TOYOTAGroup 6: SYBBA B

Name Roll No.

Mihir Mandrekar B030

Surbhi Mehta B032

Abhilasha Mohan Ram B034

Rohan Negi B035

Dhawal Pasad B037

The Toyota Group (トヨタグループ  Toyota Gurūp) is a conglomerate company that work together and mostly share the Toyota brand.

Toyota Motor Corporation abbreviated TMC, is a Japanese multinational automaker headquartered in Toyota, Aichi, Japan.

It is the largest carmaker in the world

The primary companies in the group are Toyota Industries Corporation and Toyota Motor Corporation. It is also considered by many to be a keiretsu, although it does not contain a major bank.

A keiretsu (system, series, grouping of enterprises, order of succession) is a set of companies with interlocking business relationships and shareholdings. It is a type of informal business group. 

Majority-owned subsidiaries

Toyota Industries Corporation (founded in 1926)

JTEKT Corporation(1935)

Toyota Motor Corporation(1937)

Toyota Auto Body, Co. Ltd. (1940)

Aichi Steel Corporation (1940)

Kanto Auto Works, Ltd. (1945)

Toyota Tsusho Corporation (1946)

Aisin Seiki Co., Ltd. (1949)

Toyoda Gosei Co., Ltd. (1949)

Denso Corporation(1949)

Toyota Boshoku Corporation (1950)

Towa Real Estate Co., Ltd. (1953)

Toyota Central R&D Labs., Inc. (1960)

Toyota Communication Systems Co., Ltd. (2001)

Toyota’s Global Vision

“Toyota will lead the way to future of mobility, enriching lives around the world with the safest and the most

responsible ways of moving people.

Through our commitment to quality, and respect to the planet, we aim to exceed expectations and be

rewarded with a smile.

We will meet our challenging goals by engaging the talents and passion of people, who believe there is

always a better way.”

One aspect of the vision is “respect to the planet”

The process for developing an Environment Action Process begins with the parent company in Japan, Toyota Motor Corporation (TMC).

Every five years, TMC develops a global five-year environmental action plan (EAP).

This has made their plant in Princeton, Indiana, honor as one of only two North American recipients of the Water Champion award.

The Statement gives voice to who they are as a global enterprise, the values they embody, an the good that they are striving to accomplish.

Designed to inspire all Team Members to even greater things, the Statement emphasizes Toyota's commitment to quality, innovation and respect for the planet.

At its heart is this signature statement: We aim to exceed expectations and be rewarded with a smile.

TOYOTA’S 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.” 

Toyota’s Mission Statement defines the organization's purpose and primary objectives.

Its prime function is “to provide a safe and sound journey.”

It provides a reason for being, which is one of the most important aspect of a mission statement. The mission statement is clear and concise and provides focus and a sense of direction.

To develop new technologies and to conserve energy.

Seek to be environment friendly.

CORPORATE LEVEL STRATEGY

1. Expansion: Diversification

2. Expansion: Integration

3. Combination: Joint Venture & Divestment

EXPANSIONDiversification:

From Textiles to Automobiles

(Unrelated)

In 1921, Sakichi Toyoda founded Toyoda Automatic Loom Works

In 1926 Toyoda Automatic Loom Works, Ltd. was established

Toyoda Automatic Loom Works Ltd., producing looms that stopped automatically if there was the slightest problem

The looms were so successful that in 1929, Sakichi sold the rights to his Type-G automatic loom to Platt Brothers, a huge British textile company, for one million yen

Then why Diversify? Why automobiles?

1913 - Assembly line production technique developed by Henry Ford

Military subsidies act of 1918 - Japan

1920s - Automobile Industry was growing

1930s - Japan was gearing up for war: demand for trucks

Automobile manufacturing Enterprise Act in 1936 – Japan

Competitor Nissan: not well prepared to start the auto business without the American alliance, Ford.

•Capital (money)

•Competition in textile sector

•Protective environment from the government

•Large Volumes Demanded: Military

•Nissan at a disadvantage

Automobile Market in Japan

1929

1930

1931

1932

1933

1934

1935

1936 93

719

3819

390

5000

10000

15000

20000

25000

30000

35000

40000

Domestic ProductionImports

*includes both cars and trucksSource: Cusumano, 1985

How did they go from textiles to Automobiles?

