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CORPORATE STRATEGY OF TOYOTA
Toyota is one of the world's leading auto manufactures, offering a wide range of passenger
car models. TMC (Toyota Kirloskar Motors) is a Japanese car manufacturing giant with
manufacturing facility in 52 countries and products sold in 170 countries. TMC employees
334,000 people and have 56 manufacturing facilities over 6 continents. TMC is present
business in areas related to Automobiles like vehicle finance, automobile parts
manufacturing, agriculture equipment, aeronautical components and Logistics. TKM (Toyota
Kirloskar Motor Pvt. Ltd.) is the Indian subsidiary of TMC (Toyota Motor Corporation).
TMC is celebrating their 75 years of existence. TMC entered India in 1997 with the launch of
Toyota Qualis which was the best selling Multi-Utility vehicle in the Indian Market.
Aim of this seminar is to study the Corporate Strategy of Toyota Motors Corporation. Aim of
this seminar is to study Corporate Strategy, Management Practices and Corporate Social
Responsibility of TKM.
Introduction to TMC
Fig: TKM Showroom in Gurgaon, NCR Region of Haryana
Toyota is one of the world's leading auto manufactures, offering a wide range of passenger
car models. TMC (Toyota Kirloskar Motors) is a Japanese car manufacturing giant with
manufacturing facility in 52 countries and products sold in 170 countries. TMC employees
334,000 people and have 56 manufacturing facilities over 6 continents. TMC is present
business in areas related to Automobiles like vehicle finance, automobile parts
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manufacturing, agriculture equipment, aeronautical components and Logistics. TKM)
(Toyota Kirloskar Motor Pvt. Ltd.) is the Indian subsidiary of TMC (Toyota Motor
Corporation). TMC is celebrating their 75 years of existence. TMC entered India in 1997
with the launch of Toyota Qualis which was the best selling Multi-Utility vehicle in the
66 Years of Corporate Tradition
Toyota is one of the biggest vehicle manufacturers, and one of the most widely known
companies, in the world today.
Toyota believes that there is always a better way - in everything that we do. We at Toyota
Kirloskar Motor have always followed our global philosophy of continuous improvement
(Kaizen). Our lineage of consistently making quality cars backed by quality services gives us
the edge and insight to deliver to you, cars built to international quality standards yet keeping
in mind the local sensitivities. Quality to us has never been just a word. It’s been a way of life
at Toyota and will continue to be so.
Toyota’s firm belief is in putting customers first has constantly enabled us to respond
effectively to your needs, whether it's in terms of quality of product, service or driving
experience. It is this very belief, throughout generations, that is responsible for Toyota’s
renowned Quality Durability and Reliability (QDR) which has also led to our steady growth
in the Indian automotive market backed by products and services that are loved and
cherished. We are proud that today, over 1 million Indians are part of the ever growing
Toyota family. We also strive towards developing a more sustainable future. Being pioneers
in Hybrid Technology is our first step towards the same.
Through initiatives focused on the areas of education, community development and the
environment, we aim to create a company that works in harmony with nature and society.
Toyota's Lexus and Toyota branded vehicles rank annually among the world's highest quality
cars in third party surveys of customer satisfaction.
Using such success as a springboard, Toyota is pursuing a policy of sustained development
and hopes to use innovation and strong R & D to create cars that are greener, safer and more
fun to drive.
As a global company, Toyota realizes that local commitment is a prerequisite to success on a
worldwide scale. Toyota's activities are highly appreciated around the world, a result of the
company's devotion to customer-oriented activities and social contributions in every market it
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Toyota Global Vision: Your Satisfaction Our Commitments
Toyota will lead the way to the future of mobility, enriching lives around the world
with the safest and most responsible ways of moving people.
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 there is always a better way.
Executive Management at TMC
Chairman of the board Takeshi Uchiyamada
President, member of the board Akio Toyoda
Executive Vice President,
member of the board
Satoshi Ozawa Nobuyori Kodaira
Mitsuhisa Kato Masamoto Maekawa
Yasumori Ihara Seiichi Sudo
Mamoru Furuhashi Kiyotaka Ise
Koei Saga Shigeki Terashi
Yoshimasa Ishii Ikuo Uno
Haruhiko Kato Mark T. Hogan
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History of Toyota Motors Corporation
Towards the end of the nineteenth century, Sakichi Toyoda invented Japan's first
power loom, revolutionising the country's textile industry. January 1918 saw him create the
Toyoda Spinning and Weaving Company, and with the help of his son, Kiichiro Toyoda,
Sakichi fulfilled his lifelong dream of building an automatic loom in 1924. The establishment
of Toyoda Automatic Loom Works followed in 1926. Kiichiro was also an innovator, and
visits he made to Europe and the USA in the 1920s introduced him to the automotive
industry. With the £100,000 that Sakichi Toyoda received for selling the patent rights of his
automatic loom, Kiichiro laid the foundations of Toyota Motor Corporation, which was
established in 1937. One of the greatest legacies left by Kiichiro Toyoda, apart from TMC
itself, is the Toyota Production System. Kiichiro's "just- in-time" philosophy - producing only
precise quantities of already ordered items with the absolute minimum of waste - was a key
factor in the system's development. Progressively, the Toyota Production System began to be
adopted by the automotive industry across the world.
