Toyota Motor Corporation Essay

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Toyota Motor Corporation is one of the largest Asian multinational enterprises, in terms of sales, assets, and profitability. Its corporate headquarters is in Japan. It is the core corporation of the Toyota Group and a partner of the Mitsui Group. Toyota Motor Corporation’s origins can be traced back in 1933, when Kiichiro Toyoda established an automobile department within Toyota Automatic Loom Works. The establishment of Toyota Motor Company as a distinct corporate entity took place on August 28, 1937.

During the first years of the post–World War II era, Japan’s production capacity had largely diminished and the economy had slowed down to a large extent. Side effects of this were also manifested in Toyota’s production capacity, which faced severe financial and operating problems. However, the Bank of Japan, which was virtually a consortium of several banks dominated by Mitsui Bank, provided necessary capital, which helped the firm rejuvenate its activities. The bank’s decision for funding investments included the agreement that the sales department should form a distinct enterprise, production volumes should be rationalized to a lower level, and excessive labor force would be let go. This reengineering of activities reinforced the bonds of Toyota with leading banks in the country, which then became Toyota’s largest shareholders. The original Toyoda family now possesses a small percentage of shares and has a small representation in the governing bodies of the firm, such as the board of directors.

Exporting Toyota Automobiles

The year 1957 was a milestone in the history of the firm because it commenced its exporting activity. Toyota Motor Sales USA Inc. was established, and the first export of the Japanese passenger car (the Crown) to the United States became a reality. International activity continued to flourish, and in the following years, the firm gradually established itself in other countries, such as Brazil (1958) and Thailand (1962). As a result of this internationalizing process, cumulative exports reached 1 million units in 1969. In the mid-1980s, Toyota possessed production facilities in a number of countries, such as Peru, Portugal, Indonesia, Australia, New Zealand, and Thailand. Moreover, in 1992, it established a production plant in the United Kingdom, to accelerate penetration in the important European passenger car market.

Currently, Toyota Motor Corporation is operating with more than 500 subsidiaries around the world. In the fiscal year between April 2007 and March 2008, the business performance figures, including consolidated subsidiaries, showcased the dominance of the firm as one of the world’s largest corporations. The number of employees exceeded 316,000 and net revenues were JPY 26.289 billion, with a net income of JPY 1.717 billion.

An explanation for the generation of these impressive figures can be attributed to a main feature of Toyota’s business activity: the establishment of strategic alliances with key players in a number of related fields. Such alliances help the firm to be at the edge of technological advances and create commensurate value for its customers. For example, in 1998, it formed an alliance with firms such as Fujitsu and Matsuhita to develop a database for an in-vehicle navigation system.

In 1996, it formed a strategic alliance with Panasonic to develop a system of rechargeable batteries that would be later used in its hybrid Prius model. Moreover, its pioneering position in the development and implementation of the Just-in-Time supplying scheme allows the firm to minimize costs stemming from procurement and obsolete materials. Another factor of success is its knowledge base, which has been achieved through continuous investments in research and development (R&D).

On the other hand, the firm faces severe competition from German automobile makers (especially in the premium segments of the market with its Lexus brand) and it has not managed to achieve similar results (as in Japan or the United States) in the major but highly competitive market of Europe. Moreover, the firm seems to have a “we can do it on our own” philosophy, which rejects extended acquisitions or mergers with other automobile groups. This avoidance goes against the flow of megamergers that have recently taken place in the automobile sector. The future will show to what extent this will be proven a strength or a weakness for the firm in the challenging landscape of automobile manufacturing.

Bibliography:

  1. Dennis Chambers, Toyota (Greenwood, 2008);
  2. Jeffrey Liker, The Toyota Way: Fourteen Management Principles From the World’s Greatest Manufacturer (McGraw-Hill, 2004);
  3. Jeffrey Liker and David Meier, Toyota Talent (McGraw-Hill, 2007);
  4. Matthew E. May and Kevin Roberts, The Elegant Solution: Toyota’s Formula for Mastering Innovation (Free Press, 2006);
  5. Darius Mehri, “The Darker Side of Lean: An Insider’s Perspective on the Realities of the Toyota Production System,” Academy of Management Perspectives (v.20/2, 2006);
  6. Toyota, www.toyota.co.jp (cited March 2009);
  7. Kazuo Wada, “The Fable of the Birth of the Japanese Automobile Industry: A Reconsideration of the Toyoda-Platt Agreement of 1929,” Business History (v.48/1, 2006).

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