UNIVERSITY OF THE EAST

CALOOCAN
COLLEGE OF BUSINESS
ADMINISTRATION

CASE STUDY: TOYOTA

SUBMITTED BY:
TIMOTHY JAMES D. PACSON

SEPTEMBER 22, 2014

Time Context

Summary or Abstract of Toyota

Toyota Motor Corporate is a Japanese automotive manufacturer
headquartered in Toyota, Aichi, Japan. In 2013 the multinational
corporation consisted of 333,498 employees worldwide and, as of
January 2014, is the fourteenth-largest company in the world by
revenue. Toyota was the largest automobile manufacturer in 2012 (by
production). In July of that year, the company reported the production
of its 200-millionth vehicle. Toyota is the world's first automobile
manufacturer to produce more than 10 million vehicles per year. It did
so in 2012 according to OICA,[4] and in 2013 according to company
data. As of November 2013, Toyota was the largest listed company in

Japan by market capitalization (worth more than twice as much as 2ranked SoftBank) and by revenue.
The company was founded by Kiichiro Toyoda in 1937 as a
spinoff from his
father's company Toyota Industries to create
automobiles. Three years earlier, in 1934, while still a department
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 produces vehicles under 5 brands, including the Toyota
brand, Hino, Lexus, Ranz, and Scion. It also holds a 51.2% stake
in Daihatsu, a 16.66% stake in Fuji Heavy Industries, a 5.9% stake
in Isuzu, and a 0.27% stake in Tesla, as well as joint-ventures with two
in China (GAC Toyota and Sichuan FAW Toyota Motor), one in India
(Toyota Kirloskar), one in the Czech Republic (TPCA), along with
several "nonautomotive" companies. TMC is part of the Toyota Group,
one of the largest conglomerates in the world.
1920s-1930s
Toyota was started in 1933 as a division of Toyoda Automatic
Loom Works devoted to the production of automobiles under the
direction of the founder's son, Kiichiro Toyoda. Its first vehicles were
the A1 passenger car and the G1 in 1935. The Toyota Motor Co. was
established as an independent company in 1937. In 2008, Toyota's
sales surpassed General Motors, making Toyota number one in the
world.
In 1924, Sakichi Toyoda invented the Toyoda Model G Automatic
Loom. The principle of Jidoka, which means the machine stops itself
when a problem occurs, became later a part of the Toyota Production
System. Looms were built on a small production line. In 1929, the
patent for the automatic loom was sold to a British company,
generating the starting capital for the automobile development.
Vehicles were originally sold under the name "Toyoda" , from
the family name of the company's founder, Kiichir Toyoda. In April
1936, Toyoda's first passenger car, the Model AA, was completed. The
sales price was 3,350 yen, 400 yen cheaper than Ford or GM cars.

In September 1936, the company ran a public competition to

design a new logo. Of 27,000 entries, the winning entry was the three
Japanese katakana letters for "Toyoda" in a circle. But Risabur
Toyoda, who had married into the family and was not born with that
name, preferred "Toyota" because it took eight brush strokes (a lucky
number) to write in Japanese, was visually simpler (leaving off
the diacritic at the end) and with a voiceless consonant instead of
a voiced one (voiced consonants are considered to have a "murky" or
"muddy" sound compared to voiceless consonants, which are "clear").
Since "Toyoda" literally means "fertile rice paddies", changing
the name also prevented the company from being associated with oldfashioned farming. The newly formed word was trademarked and the
company was registered in August 1937 as the "Toyota Motor
Company".

1940s-1950s
From September 1947, Toyota's small-sized vehicles were sold
under the name "Toyopet" .The first vehicle sold under this name was
the Toyopet SA, but it also included vehicles such as the Toyopet
SB light truck, Toyopet Stoutlight truck, Toyopet Crown, Toyopet
Master, and the Toyopet Corona. The word "Toyopet (Japanese
article)" was a nickname given to the Toyota SA due to its small size,
as the result of a naming contest the Toyota Company organized in
1947. However, when Toyota eventually entered the American market
in 1957 with the Crown, the name was not well received due to
connotations of toys and pets. The name was soon dropped for the
American market, but continued in other markets until the mid-1960s.
1960s-1970s
By the early 1960s, the US had begun placing stiff import tariffs
on certain vehicles. The chicken tax of 1964 placed a 25% tax on
imported light trucks. In response to the tariff, Toyota, Nissan Motor
Co. and Honda Motor Co. began building plants in the US by the early
1980s.
1980s

