Case Analysis - Toyota Motor Corp

Case analysis: Toyota Motor Corp.

1. Problems of Toyota

Toyota is a motor corporation which has No.2 spot behind GM and it occupies 12% of the world-wide car market. In late 1990s, Toyota make the Japanese company to assemble one car more than 10 hours faster than GM. Furthermore, Toyota’s culture, like “kaizen” which means continuous improvement and “lean production” which is a flexible production system, supports huge success of Toyota. For many years Toyota has shown a rapid growth in the motor industry.

Recently, however, Toyota faces problems. Toyota has focused on so many details and it becomes one of Toyota’s drawbacks. The rival executive of Toyota pointed out that Toyota was paying too much for parts compared with peers. Toyota’s CEO, Katsuaki Watanabe, thinks Toyota is losing its competitive edge in the world. Last year, recall of Toyota’s vehicles exceeded selling of vehicles in U.S and its growth rate becomes much slower in the market. Toyota’s rapid growth makes mushrooming quality-control problems. Furthermore, other competitive companies are catching up most of the traditional core strengths of Toyota.

 Also, Watanabe worries that Toyota’s factories and engineering practices aren’t efficient enough. Most of its machines were too big and slow. The rise of inexpensive Chinese suppliers make Toyota which has hesitated buying Chinese supplies because of quality, had to cut costs more aggressively.

2. Toyota’s Solution of the Problems

    Watanabe sets again the ultimate goal of Toyota. He tries to cut in vehicle costs in the next 3 to 4 years and maintains its splashing costs. Then, he pushed Toyota and its parts suppliers to make vehicles simpler and less expensive without affecting quality. The effort is called “CCC21” which stands for “construction of cost competitiveness for the 21st century. “ It made possible of millions of dollars in savings and 30% cut in the company’s procurement costs in the last 5 years.