Kiichiro Toyoda had traveled to Europe and the United States in 1929 to investigate
automobile production and had begun researching gasoline-powered engines in 1930. Toyoda
Automatic Loom Works was encouraged to develop automobile production by the Japanese
government, which needed domestic vehicle production, due to the war with China. In 1934,
the division produced its first Type A Engine, which was used in the first Model A1
passenger car in May 1935 and the G1 truck in August 1935. Production of the Model AA
passenger car started in 1936. Early vehicles bear a striking resemblance to the Dodge Power
Wagon and Chevrolet, with some parts actually interchanging with their American originals.
Since the company manufactured its first passenger vehicle in 1936, Toyota has continuously
pursued the number one position for total customer satisfaction in all areas, ranging from
manufacturing and products to sales and service. Toyota exported its first Japanese-made
passenger car to the United States in 1957. Since then, Toyota has steadily expanded its
global presence with the establishment of overseas bases.
Rising from the ashes of industrial upheaval in post-war Japan, Toyota has become the
largest vehicle manufacturer in Japan with over 40% market share. Toyota began to make
inroads into foreign markets in the late 1950s. The first Crown models arrived in the USA in
1957, and by 1965, with models such as the Corolla, Toyota began to build its reputation and
sales to rival those of domestic producers. The first Toyota imported into Europe was via
Denmark in 1963. Toyota has con-tinued to grow in Europe's sophisticated and complex
market, and in 2000 the company delivered its ten millionth car to a customer in Germany. In
fact, growth is currently one of the main words in Toyota's European vocabulary, and the
com-pany plans to reach annual sales of 800,000 in Europe by 2005. Toyota is number one
for customer satisfaction in the majority of European countries and has built an excellent
reputation across Europe for reliability and customer service. This enviable reputation, along
with the support of a network of more than 25 distributors and 3,500 sales outlets, are
important factors in supporting Toyota's European sales growth in the coming years.
Although the Toyota Group is best known today for its cars, it is still in the textile business
and still makes automatic looms, which are now computerized, and electric sewing machines
which are available worldwide.
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From “TOYODA” to TOYOTA
Toyota originated from the family name of the founder, “Toyoda”, with early vehicles
produced by the company originally sold with a “Toyoda” emblem. In 1936, the company ran
a public competition to design a new logo, which lead to a change in the brand name to what
is now called “Toyota”.
It has been regarded as a favorable transition from “Toyoda” to “Toyota”, because voiceless
consonants sound more appealing than voiced consonants. In addition, through the concept of
“jikaku” (counting the number of strokes in writing characters to determine good and bad
luck), its eight-stroke count is associated with wealth and good fortune. Lastly, the change
also signified the expansion of an small independent company to a larger corporate
About the Mascots and Chronology
The front emblem from the first passenger car (the model AA) which started mass production
in 1937. This mark is composed of the wings to convey speed and kanji “Toyoda” which was
made into a design.
A front mascot composed of the kanji mark “Toyoda” and the “shachihoko”, which is an
iconic symbol of Nagoya, prefectural capital of Aichi and origin of Toyota. It was first used
in Toyota’s first truck, the “G1 Truck.”
Ever since its founding, Toyota has sought to contribute to a more prosperous society through
the manufacture of automobiles, operating its business with a focus on vehicle production and
To celebrate its 75th anniversary, the company has compiled 75 Years of Toyota. Have a
look at the company’s progress over the last three-quarter century.
History of Technological Development
Toyota is striving to develop automobiles that meet the needs of our customers while at the
same time achieving an optimal balance between consideration for the environment, safety,
drivability, comfort and reliability.
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1867Birth of Sakichi Toyoda.
1924Sakichi Toyoda invents Toyoda Model G Automatic Loom.
1929Automatic-loom patent is sold to a British company.
1930Kiichiro Toyoda begins research on small gasoline-powered engine.
1933Automobile Department is established at Toyoda Automatic Loom Works, Ltd.
1935The Toyoda precepts are compiled.
1936The AA Sedan is completed.
1937Toyota Motor Co., Ltd. is established.
1938Honsha Plant begins production
1950Company faces a financial crisis; Toyota Motor Sales Co., Ltd. is established.
1951Suggestion System begins.
1955The Toyopet Crown, Toyopet Master and Crown Deluxe are launched.
The first prototypes of the Crown are exported to the United States; Toyota Motor Sales U.S.A.,
Inc. is established.
1959Motomachi Plant begins production.
1962Joint Declaration of Labor and Management is signed.
1965Toyota wins the Deming Application Prize for quality control.
1966The Corolla is launched; business partnership with Hino Motors Ltd. begins.
1967Business partnership with Daihatsu Motor Co., Ltd. begins.
1974Toyota Foundation is established.
1975The prefabricated housing business begins.
Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. are merged into Toyota Motor
Joint venture with General Motors (New United Motor Manufacturing, Inc.) begins production
in the USA.
1988Toyota Motor Manufacturing, USA, Inc. (present TMMK) begins production.
1989The Lexus brand is launched in the USA.
1992Toyota Motor Manufacturing (United Kingdom) Ltd. begins production.
1997The Prius is launched as the world’s first mass-produced hybrid car.
1999Cumulative domestic production reaches 100 million vehicles.
2000Sichuan Toyota Motor Co., Ltd. begins production in China.
