Business Model Innovation and Logistics

Question: Discuss about the Business Model Innovation and Logistics. Answer: Introduction: Toyota Motor Corporation is a Japanese automobile manufacturing company having its headquarter at Aichi, Japan. In the year 2014 Toyota consisted of the 338,875 employees globally and by the end of February 2016 Toyota was considered as one of the 13th largest company worldwide in terms of the revenue produced ahead of Volkswagen and General Motors. Toyota automobiles were established in the year 1933 as the division of Toyoda Automatic Loom Works, which was centrally focussed on the production of automobiles under the direction of Kiichiro Toyoda. Toyota presently operates through dealership sales channel. It is primarily focussed on the production and selling of luxury sedan such as Toyota corona, Toyopet Toyo Ace truck. Toyota Dyna, Toyota Coaster, Toyota corolla are some of the major products, which are produced by Toyota. The executive management of Toyota comprises of Christian Ruben, Ivo Ljubica who are the directors of the company. The board of directors of Toyota allocates accounts based on the location of the registered offices of its relevant offices and groups. Vision and Mission: The mission of Toyota is to provide safe journey to its customers. Toyota is focused on developing new technologies with the intention of saving energy and diversifying the energy sources. Toyota is working with the vision of creating a prosperous society and clean environment by promoting the production of battery cars (Cusumano 2013). Value chain analysis of Toyota: Value chain analysis can be defined as the analytical theory, which helps in identifying the business operation by creating value and competitive advantage for the firm. Inbound logistics of Toyota consist of two separate activities first being the transport of parts from the local suppliers to the manufacturing unit and the second part consist of international inbound logistics to ship its parts from Japan to North America and European plant. Localization of the production is one of the central strategy undertaken by Toyota and 75.4% of the non-domestic sales were produced outside the territories of Japan for the calendar of 2015 (Backer and Miroudot 2014). In addition to this, Toyota has perfectly crafted Just-In-Time systems of manufacturing in order to eliminate the need for inventory which helps in saving considerable amount of cost. Operations: Toyota automotive operations support the promotion of conscientious manufacturing throughout its operational functions. On the other hand, lean manufacturing technology helps in promoting competitive advantage. Figure 1: representing Toyota assembly plant (Source Kilger et al. 2015) Outbound logistics: Approximately Toyota has more than 175 distributors and 8900 dealers outside the territory of Japan. The company employs carriers, railroads and trucks to transmit its vehicles from the manufacturing plant to the dealers. Toyota employs numerous distribution strategies in US, Europe and Japan (Diabat et al. 2013). Distribution of vehicles produced in North America: Once out of plant vehicles are shipped into the marshalling yard where it is prepared for transportation to its distributors and dealers. Distribution of vehicles produced overseas: Large number of vehicles produced in Japan are transported in North America and are further transported to dealerships. However, Toyota value chain represents that the delivery time should vary from three weeks to five weeks to those ports where dealers are located close to its manufacturing unit (Christopher 2016). Marketing and sales: Toyota puts more of its focus on innovating product and promoting efficiency of brand through brand integration practices. Toyota marketing strategy makes the use of print and media advertising to promote sales. It also focuses on public relations and direct marketing techniques with the help of television advertising for effective marketing and sales. Services: Toyota operates according to the value of serving its customers first. This principle is reflected in all the business processes and operational procedures in company (Backer and Miroudot 2014). Figure 2: Diagrammatic representation of Toyotas value chain (Source Backer and Miroudot 2014) Planning process of Toyota: Toyota has adopted intensive business strategy in order to succeed on selected market to develop its business. Toyota adopts the strategy of continuous improvement in order to create an impact on the level of quality product. Toyota adopts an integrating strategy of cross-functional business through gradual improvement and continuous business activities. Product strategy: The product strategy of Toyota is based on rendering high quality fuel efficient cars through the employment of innovating technologies through intensive hard work and creativity (Kumar 2015). Research and development: Toyota is considered as one of the leader of automobiles industries through advanced research and development technology. Business strategies adopted by Toyota is aimed at developing intelligence responses in order to challenge the automobile industry by presumptuous responsibility for future generations. Designing fuel-efficient engines: Regarding the problems of pollution and emission Toyota intensively makes the use of technology to design its car engines which are less polluting. It is committed towards developing hybrid car engines by undertaking the combination of different source of power units. Toyota designs its engines, which are technologically more advanced which helps in achieving the business mission of