Value chain and competitive advantage of toyota


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Value chain and competitive advantage of toyota

  2. 2. ToyotaToyota Motor Corporation (トヨタ自動車株式会社Toyota Jidōsha KK?, IPA: [toꜜjota])/tɔ ɪ ˈoʊ tə/, abbreviated TMC, is a Japanese multinationalautomaker headquartered inToyota, Aichi, Japan. In 2010, Toyota employed 325,905 people worldwide, and was thethird-largest automobile manufacturer in 2011 by production behind General Motors andVolkswagen Group. Toyota is the eleventh-largest company in the world by revenue. In July2012, the company reported it had manufactured its 200-millionth vehicleThe company was founded by Kiichiro Toyoda in 1937 as a spinoff from his fatherscompany Toyota Industries to create automobiles. Three years earlier, in 1934, while still adepartment of Toyota Industries, it created its first product, the Type A engine, and, in 1936,its first passenger car, the Toyota AA. Toyota Motor Corporation group companies areToyota (including the Scion brand), Lexus, Daihatsu, and Hino Motors, along with several"nonautomotive" companies. TMC is part of the Toyota group, one of the largestconglomerates in the world.Corporate governanceToyota is headquartered in Toyota City, Aichi. The main headquarters of Toyota is located ina three story building in Toyota. As of 2006 the head office has the "Toyopet" Toyota logoand the words "Toyota Motor". The Toyota Technical Center, a 14-story building, and theHonsha plant, Toyotas second plant engaging in mass production and formerly named theKoromo plant, are adjacent to one another in a location near the headquarters. Vinod Jacobfrom The Hindu described the main headquarters building as "modest". In 2013 companyhead Akio Toyoda reported that it had difficulties retaining foreign employees at theheadquarters due to the lack of amenities in Toyota.Its Tokyo office is located in Bunkyo, Tokyo. Its Nagoya office is located in Nakamura-ku,Nagoya. In addition to manufacturing automobiles, Toyota provides financial servicesthroughits Toyota Financial Servicesdivision, and also builds robots.Akio Toyoda, CEO of Toyota, at the annual results press conference, May 11, 2011
  3. 3. Toyotas global network:Red - JapanGreen - Official dealership(s) present.Blue - Localized manufacturing plant(s)Light Blue - Regional headquarters (HQ)Dark Blue - Regional headquarters (HQ) and localized manufacturing plantsTypical breakdown of sales by regionPresident of Toyota Motor Company:Rizaburo Toyoda (1937–1941)Kiichiro Toyoda (1941–1950)Taizo Ishida (1950–1961)Fukio Nakagawa (1961–1967)Eiji Toyoda (1967–1981)In 1981, Toyota Motor Co., Ltd. announced plans to merge with its sales entity Toyota MotorSales Co., Ltd. which existed as separate companies since 1950 as a prerequisite forreconstruction in postwar Japan. Shoichiro Toyoda took the helm at Toyota Motor Sales inpreparation for the consummation of the merger which would occur in 1982 with Shoichirosucceeding his uncle Eiji as the President of the combined organization, now known asToyota Motor Corporation.President of Toyota Motor Corporation:Eiji Toyoda (1981)Shoichiro Toyoda (1982–1992)CEO of Toyota Motor Corporation:Dr. Tatsuro Toyoda (1992–1995)
  4. 4. Hiroshi Okuda (1995–1999)Fujio Cho (1999–2005)Katsuaki Watanabe (2005–2009)Akio Toyoda (2009–present)Chairman of Toyota Motor Corporation:Shoichiro Toyoda (1992–1999)Hiroshi Okuda (1999–2006)Fujio Cho(2006–present)HistoryToyota was started in 1933 as a division of Toyoda Automatic Loom Works devoted to theproduction of automobiles under the direction of the founders son, Kiichiro Toyoda. Its firstvehicles were the passenger car and the in 1935. The Toyota Motor Co. was established as anindependent company in 1937. In 2008, Toyotas sales surpassed General Motors, makingToyota number one in the world.Mass production of Toyoda automated loom, displayed at the Toyota Museum in Nagakute-cho, Aichi-gun, Aichi Pref. JapanIn 1924, Sakichi Toyoda invented the Toyoda Model G Automatic Loom. The principle ofJidoka, which means the machine stops itself when a problem occurs, became later a part ofthe Toyota Production System. Looms were built on a small production line. In 1929, thepatent for the automatic loom was sold to a British company, generating the starting capitalfor the automobile development.Toyoda Standard Sedan AA 1936