2001Toyota Motor Manufacturing France S.A.S. begins production in France.
Toyota enters Formula One World Championship; Tianjin Toyota Motor Co., Ltd. begins
production in China.
2004The Toyota Partner Robot is publicly unveiled.
2005The Lexus brand is introduced in Japan.
2008Worldwide Prius sales top 1 million mark.
Worldwide Prius sales top 2 million mark; Toyota and Tesla Motors agree on joint EV
Worldwide Hybrid Vehicle sales top 3 Million mark; Toyota Motor Manufacturing, Mississippi,
Inc. begins production in the USA.
Mission for Technologies
Statements to activities relating to the development of key technologies. Create vehicles that
are popular with consumers.
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Activities & Initiatives
o Provide world-class safety to protect the lives of customers.
o Provide optimization of energy/infrastructure to local communities.
o Putting high priority on safety and promote product development with the ultimate
goal of “completely eliminating traffic casualties”.
o Deliver cars that will stimulating and even inspiring and that will thereby earn smiles
from our customers.
o Addressing employees education under “Genchi-genbutsu” philosophy, which is to go
to the source to find the facts to make correct decisions, build consensus and achieve
goals at our best speed.
o Through true mutual trust with partners, contribute to development of new technology
and improved expertise.
o Contribute for economic development of local communities with R&D operations
functioning effectively in each region.
Fast facts about Toyota
You may just have bought yourself a shiny new Toyota sedan, or perhaps still considering
buying one. But you may not know the brand well enough. For most people, the fact that
Toyota is a Japanese car manufacturer is enough to help them make their decision of whether
or not they want to buy that car. However, besides the long history of expansion in Japanese
market, this famous brand has a number of impressive notes on the books.
Fastest Selling Car
Since 1966, Toyota has been manufacturing and selling Corolla every 37 seconds on average.
As of 2013, the rate has gone much faster at every 27 seconds on average. The sales have hit
an unprecedented 40 million, which is absolutely mind-boggling.
Since 1957, Toyota has expanded the scope of its sales across the entire world. In almost 50
years, Toyota has managed to set up production bases and showrooms in over 170 countries
and regions all over the globe. Even McDonalds doesn’t have as many restaurants
worldwide! Because of Toyota’s successful policy of “producing vehicles where the demand
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exists,” there are more than 50 production bases in over 25 countries and regions including
Leading Manufacturer of Hybrid Toyota has the largest hybrid model line-up in the world.
The famous Toyota Prius, launched in 1997 as the first mass produced hybrid vehicle, has
reached its target of 1 million unit sales each year, as of 2012. At Australia’s Altona factory,
the Camry Hybrid is one of the vehicles manufactured there.
Best Selling Nameplate According to the statistics, Corolla is the bestselling nameplate for
vehicles all over the world. As of 2013, the total number of Toyota Corolla nameplates that
have been sold is 30 million, which is astonishing. What is even more astonishing is that it
has been the best-selling nameplate since 1997 when the cumulative sales went over 30
million units. You would think that it would have a stronger competition in today’s
automobile market but Corolla still stands out as the best-selling one.
First Country to Import Toyota Australia was the first country in the world to import
Toyota Corolla from Japan in November 1966, which was just a month after the vehicle was
launched in Japan. After that, Australia started manufacturing Corolla from 1968 until 1999.
Even now, it is the most in-demand automobile in the country. In fact, one out of every five
vehicles sold in the country is a Corolla.
Most Ethical Multinational Corporation It has been four consecutive years since the
Covalence Ethical Ranking has been declaring Toyota to be the most highly ranked ethical
corporation in the world. Their rankings are based on data about product social utility, waste
management, human rights policy and labor standards.
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Supporting Employment Prospects Toyota has a lot of obligations towards its employees.
The company has created over 365,000 jobs in the United States alone. Similarly, there are
240 Toyota franchises, because of which, there are over 30,000 jobs being supported by the
Best Resale Value According to many market researches that have been carried out in the
last decade, Toyota has the most models for cars with best resale value in the market. From
Land Cruiser for premium utility vehicles to hybrid Prius for alternative fuel vehicles,
Toyota’s units sell like hot cakes in the previously owned vehicles businesses.
Research and Development Every year, Toyota spends over $9 billion on research and
development towards the future automobile technologies. Nine billion dollars per year means
more than one million dollars an hour, which is more than any company in the world spends
on research and development.
Awards The Toyota Camry has won the U.S. Sales Crown 12 times in a row, which makes it
the top selling car in the country.
Management Practices at TMC
MOTIVATION PRACTICES IN TOYOTA
To hire a competent employee is not a simple task but after that, how to make your
employees work efficiently, happily and being enthusiastic in contributing to Organizational
goals are even more challenging. This article will try to analyze and explain what methods
are practiced in Toyota to motivate its employees by using motivation theory models such as
Maslow’s hierarchy of needs & Goal setting theory
First, we will analyze how Maslow’s hierarchy of needs is applied in Toyota.
Maslow’s Hierarchy of needs:
Basically, Maslow’s Hierarchy of needs is pyramid of different levels of needs. The base at
the lowest is Physiological needs, the next is Safety needs, Love & Belonging, then Esteem
and the highest level is Self-Actualization (Please refer to Figure 1 for more details). Only
when lower levels of needs such as physiological and safety are satisfied, then employees can
achieve higher levels such as esteem and self-actualization, which make them work more
efficiently, with more drive and more innovative ideas.
