Analysis for Toyota
Content
1. Introduction 2 2. Ownership advantages 3 2.1 Toyota Production System (TPS) and Just-In-Time (JIT) management 3 2.2 Resource – based view: core competencies of Toyota 4 3. Internalization advantages 6 4. Location advantages 7 4. Conclusion 8 References 9 Appendix 10
1. Introduction
As the leading auto manufacturing company, Toyota is not only the symbol of Japan, but also the one of the best business models for MNCs expansion overseas. Since the company was established in 1937, it has experienced many changes and challenges. However, depending on the distinguished competitive advantages in quality of cars and perfect management, ultimately, Toyota achieved huge success worldwide. In 2010, for example, Toyota sold 8.42 million vehicles in the global market that exceeded GM total sales (Theguardian Inc, 2011). The aims of this paper is to analyze how Toyota keeps its sustainable competitive advantages by applying different strategies and try to find out what potential threats behind its brilliant success. The analysis is based on the Dunning’s Eclectic (OLI) paradigm, which including three specific perspectives of ownership, internalization and locational advantages.
2. Ownership advantages
2.1 Toyota Production System (TPS) and Just-In-Time (JIT) management
According to Akio Toyoda - the president of Toyota corporation, the company’s success is mainly attributed to two factors: Toyota Production System (TPS) and Customer Focus (Toyota annual report, 2011). Clearly, production process is an essential part not only in Toyota, but also in all-manufacturing companies that could directly affect the firm’s profitability. Hence, to highly improve the effectiveness of production system is the main project for all automakers. TPS is a typical lean manufacturing model, which could effectively avoid waste during the production process. Moreover, due to the key feature of TPS is producing in large economic scale with highly standardized
1. Introduction 2 2. Ownership advantages 3 2.1 Toyota Production System (TPS) and Just-In-Time (JIT) management 3 2.2 Resource – based view: core competencies of Toyota 4 3. Internalization advantages 6 4. Location advantages 7 4. Conclusion 8 References 9 Appendix 10
1. Introduction
As the leading auto manufacturing company, Toyota is not only the symbol of Japan, but also the one of the best business models for MNCs expansion overseas. Since the company was established in 1937, it has experienced many changes and challenges. However, depending on the distinguished competitive advantages in quality of cars and perfect management, ultimately, Toyota achieved huge success worldwide. In 2010, for example, Toyota sold 8.42 million vehicles in the global market that exceeded GM total sales (Theguardian Inc, 2011). The aims of this paper is to analyze how Toyota keeps its sustainable competitive advantages by applying different strategies and try to find out what potential threats behind its brilliant success. The analysis is based on the Dunning’s Eclectic (OLI) paradigm, which including three specific perspectives of ownership, internalization and locational advantages.
2. Ownership advantages
2.1 Toyota Production System (TPS) and Just-In-Time (JIT) management
According to Akio Toyoda - the president of Toyota corporation, the company’s success is mainly attributed to two factors: Toyota Production System (TPS) and Customer Focus (Toyota annual report, 2011). Clearly, production process is an essential part not only in Toyota, but also in all-manufacturing companies that could directly affect the firm’s profitability. Hence, to highly improve the effectiveness of production system is the main project for all automakers. TPS is a typical lean manufacturing model, which could effectively avoid waste during the production process. Moreover, due to the key feature of TPS is producing in large economic scale with highly standardized
References: Lander, E. E., & Liker, J. K. (2007). The Toyota Production System and art: making highly customized and creative products the Toyota way. International Journal Of Production Research, 45(16), 3681-3698. doi:10.1080/00207540701223519 Minhyung, K Spear S. J. (2002). Just-in-Time in practice at Toyota: Rules-in-Use for building self-diagnostic, adaptive work-systems. Assistant Professor of Harvard Business School, Working paper: 02-043 Theguardian Inc Toyota annual report (2011). Reward with smile by exceeding your expectations. Retrieved on 20th, June 2012 from: www.toyota-global.com/investors/ir_library Appendix (sourced from: Toyota annual report, 2011) Figure III – Hourly compensation costs of manufacturing employees in China