Case Study Of Change Strategy In Toyota Accounting Essay


This paper presents about case study of Toyota that has the strategy in the change environment. Firstly, the paper shows the economic change situation and information of Toyota that adapt the strategy for the changed environment. After that, the paper offers the historical of Toyota and the cause to establish the company. First strategy that be used to develop the organization was pull strategy and Kanban strategy that applied from American shopping. Next strategy was Just in Time that increased the efficiency of working process to the company. Last strategy was applied for use in the global market. It was called Kaisenstrategy that mean improve for better. This strategy was distributed to every branch around the world. From these strategies, Toyota is the world's largest carmaker in terms of market capitalization in the present. 


Nowadays, most of modern companies in the world there are rapid economic change situations that are currently running practically every business in the improved Western economies to place knowledge at the summit of the businessoutline. Influencesfor exampleextensivecollapse, growninternationalrivals, operational unemployment and the irregulardiffusion of economic renaissance are a few amongstseveral causes. Motivated in huge part by these situations, several theorists and researchers are aiming to the crisis situation of volumemanufacturepresently being perceivedthrough the improved economies. Growing of economic in the industrial business will be in huge part throughout the flexible specialization in industrial and the common modernizing of invention and appropriate strategies.

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Toyota Company is the largest automotive industry company in the world. The company has increased revenue until be the third biggest automotive industry and fifth biggest industrial company in the world. The company arrays the standard in effectiveness, productivity and quality in the automotive industry; and is the jealousy from competitors such as General Motor, Honda and more. Toyota Company develops the strategies to reduce the cost that are the strength point of the company to increase advantage competitive in the economic change. The company creates several strategies such as Total Quality Management (TQM), Just in Time (JIT) and more to drive business in the rapid economic change situations. These strategiesareunderstood as holding bettercapacity for the company renovation and effectiveproducing than following to unsuitable, unproductive and outmoded massproduction methods.

Toyota has the difference concept with the other competitors such as General Motor, Ford and other rivals. The concept of Toyota is to use small lot size with low-cost automobiles to play with the cost of automobile companies by nonstop decreasing cost throughout waste removal. In 1950 The Company still used the same concept follow the book today and tomorrow of Henry Ford. Therefore, Toyota can reduce the waste removal and develop the appropriate strategies start from pull system which was stimulated by supermarkets system in the US. After periods of preparation and improvement, the above main beliefs and the idea form the main of judoka and justintime (JIT), and Kisen making Toyota productive system more purposeful. When Toyota Company can decrease the cost in operation, the company has the objective to remain the quality of product in order to build the loyalty of the customers by creating total quality management to support the quality of product.

History of Toyota

Fujimoto (1999) mentioned that Toyota began produce the four-wheel car in Japan approximately 1910; early work was nothing but irregular way by small project business owner, inventory- engineer and mechanics. A few of automobile presented the wealthy upper-class in the social with curiosity. By 1925, growing production did not surpass many hundred units, manufacturing fundamentally continued in model production step. None of the automobile project company set up during this time were openly associated today's automobiles. By 1920, the automobiles were imported by Europe Company and American company, in the other ways the domestic company produced approximately one hundred cars that not enough with the need of the customer. Especially, the American company such as Ford and General Motor mostly imported their product between 1920s and mid-1930. Therefore, the Japanese government tried to prevent imported product by the Tokyo municipal authority made a decision to import about eight hundred frameworks of Ford model T for bus use, which demonstrated the usefulness of automobile as a substitute shipping mode. Prior to the war however there was a sharp growth in the automobiles market to 50000 units in the truck model. In 1936, the Japanese government launched the protection policy called Automobile Manufacturing Enterprise Law that prevented the foreign companies. In1930s, the foreign company had to shut down all of the manufacturing in Japan. Toyota motor was established in 1937 from that law in order to produce automobile substitute American Company. However, the planes size of Toyota that produced 2000 units per month with 5000 employees still was much smaller than American. For that reason, Toyota continued developed the production and strategies to compete with the foreign company.