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Fig.: Maslow’s hierarchy of needs
For Physiological & Safety needs:
According to Liker (2004, p.210), all employees of Toyota are satisfied in lower level needs,
they are well paid, their jobs are secured and the working environment is safe and organized.
Besser (1995, p.390) also stated that Toyota provided child care and recreational facilities
available on site for employees. All these benefits were provided to ensure their employees
are safe and secured to work for a higher level of needs, which brings more results.
For the needs of belonging:
Besser (1995, p. 390) described the way Toyota promoted a strong team spirit and sense of
belonging is by showing no discrimination between team members; or between managers and
employees. In particular, “There are no private parking facilities, private cafeterias for
managers, private offices, or private secretaries. All staff are encouraged to wear the
company uniform and are called by their first name” (Besser, 1995, p.390). This practice
makes employees really feel that they are a part of a community and creates a strong bond
between employees and the company.
For esteem & self-actualization:
Toyota also encourages its employees to try to solve challenging problems to build up their
confidence so that they can satisfy their higher needs in esteem and self-actualization.
Also, by using a ratio of team leader to team members of 1 to 4, or 5; comparing to 1 to 20 or
30 in the industry, Toyota created 4 to 5 times the promotion opportunities for employees
(Besser, 1995, p. 393). Ambitious workers are also promised that their assembly line jobs are
temporary and after being promoted to team leader, they would receive a lot of training and
job rotation opportunities.
All employees are also encouraged to solve daily work problems innovatively, they would
receive gift certificates for their ideas contribution.
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Next we will examine how Toyota applied Goal-setting in their work environment.
According to Williams and McWilliams (2010, p. 272), Goal-setting theory proposed that
“people will be motivated to the extent to which they accept specific, challenging goals and
receive feedback that indicates their progress towards goal achievement.”
From this definition, we can decompose it into 4 components, which are:
- Goal specificity: i.e. goals should be clear, detailed and not vague.
According to Obara and Wilburn (2012, p. 167), Toyota required goals must be clear and
defined for example “total lead-time must be less than customer-order-to-delivery lead-time
- Goal difficulty: i.e. challenging goals are more motivated than easy goals.
According to Bodek (2008, p.40), one of the challenging goal he found in Toyota is that
managers even challenged workers to find solution to make things one Yen cheaper, and one
Yen is even less than one US penny. Bodek (2008, p.41) pointed out that we even may not
pick up one penny on the floor, not to mention trying to solve problems that save one penny.
- Goal acceptance: employees should comprehend and support the goals. At Toyota, an
“community of fate” ideology was developed, it means that employees are feeling that they
and the organisation share the same fate, that they would succeed or fail together. (Besser,
1995, p.383). This helps the personal goals align with organisational goals.
- Performance feedback: i.e. progress indication towards a goal.
Fig. An Andon Problem Display Board That Communicates Abnormalities.
If performance feedback is clear, employees are more motivated. For Toyota, it uses visual
management systems such as Jidoka to communicate problems from a specific production
line so that every employees can track their progress, this provides direction for them to move
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TOYOTA HR PROCESS
The right process will produce right result
Lean manufacture strategy has become the standards of selection operation. In order to
reduce the unnecessary cost during production process, employees should have other traits
except the normal techniques
(1) Teamwork & cooperation - social communication
(2) Being hungry for the new things - enthusiasm
(3) Consistent decision-making - studious
Company needs the employees who can surpass the general duties of his position it needs
Flexibility adaptability .Employees can work for a whole company not only a part of it.
Toyota has strict recruitment process and multi-layered recruitment techniques. It calls for
standardized behaviour. For instance, when Toyota is holding an interview, judgers would
take ability, techniques, and characteristics into consideration. And in the assessment centre,
interpersonal interaction plays an essential role in the decision-making of judgers, which tend
to find the potential and ability of the employees.
Toyota is primarily interested in hiring people with a strong work ethic. It prefers to select
people who are familiar with hard work and have the motivation necessary to learn and
perform. (Jeffrey K. Liker & David P. Meier, 2007, P14)
As for team leader and group leader selection, it includes the characteristics that make a
strong trainer. The team leaders know all the jobs in their areas, so they are able to train for
all jobs. In this way the people in each area who know the works are training others to do the
work. (Jeffrey K. Liker & David P. Meier, 2007, P64)
A common expression heard around Toyota is:’’ we do not just build cars, we build
people.”(Jeffrey K. Liker & David P. Meier, 2007, P3) Every developing program, every
kaizen activity and every quality defect is an opportunity to build people. That is the
philosophy of training and development of Toyota. And training exceptional people is
Toyota’s number one priority. This has become ingrained throughout the company, as a
cultural value of the Toyota Way.
Toyota is increasing the emphasis on training by opening three regional training centres
called Global Production Centres—one in Thailand to support the Far East, one in England to
support Europe, and the third in Kentucky for all North American plants. Satellite centres are
being developed globally at every plant. (Jeffrey K. Liker & David P. Meier, 2007, P22)In
addition, due to the lack of sufficiently skilled trainers to teach the throngs of new people
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being hired and assimilated, Toyota discovered in the process of developing formal training
programs. And computers are an important part of training, including interactive learning
systems with videotapes of the right and wrong ways to do the steps of the job. ( Jeffrey K.
