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History and organizational structure.

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Agnieszka P

on 30 January 2014

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Transcript of History and organizational structure.

Organizational structure
Source: own preparation based on Toyota-Global.com
Toyota Production System
History and organizational structure.
Company Profile
Strategy and Structure
Company’s Strategy:

1.Lean Manufacturing
2. Just in Time Production

Year 2001 - “Toyota Way’s” 5 Principles:
1. Challenge
2. Kaizen (Continuos Improvement)
3. Genchi Genbutsu (Go and See)
4. Respect
5. Teamwork

“Toyota Way's” four components:
1.Long-term thinking as a basis for management decisions
2.A process for problem-solving
3. Adding value to the organization by developing its people
4. Recognizing that continuously solving root problems drives organizational learning
Agnieszka Pietkiewicz 130529051, Zurab Akhvlediani 100085648
Globalisation of production
1984 - New United Motor Manufacturing (GM and Toyota) begins production in the USA
1988 - Toyota Motor Manufacturing, USA, Inc. begins production.
1992 - Toyota Motor Manufacturing (UK) Ltd. begins production.
1995 - New global business plan announced
2000 - Sichuan Toyota Motor Co., Ltd. begins production in China.
2001 - Toyota Motor Manufacturing France S.A.S. begins production.
Expansion to Eastern Europe and Russia
2002 - Toyota Peugeot Citroen Automobile Czech, s.r.o. is established.
2002 - Toyota Motor Industries Poland Sp.z o.o. (TTIP) is established.
2004 - Toyota Ukraine established
2005 - "Toyota Motor Manufacturing Russia"(TMMR) is established.
2007 - Toyota Romania established
Further expansion and diversification
2010 - Toyota and Tesla Motors agree on joint EV development.
2010 - Toyota Housing Corporation is established.
1937 -
Toyota Motor Co., Ltd. is established.
1938 - Honsha Plant begins production.
1950 -
Toyota Motor Sales Co., Ltd. is established.
1957 -
Toyota Motor Sales U.S.A., Inc. is established.
1958 -
Toyota Motor Corporation Australia is established
1959 - Motomachi Plant begins production.
1974 - Toyota Foundation is established.

1982 -
merger of Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. into Toyota Motor Corporation.
1984 - Joint venture with GM (New United Motor Manufacturing, Inc.) begins production in the USA.

History of Evolution
Initial development
Source: Toyota Financial Services, Toyotafinancial.com
1. Company profile
2. History of Evolution
3. Organizational structure
Multidivisional structure
4. Strategy and structure
5. Production
Overseas manufacturing
Source: Toyota Global, toyota-global.com
Japanese automotive company
Industry leader in manufacturing and production
CEO: Akio Toyoda (from 2009)
Main headquarter: Toyota City, Japan

Forbes: #14 World's Most Valuable Brands, #9 in Sales, #29 in Market value
540 consolidated subsidiaries and 226 affiliates
Chandler, A.D., 1990.
Scale and Scope: The Dynamics of Industrial Capitalism, chapter 2 Scale, Scope and Organizational Capabilities
, Harvard University Press

Chandler, A. D., 2005. Response to the symposium: framing business history,
Enterprise & Society
, 6(1), 134–137.

Chandler, A.D., 1980. The Growth of the Transnational Industrial Firm in the US and UK: A Comparative Analysis,
Economic History Review
33(3) p. 396-410

Chandler, A.D., 1990.
Strategy and Structure : Chapters in the History of the Industrial Enterprise
. Cambridge, Mass : M.I.T. Press

Forbes.com. 2014. Toyota Motor on the Forbes World's Most Valuable Brands List. [online] Available at: http://www.forbes.com/companies/toyota-motor/ [Accessed: 27 Jan 2014].

The Economist. 2009. Vertical Integration. Moving on up. [online] Available at: http://www.economist.com/node/13173671 [Accessed: 25 Jan 2014].

Toyota-global.com. 2014. History of Toyota [online] Available at: http://www.toyota-global.com/company/history_of_toyota/2010-2019.html [Accessed: 25 Jan 2014].

Toyota-global.com. 2014. Organizational Changes. [online] Available at: http://www.toyota-global.com/company/history_of_toyota/75years/data/company_information/management_and_finances/management/organizational/index.html [Accessed: 27 Jan 2014].