Toyota received its first Japanese Quality Control Award at the

start of the 1980s and began participating in a wide variety
of motorsports. Due to the 1973 oil crisis, consumers in the lucrative
US market began turning to small cars with better fuel economy.
American car manufacturers had considered small economy cars to be
an "entry level" product, and their small 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, the Toyota Motor
Corporation. Two years later, Toyota entered into a joint venture
with General Motors called the New United Motor Manufacturing,
Inc, NUMMI, operating an automobile-manufacturing plant in
Fremont, California. The factory was an old General Motors plant that
had been closed for two years. Toyota then started to establish new
brands at the end of the 1980s, with the launch of their luxury
division Lexus in 1989.
1990s
In the 1990s, Toyota began to branch out from producing mostly
compact cars by adding many 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 theCamry,
known as the Camry Solara; and the Scion brand, a group of several
affordable, yet sporty, automobiles targeted specifically to young
adults. Toyota also began production of the world's best-selling hybrid
car, the Prius, in 1997.
With a major presence in Europe, due to the success of Toyota
Team Europe, the corporation decided to set up Toyota Motor Europe
Marketing and Engineering, TMME, to help market vehicles in the
continent. Two years later, Toyota set up a base in the United
Kingdom, TMUK, as the company's cars had become very popular
among British drivers. Bases in Indiana, Virginia, and Tianjin were
also set up. In 1999, the company decided to list itself on the New
York and London Stock Exchanges.
2000s

In 2001, Toyota's Toyo Trust and Banking merged with two

other banks to form UFJ Bank, which was accused of corruption by
Japan's government for making bad loans to alleged Yakuza crime
syndicates with executives accused of blocking Financial Service
Agency
inspections.
The
UFJ
was
listed
among Fortune
Magazine's largest money-losing corporations in the world, with
Toyota's chairman serving as a director. At the time, the UFJ was one
of the largest shareholders of Toyota. As a result of Japan's banking
crisis, UFJ merged 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
ventures
with
French
motoring
companies Citron and Peugeot a year after Toyota started producing
cars in France.
Toyota ranked eighth on Forbes 2000 list of the world's leading
companies for the year 2005 but slid to 55 for 2011. The company was
number one in global automobile sales for the first quarter of 2008.
In 2007, Toyota released an update of its full-size truck,
the Tundra, produced in two American 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.
2010s
From November 2009 through 2010, Toyota recalled more than
9 million cars and trucks worldwide in several recall campaigns, and
briefly halted production and sales. Toyota initiated the recalls, the
first two with the assistance of the U.S.National Highway Traffic
Safety Administration (NHTSA), after reports that several vehicles
experienced unintended acceleration.
In 2011, Toyota, along with large parts of the Japanese
automotive industry, suffered from a series of natural disasters.
The 2011 Thoku earthquake and tsunami led to a severe disruption
of the supplier base and a drop in production and exports. Severe
flooding during the 2011 monsoon season in Thailand affected
Japanese automakers that had chosen Thailand as a production base.

Toyota estimated to have lost production of 150,000 units to the

tsunami and production of 240,000 units to the floods.
In October 2012, Toyota announced a recall of 7.43 million
vehicles worldwide to fix malfunctioning power window switches, the
largest recall since that of Ford Motor Company in 1996. The move
came after a series of recalls between 2009 and 2011 in which it
pulled back around 10 million recalls amidst claims of faulty
mechanics.

MISSION
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.

VISION
To be the most respected and successful enterprise,
delight customers with a wide range of products and
solutions in the automobile industry with the best
people and best technology.

Corporate Social Responsibility

TOYOTA MOTOR CORPORATION and our
subsidiaries, take initiative to contribute to harmonious
and sustainable development of society and the earth

through all business activities that we carry out in each

country and region, based on our Guiding Principles.
Toyota has been selected as a constituent of
the DJSI and the FTSE4Good Index Series
"Toyota's Approaches to Conflict Minerals
Issues"added
"Vehicle Recycle"revised
The Toyota Environmental Activities Grant
Program FY2014 now accepts Applications
"Disaster Area Recovery Support by Toyota
Group" updated
Toyota has been selected as a constituent of
the MS-SRI
TMC Holds the CSR Boost-up Initiative
Toyota has been selected as a constituent of
the DJSI and the FTSE4Good Index Series
"Preserving Loggerhead Turtle Spawning
Beaches (Japan)" updated
Introduction video of "Saving the Hyacinth
Macaw (Brazil)" added
Digest of "Toyota's Activities for Protecting
Flora and Fauna Ecosystem" added
TMC to Conduct Spring Traffic-safety
Campaign

Honors and Awards

Best Sports Car for the Money

Best of 2013
Car of the Year 2012
Most Desired Car of 2012
Performance Car of 2012
Car of the Year