Liker & David P. Meier, 2007, P24) It eliminated a lot of training methods among individual
trainers like exceptional trainers.
4. Performance appraisal
Toyota focuses on total system efficiency rather than on individual efficiency. It is important
to look beyond the individual’s work during the evaluation of the standardised work and to
examine the total picture in the workplace. (Jeffrey K. Liker & David P. Meier, 2007, P141)
Toyota encourages the isolation of variation within the work processes. It has a structure in
place to allow the value-adding team associates to focus on their own tasks and not be
distracted by other issues. (Jeffrey K. Liker & David P. Meier, 2007, P141) And this attach
great importance in evaluating performance.
Now the secret of Toyota’s success is attributed to the fact that it hires only the best workers.
Because of other extenuating circumstances, Toyota is able to pay higher wages and benefits
and thus attract and retain exceptional employees. Again, there is an element of truth in this
excuse. Toyota does pay good wages, but not the highest in the industry or across the nation.
(Jeffrey K. Liker & David P. Meier, 2007, P12, P13)
6. Employee separation:
According to Besser (1995, p. 391), Toyota has a history of not laying off their employees,
they doing this by practicing Lean Management, it means that they only hire the best people
available, work a little harder in good times, but in bad times they would not have to lay-off
or fire any employees.
For example, Besser (1995, p. 391) told a story of a worker who was injured on the assembly
line, but instead of firing him, Toyota retrained him and gave him an office job. This practice
would make employees trust and work harder for the company.
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Leading in Toyota
There are several external and internal factors to consider as Toyota’s management use
leading. Focus on the four functions are: globalization, technology, innovation, and diversity.
In the Toyota production system and the Toyota way, let us know it is to provide employees a
tool, so that they can continue to improve the working system, Toyota model just leaned
more on employees, rather than reduce dependence on staff. Toyota way is a kind of culture,
rather than just a set of improved efficiency and improvement tools and methods, you must
rely on employees to reduce inventory, find out the hidden problem, and solve the problem,
employees have a sense of urgency, purpose, and the concept of teamwork, because if they
can’t solve the problem, inventory shortage situation occurs. During the daily operations,
engineers, suppliers and supervisors, and workers, are all involved in problem solving and
continuous improvement work, over time, everyone was trained to be more effective to solve
the problem. Facilitate and strengthen the team cooperation spirit, must rely on the necessary
help, training and reward. To encourage employees to properly maintain and continuous
improvement process and the workplace environment.
In Toyota, executives often encourage and help their employees. In any staff when in trouble,
both the boss and colleagues, they will go to provide the corresponding help to get the job
done. Because they think the team spirit is important. This not only allowed them to finish the
work smoothly, also make them in leading to high personal accomplishment. And technology
allows management to be leaders and to motivate their employees by sending congratulations
e-mails to the top sales employee or by telling them what they have earned if they sell a
specific amount of vehicles. Motivating employees helps keep the morale strong, and the
Internet helps communicate motivational messages across different countries and
The important points of leading not only inspiring employees, but also communication with
customer. In Toyota, they figured out to develop a new customer is equal to six old
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customers. To keep an old customer, by loyalty. Loyalty will be made for our customers
bring more publicity, this is the most effective free advertising. A large number of cases and
the fact that the wealth of the enterprise’s bring for loyalty customer. With a old customers
have a good communication is very important. However how to develop new customer? The
manager organizes information using technology such as the Internet, which the customers
can search more information regarding their vehicles and their prices. They also organize
information for the employees so they can see new information which is out, such as the
recall on the Toyota vehicles. Then they can tell their customers what to expect and how to
handle the situation.
In Toyota company, managers give information to employees and customers. At the same
time they will get employees and customer feedback from various aspects. This way make
the managers understand the difficulty of employees and the company is what aspects need to
improve and progress. The conversation with customer to understand customer needs, how to
do let customer satisfaction products. You can also change many of the after-sales service is
the need to increase.
Our Most Valuable Asset – Our Employees
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Toyota believes in the basic philosophy of Mutual Trust and Respect and recognises
employees as the most valuable assets for the company. We strive to provide stable
employment, maintain and improve working conditions balanced with the growth of the
By following the Toyota Way - the company's fundamental DNA, we have been able to
transcend language and nationality. The Toyota Way is supported by two pillars:
o Continuous Improvement: Our constant drive to put forth our best ideas and efforts.
o Respect for People: We respect people and believe the success of our business is
created by individual efforts and good team work.
o From Human Resources Management perspective, we strive to:
o Create a workplace environment where employees can work with their trust in the
o Create a mechanism for promoting constant and voluntary initiative in continuous
o Fully committed and thorough human resources development.
o Promote teamwork aimed at pursuit of individual roles and optimisation of the entire
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Planning process in Toyota
Toyota is the third-largest auto manufacturer in the world, behind General Motors and Ford,
with global vehicle sales of over six million per year in 170 countries. However, Toyota is far
more profitable than any other auto manufacturer. Auto industry analysts estimate that
Toyota will pass Ford in global vehicles sold in 2005, and if current trends continue, it will
eventually pass GM to become the largest automaker in the world.