Went to the US and observed ‘Fordism’ in action i.e. assembly line production and developed a Japanese version of it

Reverse Engineered motor cycle engines and vehicles made by GM, Ford and Chrysler

Ordered machine tools for their prototype from Germany

Their Very First Prototype [Model A1 1934]

Model G1 [1935]

Model AA, AB, AC [1935,1936]

1937: Toyota Automobile Company Ltd is established

1938: Honsha Plant then known as Koroma Plant is set up

Concept of Just – In – Time is developed

Concentrated on manufacturing of Trucks rather than Passenger Cars till the end of World War II

Source: Cusumano,1985

1935

1936

1937

1938

1939

1940

1941

1942

1943

1944

1945

1946

1947

1948

1949

0

100

200

300

400

500

600

700

Passenger cars manufactured by Toyota

Units

Production of Cars and trucks by Toyota

1946 1947 1948 1949 1950 1951 1952 1953 19540

10000

20000

30000

40000

50000

60000

TrucksCars

Source: Toyota global, Cusumano, 1985

Since then..

Segmental Sales of Toyota [2011-12]

Source: Toyota Global

Market Share

Toyota first became No. 1 in 2008 and held the position for three years. GM held the top spot for almost eight decades before being dethroned.

Toyota sold 9.75 million vehicles 2012, compared with 9.29 million for GM regaining its No. 1 position after a down year 2011 at No. 3 due to the tsunami in Japan.

EXPANSIONIntegration

Toyoda Gosei Co. Ltd

Toyoda Gosei engages in Research, development,

manufacture and sales of: Parts for

automobiles, conveyors, ships and various other

transportation equipment; rubber, plastic and

urethane component

Timeline 1949

Toyota Motor Industry Co., Ltd. incorporates rubber research operations as Nagoya Rubber Co., Ltd.

1973

Changes name to Toyoda Gosei Co., Ltd.

1990-1991

Established Meigi Logistics Center (logistics sector)

Establishesd Toyoda Gosei Kyushu Co., Ltd. in Takeo, Saga Prefecture (rubber and plastic sector)

Established TG Technical Center (U.S.A.) (design and technological development)

1994 Established TG Pongpara Co., Ltd. in Chonburi, Thailand

(plastic and urethane sector)

1997 Develops new recycling technology for rubber

Earns ISO 9001 certification for major products in Bisai, Inazawa, Heiwacho, and

Moricho Plants

Begins manufacturing and marketing green LEDs

1998-1999

Begins manufacturing and marketing New LEDs, "TG Blue" and "TG Green“

Earns ISO 14001 certification for Heiwacho Plant

Established TG Kirloskar Automotive Ltd.

Earns ISO 14001 certification for environmental management.

ESTABLISHMENTS BETWEEN 2000-2010

Established Daicel Safety Systems America, LLC

Established Toyoda Gosei Rubber (Thailand) Co., Ltd.

Established Toyoda Gosei India Pvt. Ltd.

Develops rear-end impact airbag

Develops rear seat center airbag

EstablishesdTE Opto Corporation.

How did the Integration

begin?

Toyota Motors was established in 1937 & within 10 years of inception was a big player in the Japanese market.

Toyota Motors Co. Ltd felt the need to expand the scope of its business, to bring down the cost of production.

This led to the establishment of Toyoda Gosei Co. Ltd, which would supply Toyota Motors with various car parts.

This can be seen as a move back in value chain as Toyota, which initially manufactured cars, will now be making parts for its car rather than relying on outsiders.

Reasons behind adopting this

strategy

As per Toyota Global Vision, “Through our commitment to quality, constant innovation and respect for planet, we aim to exceed expectations and be rewarded with a smile.”

To achieve this vision they came up with Toyoda Gosei co., Ltd to bring quality to their automobiles by providing raw materials to Toyota Motors.

Shareholder's nameNumber of shares held(thousand shares)

Holding ratio (%)

Toyota Motor Corporation 55,459 42.65

The Master Trust Bank of Japan ,Ltd.(Trust) 7,752 5.96

Japan Trustee Services Bank,Ltd.(Trust) 6,158 4.73

Sumitomo Mitsui Banking Corporation 5,049 3.88

Japan Trustee Services Bank,Ltd.(Trust 9) 2,291 1.76

Nippon Life Insurance Company 1,714 1.31

SSBT OD05 OMNIBUS ACCOUNT - TREATY CLIENTS

1,501 1.15

The Dai-ichi Life Insurance Company, Limited 1,493 1.14

Mitsui Sumitomo Insurance Company, Limited 1,162 0.89

Toyoda Gosei Co., Ltd. Employee Stock Ownership Plan 1,044 0.80

AnalysisToyota Motors became the major stakeholder in

company with 42.65% holding ratio.

Toyoda Gosei Group is a global system supplier of automotive components and LEDs with an extensive network.

As a pioneer in the fields of polymer technologies and optical semiconductors, they strive to become a true global system supplier.

Toyoda Gosei uses automation more wisely than its competitors. Automation for them drives design of their processes.

