FACTORS:
Inflation rate
SOCIAL FACTORS:
Toyota is a symbol of reliability, comfort, luxury
and trust.
TECHNOLOGICAL FACTORS:
Technological shift

BCG Matrix
STARS

Cash Cow

Dogs

Toyota in Australia
Designed with state of the art telecommunications,
but also has storm water recycling, external solar
shades, double and triple glazing, zoned and filtered
air conditioning, and an air reticulation system to
reduce energy usage
Award for the best contribution to sustainable
development
Carpets are made with recycled materials, supplied all
over the world.

Toyota in china
Considering China is an immature auto
market, the company has adopted a threestage development plan
First to establish a local sales network and
launch brand promotions, then
To build auto parts manufacturing bases, and,
To establish joint ventures (JVs) with local
players and produce automobiles.

Customization in Europe
1997 launched Prius a gasoline electric
car
April 1998 new small car in Europe market
Yaris

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Europe
Yaris launched for targeting European market.
Engage European designers to design more
cars
Started the French Riviera Design Center
Increase manufacturing capacity in Europe
Local procurement, locally produced units
Entered into partnerships with other automobile
companies
Partnered with PSA Peugeot
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TOYOTA - INDIA
In India, Toyota Motor Corporation entered in a joint venture
with Kirloskar Group.
89% stake is owned by Toyota and the remainder by India's
Kirloskar group.
Toyota Kirloskar Motor Private Limited (TKM) has 2 units
one solely handling manufacturing and the other focused on
marketing, distribution and sales

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Vision and Mission

Vision is to be the most respected and successful
enterprise, delighting customers with a wide range of
products and solutions in the automobile industry with
the best people and the best technology.
Mission of Toyota is to provide safe & sound journey.
Toyota is developing various new technologies from the
perspective of energy saving and diversifying energy
sources. Environment has been first and most important
issue in priorities of Toyota and working toward creating
a prosperous society and clean world.
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Core Values
World class product quality.
Achieving the ultimate goal of complete
customer satisfaction.
Fostering the spirit of Teamwork.
Inculcating ethical and honest practices.

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PRODUCT LIFE CYCLE

TKM IS IN BETWEEN THE
GROWTH AND MATURITY
STAGE .
Toyota decided to replace
Qualis because of two reasons.
Qualis was a major success
among the tour operator
segment but was not popular at
the individual/home segment.
Second reason was the
increased competition from
Chevrolet Tavera which was
perceived to be a more refined
upmarket SUV.
Toyota also wanted to bring in
the latest products in the
Indian market.
Qualis was only a test product.
Further, Toyota wanted to
appeal to the individual/home

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DISTRIBUTION NETWORK

Penetration

Four key components for

Toyota
These are linked to the pursuit of a new global image with :
being kind to the earth,
providing comfort of life,
excitement for the world,
and respect for all people.
The encompassing motto of Toyota
"innovation into the future" is "working with passion and
dedication to create a prosperous society."

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LOGO
Three ellipses depicting the heart of the customer, the heart
of the product, and the ever-expanding technological
advancements and boundless opportunities that lie
ahead.

Pricing Strategy
Optional-Feature Pricing : e.g. an Innova customer can order
mud flaps, side steppers or other accessories.
Promotional Pricing :
Low Interest financing : This technique is for short period
and is mainly used in festive seasons.
Longer Payment Terms : The company stretches loans over
longer periods and thus lowers the monthly payments.

 Warranties and Service contracts : The company

provides 3 year or 1 lak Km (whichever earlier)
warranty on all repairs using Toyota genuine parts.
Differentiated Pricing :
Location Pricing : Toyota cars are priced differently
in different states. Car cost remains the same across
the country but the road tax and insurance rates differ
in different states.

26

Innovation

1.
2.
3.
4.

Toyota has introduced new ideas & technologies which

enable them to lead the innovation among others
competitors.
Example
Hybrid gas-electric vehicles.
Advanced Parking Guidance System.
Eight-speed automatic transmission.
Four-speed electronically controlled automatic with buttons
for power and economy shifting.

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-Promotion
INNOVA" All you desire "

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CSR Strategy
Toyota company contributed to public relations in
the following manner :
1. It contributed to Tsunami.
2. Toyota Kirloskar signs MOU with Bangalore
University for promotion of Japanese language.
3. Toyota observes earth day by supporting local
schools.