  5. 5. Vehicles were originally sold under the name "Toyoda" (トヨダ), from the family name ofthe companys founder, Kiichirō Toyoda. In April 1936, Toyodas first passenger car, theModel AA, was completed. The sales price was 3,350 yen, 400 yen cheaper than Ford or GMcars.House of Toyota founder Kiichiro Toyoda, near Toyota CityIn September 1936, the company ran a public competition to design a new logo. Of 27,000entries, the winning entry was the three Japanese katakana letters for "Toyoda" in a circle.But Risaburō Toyoda, who had married into the family and was not born with that name,preferred "Toyota" (トヨタ) because it took eight brush strokes (a lucky number) to write inJapanese, was visually simpler (leaving off the diacritic at the end) and with avoicelessconsonant instead of a voiced one (voiced consonants are considered to have a"murky" or "muddy" sound compared to voiceless consonants, which are "clear").Inside the house of Toyota founder Kiichiro Toyoda, near Toyota CitySince "Toyoda" literally means "fertile rice paddies", changing the name also prevented thecompany from being associated with old-fashioned farming. The newly formed word wastrademarked and the company was registered in August 1937 as the "Toyota MotorCompany".First-generation Toyopet Crown Model RSD (1955/1 – 1958/10)
  6. 6. Toyota at the Rally Dakar, 1992From September 1947, Toyotas small-sized vehicles were sold under the name "Toyopet"(トヨペット). The first vehicle sold under this name was the Toyopet SA, but it alsoincluded vehicles such as the Toyopet SB light truck, Toyopet Stout light truck, ToyopetCrown, Toyopet Master, and the Toyopet Corona. The word "Toyopet (Japanese article)" wasa nickname given to the Toyota SA due to its small size, as the result of a naming contest theToyota Company organized in 1947. However, when Toyota eventually entered theAmerican market in 1957 with the Crown, the name was not well received due toconnotations of toys and pets.[28]The name was soon dropped for the American market, butcontinued in other markets until the mid-1960s.By the early 1960s, the US had begun placing stiff import tariffs on certain vehicles. Thechicken tax of 1964 placed a 25% tax on imported light trucks.[29]In response to the tariff,Toyota, Nissan Motor Co. and Honda Motor Co. began building plants in the US by the early1980s.[29]With over 30 million sold, the Corolla is one of the most popular and best selling cars in theworld.Toyota received its first Japanese Quality Control Award at the start of the 1980s and beganparticipating in a wide variety of motorsports. Due to the 1973 oil crisis, consumers in thelucrative US market began turning to small cars with better fuel economy. American carmanufacturers had considered small economy cars to be an "entry level" product, and theirsmall vehicles employed a low level of quality to keep the price low.In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, theToyota Motor Corporation. Two years later, Toyota entered into a joint venture with GeneralMotors called the New United Motor Manufacturing, Inc, NUMMI, operating an automobile-manufacturing plant in Fremont, California. The factory was an old General Motors plant thathad been closed for two years. Toyota then started to establish new brands at the end of the1980s, with the launch of their luxury division Lexus in 1989.