What is the secret of Toyota success?
The incredible consistency of Toyota s performance is a direct result of operational
excellence. Toyota has turned operational excellence into a strategic weapon. Toyota s
continued success at implementing these tools stems from a deeper business philosophy
based on its understanding of people and human motivation. Its success is ultimately based
on its ability to cultivate leadership, teams, and culture, to devise strategy, to build supplier
relationships, and to maintain a learning organization (Liker, 2004).
Fig.: Toyota Planning Process
According to the book wrote by Jeffrey K. Liker, Ph.D., is Professor of Industrial and
Operations Engineering at the University of Michigan we can comprehend what have made
Toyota success. They have incredibly applied planning process to their operation step by
step. From setting goal, develop commitment, develop effective action plan, track progress
toward goal achievement, maintain flexibility.
1. Setting goal
Toyota has identified specific company is to achieve simultaneously high quality, low cost,
short lead times, and flexibility.
2. Develop commitment
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Then, the leaders try to motivate their employees because goals don’t encourage them to
worker harder or smarter. Thus, they were armed with their shop-floor knowledge, dedicated
engineers, managers, and workers who would give their all to help the company succeed.
3. Develop effective action plan
They move to next step of planning is to develop effective action plans to their objectives.
Toyota lists the specific steps (how), people (who), resources (what) and time period (when)
for accomplishing a goal.
4. Track progress toward goal achievement
After completing second step, they use the method of tracking progress toward goal
achievement to get more motivating and rewarding and then gather and provide performance
feedback to make adjustment in efforts, direction and strategy that will lead to dramatic
increase in performance.
5. Maintain flexibility
Finally is maintaining flexibility, which is the key to their operations. They learned from
experiences and failures and improve them to satisfy their customers and get the best
They accept challenges with a creative spirit and the courage to realize their own dreams
without losing drive or energy. They approach their work vigorously, with optimism and a
sincere belief in the value of our contribution. Furthermore, they strive to decide their own
fate. They act with self-reliance, trusting in their own abilities. They accept responsibility for
their conduct and for maintaining and improving the skills that enable them to produce added
value. Toyota understands that in a typical business system, meeting and exceeding the
customer’s requirements is the task of everyone within an organization. And they
comprehended the definition of customer to include both internal and external customers.
Each person or step in a production line or business process was to be treated as a customer
and to be supplied with exactly what was needed, at the exact time needed.
Understanding Toyota’s success and quality improvement systems does not automatically
mean you can transform a company with a different culture and circumstances. Toyota can
provide inspiration, demonstrate the importance of stability in leadership and values that go
beyond short-term profit, and suggest how the right combination of philosophy, process,
people, and problem solving can create a learning enterprise. I believe all manufacturing and
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service companies that want to be successful in the long term must become learning
enterprises. Toyota is one of the best models in the world. Though every company must find
its own way and learn for itself, understanding the Toyota Way can be one giant step on that
journey. (Liker & Meier, 2007)
Fig: Planning Horizons of Toyota
TKM: Toyota in India
Toyota Kirloskar Motor Private Limited is a subsidiary of Toyota Motor Corporation of
Japan (with Kirloskar Group as a minority owner), for the manufacture and sales of Toyota
cars in India. It is currently the 4th largest car maker in India after Maruti Suzuki, Hyundai,
The company Toyota Kirloskar Motor Private Limited (TKMPL) according to its mission
statement aims to play a major role in the development of the automotive industry and the
creation of employment opportunities, not only through its dealer network, but also through
ancillary industries with a business philosophy of "Putting Customer First".
Globally, Toyota has indicated a strong and diverse commitment to the pursuit of
harmonious growth through its technically advanced and environment-friendly products.
There have been relentless efforts in the crucial fields of mobility, city transportation,
resources, society and environment, through research & development.
Protecting the environment has always been a priority at TKM, starting with the eco-
friendly engines that are manufactured for the Toyota vehicles, to the advanced technology
that is used for purification or recycling of waste water at the plant. Apart from this, the
plant at Bidadi, Karnataka, is surrounded by a green belt, meets high environmental
standards and has achieved the ISO 14001 certification in its very first year of operations.
Quality is ensured in every vehicle that rolls out of Toyota Kirloskar Motor, through in-built
audits at every process of the system. The company's operational excellence is based on the
20 | S e m i n a r r e p o r t
improvement tools and methods developed by Toyota under the Toyota Production System
(TPS), greatly emphasizing superlative quality and minimal waste.
In line with Toyota's growing comfort with its India operations, the company set up Toyota
Kirloskar Auto Parts (TKAP), which commenced production of transmissions in May 2004,
for its global requirements. Another initiative is the Toyota Techno Park India (TTPI), a
non-profit industrial infrastructure company aimed at boosting local industries and related
Setting benchmarks for the automobile industry, the manufacturing facility consists of 4
divisions (shops) – Press, Weld, Paint and Assembly.
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Fig.: History of Toyota in India
1. Delight our customers through innovative products, by utilising advanced technologies and
2. Ensure growth to become a major player in the Indian auto industry and contribute to the
Indian economy by involving all stakeholders.
3. Become the most admired and respected company in India by following the Toyota Way.
4. Be a core company in global Toyota operations.
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1. Practise ethics and transparency in all our business operations.
