Toyota Motor Corporation’s Structure and Organisation of its Global Operations Custom Essay

Evaluating Toyota Motor Corporation’s Structure and Organisation of its Global Operations
I. Introduction
The purpose this article is to evaluate the Toyota Motor Corporation’s strategy for organising and structuring

its global organisation.
Toyota is the largest auto manufacturer in the world and it sells its vehicles in more than one hundred and

seventy countries. It employs 325, 905 employees, as of 31 March 2012, in Japan, North America, Europe and

Asia. It recorded revenues of $235,454.9 Million during FY2012 with an operating profit of $4,505.8 million.

(Marketline, 2013)

II. A Brief History
In 1937 the Toyota Motor Co., Limited was established, as a separate company from Toyoda Automatic Loom Works

(of which it had been part of since 1933), by Toyoda Sakichi.
During the Second World War it manufactured military lorries for the Japanese imperial army. After the

conflict the company faced economic difficulties due to wrecked facilities and the nation’s chaotic state so

it was forced to suspend its auto production. (Encyclopaedia Britannica, 2014) The company had to obtain a

loan from a banking consortium on the condition that it would cut manpower and separate its sales into an

independent operation. It nearly went bankrupt in the 1950s but was saved due to large US army order for over

5000 lorries during the Korean War.
Toyota still continued to manufacture cars and produced the model SA (Toyopet). Subsequent models were

designed and produced, each an improvement over its predecessor. In 1955 with production increasing rapidly

Toyota diversified its production and introduced the Land cruiser SUV and the Crown luxury car to its model

line-up.
Toyota decided that it was time, with a variety of models in its production line-up, to establish an

international presence. It opened its first dealership in the United States in 1957 and in 1959 its first

overseas production plant in Brazil. (Anon, 2013) As part of this strategy Toyota made sure that each of the

models it produced were unique to that region. We start to see the first signs of their strategy of adaptation

to the respective markets. This led to series of plants and operations opening up in Europe and Asia during

the nineteen sixties and seventies.

The oil crisis of the nineteen seventies provided Toyota with the opportunity to establish itself within the

North American market, when the crisis forced the US domestic automakers to produce smaller more fuel

efficient vehicles. These new vehicles produced by the US auto makers were not of very good quality and

suffered from a reliability image problem within the United States. These image problems became so deep within

the American culture that some became the target of unflattering jokes by the public such as FORD (Fix Or

Repair Daily). Interestingly domestic auto manufacturers are still fighting to overcome some of these images

today. Toyota did not have this problem as they already had several fuel efficient models that were of good

quality and the Corolla soon became America’s favourite compact car. Toyota has since built on this success

and today has a wide range of models on offer around the world for both regular and luxury brand (Lexus)

vehicles. Its market share in FY2012 in Japan was 45.5%, North America 12.2%, Asia 13.4%, Europe 4.3% and

China 7%. (Marketline, 2013) It also has a significant market share in Africa, the Middle East Latin America

and Oceania.

III. Organising and Structure Strategy

Toyota’s Global vision
“Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed

expectations and be rewarded with a smile. We will meet our challenging goals by engaging the talent and

passion of people, who believe that there is a better way”

(Toyota

Motor Corporation, 2014)

Toyota has had a global reputation for treating their employees in a favourable way that causes them to want

to work harder for the company’s success. For example at the Toyota manufacturing plants workers are

assimilated into the Toyota ideology and manufacturing process. First line supervisors and above are sent to

Toyota Japanese operations facilities for information exchange trips. “Toyota believes in the uniqueness of

Japanese management and regards the major tenets of that management style as transferable to its US

operations” (Abo, 1989, cited in Besser, 1995, p.386)

Findings by Besser in research conducted on Toyota, using the George Town Manufacturing plant as a sample,

establishes the importance of the role of small work groups and company ideology as official mechanisms for

motivating employees in large Japanese organizations” (Besser, 1995, p.398). The team members have incentives

to encourage each other to be on time, work effectively and conform to standards and norms. The individual

feels a responsibility to his or her fellow members to meet these goals and not let the team down. There is a

great emphasis on quality and continuous improvement that is a facet of all levels within the organisation.

