Significant organizational change at Toyota Motor Company Essay

The Toyota Motor Company has ever been one of the most popular car mobile fabricating companies in the universe. They have been in the auto fabrication concern since 1937. Kiichiro Toyoda founded the company to industry cars. TOYOTA MOTOR COMPANY has now secured the place as one of the largest auto fabrication companies in the universe. Their success has evolved from the execution of the Nipponese quality and efficiency. Toyota has ever designed faster and more dependable vehicles at a more economic monetary value with the consequence that now TOYOTA MOTOR COMPANY is a far more profitable car maker than any other company in the universe. In the twelvemonth 2003, TOYOTA MOTOR COMPANY ‘s one-year net incomes were $ 8.13 billion ; that more than GM, Ford and Chrysler net incomes combined. Toyota has invented the “ Toyota Production System ” and the “ Just in Time Production ” which has been one of the most popular direction doctrines in the universe. The company believes in uninterrupted betterment and has been in the pattern of doing important organisational alterations from clip to clip. ( Jeffrey K. Liker, 2005 )

The chief ground said to be a major factor in the TOYOTA MOTOR COMPANY ‘s success is that they are continuously conveying new merchandise and characteristics in the market with velocity. The most basic of their vehicles is the Corolla whose overall merchandise development and production resulted in merely 15 months. One of TOYOTA MOTOR COMPANY ‘s taking schemes has been to larn from others. They take inspirations from companies like Ford Motor Company, quality gurus and industrial applied scientists. Besides the factor that sets the company apart from its equals is the fact that Toyota Motor Company enjoys cost distinction factor. They provide the same luxuries and benefits in their vehicle and make so at a lower cost compared to other celebrated companies. ( Morgan, James M. Liker, Jeffery K. 2006 ) .

“ We place the highest value on existent execution and taking action. There are many things one does n’t understand and hence, we ask them why do n’t you travel in front and take action ; attempt to make something? You realize how small you know and you face your ain failures and you merely can rectify those failures and remake it once more and at the 2nd test you realize another error or another thing that you did n’t wish so you can remake it one time once more. So by changeless betterment, or should I state, the betterment based upon action, one can lift to the higher degree of pattern and cognition. ”

– Fujio Cho, President, Toyota Motor Corporation, 2002 ( Ananth Iyer, Sridhar Seshadri, Roy Vasher, 2009 ) .

Some of Toyota ‘s company rules have been an inspiration to many companies. Some of them are to make consciousness of the jobs, set up capableness to work out the job, take action protocols, create system consciousness at all degrees and promote the ability to learn.

Significant Organizational Changes:

On 1st January, 2010, Toyota announced a important alteration in their organisational construction as portion of their uninterrupted betterment policy. Toyota has been known to do organisational alterations every so frequently to give the company the competitory border in the market. These alterations vary from direction aims alterations to reevaluation of hierarchies in the company. Some of the major alterations announced in 2010 are as follows:

For the intent of increasing efficiency and utilizing company resources providentially, the Business Development Unit and Marine Business Division shall now be renamed to Marine and Unit Business Division. The gross revenues maps shall besides be looked after by this unit.

The Purchasing planning section shall now be restructured into the Purchasing Administrative Department and the Global Purchasing Promotion Division and the Body Parts Purchasing Division shall now be updated to the Purchasing Planning Division. The intent is to consolidate local and foreign administrative maps and work on future undertaking direction activities and cost efficiency schemes.

The Ad and Marketing Division, Japan shall now come under Toyota Marketing Japan Co. Ltd, a new add-on to the Toyota Motor Corporation. The thought is to doing the market of Japan the focal point of their selling schemes.

The Gross saless and Marketing Support Division shall now be incorporated to the Gross saless Enhancement Department to reenforce selling schemes and actions.

The Strategic Production Planning Division shall now come under the caput of Customer Services Operations Division to beef up TOYOTA MOTOR COMPANY ‘s client services and assure quality benchmarks.