2. Touch the hearts of our customers by providing products and services of superior quality at
a competitive price.
3. Cultivate a lean and flexible business model throughout the value chain by continuous
4. Lead the Toyota global operations for the emerging mass market.
5. Create a challenging workplace which promotes a sense of pride, ownership, mutual trust
6. Create an eco-friendly company in harmony with nature and society.
THROUGH THESE ACTIVITIES ESTABLISH A SUPERIOR BRAND IMAGE IN INDIA.
Fig.: Marketshare of TKM in India
TKMPL's current plant at Bidadi (near Bengaluru), Karnataka is spread across 432 acres and has a
capacity of 80,000 vehicles per annum.
TKMPL's second manufacturing plant on the outskirts of Bangalore, Karnataka has a capacity of
70,000 vehicles per annum. Both plants have a combined capacity of 150,000 vehicles per annum.
On 16 March 2011, it announced that it was increasing production to 210,000 vehicles per annum
due to increase in demand for its models especially the Etios and Fortuner.
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With effect from June 1, 2012, Toyota Kirloskar Motor will be increasing the prices of Etios diesel
and Innova by 1 per cent and Fortuner and Etios Liva diesel by 0.5 per cent. The price hike is on
account of the weakening of Rupee. Toyota announced that Etios sedan and the Liva hatchback has
posted sales of over one lakh units, hence Toyota is all set for giving its production a big
boost.Toyota Kirloskar Motor (TKM) plans to hike the production capacity of its Etios series
models by 75% by early 2013. Toyota Kirloskar Motors would launch its motor racing series in 3
cities in India next year.
On 16 March 2014, Toyota Kirloskar Motor temporarily suspended the production at two of its
assembly plants in Bidadi,Karnataka whose production capacity was 310,000 units annually and has
employee strength of 6,400. Cause for the shutdown was failure to reach an agreement with the
union over the issue of wages, deliberate stoppages of the production line by certain sections of the
employees and abusing & threatening of supervisors thereby disrupting the production for the past
25 days. Toyota Kirloskar Motor announced on 21 March 2014 to lift the lockout at the plants
effective from March 24, 2014 with subject to a acceptance of a service condition which requires all
the employees signing a undertaking on good conduct. On 22 April 2014, employees called off the
strike after 36 days of standoff and resumed full operations.
Toyota Product line in India
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o Toyota Corolla (launched 2003)
o Toyota Innova (launched 2005)
o Toyota Etios (launched 2010)
o Toyota Etios Liva (launched 2011)
o Toyota Fortuner (launched 2009)
o Toyota Camry (launched 2002)
o Toyota Land Cruiser Prado (launched 2004)
o Toyota Land Cruiser (launched 2009)
o Toyota Prius (launched 2010)
o Toyota Qualis (1999-2004)
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Toyota Production System at TKM
Kaizen (改善) Japanese for "improvement" or "change for the best", refers to philosophy or
practices that focus upon continuous improvement of processes in manufacturing, engineering,
business management or any process. It has been applied in healthcare, psychotherapy, life-
coaching, government, banking, and other industries. When used in the business sense and applied
to the workplace, kaizen refers to activities that continually improve all functions, and involves all
employees from the CEO to the assembly line workers. It also applies to processes, such as
purchasing and logistics,that cross organizational boundaries into the supply chain. By improving
standardized activities and processes, kaizen aims to eliminate waste (lean manufacturing). Kaizen
was first implemented in several Japanese business after the Second World War Second World
War, influenced in part by American business and quality management teachers who visited the
country. It has since spread throughout the world and is now being implemented in environments
outside of business and productivity.
The concept Kaizen is a part of Toyota Production System and came into existence at TMC. Other
concepts like Total Quality Management, Just-in Time, Lean Production and Six-Sigma are related
Toyota Production System (TPS) combines a balanced mix of human resources and robot
technology for increased productivity. This system involves two important principles:
Jidoka - building quality into the production system and ensuring damaged parts do not proceed to
the next stage.
Just In Time (JIT) - making only what is needed, when it's needed, and only as much as is needed.
Eco Factory: As part of our sustainable plant initiatives, the plant is designed with an Eco-Factory
concept to maximise the output with minimum input by creating a highly optimised manufacturing
process. From our energy efficient servo press to our state-of-the-art global body line, we are able
to reduce process steps to further increase our energy efficiency. We also use water borne paint and
a water recycling system that recycles 40% waste water back into the process, thereby leading to
higher resource optimisation and contributing towards a greener society
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In our drive to build the perfect automobile, selecting the components that go in to it becomes a key
criterion for success. We at TKM believe that an innovative, capable and cost competitive supplier
base is critical to our viability.
We perceive suppliers and dealers as equal stakeholders in our drive towards sustainability.
Supplier enhancement initiatives are designed to bring a sense of partnership in all our endeavours.
Industry Academic Relations
To ensure that only the highest level of automotive professionals work on Toyota vehicles, Toyota
has partnered with industrial and technical training institutes all across India to create the Toyota
Technical Education Program (T-TEP). Over 3000 students from these institutes have benefited
from this Program so far, with over 600 students undergoing training on the latest automotive
technology and service techniques every year. The curriculum of this Program includes on-the-job
training at Toyota dealerships.