Theses corporate ideals, reflected its global vision, are shared in every one of its facilities no matter the

location in the world.

As Miroshnik states based on the findings of her research into Toyota’s creation of company citizen in India
“As we can see similar characteristics of corporate management in their subsidiary operation in India, we can

fairly conclude that the organization may have successfully transmitted its Japanese organizational culture to

its subsidiary operation in India”.

(Miroshnik, 2012 p.683)

These values, sometimes known as the Toyota way, instil commitment in their employees and play an important

part in a firm’s successful performance.
These organisations that, encouraged trust, employee participation and entrepreneurship are effective across

the globe, both in the home country and in the host country. (Basu et al, 2007).

As inferred in its global vision Toyota has a belief in continuous improvement and innovation. It therefore

has a strong R&D focus and organisation that bring new products and innovations to its vehicle line-ups. Not

only does it have R&D facilities in Japan but it also conducts R&D in fourteen other facilities around the

world. This strong emphasis on R&D has led to innovations such as “the Pre-Collision System (PCS), collision

avoidance assist that helps in mitigating collisions at high-speed” (Marketline, 2013).

Toyota has not been averse to sharing technology with partners be it suppliers or other auto manufacturers.

This is a rather prudent strategy because by teaming up, the partners share costs and risks and they also reap

the rewards. One such example of sharing technology with another auto maker is Toyota’s partnership with BMW

to “work together on fuel cells, electrification, light weighting and sports cars” (Bickerstaffe, 2012, p.4)

Toyota has close working relationships with its many suppliers that has seen the relationships grow from one

of based on social friendly informal relations between it and its suppliers, to one of sophisticated systems

for tracking and enhancing suppliers’ performances, with heavy emphasis on product quality. (Wade, 1991)

“Toyota has focussed on a partnering with its first tier suppliers and passed on technology and management

expertise to enable them to align with the way Toyota does things and in effect making them mini Toyotas. The

first tier companies are made responsible for the relationships with the second and third tier suppliers. This

has allowed Toyota to keep its purchasing control staff small and focused” (Wade, 1991).

Another strategy that Toyota has employed with considerable success is the one of understanding the country it

exports to or operates in is also key to success of an organisation. An example of such a strategy was how

Toyota dealt with the growing anti-Japanese sentiment that was growing in the United States partly due to the

US auto industry losing business to the Japanese. Shoichiro Toyoda, the then president of Toyota, managed a

successful public relations campaign to win the hearts and minds of the American public. He initiated business

ventures with General Motors, New United Motor Manufacturing, and launched production operations in the United

States. Toyota also delayed the introduction of models that would directly compete with domestic vehicles

that had American national iconic status such as the f-150. As Maskery quotes a Southern California auto

dealer in her article

“Fear of arousing anti-Japanese sentiment was one reason Toyota was conservative with its first effort at a

larger truck. The dealers wanted a (Ford) F-150 competitor right out of the chute. But politically, they

weren’t going to do it. Most dealers understood that.”

(Maskery, 2007)
This was rather prudent of Toyota as the large pickup truck is a symbolic icon in rural America as the horse

and cowboy was in 19th century America.

IV. Conclusion
Toyota has seen much success with both its domestic and global operations and has seen itself journey from a

minor player in vehicle manufacturing and build its way up being the world’s number one auto manufacturer. It

has arrived at this position by building on quality, innovation and understanding its customer’s needs all

which have engendered customer loyalty. Toyota however faces threats from new aggressive competitors such as

Hyundai and failures in quality which resulted in vehicle recalls in 2010. The fact that Toyota did not deal

with the recall situation quickly enough caused a dent in their reputation. Though the monetary costs were

high, $2 Billion, the costs in reputation could have been a lot higher. Only by the president of Toyota, Akio

Toyoda, personally taking out full page advertisements in major US newspapers, such as the Washington Post,

apologising about the lapses in safety and explaining in detail how he intended to make sure these lapses

would not happen again did the slide in reputation halt. (Toyoda, 2010)

Toyota has to remain vigilant, true to its vision goals and guard against compliancy to remain at its

position of number one vehicle manufacturer in the world and maintain its strong customer loyalty.

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