The Tokyo Design Division shall now be called Advanced Design Division to concentrate more on future technological growings. This division has ever been one of the chief success factors for TOYOTA MOTOR COMPANY. Toyota has ever been known for their new and improved technological enterprise at a relatively lower cost.

( Toyota, , 2009 )

Internal and External Drivers:

Every alteration is driven by certain factors that encourage that alteration. Some of the internal and external drivers that encouraged this alteration are as follows:

Some of the External Change Drivers are:

These include the external that is the economic, political or natural alteration factors that drive a company towards alteration. They besides play a major function in the entire productiveness degree of the company.

Increased Competition:

Technology is a field where new enterprises are introduced really often. For a company to bask competitory border, they need to be invariably on the sentinel for ways to maintain themselves updated with the latest technological tendencies and developments. They need to constantly do alterations and maintain on upgrading themselves. Toyota Motor Corporation has ever been one of those companies that believe in uninterrupted alteration. This gives them a competitory border over other companies as they are reexamining their systems, procedures, schemes and actions on a really frequent footing. The ground for this major organisational alteration was besides to keep that competitory border in the market as competition keeps increasing with clip.


Interaction and integrating between people across the universe is acquiring closer and closer twenty-four hours by twenty-four hours. As the engineering progresss, distances lessening. For this ground a company needs to maintain up with the latest tendencies of globalisation. Globalization was another chief driver for the organisational alteration. The societies are now going even more incorporate with each other through concern and communicating. This is the ground why many of TOYOTA MOTOR COMPANY ‘s divisions which were antecedently runing on a national degree were developed to look after planetary schemes and developments. This is a hard undertaking as the consumers of each part are different and have different purchasing forms. The undertaking of the company would be to analyse those forms of each of those companies and so offer merchandise consequently.

Changes in consumer demands:

Due to recession, there have been a batch of alterations in the consumer ‘s purchasing behaviour forms. Cost has become a major factor in the consumer purchasing determinations. Fortunately, Toyota has besides opted for cost distinction and enjoyed a cardinal place in that facet. Customer satisfaction is besides become a major concern presents and was a chief driver for the alteration in the organisational construction. In the new scheme, TOYOTA MOTOR COMPANY has focused more on supplying quality services for client satisfaction. This is another major factor is making trade name trueness and good will amongst the client.

Resource deficit:

Due to recession, there has been a important deficit in the resources available. The wisest move for any company is to efficaciously and expeditiously use the bing resources alternatively of bearing the disbursal and hazard of traveling after new 1s. That has besides been a major driver in this alteration. Many companies have besides had to allow travel of a few of their employees to counterbalance for the deficiency of production and gross revenues. TOYOTA MOTOR COMPANY made the determination to maintain a tight tether on their resources alternatively and use them providentially so that the production and gross revenues side do non hold to endure.

Internal drivers:

Along with the external, there are besides many internal drivers that motivate alteration in the organisation. TOYOTA MOTOR COMPANY has been a company that has ever believed in the Kaizen rule that is the uninterrupted alteration rule. That has resulted in alteration in their organisational construction and ends often. TOYOTA MOTOR COMPANY is ever looking for ways through which they can better themselves. Their inspirations have besides come from other successful fabrication companies like Ford and the aggression to be the best in the universe.

Change in engineering:

Technology has ever been a competition driven field. Every twenty-four hours there are major inventions that change the universe of engineering and those affected by it everlastingly. For every concern den pendant on engineering, it is highly of import to maintain the procedure of invention and patterned advance uninterrupted. For any car nomadic company every bit good, to bask competitory border in engineering is really of import, but it is besides a hard undertaking. Toyota Motors Company has surrounded itself with advanced applied scientists and interior decorators to maintain that competitory border alive. The chief internal driver for this alteration has been to reenforce that aggression towards technological cognition and aptitude.

Company Growth:

Growth is the coveted result for all companies. Schemes ‘ are developed, ends are set and action programs are created for this ground merely. For any company to turn, alteration is of import. It has been the usual pattern of TOYOTA MOTOR COMPANY to alter their schemes and development programs every so frequently to maintain the executives, employees and even the clients on their toes. Positive alteration brings growing for a company. ( Jean Phillips, Stanley M. Gully. 2011 ) .