green machine. Brand Positioning of Toyota: Toyota develops a strategy of product positioning strategy to influence their positioning in the automobile market. For example, Toyota and Lexus are other competing automobile brand that has different positioning strategies. A Toyota Camry and Lexus IS may be comparable in terms of shape and size but the two models is designed and marketed intensively to reach two different groups of consumer. Toyota positions its product by formulating positioning strategy by appealing its targeted groups of customers. Toyota has the better understanding of its competitors such as Nissan, Lexus etc by identifying their unique selling point, which helps in determining the differences in their product (Simons 2013). Hence, Toyota uses low cost strategy by focussing more on the superior designing and quality, which helps in differentiating its product from its competitors. Manufacturing budgets of Toyota: Manufacturing budgets of Toyota potentially consists of capital surplus, retained earnings and earnings generated from the current year surplus. In accordance with the going concern approach, a significant part of the regulatory budgets complies with the minimum requirement of Toyota for covering the risk. In addition to this, a budgeted profit is also taken into the consideration under the going concept for determining the manufacturing budgets of Toyota. To comply with the risk requirement Toyota takes into the account only a prudent budgeted profit to promote its sales. Figure 3 representing the budget cost of component in manufacturing of Toyota (Source Rothaermel 2015) Controlling: Monitoring control: Indentifying waste: According to Rothaermel (2015) there is always waste or residual left out whatever be the process of production Toyota believes in improving its technology through better monitoring of manufacturing process. Toyota continuously aims to improve the process through vital tools by bringing out enhanced product or services. Toyota monitors the activities of its organisation by analysing the activities of department that are directly connected with the manufacturing unit. Analysing the waste and discovering the root cause: For each of the waste that is identified Toyota discovers the root cause for such waste. If a machine in production unit constantly breaks down Toyota identifies the real problem by providing adequate training to the operators who do not use the machine properly. Tools implemented to reduce waste: Once Toyota identifies the waste monitoring process in the above stated stages it employs the tools of reducing the waste through using Just-in-time (Simons 2013). In order to minimise the use of stock and resources Toyota only purchases materials and makes effective utilisation of the available resources to help production run smoothly and efficiently. Such strategies reduce the possibilities of poor engine quality in future batches of cars. Implementing balanced scorecard: Attaining productivity in business has always been an important requirement for continuous growth and expansion. Managers and directors of Toyota are under the responsibilities of assuring the success of business operations though using balanced scorecard techniques, which enables them to achieve their goals throughout their production level. According to Okongwu et al. (2015) balanced scorecard can be defined as the strategic management techniques used for communicating and evaluating the mission and strategy of a business firm. Toyota balance scorecard is divided into four categories to measure the performance of the company which are as follows; Financial perspective: The financial prospect of Toyota aims to answer the queries of its shareholders. Financial measures of Toyota emphasises on the profitability related measures as its shareholders verifies the profit level of the investment undertaken by Toyota. Financial measurement covers up the areas of Toyotas return on investment, cash flow, net operating income and growth in earnings. Customers perspective: According to Keyes (2016) this aspects covers up the ability of Toyota to offer quality cars and engine services by attaining the overall satisfaction level of customers. Toyota believes that if the customers are not happy then they might not return. Therefore, customers satisfaction is of critical importance in achieving the companys financial goals defined under financial perspective of the balanced scorecard. Toyota focuses on increasing the customers retention through improved customer relationship by responding to complaints of customers. Internal business process: The internal business perspective of Toyota is based on the internal business results, which lead to financial success and satisfied customers. To recognise its organisational objectives and customers anticipations Toyota identifies the vital business process such as internal business management, which helps the organisation excel in international automobile market (Sainaghi, et al. 2015). Internal business process of Toyota consists of cost of services, cost of conformance, process innovation are some of the vital measures aimed at increasing the level of production capacity. Learning and growth perspective: This perspective of Toyota looks into the employee performance as how they grow and learn within the organisation. Such measures examine the employees level of expertise and knowledge in support of organisational objectives. Managers of Toyota also identify the vision and mission by sustaining the ability of the employers to sustain and improve (Black et al. 2014). Decision-making: International product strategy