At Toyoda Gosei, they look at a process that they know how to do very well, and think of how to make that process better.

Today, they have diversified themselves by providing various products and Technology.

Interior and Exterior Parts

Front Bumper Spoilers

Base, Room Lamp

Radiator GrillesHybrid Wheels

Cockpit Modules

Console Boxes

Automotive Sealing Parts

Luggage Weatherstrip

Door Weatherstrip

Opening Trim Weatherstrip

Functional Parts

Power Train Parts

Fuel Tank Modules

Safety System Products

Optoelectronic Products

General Industry Products

Mobile Phone cases

Home Construction Components

Recycling Technology

There has been a tremendous increase in their Net Sales (in millions) from ¥292,883 in 2001 to ¥504,518 in 2012.

Even though there is increase in net sales but there is not a greater change in their Net Income (in millions) which has increased from ¥4,058 in 2001 to ¥8,971 in 2012.

In 2009, there was no major effect on Net sales but Net income fell drastically. (Net Sales: ¥546,380 and Net Income: ¥3,951)(in millions).

Strategy: Combination

Joint Venture(Cooperation) +Divestment(Retrenchment)

Corporate Level Strategy

BackgroundToyota’s Failed initial entry attempt.

Demand for compact cars.

Incompetence of U.S. automakers.

Trade Barriers

Strong Competition

Analysis:

Beginning Reasons Approach Taken Results End

Benefits

I. How did the Joint Venture Begin?

General Motors provided the land & buildings as its contribution to New United Motor Manufacturing Inc.

Toyota put in at least $100M, along with manufacturing know-how.

New United Motor Manufacturing, Inc. (NUMMI) was born as an automobile manufacturing plant in Fremont, California.

Partnership: 50-50

II. Reasons behind the Joint Venture

Toyota General Motors

Need to start building cars in the United States due to the possibility of import restrictions.

To build high-quality & profitable small cars .

Help diffuse the trade issue between the United States and Japan.

Learn Toyota’s:i. Lean manufacturingii. Production System

Gain experience with American suppliers.

Implement learning at other plants.

Gain experience with American unionized labor.

To obtain high quality vehicles for its ‘Chevrolet’ division.

To catch-up with competition. Failure to compete with Japanese automakers.

III. Approach towards the Joint Venture & Result

Responsibility:-

i. Manufacturing - Toyota

ii. Marketing - General Motors

Key factors in Toyota’s approaches, however, were:

i. Developing cooperative management-labor relations;

ii. Careful selection and extensive training of workers;

iii. Stressing teamwork and responsibility of the individual to the work group;

iv. Putting safety and quality first, assigning the responsibility for safety and quality to each worker, and giving them the authority to assure it.

Results:

i. Improved Productivity

ii. Researchers at MIT estimated in 1988 that productivity at the NUMMI plant exceeded that of all American-owned U.S. automobile plants, except Ford’s Taurus facility with which it was approximately equal.

iii. The cars produced have won numerous awards.

iv. The plant won J.D. Power awards as the second or third best automotive plant in North America six times between 1994 and 2002.

V. End of Joint Venture (Divestment)

June 29,2009 - General Motors bails out.

Attempts to sustain the venture fail.

July 10, 2009 - GM Files for bankruptcy.

August 27, 2009 - Toyota makes a decision.

April 1, 2010 - NUMMI Plant ceases operations.

Calendar Year

U.S. sales(vehicles) Chg/yr.

2004 4,707,416

2005 4,517,730 4.0%

2006 4,124,645 8.7%

2007 3,866,620 6.3%

2008] 2,980,688 22.9%

2009 2,084,492 30.1%

General Motors

Toyota Sales by region

Region 2006 2007 2008 2009

N.America

2,738.3 2,822.2 2,441.8 1,975.4

Europe 1,124.1 1,238.6 1,119.5 886.0

Asia 1,106.7 1,329.6 1,438.6 1,533.9

Worldwide

7,921.68,429.3 7,996.1 6,979.6

New United Motor Manufacturing,Inc. only turned a profit in one year, 1992.

One of Toyota’s most expensive factory:

i. High Worker Wages.

ii. Higher fixed costs.

iii. High transportation costs.

The Final Car

Benefits Toyota Starts Car Production in USA.

Toyota learned to work with American unionized labor.

Confidence to expand.

Increase in US market share.

The company did learn to work effectively with American suppliers or, to put it another way, American suppliers learned to work with Toyota.

Its next factory was established as a wholly-owned subsidiary.

SWOT ANALYSIS

What is SWOT ?

