Introduction
Toyota Motor Corporation commonly known simply as Toyota, is a
multinational corporation headquartered in Japan. At its peak, Toyota
employed approximately 320,000 people worldwide. It is the world's
largest automaker by sales.
The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his
father's company Toyota Industries to create automobiles. Three years
earlier, in 1934, while still a department of Toyota Industries, it created its
first product, the Type A engine, and, in 1936, its first passenger car, the
Toyota AA. Toyota also owns and operates Lexus and Scion brands and
has a majority shareholding stake in Daihatsu and Hino Motors, and
minority shareholdings in Fuji Heavy Industries, Isuzu Motors, Yamaha
Motors, and Mitsubishi Aircraft Corporation. The company includes 522
subsidiaries.
Toyota is headquartered in Toyota City, Aichi and in Tokyo. In addition to
manufacturing automobiles, Toyota provides financial services through its
division Toyota Financial Services and also builds robots. Toyota Motor
Corporation (including Toyota Financial Services) and Toyota Industries
form the bulk of the Toyota Group, one of the largest conglomerates in the
world.
Vehicles were originally sold under the name "Toyoda", from the family
name of the company's founder, Kiichiro Toyoda. In September 1936, the
company ran a public competition to design a new logo. Out of 27,000
entries the winning entry was the three Japanese katakana letters for
"Toyoda" in a circle. But Risaburo Toyoda, who had married into the family
and was not born with that name, preferred "Toyota" because it took eight
brush strokes (a fortuitous number) to write in Japanese, was visually
simpler and with a voiceless consonant instead of a voiced one Since
"Toyoda" literally means "fertile rice paddies", changing the name also
helped to distance the company from associations with oldfashioned
farming. The newly formed word was trademarked and the company was
registered in August 1937 as the "Toyota Motor Company"
Public (TYO: 7203) & (NYSE: TM)
Founded 1937
Founder(s) Kiichiro Toyoda
Headquarters Toyota City, Aichi, Japan; Tokyo, Japan
Key people
Fujio Cho (Chairman and Representative Director)
Katsuaki Watanabe (Vice chairman and Representative Director)
Akio Toyoda (President and Representative Director)
Shoichiro Toyoda (Honorary Chairman)
Industry
Automotive
Robotics
Financial services
Biotechnology
Products
Automobiles
Financial Services
Revenue ▼ US$263.42 billion
(2009)
Operating income ▼ US$4.56 billion
(2009)
Net income ▼ US $ 4.33 billion (2009)
Total assets ▼ US $324.98 billion (2009)
Total equity ▼ US$5.54 billion (2009)
Employees 316,121
Subsidiaries 522
Website www.toyota.co.jp/en/
Recent company developments
Financial crisis of 2007–2010
On May 8, 2009, Toyota reported a record annual net loss of US$4.4
billion, making it the latest automobile maker to be severely affected
by the 2007-2010 financial crisis. It had to ask the Japanese
government for loans.
2009–2010 vehicle recalls
In January 2010, Toyota announced recalling up to 1.8 million cars
across Europe, including about 220,000 in the UK, following an
accelerator problem.
The US Transportation Department has opened an investigation into
brake problems in Toyota vehicles. This is after the department
received 124 reports from drivers about the issue, including four
involving crashes.
The company said its recall could cost the company up to US$2
billion in lost output and sales. Toyota later recalled the Prius model
after problems were found in the ABS system.
The models involved were the RAV4 2009 to 2010 (model year),
Corolla (2009-2010),
Matrix (2009-2010),
Avalon (2005-2010),
Camry (2007-2010),
Highlander (2010), Tundra (2007-2010)
Sequoia (2008-2010).
The woes of Toyota, the world's biggest carmaker, are a warning
for rivals
As executives from Toyota squirmed before their tormentors in America's
Congress, there was little public gloating from rival carmakers. Although it
is Toyota that is currently in the dock after a crushing series of safetyrelated
recalls across the world, competitors are only too aware that it
could be their turn next. After all, there is not a single big car company
that has not modeled its manufacturing processes and supplychain
management on Toyota's lean production system. That said, there is a widespread belief within the car industry that Toyota is the author of most of its own misfortunes and that its mistakes hold lessons for others. James Womack, one of the authors of "The Machine that Changed the World", a book about Toyota's innovations in manufacturing, dates the origin of its present woes to 2002, when it set itself the goal of raising its
global market share from 11% to 15%. Mr Womack says that the 15%
target was "totally irrelevant to any customer" and was "just driven by ego". According to Mr Womack, the requirement to expand its supply chain rapidly "meant working with a
lot of unfamiliar suppliers who didn't have a deep understanding of Toyota
culture." By the middle of the decade, recalls of Toyota vehicles were increasing at
a sufficiently alarming rate for Mr Toyoda's predecessor, Katsuaki
Watanabe, to demand a renewed emphasis on quality control. But nothing
was allowed to get in the way of another goal: overtaking General Motors
to become the biggest carmaker in the world. Even as Toyota swept past
GM in 2008, the quality problems and recalls were mounting.
The majority of those problems almost certainly originated not in Toyota's
own factories but in those of its suppliers. The automotive industry
operates as a complex web. The carmakers (known as original equipment
manufacturer or OEMs) sit at its centre. Next come the tierone
suppliers, such as Bosch, Delphi, Denso, Continental, Valeo and Tenneco, who
deliver big integrated systems directly to the OEMs. Fanning out from
these are the tiertwo suppliers who provide individual parts or assembled
components either directly to the OEM or to a tierone
supplier. CTS Corp, the maker of the throttle-pedal assemblies that Toyota has identified as one of the causes of "unintended acceleration" in some of its vehicles, is a
tier two supplier whose automotive business accounts for about a third of its sales.
On the outer ring of the web are the tier three suppliers who often make just a single component for several tier two suppliers. Although there are
thousands of tier-two and tier-three suppliers around the world, their
numbers have been culled over the past decade as the OEMs and the tier-ones
have worked to consolidate their supply chains by concentrating
business with a smaller number of stronger companies.
Toyota revolutionised automotive supplychain management by anointing
certain suppliers as the sole source of particular components, leading to intimate collaboration with longterm partners and a sense of mutual
benefit. By contrast, Western carmakers tended either to source inhouse
or award short contracts to the lowest bidders. The quality Toyota and its
suppliers achieved made possible the "just in time" approach to delivering
components to the assembly plant.
Most big car firms now operate in a similar way. By and large, the
relationships between the OEMs and the tierone
suppliers run smoothly.
When problems crop up, it is usually with the other suppliers. One top
purchasing executive says that consolidation, the need to trim capacity
and the shock to demand that began in mid2008
have put the weaker parts of the supply chain under great strain:
A consequence of Toyota's breakneck expansion was that it became
increasingly dependent on suppliers outside Japan with whom it did not
have decades of working experience. Nor did Toyota have enough senior
engineers to keep an eye on how new suppliers were shaping up. Yet
Toyota not only continued to trust in its solesourcing
approach, it went even further, gaining unprecedented economies of scale by using single suppliers for entire ranges of its cars across multiple markets.
One senior executive at a big tierone supplier argues that although
Toyota's singlesupplier philosophy served it well in the past it had taken it
to potentially risky extremes, especially when combined with highly centralised decisionmaking in Japan. In the aftermath of Toyota's crash,
the question the industry is now asking itself is whether solesourcing
has gone too far. Until very recently, Toyota was the peerless exemplar. For
now, at least, it is seen as an awful warning.
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