standardisation: Toyota automobile revealed its plans by stating that it aims to invest $1billion for setting up new plants in Mexico and another $440 million to add up a new manufacturing line in china. The company has revealed its expansion plans in three years by highlighting its strategy, which aims to put high importance in the U.S markets and also aims to take up more measurable step in china (Tjader et al. 2014). Toyota has formed ambitious goals of doubling its sales and production by 2 million cars in the upcoming years. On the other hand, Toyota is considering catching up its rivals in china by making large sum of investment in building an excessive production strategy. Finding and facts: Planning: Toyota has adopted intensive business strategy in order to succeed on selected market to develop its business. The product strategy of Toyota is based on rendering high quality fuel-efficient cars to its customers. Toyota is committed towards developing hybrid car engines by undertaking the combination of different source of power units. Controlling: Toyota believes in improving its technology through better monitoring of manufacturing process. Managers and directors of Toyota are under the responsibilities of assuring the success of business operations though using balanced scorecard techniques (Abdulrahman et al. 2015). Furthermore, Toyota takes into the account only a prudent budgeted profit to promote its sales. Decision-making: The decision-making aspects of Toyota motors are focussed towards expansion of units in other parts of world especially in china and Mexico. Toyota has formed ambitious goals of doubling its sales by building an excessive production strategy. Conclusion: To conclude with this report it is noteworthy to denote that Toyota is currently looking forward to expand its operations by expanding its capital base by attracting more investment in its shares. The main goals associated with Toyota are to achieve the overall performance and make a profit from its operations. Several scholars have suggested that high tech automobile firms like Toyota should standardise their products by improving the performance of the engines by making improved innovation on reducing the fuel consumption. It is suggested that automobiles firms like Toyota should contribute more towards society and communities under which it operates. Toyota should effectively contribute in corporate social responsibility in order benefit the society far beyond the activates of law. It is recommended that high tech automobile companies like Toyota should become more positive towards adding up high intangible worth to its products by introducing high-tech battery operated cars. This will help in reducing the dependence on fuel and will add more value to its brand. Reference list: Abdulrahman, M.D.A., Subramanian, N., Liu, C. and Shu, C., 2015. Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies. Journal of Cleaner Production, 105, pp.311-323. Anderson, D.R., Sweeney, D.J., Williams, T.A., Camm, J.D. and Cochran, J.J., 2015. An introduction to management science: quantitative approaches to decision making. Cengage learning. Black, S., Washington, M. and Rasheed, H., 2014. Business Model Innovation and the Balanced Scorecard. Christopher, M., 2016. Logistics supply chain management. Pearson Higher Ed. Cusumano, M.A., 2013. The Japanese automobile industry: Technology and management at Nissan and Toyota (No. 122). Harvard University Press. De Backer, K. and Miroudot, S., 2014. Mapping global value chains. Diabat, A., Khodaverdi, R. and Olfat, L., 2013. An exploration of green supply chain practices and performances in an automotive industry. The International Journal of Advanced Manufacturing Technology, 68(1-4), pp.949-961. Gereffi, G. and Sturgeon, T., 2013. 14 Global value chain-oriented industrial policy: the role of emerging economies. Global value chains in a changing world, p.329. Gibbons, R. and Kaplan, R.S., 2015. Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?. Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy. CRC Press. Kilger, C., Reuter, B. and Stadtler, H., 2015. Collaborative planning. In Supply chain management and advanced planning (pp. 257-277). Springer Berlin Heidelberg. Kumar, R., 2015. Impact of Promotional Activities, After Sale Services, Mileage and Resale Value on the Purchase Decision-A Consumer Behaviour Study in Automobile Industry. Journal of Commerce and Trade, 10(1), pp.86-95. Mitra, A., 2016. Fundamentals of quality control and improvement. John Wiley Sons. Nof, S.Y., Wilhelm, W. and Warnecke, H., 2012. Industrial assembly. Springer Science Business Media. Okongwu, U., Brulhart, F. and Moncef, B., 2015. Causal linkages between supply chain management practices and performance: a balanced scorecard strategy map perspective. Journal of Manufacturing Technology Management, 26(5), pp.678-702. Petersen, J.A., Kushwaha, T. and Kumar, V., 2015. Marketing communication strategies and consumer financial decision making: The role of national culture. Journal of Marketing, 79(1), pp.44-63. Rothaermel, F.T., 2015. Strategic management. McGraw-Hill. Sainaghi, R., Phillips, P. and Corti, V., 2013. Measuring hotel performance: Using a balanced scorecard perspectives approach. International Journal of Hospitality Management, 34, pp.150-159. Simons, R., 2013. Levers of control: how managers use innovative control systems to drive strategic renewal. Harvard Business Press. Tjader, Y., May, J.H., Shang, J., Vargas, L.G. and Gao, N., 2014. Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model. International Journal of Production Economics, 147, pp.614-623.