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Signature of Student GHz,Wang Date 201 3/119 DUE DATE RECEIVED DATE Individual essay Introduction: The global automobile industry had reached 1,640 billion dollars in 201 0, and the market value is forecasted to increase 49. 3% since 2010 to 2,449. 2 billion dollars in 201 5 (Marketing, 2011 Toyota, which takes up 6. 8% of global industry value, has just experienced its recall crisis from September 29th 2009 to January 27th 2010. More than 9 million cars and trucks around the world in the whole world were recalled by Toyota (Chris, P. Roger, W. , G. , 2010).
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Toyota was immersed in trough because of these faults and bad luck, and the public image is also seriously damaged. At present, Toyota is been returning on track gradually, and according to the report from Toyota Motor Sales, SACS, Inc. , its sales increased 17. 2% to 161 ,695 units in November 2012 because Toyota only sold 137,960 units in November of 2011 (Marketing 2012). These bad luck and breakdowns are very serious to any company which would encounter, so Toyota expressed its professional skills and abilities to handle these crises which are advanced in the automobile industry.
New CEO of Toyota, Kaki Toyota, brought some improvements to company’s operations and supply chain strategy. This critique will focus on three aspects of these changes, namely quality management, new product development and cost reduction, respectively, and in addition, some academic theories will be applied to explain these strategies Discussion: Quality management: The core competitive advantage of Toyota in the past was the high quality, and the main cause of the recall crisis was also quality problem.
Nearly all firms pay much effort to quality improvement to achieve goals like cost deduction, higher customer satisfaction, more loyalty from customer, and better performance from financial and market aspects (Versa, R, Borer, K. K. , 2010). In general, costs of company are from internal failure costs, external failure costs, assurance costs and prevention costs. Quality control system reduces some costs such as internal costs but the accompanying results are higher assurance costs and prevention costs.
In the wrong cost reduction program taken by Toyota, the less spend in assurance costs and prevention cost made Toyota move quality from the first principle replaced by outputs, aid by Kaki Toyota. Total quality management (TTS), six sigma and many other quality improvement approaches are depended on customer feedback (Paned, p. S. , Caving, R. R. , & Neumann, R. P. , 2000), and the system taken by Toyota which called Toyota production system has the same characteristic.
Another approach for quality improvement comes from employee feedback, In Toyota, quality circle (ICQ) and the concept of Kamikaze are required (Deeming,W. , 1970), and however, these essential operation elements have risk of gradually missing in the rapid expansion. In order to save the deteriorating profits brought by trade conflicts and the revaluation of yen, Toyota increased its overseas productions steadily. In the period between 2000 and 2009, overseas production of Toyota increased by more than 10 percent annually, higher than the increase of Honda and Ionians (Gang, 2010).
As a result, it is difficult to implement tacit knowledge in abroad production bases to ensure quality control and efficiency in manufacturing. According to annual report in 201 0, CEO of Toyota, Kaki Toyota put forward some improvements in operation and supply chain strategy to improve laity management.. 1. Toyota establishes new quality assurance system in order to ensure security and safety based on the perspectives of customers. 2. Set up a Special Committee General Overview of Quality Issues for global quality (Figure 1 3.
Some specific measures to improve quality and safety, which include three aspects: A) Strengthen the monitoring functions including better information gathering function, more technical offices, assisting root cause analysis by using Remote Communications Functions (RCA) and onboard event data recorders (DARED), better information analysis ND better safety decision-making process. B) Enhancing information disclosure to regain trust from customers C) Establishing five Customer First Training Center to develop Toast’s human resource and maintain quality.
New product development: New product development is also the soul of Toast’s value network so Kaki Toyota enhanced and improved this process. New products may fail in the fierce competition, and this has been proved in many industries. However, the mass benefits brought by new products can always push enterprises to take this process, either the Toyota. Firstly, these new products are always the resources of competitive advantage, and if enterprises take the leading role in the emerging product categories the effects will be more obvious.
In the automobile industry, new energy cars are the new development direction, and according to the report from Lei and Line (2011), Toyota will develop 10 kinds of cars in this field. Secondly, firms which develop new products will enhance their corporate image and Brand name. Further, Toyota wants to satisfy the needs from customers worldwide when provide clean and safe products, so Toyota put tremendous efforts to R&D activities which are regarded to improve the quality of people (Toyota, 2012).
With the help from outsides experts, Toyota regularly reviewed research issues like energy, information technology, materials to achieve the goal of efficient cost control (Toyota, 2010). Cost Reduction: The third aspect is the cost reduction which needs enterprises implement changes on both operation and logistic structure. Since the revaluation of the yen, adding the price rise of raw materials and human resource in Japan especially after the big earthquake in 2011.
The cost of production in Japan as jumped dramatically, so Toyota pays more efforts to localization production to implement cost reduction (including maintain R&D process quality with less expense) which can be analyzed from the annual reports from 2009 to 2012 (Figure 2). Conclusion: In Summary, by applying some strong improvements in quality management, Toyota recovers its quality crisis quickly and restores confidence from customer about automobile quality which was the core competitive advantage of Toyota. New products development helps Toyota improve its competitive ability and enhance its corporate image and brand name.