Toyota Motor Corporation. 2013. TMC Announces New Organizational Structure and
Executive Changes [online] Available at: http://cdn.toyota.jp/information/news/20130306/0306_1.pdf [Accessed: 25 Jan 2014].

1. Waste of over production (largest waste)
2. Waste of time on hand (waiting)
3. Waste of transportation
4. Waste of processing itself
5. Waste of stock at hand
6. Waste of movement
7. Waste of making defective products
Chandler – “
Expansion of a business enterprise dictates the need for need for new structure
”(Chandler, 1974, p.21)

New Organizational Structure
TPS is an integrated Socio-Technical System developed by Toyota in 2001

Main objectives of TPS are:
1. to design out Overburden and Inconsistency
2. to eliminate waste (Muda)
The elimination of waste (Muda) is the main focus for the company.

7 kinds of Muda (waste) that are addressed in the TPS:
Toyota’s manufacturing facilities are located worldwide, which are either owned by the company or run under a contract.

Vertical Cooperation by Toyota in Overseas Markets
“Toyota is committed to producing vehicles where we sell them, and our supplier diversity initiative is one reason we’ve had so much success building quality vehicles” (Toyota Website, 2013)”
- Supplier Organization (Level of Responsibility)
1. 1st Tier Supplier: In depth relationship to Toyota
2. 2nd Tier Supplier: Produce Individual Parts

- Scale of Cooperation among Toyota and its Suppliers
1. Product development Teams
2. Cross-Sharing of Personal (workers and managers are exchanged)
3. Good Communication between Toyota and Suppliers
4. Suppliers are Partners
5. Focus on Long-term Relationships to gain trust

Manufacturing – Vertical Cooperation and Vertical Integration
Reasons of vertical integration:
Lack of availability of suppliers in Japan
The need to expend the scope of the Business
The need to decrease the Cost of Production

The establishment of Toyota Gosei Co Ltd – Backward Integration:
It Supplies Toyota with various car parts
Makes parts for its cars, rather then relies on outsiders
Case of backward integration – they got closer to raw materials that are rubber and plastic parts

Advantages of Backward Integration for Toyota:
Reduction in costs
Good Quality product
Consistent supply – Helps with Toyota’s JIT Production

Vertical Integration on domestic Market
Horizontal Integration of Toyota
Acquisition of Lexus – Luxury Vehicle Division
Acquisition of Isuzu Motors
Acquisition of Scion
Acquisition of Daihatsu – the oldest Japanese Car Manufacturer

followed a “Chandlerian” route to success (Chandler, 2005)
Structure follows Strategy - Chandler
multi-division form - 212 divisions (product or geographical market)
complexity of structure is the result of strategy (Global Vision 2011)
Organizational structure in 1937
7 departments
Field offices in Tokyo, Osaka, and Nagoya
Founder, Kiichiro Toyoda served as manager of the R&D Department.
Source: own preparation based on toyota-global.com
Source: Chandler, A.D., 1990.
Strategy and Structure : Chapters in the History of the Industrial Enterprise
. Cambridge, Mass : M.I.T. Press
Recent changes
Global Vision, 2011
increase in the share of sales made up by emerging markets, from 40% to 50%.
followed by Structure:
New Organizational Structure, 2013
reorganization of region groups to improve products and services in emerging markets
Asia and Oceania Operations Group and the Middle East, Africa and Latin American Operations Group --> East Asia & Oceania Region, the Asia and Middle East Region, the Africa Region, and the Latin America & Caribbean Region

Strategy follows structure
- Chandler
Multidivisional structure
Toyota's Principles
History of MNC. Choose multinational company, research its history, organizational structure, link to Chandler's Theory.
1. Toyota followed a 'Chandlerian' path of evolution
2. It is true that 'structure follows strategy' at Toyota
3. Currently structure of Toyota is very complex and businesses diversified.
4. Company has a very strong financial position, with increasing profits on yearly basis, which allows them to further invest in machinery.
5. Its product diversification ensures company's financial stability in forceable future
6. Company's adaptive strategy (in terms of innovation) is a key for their success in the automotive industry
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