Toyota Motor Corporation: Background, Morals and Strategy

Toyota Motor Corporation (TMC) was founded in 1937. In 1950, Toyota Motor Sales was established and merged into Toyota Motor Corporation in 1982. Two years later, it formed a joint venture with General Motors, which then began producing cars in the United States and launched its new “Lexus” brand in 1989. In 1992 Toyota began manufacturing in Britain. Besides, in the early 1990s, the company introduced a variety of new cars for its product lines, such as compact and luxury cars, sports cars of all types, SUVs, and large pickups for the U.S. market. Finally, in 1997, Toyota began producing the “Prius”, now its best-selling hybrid car. In 2002, Toyota entered the prestigious world championship 'Formula One'. Toyota's core products and services are as follows:

• Auto manufacturing: the company is developing comfortable and safe automobile technology;
• Environmental technology: Toyota worries about environmental pollution; So it has created hybrid vehicles with new engines, new fuel types and new recycling technologies;
• Intelligent Transport System (ITS): the invention of the road traffic system;
• Personal motor vehicles: new models with new technology;
• Robot technology: produce all kinds of robots with the concept of 'harmony with people';
• Toyota financial services: the company provides various financial services, such as credit, leasing, insurance, etc.

Company headquarters are located in Japan Aichi Nagoya Toyota city and Tokyo. By 2009, Toyota established factory in 28 countries around the world: Japan, Canada, the United States, Argentina, Brazil, Colombia, Mexico, Venezuela, France, the Czech Republic, Poland, Portugal, Turkey, Britain, Russia, Kenya, South Africa, China, Taiwan, India, Indonesia, Malaysia, Pakistan, the Philippines, Thailand, Vietnam, Australia, and Bangladesh. At the end of March 2009, the capital of TMC was 395.05 billion yen. According to Forbes, Toyota was said to be the third leading company in the world compared to homogenous competitors in August 2009. However, in January 2009, the company suffered a crisis, with its production level dropping by nearly 40%. In the first half of 2009, Toyota's net income fell 31.3% year on year. Operating income fell by 137 billion yen and net profit by 56 billion yen. However, in the financial services sector, the operating income of the division increased by 17.2 billion yen, including 16.9 billion yen of interest rate swap valuation gains.

Moral Influence

“A stakeholder in an organization is any group or individual who can affect or is affected by the achievement of the organization’s objectives”. From the perspective of the enterprise, stakeholders such as employees and customers are crucial to survival because they provide the important resources for the organization. Actually, the reason of it always referred to as instrumental stakeholder theory and provides a basic rationale for why stakeholder concerns should be considered in such a way that the organization is directed and controlled. On the basis of the theory of instrumental stakeholders, a company only needs to focus on those stakeholders who can influence its value. From an instrumental perspective, stakeholder governance needs to speak out to stakeholders to make sure that they contribute to the success of the company.

There are two other views of stakeholder theory: descriptive and normative. The descriptive stakeholder approach identifies and classifies the different components of the organization without specifying any value claims about their claims or legitimacy of power. Normative stakeholder theory goes further, entrusting the intrinsic value of stakeholder rights to any individual affected by corporate behavior.

The core problem of regulating stakeholder theory is to consider the rights and obligations of relevant participants and how to achieve a fair balance of different stakeholder concerns. In order to be fair, stakeholder dialogue is not strategic, but open, thoughtful and close to the ideal presentation context of Habermas. The stakeholder dialogue in this normative view applies the procedural understanding of legitimacy and the discourse understanding of responsibility. Mintzberg and Manville and Ober also put forward similar normative views.

Within Toyota Motor Marketing Europe (TMME), a monthly newsletter called 'In-Team' is published. This tool is also being used to disseminate environmental information, raise awareness among employees and encourage 'green behavior'. In addition, the Environmental Committee and Environmental Working Groups including members of each division, provide further tools for internal communication. Toyota Manufacturing UK’s (TMUK) Burnaston and Deeside plants also use a variety of communication tools to disseminate environmental information to employees. These include lunch meetings (opportunities for discussion with management), briefings for all production teams, presentation boards, and the company magazine t-mag. This publication is published quarterly and distributed to all employees. Regular environmental presentations on any relevant projects within the company and Toyota product information related to the environment. Toyota also developed a philosophy called kaizen, or continuous improvement. Each team member is trained to find ways to improve their work. In fact, the assembly line stops every two weeks so the team can meet to discuss their ideas for improvements. Awards are given to those who have good ideas and put them into practice in terms of environment, cost, quality, safety, and operability. Such improvements also give the startup team a reputation. For example, in 2000, the Deeside team won an award for starting to recycle aluminum dross (waste material) from the casting process.