  7. 7. In the 1990s, Toyota began to branch out from producing mostly compact cars by addingmany larger and more luxurious vehicles to its lineup, including a full-sized pickup, the T100(and later the Tundra); several lines of SUVs; a sport version of the Camry, known as theCamry Solara; and the Scion brand, a group of several affordable, yet sporty, automobilestargeted specifically to young adults. Toyota also began production of the worlds best-sellinghybrid car, the Prius, in 1997.With a major presence in Europe, due to the success of Toyota Team Europe, the corporationdecided to set up Toyota Motor Europe Marketing and Engineering, TMME, to help marketvehicles in the continent. Two years later, Toyota set up a base in the United Kingdom,TMUK, as the companys cars had become very popular among British drivers. Bases inIndiana, Virginia, and Tianjin were also set up. In 1999, the company decided to list itself onthe New York and London Stock Exchanges.In 2001, Toyotas Toyo Trust and Banking merged with two other banks to form UFJ Bank,which was accused of corruption by Japans government for making bad loans to allegedYakuza crime syndicates with executives accused of blocking Financial Service Agencyinspections.[30]The UFJ was listed among Fortune Magazines largest money-losingcorporations in the world, with Toyotas chairman serving as a director.[31]At the time, theUFJ was one of the largest shareholders of Toyota. As a result of Japans banking crisis, UFJmerged with the Bank of Tokyo-Mitsubishi to become the Mitsubishi UFJ Financial Group.In 2002, Toyota managed to enter a Formula One works team and establish joint ventureswith French motoring companies Citroën and Peugeot a year after Toyota started producingcars in France.Toyota ranked eighth on Forbes 2000 list of the worlds leading companies for the year2005[32]but slid to 55 for 2011.[33]The company was number one in global automobile salesfor the first quarter of 2008.[34]In 2007, Toyota released an update of its full-size truck, the Tundra, produced in twoAmerican factories, one in Texas and one in Indiana. "Motor Trend" named the Tundra"Truck of the Year," and the 2007 Toyota Camry "Car of the Year" for 2007. It also beganthe construction of two new factories, one to build the RAV4 in Woodstock, Ontario, Canada,and the other to build the Toyota Prius in Blue Springs, Mississippi, USA. This plant wasoriginally intended to build the Toyota Highlander, but Toyota decided to use the plant inPrinceton, Indiana, USA, instead. The company has also found recent success with its smallermodels—the Corolla and Yaris—as gasoline prices have risen rapidly in the last few years.From November 2009 through 2010, Toyota recalled more than 9 million cars and trucksworldwide in several recall campaigns, and briefly halted production and sales.[35]. Toyotainitiated the recalls, the first two with the assistance of the U.S. National Highway TrafficSafety Administration (NHTSA), after reports that several vehicles experienced unintendedacceleration.Main article: 2009–2010 Toyota vehicle recallsIn 2011, Toyota, along with large parts of the Japanese automotive industry, suffered from aseries of natural disasters. The 2011 Tōhoku earthquake and tsunami led to a severedisruption of the supplier base and a drop in production and exports. [36][37]Severe flooding
  8. 8. during the 2011 monsoon season in Thailand affected Japanese automakers that had chosenThailand as a production base. Toyota estimated to have lost production of 150,000 units tothe tsunami and production of 240,000 units to the floods.In October 2012, Toyota announced a recall of 7.43 million vehicles worldwide to fixmalfunctioning power window switches, the largest recall since that of Ford Motor Companyin 1996. The move came after a series of recalls between 2009 and 2011 in which it pulledback around 10 million recalls amidst claims of faulty mechanics.[38]Company strategyToyotas management philosophy has evolved from the companys origins and has beenreflected in the terms "Lean Manufacturing" and Just In Time Production, which it wasinstrumental in developing.[48]Toyotas managerial values and business methods are knowncollectively as the Toyota Way.In April 2001, Toyota adopted the "Toyota Way 2001", an expression of values and conductguidelines that all Toyota employees should embrace. Under the two headings of Respect forPeople and Continuous Improvement, Toyota summarizes its values and conductguidelines with the following five principles:[49]ChallengeKaizen (improvement)Genchi genbutsu (go and see)RespectTeamworkAccording to external observers, the Toyota Way has four components:[50]1. Long-term thinking as a basis for management decisions2. A process for problem-solving3. Adding value to the organization by developing its people4. Recognizing that continuously solving root problems drives organizational learningThe Toyota Way incorporates the Toyota Production System.COMPETIIVE ADVANTAGECost LeadershipI am constantly coming up with situations where people just don’t understand the costleadership strategy. People tend to think of it as price competitiveness, which immediatelyintroduces the concept of price wars. Cost leadership can assist people to be pricecompetitive, but it has nothing to do with price competition. It has everything to do withbeing able to produce a product of similar quality to that of a competitor at a lower cost.