Pull systems and Kanban strategy

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In the mid fall 1945, Toyota set the target that the productivity of the company grew the American level within three years. Nevertheless, the financial capability of Toyota was inadequacy; the company had to develop the productivity without much hardware investment. The company focused on the soft development that was the management strategy. Pull strategy was applied to the working process. Melaver and Anderson (2009) stated thata pull system was wherever procedures were found on client request. The idea was which each procedure was industrial each section in line with other divisions to construct a finishing fragment to the careful expectancy of distribution from the client.Rother and Shook (1999) in a generally spread object about Toyota's Production System that the mainly improvement of Toyota in first period used the pull strategy. The company created lean system to reduce the cost in manufacturing especially inventory of the company is unnecessary cost. The company followed the concept that "Flow where you can, pull where you must." Toyota considered the pull system in the construction plant. The manufacture procedure were designed to make simply deliverable develops leaner, as result of not holding extreme inventory levels of raw material, part-finished, and finished materials. The key identify of pull systems arise in the system of having Kanban approaches in the company production cycle. Lu and Kyokai(1989) confirmed that Kanban was applied from shopping in the supermarket; each customer chose the product in the supermarket put item in the cart and then collected the item to the counter paid money and lastly took them home. When customers purchased item to home, they had to consider in the number of people in the family, available space in the refrigerator and number of day that they will come back to purchase item again. Therefore, Toyota improved the concept of this situation to use in the company by ordering the raw material and start to calculate the number of processing day. In core of Kanban can be explained as anopticalsupportthat was used to present that either the company had either finished a process, require workmore materials. The objective of having anopticalsupportwas that the people who either fedemployees work off or gaveemployees work, becameostensibleof needrapidly. Kanbanwas anidea that offered to high turnaround businesses, but it could be adapted to other environments.For the pull system, accomplishments at the procedure places were generated by exhausted productivity kanban inventory at the procedure places. Each exhausted kanban stock establishes a queue part at the section. Before a work process was loaded a check was made to guarantee that the primacy control was satisfied that was adequate inventory in the output kanban stock of the upstream procedure of that work. If so a plan was made from the output kanban stock. The company had the output kanban stock to dropunder the re-order level, the dutywas queued at that place. The platform hadrequirements for variable the production quantity, pull quantity and re-order level. This approach was based on the just in time (JIT) strategy. Toyota succeeded and be leader in the competitive.

Just in Time (JIT)

Kichiro Toyoda who was the first president invented just in time theory of Toyota. In the past, Toyota had long term plan to produce the products such as annual plan, monthly plan. However, in the real situation, ordering and marketing condition was changedin every second or second by second. When the sale decreased, the company had to reduce the number of unit that produce. In the opposite way, when the sale grew, the company had to raise the product. Hence, other companies that had the fix plan to produce the product. When demand in the market changed, which was hard to modify the working process immediately. So Toyota designed the strategy that was called Just in Time (JIT) to reduce cost in the inventory. The sale of company was the factor to define the number in manufacturing. JIT helped the company to increase flexibility in the working process. If the sale did not relate with the number of product, the company raised the cost in the process. For example, the sale was higher that the number of products, the company loss the opportunity to sell produce. In the other hands, the sale was lower than the number of product; the company had the cost to keep the product in inventory. A production plan was controlled by internal and external environment. Moreover fix plan made the effect to the company that made surplus product on the hand or shortage in the other. JIT was designed to reduce the trouble in operation process. Fang and Kleiner (2003) citied that Just-in-Time was a structure that retains inventory at a minimum, demanding rigid control so as to succeed smooth operation. The JITsystem rejected inventory build-up, storage and made better use of capital.The previousmentioned to inventory managementthat wasconcreteapproaches and mean of confirming that at each manufacturing and association stage in the chain of production only the right number of products weredelivered when desired on time. The originalresolutionwas to smooth out the production procedure, removewaste and other types of ineffectiveness. JIT was also a concreteattitude in which at each step of production the next in line was observed as a customer, with the collect to suppose quality service and get widespreadfulfillment.Moreover, Toyota had to control internal and external factors. JIT used the process working of suppliers and internal department. For example, suppliers were the importance factor that the company needed to control because when the company needed the raw material to produce the automobile from the suppliers;theyhad the power to manage the item to the company on time. The most significant thing that the employee needed to know for this strategy was the priority in working process such as Camry is the first priority, next is the Yaris and so on. Next, time management was vital to know the whole of cycle time in operation. Furthermore the company analyzed the period of each process and calculated the time to order the item from suppliers.JIT controlled in the part of inventor of the company by using relationship between suppliers and internal processing of company. Firstly, the company knew the number of products that the customer need in that time and calculated the period to use in the process including the time that the suppliers spent to deliver the raw material to the company. After that the company controlled the collect time with the supplier in order to reduce waiting time. The raw materials came to the company, while the company needed to produce. The company decreased the cost to keep inventory. Besides, the company reduced cost of employee in each process because everyone in the organization had duty to work without the bottle necked or duplicate working. There werethree benefit to use JIT strategy of Toyota consist of facility improvement costs money, facility improvement cannot be done over again and facility improvement undertaken at the workplace where work improvement has not been completed is more likely to fail. Firstly, the purpose of improvement costs money was to reduce the number of employee in working activities. While the number of employee decreased, the effective in job equaled with the job before improvement. Secondly, the objective of the company was to decrease trial and error percent in the product or reduce defect of product in manufacturing because of the best planning. Lastly, Failure was more situations in the working process; JIT could reduce the failure by controlling the time to working and the standard of working process. As the result, the defeat of product reduced from control in every step. However, JIT had the mistake point for the quality of product, so Toyota developed the strategy that was called Kaisen to improve the weakness point of JIT strategy.