Toyota is acutely aware of the need for global environmental protection. Therefore, Toyota has decided to 'commit to providing clean and safe products and improving the quality of life through all our activities'. Also, Toyota has developed an active policy and program to ensure continuous improvement of the environmental performance of the Toyota earth charter and Toyota environmental action plan. Toyota sees environmental issues as one of its major challenges and considers environmental impacts across all life cycle stages of its vehicles, including development, production, use and disposal. Toyota keep up with international environmental qualities, initiates enhanced environmental assessments, and works with suppliers, dealers, and others to achieve the principle of 'building people and environmentally friendly vehicles.' They strive to achieve the highest level of environmental management in every country and region.

For the employees, the Toyota industry has adopted a policy to improve its safety and health management standards by promoting occupational safety and health management systems and working more closely with its subsidiaries and affiliates. The company's safety and health committee is composed of management staff and is responsible for company-wide activities aimed at preventing occupational accidents. Safety and health activities are implemented throughout the company on a daily basis, focusing on key aspects of personnel, materials and management. The company's accident rate has been below the regional industry average. Toyota industries is also participating in ongoing efforts to improve occupational safety and health management at its subsidiaries and affiliates.

Furthermore, TMC also supporting balance between family and work. Falling birth rates, ageing societies and the increasing prevalence of nuclear families are placing an increasing burden on company workers. In many cases, employees are forced to balance their work and family roles, taking care of children or the elderly. Toyota is actively involved in creating projects and encouraging a workplace culture that allows its employees to balance family and workplace obligations without sacrificing one or the other.

Differentiation Strategy

Toyota Motor Corporation (TMC) is the largest automobile manufacturer of the world and also largest scale company in Japan for today. For its successful position, there is absolutely has a differentiation strategy to other competitor. The main cause of Toyota's success in the global market lies in the so-called 'Toyota way'. Toyota's approach is not just about technology and efficiency, it's about 'Doing the right thing for the company, its employees, the customer and the society as a whole'. It can be concluded that 4P model to Toyota way, such as Philosophy, Process, People and Partner and, Problem solving.

First, Toyota has been so successful in the global market is its corporate philosophy. Corporate philosophy can be defined as a set of rules and attitudes that control the use of corporate resources. In Japanese culture, long-term positioning and long-term thinking play an important role. This is reflected in Konosuke Matsushita's famous 250-year development plan at TMC, this basically means that management makes decisions based on long-term concepts, even at the expense of short-term financial goals. Furthermore, Toyota’s leaders are always adding values to customer, society, and community. It's not always about delivering a perfect product or cutting costs or avoiding waste. Behind everything, there are concepts of humanity, humility, empathy and connection.

Second, another factor in Toyota's success as the world's most successful car company is its famous manufacturing method, known as the Toyota Production System (TPS). One of TPS's biggest strengths is its strong focus on lean manufacturing. Lean manufacturing is designed to eliminate waste in any area of production, including customer relations, product design, supplier networks, and factory management. The goal is to include fewer people, less inventory, less time to develop products, and less space to be highly responsive to customer needs, while producing high-quality products in the most efficient and economical manner possible. For example, in the 1970s, Toyota invented just-in-time (JIT), an inventory strategy that strives to improve a company's return on investment by reducing in-process inventory and associated carrying costs, following a simple philosophy that inventory is wasteful. When using a minimum material inventory and JIT inventory system, one of the most important aspects is to ensure that every component that goes to the next step of the manufacturing process meets the highest quality standards. Therefore, all production and logistics employees must be trained and sensitized to these issues.

Third, TMC also add value to the organization by developing people and partners. The concept of re-engineering has been another important factor in Toyota's success. Re-engineering can be defined as a fundamental rethinking and radical redesign of business processes to achieve rapid improvements in key performance measures such as cost, service, and speed. It combines strategies that foster business innovation with strategies that significantly improve business processes, enabling the company to become a stronger and more successful competitor in the marketplace.

Moreover, another major success factor for Toyota is its effective and efficient human resource management system. For Toyota, human resources are the cornerstone of employee loyalty and commitment to quality. The basic principle is that a workplace with high morale and job satisfaction is more likely to produce reliable, high-quality products at an affordable price. For instance, at a Toyota factories, group activities are promoted among team members on the shop floor. In addition, the knowledge base of all employees is used to improve the reliability and productivity of equipment, thereby reducing maintenance and operating costs.

Finally, the characteristics at the top of the Toyota success pyramid are a willingness to solve problems, constantly improve and learning, which is deeply rooted in the Toyota culture. Its mean this does not only imply continuous improvement process (CIP) that the philosophy or practice focusing on continuous improvement of manufacturing, engineering, supporting business processes, and management processes, and more deeper than this. In fact, this has led to a belief that one must always see with one's own eyes in order to understand the situation thoroughly. The key to sustained problem solving and long-term business success is to make decisions slowly and by consensus, considering all options.