Brief Review on Business Process Analysis of Toyota

Question :

Research the elements and core disciplines of a business process for a manufacturing or services organization with which you are familiar.

Answer :

1 Company Background

Toyota Motor Corporation is a Japanese automobile company established in the year 1937 (Toyota Motor Corporation, 2016). It is a leader in the global automobile industry and its processes include design, production, assembly, sales and after-sales services. The major markets of Toyota are located in Japan, Europe, Asia and North America. Some of its famous products include Lexus, Hino and Auris.

2 Process Management Matrices at Toyota

Just-in-Time (JIT) and Total Quality Management (TQM) are the two process management matrices used by Toyota to manage inputs and outputs. The idea behind JIT is to synchronise input and output based on actual demand. It is aimed at maintaining minimum inventory so that demand can be met on time and there is minimum or zero wait time. This is the most successful and optimal process management technique of Toyota (Christopher, 2016). Next is the TQM which is a step-by-step approach to measure the process flow. Under this matrix, every step of the process has some pre-determined standards for quality output and it helps in determining the phases that match those standards. It helps to ensure that only the best products reach the customers. Homogeneous nature of products can be maintained through this technique and wastage is reduced as there are less faults. 

3 Financial, External and Internal Performance Measures at Toyota

External Performance is measured with the help of techniques such as customer perception management and business process re-engineering. Customers’ perception is generally obtained from the surveys conducted by the company to understand customers’ needs and competitors’ performance. Toyota is known to implement business process re-engineering for in-depth changes in business processes which also helps them to reduce process costs (Velimirovića, Velimirovićb, & Stankovića, 2011). The Toyota Production System based on lean manufacturing serves as an internal performance measure for the company which are implemented in its process management. Toyota also uses Key Performance Indicators to measure financial, external and internal performance. Besides, consolidated financial accounting is used by the company for its overall financial performance measurement (Toyota, 2011). Its key financial indicators are operating income return on revenues, pre-tax returns on revenue and capital, return on assets, return on equity and shareholders’ equity (Toyota , 2020).  

4 Product Attributes and Customer Satisfaction at Toyota

The three main product attributes at Toyota are modern design, elegance and product facilities (Itasari, Rahmanto, & Slamet, 2018). The target customers of Toyota fall under the age group of 20 to 30 years and Asian customers form its major customer base. Toyota’s market oriented and value based pricing, innovative products and excellent services contribute to overall customer satisfaction. The pricing mix of Toyota is intelligently designed so that its medium range cars are priced at market-oriented prices and its luxury cars prices are value based. Toyota is continuously innovating to improve various aspects of the products such as fuel consumption and seating arrangements. This appeals to the tastes and preferences of most target customers. Toyota services include two major components of service advice and technical service. Customers find service advices helpful to make decisions and top notch technical services makes the brand reliable to the customers.  

5 Business Process Comparison: Toyota and Ford

Toyota’s strong competitor Ford follows six sigma approach and DMAIC (Define Measure Analyse Improve Control) for its business processes while Toyota mainly uses Kaizen that includes Just-in-Time and Total Quality Management. The success of both the companies mirror the implications both the processes have had on the business processes of each company. While both six sigma and Kaizen have their positive and negative aspects, given Toyota’s success at leading the markets, it can be said that Kaizen is a better approach. However, both the companies can use a combination of the two matrices to achieve overall process competencies. 

6 Product Life Cycle at Toyota

The four stages of product life cycle at Toyota are pioneering stage, growth stage, maturity stage, and decline stage Toyota conducts life cycle assessment for its products in the manufacturing phase. Consumer demands are high in the pioneering stage which is ideally the manufacturing. Due to the business process at Toyota the pioneering stage is heavily influenced by the consumer demand. During the growth stage of the product customers are looking for innovation and actively look out for the product (Zaw & Chaipoopirutana, 2014). At the maturity stage of the product consumers start evaluating competitors’ product to make a decision whether they want to stay with Toyota or choose the competitors’ product. 

7 References

Christopher, F. (2016). The Toyota Production System - The Key Elements and the Role of Kaizen within the System. . 

Itasari, A., Rahmanto, A., & Slamet, Y. (2018). Influences of Product Attribute and Event Marketing Toward Customers’ Behavior in Buying a Car Toyota New Yaris. International Journal of Multicultural and Multireligious Understanding (IJMMU).

Toyota . (2020, July 8). Financial Data. Retrieved from Global Toyota: https://global.toyota/en/ir/finance/

Toyota. (2011). Toyota Annual Report: Management's Discussion and Analysis of Financial Condition and Results of Operations. 

Toyota Motor Corporation. (2016). Company Profile. Toyota Motor Corporation.

Velimirovića, D., Velimirovićb, M., & Stankovića, R. (2011). ROLE AND IMPORTANCE OF KEY PERFORMANCE INDICATORS MEASUREMENT. Serbian Journal of Management, 63 - 72 .

Zaw, A., & Chaipoopirutana, S. (2014). Factors Affecting Customer Loyalty of Toyota Cars’ Owners in Yangon, Myanmar. International Conference on Business, Law and Corporate Social Responsibility.