First Autoguide.com
Car of the Year 2013
Vehicle Dynamics International
Jeremy Clarkson/Top Gear Car of the Year 2012
MEMA Award Best Sports Coupe 2012
People's Choice Awards Sports Car Under 100k
IIHS Top Safety Pick
Drive's Car of the Year and Best Performance car
under 60k
SEMA Hottest Sports Compact
Carsguide.com.au Car of the Year
Jaloponik Top 10 New Cars We are Thankful For
Car of the Year 2013
Best Affordable Sports Car 2012
Autocar Britans Best Driver's Car 2012
Auto123.com Canadian Sports Car of the Year
Japan Car of the Year "Special" Award
Japan Car of the Year Award
10 Most Important Cars of 2012
Ward's 10 Best Engines of 2013

I. Objectives
To enhance customer satisfaction by providing high
quality service and value for money.
To remain competitive, produce quality cars and
enhance technologies for green-energy cars
To maintain the market share of Toyota in Yemeni
market.
To service the Nation and the upliftment of society.
Ethical approach towards customers and foster the
need of the customers.

II. Central Problem or Statement of the

Problem
1. Increased risk in safety and
efficiency of the product because of
customers demand.
2. They
are
facing
tremendous
competitive rivalry in the car market
3. Global
expansion
of
market
products and services

III. Areas of Consideration

1. Strengths
a. Superior productivity and efficiency of Toyota
Production System
b. Superior quality products
c. Global strong brand awareness
d. Wide production offering
e. Pioneer in hybrid vehicles
f. High market share of products
g. Easy availability of spare parts
h.
Good resale value

2. Weaknesses
a. Recalls caused quite severe financial impact
b. Recalls undermined brand image as quality
cars producer

c. Weak presence in Europe and emerging

markets
d. Over dependency on Japan and U.S market
e. The body of the car is too heavy

3. Opportunities
a. Growing demand from merging major
markets, India and China
b. Demand for fuel efficient, compact vehicles
c. Positive growth trend in hybrid vehicles
segment
d. Modifying designs that are proven for other
countries
e. Develop new variety and style of products
f. Consolidation through acquisition European
foothold

4. Threats
a. Intensifying
competition
from
major
competitors
b. Uncertainty in global economic condition
c. Weakening demand, increasing costs of
product
d. Natural disasters could disrupt Just in Time
(JIT) method
e. Fluctuating Foreign rates

IV. Alternative Courses of Action

These are the possible solutions to the
problem with corresponding advantages and
disadvantages.
1. Build a team that will ensure at all times that
their products and services are meeting their
quality specifications and minimize the risk in
safety. Moreover, they are focus on product

quality
control,
improvement on
efficiency

continuous
learning
and
manufacturing systems for

Advantages this would ensure maximum

satisfaction and value for the customer
Disadvantage it may increase the cost of the
product and may increase the price of their
products

2. They should introduce new products, slashing

prices,
increasing
market
segments
and
innovation.
Advantage it may sustain the companys
sales and continuing patronage of customers
on their products and services

Disadvantage risk outlays will not generate

new competitive advantage

3. They must make sure it increases its market

share in the developing economies and they must
also work towards investing in Africa
Advantage it may increase the income and
market share in different countries.
Disadvantage the customers might not
auspices the products and services that the
company offers.

V. Recommendation or Strategy
Formulation
I therefore conclude that the best solution to
the problem is alternative courses of action # 2,
which is they should introduce new products,
slashing prices, increasing market segments and
innovation. Developed and produced multi product

line for different income class. They should

consider
the
segmentation,
targeting
and
positioning of their products. Diversified product
range,
highly
targeted
marketing
and
a
commitment to lean manufacturing and quality.
Concentrate on USA market by Americanize the
design, production and marketing. Invest and
expand in European market. Continuous learning
and improvement of companys products and
process through technology and innovation.
Increase customer responsiveness in order to meet
not only the customers need and satisfaction but
also the profit and the companys vision.

VI. Plan of Action

They should invest more in green technology
and manufacture environment friendly cars.
Continue and innovate their existing products.
Also, they should train and develop their workers
for them to adapt in modern changes and
incorporate it on the products and services. Invest
more on R&D, which is one of the critical successes
of the company.

VII. Potential Problem

1. What if the company decreases its
sales and demand?
2. What if there will be shortage of
fuel?
3. What if global economic crisis will
happen?
VIII. Contingency Plan

1. Focus on products with high

demand and continue to innovate it.
2. Create
product
that
uses
electricity instead of fuel.
3. They should innovate a product
that is cost friendly and high quality.