Some of the Management Objectives for the Organization Change are as follows:

TOYOTA MOTOR COMPANY ‘s highest direction aim has ever been to make the best possible merchandise for the client. Some of the aims to accomplish that are as follows:

To use the company resources more expeditiously and efficaciously: in this twenty-four hours and age, where the universe is enduring from the wakes of recession, there has besides been a important alteration in the purchasing forms of the clients. And because of this, the gross revenues side is affected. Because of that labour rates and resource direction of the company have to be rethought and re-strategized. In this clip of economic trench, it is of import for any company to utilize their existing resources with prudence. This was one of the chief aims for the alteration.

Keep client satisfaction as the top precedence of the company: Extra focal point was given to quality services for client satisfaction. To accomplish that objective a separate division for client services was developed.

Focus on long term strategic planning activities: the focal point was besides to develop future schemes ‘ for growing of the company. This was besides one of the chief aims for the alteration.

Focus on cost decrease schemes: due to the fact that there have been a batch of alterations in client purchasing behaviour and determinations, cost decrease schemes were promoted maintaining in head the effectivity and efficiency of the merchandise.

More authorization given to the executives to do on the topographic point determinations: TOYOTA MOTOR COMPANY has besides bestowed their employees with ample authorization to do major determinations on their ain harmonizing to the state of affairss demand. That has ever been one of their chief factors for success. This scheme has besides gained the employee trust in the company.

Areas for betterment were identified: The first measure in be aftering for aims is to place the countries that need to be improved. These countries can be identified by following past tendency and looking for failings. In the old twelvemonth, what were the countries that needed attending and betterment? Those are the ideal countries to get down from. Another manner to place is to carry on a study of the market and the company itself and compare consequences. It will give the director a really clear thought as to what countries the company is missing in.

Stretch ends were set for excellence: after the countries where betterment is requirement are identified, ends are set. These are non normal mark but stretch ends. Stretch ends are practical yet extremely ambitious ends that are clear, compelling and competitory. A company needs to be extremely capable and confident to be able to carry through their stretch ends. TOYOTA MOTOR COMPANY plans their ends on an one-year footing and proctors and evaluates them throughout the twelvemonth.

Performance Splashboards were used: Performance can merely be measured if it is continuously monitored and progressed is gauged. Performance Dashboards are direction tools used to measure the company ‘s public presentation and advancement on a frequent degree. The overall organisational schemes till the degree of quality service that is provided to the clients, this all can be gauged by public presentation splashboards. The ground for its popularity is that they are easy to plan and can be implemented with efficiency. More and more companies presents are traveling for public presentation splashboard with the figure increasing every twenty-four hours. a manner to guarantee the public presentation splashboards success is to develop it utilizing three simple rules in head, that is, simpleness, support of senior executives and usage of proper mensurating prosodies that should be changeless throughout the whole company.

An intelligence squad was deployed: the sort of market a company lives in ; it has to confront many sorts of convulsion and upsets. They may be political, economic or natural. But they need to be addressed. After the public presentation splashboards are set, an intelligence squad is deployed to anticipate the convulsion and uncertainnesss in the schemes and how they would be impacting the company. This is a really of import measure for the company as these surprise alterations have a really strong affect on the overall public presentation of the organisation and can act upon all the sections from the gross revenues of the company to the client services that they are supplying.