  9. 9. The other day a guy told me how he had finally bought out a competitor that had been aconstant pain in the side to his business. When he bought it with the intention of integrating itinto his own business he discovered that the competitor was more profitable than hiscompany.The reason was that it was able to produce the same or similar products more cheaply. It wasable to charge the same prices as its competitors, but the margins were better because of thefact that the products cost less to produce.So, this guy pays a premium for the competitor with the intention of integrating the businessinto his own.I suggested to this businessman that perhaps if he had understood the concept of costleadership and had focused his production around that concept, he might have been morecompetitive with a greater market share with the result that he may not have had to buy oneof his competitors. It suddenly dawned on him that cost leadership was a powerfulmanagerial tool that enables you to get on top of your competitor. Not only do you becomemore profitable but you are not at a competitive disadvantage.Another aspect of cost leadership is its compounding effect. It is just like compound interest.Every time you produce something at a cost lower than that of your competitor, it is money inthe bank and gradually the financial benefits accumulate – so that years of cost leadership endup with giving you a serious bank account, which enhances your competitive ability.However, you have to be aware of the pitfalls. Enter the bean counter who calculates thebenefits of cost cutting to meet short-term goals. The moment short-term cost cutters come onthe scene, a number of bad things happen. The first and most serious is that good peopleleave and generally go to the opposition. The next thing is that attempts are made to lengthenthe productive life of equipment. Once again, this has short-term benefits but damages thelonger-term competitiveness of the business. Maintenance and product quality issues start tocome into play and more time is spent in addressing these issues than on simply getting theproduct out the door.Cost leadership involves the development of systemic processes that eliminate waste, involvethe passion of the worker in the enterprise and concentrates on constant improvement. Overtime, each little improvement compounds and all of the little improvements in processaggregate to massive competitive advantages.
  10. 10. Cost leadership is built around understanding the value chain and constantly identifyingelements within that chain where improvements can be achieved. GE and Motorola wentheavily into Six Sigma. The Japanese put more emphasis on staff feedback (it is said byToyota in Japan that at their Nagoya factory, they receive 500,000 improvement suggestionsa year from their employees and act on most of them).Toyota is a fantastic story of cost leadership. We are constantly hearing about how theChinese can produce manufactured goods cheaper than most people. Well, the Chinese carmanufacturer Denway Motors, which made the ranks of Forbes 2000 in 2004, has now fallenout of that esteemed company. One of the main reasons is that it can’t compete with Toyotabecause Toyota can produce good cars at a cost lower than its Chinese competitor.So, there you go, just think about cost leadership and give yourself a mark as to how you aregoing. It you aren’t travelling well, you might have to spend a lot of money to acquire yourcompetitor. Then, guess what! You might find that the combined entity still has the same coststructure as your old uncompetitive model.Toyota Differentiation StrategyToyota Motor Corp. was the largest automaker in the world as of 2011, and a key componentof the companys success was a product differentiation strategy that included introducing ahighly efficient manufacturing model to increase the performance of its vehicles and offer carbuyers increased value.1. Backgroundo Toyota was able to achieve a leadership position in the North American automanufacturing market, surpassing General Motors and others, by focusing oncontinuously finding ways to reduce production costs. The company alsooptimized its processes to accelerate the various phases of production -- frominitial design to production -- so that it could introduce new models faster thanits competitors.2. Toyota Production Systemo The Toyota Production System, introduced in the 1960s, became a model forvehicle manufacturing, though other automakers struggled to emulate thesystem. Based on the concepts of just-in-time production, the TPS builtvehicles based on immediate market demands rather than in anticipation offuture possible demands. This was designed to cut costs and eliminate waste.o3. Considerationso Another key part of Toyotas differentiation strategy is the fact that thecompany was able to produce vehicles for many different market segmentsand price ranges. In the sport utility vehicle class alone, Toyota developed theLand Cruiser, 4Runner, Rav4 and Sequoia, each tailored to different priceranges.
  11. 11. TOYOTA INNOVATION STRATEGYCharacteristics of Oil Alternative FuelsElectricity, hydrogen, biodiesel and natural gas are good alternatives for fossil fuel, but eachsource has their own disadvantages. The left figure shows compares the energy density ofeach alternativefuel.Even with the latest lithium ion battery technology, only 1/50 of the energy required bygasoline is used. Although powering a motor with electricity is much more efficient than aninternal combustion engine, liquid fuels such as gasoline are still advantageous because oftheir high volume in energy density. The figure below shows the difference in energy densitybetween electricity and gasoline but does notindicate correlation in cruising range.The cost of batteries also poses a major challenge.In an effort to attain the 2030 InnovativeTechnology Plan issued by Japans Ministry of Economy, Trade and Industry, we have barelyreached the status to be at a competitive level with gasoline powered vehicles.
  12. 12. Toyota takes measures in environmental issuessurrounding vehiclesFor more improvements in efficiency, Toyota proactively manages powertrain efficiency,reduces vehicle load, and controls energy management by integration of fuel-savingtechnologies such as charge control, idling stop etc..In Pursuit of the Ultimate Eco-carToyota has a long history of continuous improvement when it comes to conventional engines,including lean-burn gasoline engines, direct injection gasoline engines and common raildirect-injection diesel engines, as well as engines modified to use alternative fuels, such ascompressed natural gas (CNG) or electricity (for Electric Vehicle). In December 2002, welaunched limited sales of the Toyota FCHV, a Fuel Cell Vehicle that runs on high-pressurehydrogen.Engineers may disagree about which fuel or car propulsion system is best, but they do agreethat hybrid technology is the core for eco-car development. We develop these keytechnologies in-house to reduce costs and rapidly commercialize their application.