Strengths, weaknesses, opportunities and threats

Quick overview of the company’s strategic situation

An effective strategy derives from a ‘fit’ between the company’s internal sources and external environment

Aim is to maximize the strengths and opportunities and minimize the weaknesses and threats

Can be done using a grid

Example of SWOT analysis grid :

SWOT ANALYSIS TOYOTA

STRENGTHS

New Investments :

New investment by Toyota in the US and China saw profits rise, against the worldwide motor industry trend which was suffering heavy losses. Net profits rose 0.8% to 1.17 trillion yen ($11bn; £5.85bn), while sales were 7.3% higher at 18.55 trillion yen.

ANALYSIS –

The company had the right mix of products for the markets that it served

Eg: Fortuner in USA , Prius and Corolla in China

Very focused segmentation, targeting and positioning of their products

Manufacturing :

In 2003 Toyota knocked its rivals Ford into third spot, to become the World's second largest carmaker with 6.78 million units. The company is still behind rivals General Motors with 8.59 million units in the same period.

ANALYSIS –

Diversified product range, highly targeted marketing and a commitment to lean manufacturing and quality.

The company maximizes profits through Total Quality Management or TQM

The company makes a large range of vehicles for both private customers and commercial organizations, from the small Yaris to large trucks.

Strong Brand Image :

Toyota currently sells 70 models of cars under its namesake brand with Corolla and Prius as flagship models.

Toyota’s brand image is also associated with environment friendly cars as it is a leader in manufacturing of ‘green’ cars.

ANALYSIS –

Increases brand awareness, sells more cars in order to increase the existing brand image

Through several surveys, Toyota understood that customers are growing selective in terms of fuel efficiency and CO2 emissions

Invested in ‘green’ technology became one of the first companies to manufacture environment friendly cars like the Auris

WEAKNESSESLarge Scale Recalls :

The company recalled 9 million vehicles in 2009-2010 and 7.43 million cars in 2012. Such recalls have not only hurt the firm financially but significantly damaged the firm’s brand.

ANALYSIS –

Recalls have taken place mostly because of safety issues that have not been met or because of certain defects in the cars produced.

Toyota must ensure that the cars produced are faultless and of good quality

Weak presence in emerging markets :

Toyota markets most of its products in the US, Europe and in Japan. Emerging economies as China or India make only a small percentage of all Toyota’s sales.

ANALYSIS –

To reduce this weakness has started to shift its attention towards India and China, which is a good move. But, it should do more to compete with GM

Toyota must also look towards investing in Africa

OPPORTUNITIES Hybrid and Eco friendly technology :

Toyota has a reputation of manufacturing eco friendly cars like the Prius based upon advanced technology developed by the organization.

Toyota has also sold on its technology to other motor manufacturers.

Example - Ford has bought into the technology for its new Explorer SUV Hybrid.

ANALYSIS –

There is a big demand for eco friendly and fuel efficient cars

Since Toyota already has a first mover advantage in making hybrid eco friendly cars, it should capitalize on this opportunity and invest more on hybrid R&D and produce more environment friendly cars.

New Customer Segments :

Toyota is to target the 'urban youth' market. The company has launched its new Aygo, which is targeted at the streetwise youth market. The vehicle is a unique convertible with inbuilt sub woofers.

ANALYSIS –

The youth of today have become more independent and wealthy. This has created a big market for cars and Toyota is trying to capitalize on this opportunity by introducing the new Aygo

The profits earned are not big but, it has helped Toyota increase its market segment which is crucial for expansion. This segment may prove to be highly profitable in the future

GLOBAL EXPANSION :

Toyota is expanding its market share and operations in emerging economies like India and China.

Toyota’s emerging market sales ratio reached 45% in 2011, an increase of 10% in the three years since we achieved 35% in 2008. The Toyota Global Vision calls for an emerging-market sales ratio of 50% by 2015.

ANALYSIS –

Toyota must make sure it increases its market share in the developing economies

Toyota must also work towards investing in Africa

THREATS

Competition :

Toyota faces tremendous competitive rivalry in the car market with new entrants coming into the market from China, South Korea and new plants in Eastern Europe.

Volkswagen group is strongly growing and GM after its reorganization has become more competitive than ever.

ANALYSIS –

Toyota is reducing the threat of competition by introducing new products, slashing prices, increasing market segments and innovation.

Toyota has introduced the Yaris which is a very cheap car and has sliced the costs of older versions of Corolla. The Aygo and Prius are examples of innovative products by Toyota.

Shifts in exchange rates :

Majority of Toyotas profits and raw materials come from foreign countries.

Appreciating yen exchange rate against other currencies means lower profits for Toyota.

ANALYSIS –

Very difficult to minimize this threat

Toyota will have to wait till Yen depreciates but this will increase debt

Toyota should consider setting up new bases in foreign countries

THANK YOU!