Action program was developed: The last measure is to develop an action program that is based on all of the above factors. This action program is so broken down to task based activity that is more of the precise end as to what is expected of each of the person or section in the company. ( Daft, Richards. Marcic, Dorothy. 2003 )

Additional techniques

Employees input:

A successful non unostentatious thought is to take the employees input and thoughts for organisational alteration. Employees are the basal degree workers who can give the direction a really clear thought of the operations of the company. Taking the employees input will non merely ensue in their trust and trueness in the company but it can besides give the direction a new position or vision for the company. The direction does n’t hold to provide all the employees ‘ suggestions and they should non be doing any committedness in that respect as good but it is ever a good organisational move to authorise all degrees of the employees to increase their productiveness and committedness to the company. ( Mary B. Holihan 2006 )

SWOT analysis for the undertakings:

Another extra technique that can be applied by the directors is to take do a matrix of strengths, failings, chances and menaces of any of the undertaking that they wish to set about. Then those strengths, failings, chances and menaces should be given weight age harmonizing to their expected success in result. Those manner really concrete facts and figures will be available with the direction before make up one’s minding on a undertaking or even doing organisational alterations. ( Lawrence G. Fine, 2009 )

How Efficaciously Change was managed?

2010 did non turn out to be a good twelvemonth for Toyota Motor Corporation. Their bad fortune started right at the beginning of the twelvemonth in January 2010 when they started having ailments sing pedal entrapments of their autos. Finally, on 28th January 2010, the state of affairs got so bad that TOYOTA MOTOR COMPANY announced to remember the defaulted vehicles. These callbacks costs were about 5.2 million worth of vehicles. Another 2.3 million worth of vehicles were besides recalled due to accelerator jobs. Certain theoretical accounts of Lexus and Pontiac were besides identified to be defective and had to be recalled. On 29th January 2010, 1.8 million worth of vehicles were besides recalled in Europe. From China 75000 were recalled. TOYOTA MOTOR COMPANY had antecedently faced these issues last twelvemonth excessively and had worked in revamping their fabrication procedures but they did non turn out to be successful as they faced the same state of affairs once more in 2010. The chief vehicles that were identified to be defective were:








( Autos at, Toyota issues recall for 2.3 million vehicles. 22nd January, 2010 )

Consequence on Organizational Change:

Due to the recent blows that TOYOTA MOTOR COMPANY has to confront in 2010, there was an consequence of all this on the organisational alteration execution. The passage procedure of the divisions was completed as distinct but the recent calamities had a strong consequence on the production side of the company. Because of this their gross revenues were besides affected.

How the Customer Service Division was affected:

Customer services are normally the first topographic point to be impacted every bit shortly as there is a crisis. Same has been the instance with Toyota Motor Company. Their client services received the most outstanding blow as the client services division had to cover with all the clients ‘ ailments sing the faulty vehicles.

How the Gross saless Division was affected:

TOYOTA MOTOR COMPANY ‘s Gross saless Division had to digest the biggest blow. Harmonizing to the one-year studies there was a monolithic bead in the gross revenues in the twelvemonth 2010 due to the faulty vehicles. The lessening in the gross revenues was about 39 percent bead as compared to the old twelvemonth. The company had to remember about 10 billion dollars deserving of vehicles from all over the universe. Since Toyota Motor Company has besides had a large influence on the Nipponese Economy, even the Hankering suffered loss in the market.

How the production division was affected?

Toyota Motor Company ‘s production was temporarily closed down to look into the mistakes in the vehicles and until the mistake was identified and resolved, production of new autos was non resumed. Because the production section was the most involved section during the whole crisis, they had to confront the biggest examination and review by the universe.

How any opposition to alter was managed?

TOYOTA MOTOR COMPANY went through a tough twelvemonth that was 2009 and 2010. Besides holding trouble with the alteration in consumer behaviour forms and covering with the economic trench, the company besides had to confront a monolithic blow when they had to name back vehicles about worth of 10 billion dollars wholly all over the universe. But despite traveling through so many recent farces, TOYOTA MOTOR COMPANY was really optimistic and hopeful in their attitude. Harmonizing to the company, there may hold been errors in the yesteryear but the New Year ‘s end was really clear and that was to hold zero defects. By remembering their faulty vehicles, they were able to calculate out the defects in the vehicle and do certain that the same error was non repeated in the hereafter. There have been many companies that have faced the same issue in the yesteryear. For illustration, Chrysler recalled CTS pedals in Dodge Caliber vehicles in July 2010 after studies of lodging. Ford stopped production of their theodolite new wave for a piece because the design was similar to the CTS pedal.