With the help of T-TEP, training institutes will be able to develop a highly skilled technical
workforce, with greater career prospects in the automotive service industry. The skill levels of
manpower currently available remain quite low, and professionals are not trained for the repair and
diagnostics of the latest models of vehicles available in the market. T-TEP aims to correct this
imbalance by partnering with local training institutes and industry bodies. These highly qualified
students then have the option to join the Toyota Dealers, where they get the opportunity to
consistently provide “Q Service” to our customers.
T-TEP was introduced in 2006 at Delhi in General Repair category. In the year 2009, The program
has been extended to Automotive Body Repair & Automotive Paint Repair. This is first of its kind
curriculum in India in partnership with State Government which provides the students with unique
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skills in automotive accident repair.
T-TEP Program is fast becoming a benchmark in imparting automotive training and looking at the
immense benefits to the automotive service industry and the society at large.
Corporate social responsibility
Commitment to Society
As a responsible corporate citizen, Toyota Kirloskar Motor is constantly working
towards the development of people, communities, and the earth at large.
TKM's efforts over the years towards developing a prosperous society include
rebuilding a local residential school, construction of two water tanks in rural
Bangalore that benefit around 80,000 people; reconstruction of a local police station; awareness on
environmental conservation for local schools; distribution of school materials like bags, books,
computers, and chairs to under-privileged students; and donation of funds towards rehabilitating
the victims of the Tsunami and the Gujarat earthquake.
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TKM believes and practices the theory of sustainable development. Our operations are
standardised in a way so as to cause least impact on the environment. TKM had laid
greater stress on Landscaping activities to develop greenary around. The landscaping
activities add a bedight to the company. TKM has undertaken a plantation program
wherein 3000 plants were planted on the boundary.
Environment, Technology & Employment
Toyota is committed to manufacture technically advanced and environment friendly
products. Our plant at Bidadi surrounded by a greenbelt, meets high environmental
standards and has also obtained ISO 14001 certification on 26th April 2001.
Toyota has always believed that the best way to serve society is by providing
automobiles that will not only make people happy, but will also be environment
friendly. Wastewater at TKM is collected and purified to a level that can be used for
fish ponds and rice fields.
To realise high quality vehicle production at reasonable prices, Toyota seeks the best
balance between human resources and advanced robot technology. As technology
constantly evolves and employees improve themselves through daily work and training
programs, Toyota's production process improves.
Green Supply Chain
Toyota Kirloskar Motor believes in bringing Cycle of Nature and Cycle of Industry
together to live in harmony. Along with the growth of the company, we understand
that sustaining and improving the present environment is equally important and our
prime responsibility. As a part of this, TKM involves with all its stakeholders from
the Design to Disposal process of the product manufactured.
Supply Chain plays a vital role in this journey towards building a Sustainable & eco
friendly company. All parts and raw materials required for manufacturing an
automobile are sourced from various suppliers based at different geographical
locations. The environment footprint of manufacturing and transportation of parts
and raw materials will always be significant. Hence to achieve environment
sustainability, we need to develop a Green Supply Chain, which will have a positive
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impact on the environment. Realizing this, Toyota has brought out the Green
Toyota Green Purchasing Guidelines (GPG)
“Green Purchasing Guidelines” is a Toyota Global initiative which serves as a
direction to enhance supplier’s environment activities. Based on Global guidelines,
TKM launched its Green Purchasing Guidelines in 2007 to its suppliers.
It is revised every 5 years to enhance the supplier eco initiatives.
During the environment month Celebration 2013 TKM launched its New Green
TKM started the Toyota Safety Education Program (TSEP) - an interactive learning
programme designed to teach school children about road safety in the year 2007. It
features interactive courses, traffic booths, an animated film, computer and board
games, and an informative website.
The Toyota Technical Training Institute (TTTI) was started in the year 2007 to
impart technical know-how about automobiles, or Monozukuri (skilled
manufacturing), to students who have the talent, but not the means, to pursue higher
studies. This residential school aims to develop a sound knowledge base, individual
skill sets, a strong body, and a positive attitude in every student.
TKM in conjunction with Toyota Motor Corporation and its nationwide dealer
network has initiated a unique training initiative - The Toyota Technical Education
Program (TTEP). The special training module, launched in 2006, aims at enhancing
the skill sets and employability of the students at the ITIs in the country.
Conforming to its eco-commitment, Toyota, together with NDTV, conducted a host
of eco-initiatives that culminated in India's first 24-hour live TV programme -
Greenathon. The three-year nationwide environment campaign aims at creating
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awareness about issues that threaten the future of our planet. With an overwhelming
response from India's leading corporate houses, top Bollywood stars, musicians,
environmentalists, NGOs and educational institutions, Greenathon Seasons I and II
have been tremendously successful.
Besser, T. (1995, May). Rewards and Organizational Goal Achievement: A Case Study of
Toyota Motor Manufacturing in Kentucky. Journal of Management Studies, p. 383-399.
Liker, J. K., & Meier, D. P. (2007). Toyota Talent – Developing Your People The Toyota
Way. Chicago, United States of America: McGraw-Hill. doi: 10.1036/0071477454
Liker, J. K. (2004). The Toyota Way: 14 Management Principles from the World’s Greatest
Manufacturer. Madision, Wisconsin, USA: McGraw-Hill.