  13. 13. Find out more about Toyotas eco-cars:Hybrid VehiclePlug-in Hybrid VehicleElectric VehicleFuel Cell VehicleToyota Operational Effectiveness Is Not StrategyFor almost two decades, managers have been learning to play by a new set of rules.Companies must be flexible to respond rapidly to competitive and market changes. Theymust benchmark continuously to achieve best practice. They must outsource aggressively togain efficiencies. And they must nurture a few core competencies in race to stay ahead ofrivals.Positioning—once the heart of strategy—is rejected as too static for today’s dynamic marketsand changing technologies. According to the new dogma, rivals can quickly copy any marketposition, and competitive advantage is, at best, temporary.But those beliefs are dangerous half-truths, and they are leading more and more companiesdown the path of mutually destructive competition. True, some barriers to competition arefalling as regulation eases and markets become global. True, companies have properlyinvested energy in becoming leaner and more nimble. In many industries, however, whatsome call hypercompetition is a self-inflicted wound, not the inevitable outcome of achanging paradigm of competition.The root of the problem is the failure to distinguish between operational effectiveness andstrategy. The quest for productivity, quality, and speed has spawned a remarkable number ofmanagement tools and techniques: total quality management, benchmarking, time-basedcompetition, outsourcing, partnering, reengineering, change management. Although theresulting operational improvements have often been dramatic, many companies have beenfrustrated by their inability to translate those gains into sustainable profitability. And bit bybit, almost imperceptibly, management tools have taken the place of strategy. As managerspush to improve on all fronts, they move farther away from viable competitive positions.Operational Effectiveness: Necessary but Not SufficientOperational effectiveness and strategy are both essential to superior performance, which,after all, is the primary goal of any enterprise. But they work in very different ways.A company can outperform rivals only if it can establish a difference that it can preserve. Itmust deliver greater value to customers or create comparable value at a lower cost, or doboth. The arithmetic of superior profitability then follows: delivering greater value allows acompany to charge higher average unit prices; greater efficiency results in lower average unitcosts.Ultimately, all differences between companies in cost or price derive from the hundreds ofactivities required to create, produce, sell, and deliver their products or services, such as
  14. 14. calling on customers, assembling final products, and training employees. Cost is generated byperforming activities, and cost advantage arises from performing particular activities moreefficiently than competitors. Similarly, differentiation arises from both the choice of activitiesand how they are performed. Activities, then are the basic units of competitive advantage.Overall advantage or disadvantage results from all a company’s activities, not only a few.1Operational effectiveness (OE) means performing similar activities better than rivals performthem. Operational effectiveness includes but is not limited to efficiency. It refers to anynumber of practices that allow a company to better utilize its inputs by, for example, reducingdefects in products or developing better products faster. In contrast, strategic positioningmeans performing different activities from rivals’ or performing similar activities in differentways.Principle Of Toyota ManagementThere is a question of uptake of the principles now that Toyota has production operations inmany different countries around the world. As a New York Times article notes, while thecorporate culture may have been easily disseminated by word of mouth when Toyotamanufacturing was only in Japan, with worldwide production, many different cultures mustbe taken into account. Concepts such as “mutual ownership of problems,” or “genchigenbutsu,” (solving problems at the source instead of behind desks), and the “kaizen mind,”(an unending sense of crisis behind the company’s constant drive to improve), may beunfamiliar to North Americans and people of other cultures. A recent increase in vehiclerecalls may be due, in part, to "a failure by Toyota to spread its obsession for craftsmanshipamong its growing ranks of overseas factory workers and managers." Toyota is attemptingto address these needs by establishing training institutes in the United States and inThailand.[6
  15. 15. COMPETITIVE ADVANTAGE MY SELFSalah satu competitive advantage saya adalah membuat beraneka macam kue.Sejak SMA saya sudah mendapat berbagai orderan berbagai macam kue khusunya kue ulangtahun. Ke depannya saya akan mencoba memasarkannkya ke toko – toko kue.
  16. 16. REFERENCE