Globalization
Aggressive Globalization efforts that
began in mid 1990s
3 Globalization programs
New Global business plan (1955-1998)
Global vision 2005 (1996 2005)
Global vision 2010 (2002 2010)

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2010 Global Vision

Toward a recycle-oriented society
Toward the age of IT and ubiquitous networks
Toward a mature society (the decline of nationalism
and war)
Toward motorization on a global scale (societies with
little private transport gaining more)

Global Vision 2005

1995 Hiroshi Okuda became President
To improve domestic sales focus on
dealer network
Incentives to increase sales to dealers
Aggressive means to attract youngsters to
its products
Functional discrepancies among the
dealers
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 Heavy investments in advertising

Okuda decided to focus on improving
global sales performance

33

Early Globalization
Efforts:
June 1995 Toyota announced New Global
Business Plan aimed at localization of
production and increasing imports over a
3 yr period
Localization was the focus
Apart from this short term global
business plan Toyota also came up with a
long-term global vision in June 1996

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Globalization Efforts:
Increasing production of automobiles by
improvement in three core areas:
Upgrading its R&D
Developing new line of products
Replaced engines of its Lexus range of
cars with stronger models & made design
changes as per customer feedback
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 Toyota's corporate goal is to achieve continuous growth and enhance

its corporate value by contributing to society and gaining customers'

enduring trust through global operations and through products

reflecting Toyota's advanced technology that target the local demand
in each market

The automotive industry is intensely competitive across the globe

and is expected to transform significantly in the future. In order to

respond to changes in environment and attain further growth, Toyota

will come together as a group and pursue the following agenda

 Attractive Product Lineup Responding to Consumer

Preferences in Each Region
Next-Generation Eco-cars Centered on Hybrid Models
Annual Unit Sales of Hybrid Models Globally
ex:
Year Ended March 31, 2008
2009
2010(in
thousands)
Total Unit Sales
444
385
644

 Models Targeted to Resource-rich and

Emerging Markets
Global Models (IMV, Vitz/Yaris, Camry
and Corolla/Auris
Premium Brand Models (Lexus).

 Localize Global Operations with Targeted

Regional Strategies

Japan as the Center of the Global

Operations

Promote Key Initiatives

Globally
Maintain Leadership in Research and
Development
Improve Efficiency
Strengthening Finance Operations for Sales
Maintain Financial Strength
Focus on Shareholder Value
Markets, Sales and Competition

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET
RISK
Foreign Currency Exchange Rate Risk
Interest Rate Risk
Commodity Price Risk
Equity Price Risk

 Based on its assessment of market needs and prospects.

To respond flexibly to fluctuations in demand in each of
its production operations throughout the world
TPS starts with the customer, by asking, "What value
are we adding from the customer's perspective?"
Because the only thing that adds value in any type of
process- be it in manufacturing, marketing, or a
development process-is the physical or information
transformation of that product, service, or activity into
something the customer wants.

Quality
Toyota's philosophy is to identify defects when
they occur and automatically stop production so
that the problem can be fixed before the defect
continues downstream.

Go and see.
Analyze the situation.
Use one-piece flow and andon to surface problems.
Ask "Why?" five times.

Standardization
Toyota believes standardized work is the basis for empowering
workers and innovation in the work place
The 5S
Sort-Sort through items and keep only what is needed while disposing
of what is not.
Straighten (orderliness}- A place for everything and everything in its
place.
Shine (cleanliness)- The cleaning process often acts as a form of
inspection that exposes abnormal and pre-failure conditions that could
hurt quality or cause machine failure.
Standardize (create rules}-Develop systems and procedures to
maintain and monitor the first three S's.
Sustain (self-discipline}-Maintaining a stabilized workplace is an
ongoing process of continuous improvement.

Technology
Toyota introduces new technology only after it is proven through

direct experimentation with the involvement of a broad cross-section

of people

Leadership
Throughout Toyota's history, key leaders have 'been found within the
company, at the right time, to shape the next step in Toyota's
evolution.

Toyota's leaders are home grown. Leaders must live and thoroughly
understand the company's culture day by day.

Leaders must demonstrate this ability and understand how work gets
done at a shop floor level. Toyota believes that, a superficial

impression of a situation will lead to ineffective decision-making and

leadership.

Managing people

Stage 1: Orientation. The group needs strong direction from the leader and must
understand the basic mission, rules of engagement, and tools the members will
use
Stage 2: Dissatisfaction. After going to work, the members discover it is harder
than they thought to work as a team. In this stage, they continue to need strong
direction (structure) from the leader but also need a lot of social support to get
through the tough social dynamics they do not understand.
Stage 3: Integration. The group starts to develop a clearer picture of the roles of
various team members and begins to exert control over team processes. The
leader does not have to provide much task direction, but the team still needs a
lot of social support.
Stage 4: Production. The group becomes a high-performing team, no longer
dependent on the leader.

Performance measurement
There are at least three types of measures at Toyota:

1.Global performance measures-how is the company doing? At this level,

Toyota uses financial, quality, and safety measures very similar to those used
by other companies

2.Operational performance measures-how is the plant or department doing?

Toyota's measurements are timelier and better maintained than at other

companies. The people at the work group level or the project manager's level
painstakingly track progress on key metrics and compare them with
aggressive targets. The metrics tend to be specific to a process.

3. Stretch improvement metrics-how is the business unit or work group

doing? Toyota sets stretch goals for the corporation, which are translated into
stretch goals for every business unit and ultimately every work group.

Tracking progress toward these goals is central to Toyota's learning process.