Kaisen Strategy

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Alukal and Manos, Anthony (2006) identified that Kaisen was the Japanese language that mean change for the better. Kiasen was used in order to improve the business in every day. In the high competitive marketing, Toyota had to improve the strategy to compete day by day because the real situation was changed immediately. Therefore the company developedthe suitable planning in the change situation. Kaisen was the basic of Just in Time, Customer Relationship Management, Total Quality Management and more. Kaisen gave the strategy for every problem in the organization. In the nature of working process, Kiasen focuses on continuous improvement such as manufacturing processes, business supporting and management. Toyota usually usedkaisen in a local development inside a workplace or local zone. As the result, Toyota could increase productivity and effective of working process. Moreover, Kaisen reduced the defect of product that made difference with the other companies in the competitive market. Kaisen could raise the competitive advantage in every department such as marketing department, financial department and human resource department. Toyota distributed this strategy to improve every branch around the world that had the difference problems and needed the difference strategy to solve them. For this strategy, Toyota made the solution in every problem immediately day by day, therefore the company could drive the business to be the leadership in the automobile industrial.

Toyota Motor Company expresses the achievement of Japanese automobile industrial in the international market. A perpetual leader in client pleasure, the company creates the team to develop the company called Toyota Production System (TPS), process of manufacturing that the company acclaims with falling cost of product, removing defects of product and developing the total quality of vehicles. Top management of Toyota occasionallycommunicated about spreading a serving hand to General Motor and Ford, in particular by increasing prices in the US market. On the other hand the organization's motivation is to create Toyota the world's biggest automobilebusiness. The companyproposes to remaingrowing market shareand the companyremains to be the biggest investor in the industry. Toyota preservesleader by controlling the cost of product that the strong point of the company, creating gorgeous new vehicles thatresponse the actually need of customers, providing high quality products by using the strategy to control the standard and keeping production effectiveness. 


Every organization has to change and adjust itself giving to the internal and external environment. Toyota is the success automobile business in the world. The company was established in 1937 because law of government that prevented the foreign company such as General Motor and Ford. Therefore the company had to develop the strategies to compete with other rivals. And then the company faced financial problems, so the company avoided investment in the hardware instrument. Moreover, the company had the difference concept to use the low cost strategy substitute increase prize like General Motor and Ford. The company continued improved software or management strategy such as pull strategy, Just in Time (JIT) and Kaisen. Pull strategy was the basis of the strategy in the Toyota. The good president of Toyota applied American Shopping to be Kanban strategy. Consequently, Toyota created its strategy that called Just in Time or JIT to reduce cost and increase the efficiency of working process. In next generation, quality of product was interested by the customers. The company built Kaisen strategy to use in the organization. Kaisen continued improved the company in diary activities. The company was the global company, so this strategy couldmake the solution immediately in crisis. The company was founded on strategy of customization with low cost with direct business to consumer model. Strategy if implemented sagely and considerately could support every organization in reaching to great heights as seen in the case of Toyota. In the present, Toyota can move the business to the top management and original theories in the market.