Harmonizing to Akio Toyoda:

“ There was a spread between the clip that our U.S. co-workers realized that this was an pressing state of affairs and the clip we realized here in Japan that there was an pressing state of affairs traveling on in US. It took three months for us to acknowledge that this had turned into a crisis. In Japan, unluckily, until the center of January we did non believe that this was truly a crisis. ” ( Morgan, James M. Liker, Jeffery K.2006 )

To what extent the alteration was successful in run intoing its aims:

The chief end of any concern is to do its concern sustainable ; in other word, to do ample net income. From the really get downing TOYOTA MOTOR COMPANY has ne’er had problem bring forthing net incomes due to the fact that they enjoy the advantage of cost distinction in their merchandise. In the twelvemonth 2010, they were non successful in run intoing their ends.

Harmonizing to the CNN Business Edition ( 2011 ) , their Net Income fell from US $ 1.87 billion Dollars to 1.1 Billion Dollars which is a 38.9 per centum bead as compared to their public presentation last twelvemonth. In the defence of the TOYOTA MOTOR COMPANY executives, they blamed the green autos for their failure and the fact that the authorities policies had encouraged the industry of intercrossed autos in the market, ensuing in the crisp bead in the gross revenues of other autos.

( CNN -2011 )

Need for Further Changes in the hereafter:

There are still a batch of countries that Toyota Motor Company can work on to better the company. Two of them are mentioned below.

Extra Focus on the Industry of the Cars:

TOYOTA MOTOR COMPANY needs to pay excess attending to the fabricating side of the company in the hereafter. Particular Quality squad should be introduced to do certain that the auto fabrication procedure goes through an extended scrutiny of the parts before the auto is assembled. A particular testing squad should besides be introduced to prove the auto parts so that TOYOTA MOTOR COMPANY does non hold to confront the same state of affairs once more. TOYOTA MOTOR COMPANY is a extremely reputable company but the recent calamities have affected the clients trust in the trade name. TOYOTA MOTOR COMPANY will necessitate to set in excess attempt to resuscitate their trade name good will one time once more.

Enterprise to bring forth more “ green autos ” :

Since Green Vehicles are the new tendency, TOYOTA MOTOR COMPANY should besides concentrate on non merely presenting green autos but besides in thought in turning their bing autos green. The clients should be given the option of a simple alteration in engine to turn their autos eco friendly. This will turn out to be a wise determination for the company as the authorities has besides been stressing on green autos. Introduction of a new and different merchandise will assist the company win back their clients assurance in their trade name name.


Despite everything that TOYOTA MOTOR COMPANY has endured during the twelvemonth, there is still a batch of aggression and endowment in the company and it will non take them long to resile to the top of the car industry one time once more. Even now they are in the procedure of taking new enterprise to do certain that they do non hold to confront the same state of affairs in the hereafter. In my sentiment, the market might be able to forgive Toyota Motor Company if they have two bad old ages in the row. But they might non be so forgiving if the tendency continues. If the Toyota Motor Company wants to recover the clients trust and recapture the market, they will surely hold to come up with new organisational schemes to do that possible otherwise, they might even rinse off all the difficult work in their yesteryear excessively.

Microsoft ‘s President Bill Gate ‘s cardinal note reference to COMDEX in Las Vegas in November 2000 included the undermentioned observation:

“ I keep near my manus a transcript of My Years with General Motors by Alfred Sloan, the great leader who made GM the universe ‘s celebrated car manufacturer. The of import thing here is how to do organisations digest one time the mastermind enterprisers who built them have passed on. In Japan there are two companies that serve as suited illustrations: Toyota Motors and Sony. I ‘m non surprised when a company grows quickly in the span of five old ages, but I ‘m highly interested in companies that systematically generate greatest consequences over a 20 or 30 twelvemonth period. Do they hold embedded in them some mechanism for permanency? If they do, so a generational handoff wo n’t pass over out their endowment and their verve. ”

( Hino, Satoshi, 2005 )