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INTRODUCTION
We chose to present this text, since Toyota Motors is a company we know and it is present all over the world with such a strong brand that we decided to know more about it. Toyota is a brand which enjoys from a remarkable reputation and is used as a case study in many subjects, from marketing to operations management. It is known to be very innovative, to be ahead of its competitors most of the times, as well as, to have the most efficient production systems, which are a benchmark to the most automobiles manufacturers.
Another factor that attracted us to this text was that we had not heard of Toyoda Automatic Looms before, and he believed that “Toyoda” was just a typing mistake, as well as the fact that the oriental culture is a subject of great interest to the three of us.
TEXT ANALYSIS
Main Objective of the Text
The main objective of the text in analysis is to recognize the importance of the Toyoda family in shaping the development of the Japanese economy, both in the textile and automobile businesses. We can not give all the credits to Toyoda Automatic Looms and to Toyota Automobiles, because there were other important companies which contributed to Japans success. However, the members of the Toyoda family, along with all the other employees of their companies, were major players in first and second Japanese economic miracles, while most of the other companies either contributed to first or to the second economic miracles.
Brief Summary of the Text
Sakichi Toyoda spent most of his career trying to create a loom that could compete with Western models. His deal with the Platt Brothers in 1929 for the rights to manufacture and sell the Toyoda G-Type automatic loom was the crowning achievement of his life. Britain had been the worlds preeminent maker of textile machinery, and especially dominant in Japan. The fact that Japan was selling technology to a British firm hinted Japans incredible technological progress in the early twentieth century.
The cotton goods market had also been dominated by Britain but by the 1930s Japan ended the British dominance and became the largest exporter of those goods. This rise in the textile industry was part of Japans “first economic miracle”. It was initially discredited and attributed to the low wages and undervalued yen, and even allegations of unfair trade were made afterwards. However, as the competitive advantage became clear, Japan was regarded as invincible. The Japanese institutions and inventive spirit, and the governments support were key factors in this economic boost.
The early years (1930 -53) of the Japanese Automobile industry can be summarized as follows. In the beginning the Japanese car market was minuscule. Only three small manufacturers existed and the rest of the industry was dominated by big American firms like Ford and GM. This condition was a reason for resistance to join the industry. But then Kiichiro joined Toyoda and brought a new wind into the company. The very innovative and future focused son of Sakichi had travelled Europe and America and brought new ideas for the automobile manufacturing to Japan. The company experienced a big increase of capital (six fold) during that time. In May 1935 the first passenger car was produced as mixture of three different American cars. During that time, the company name “Toyota” evolved. In the same year after only half a year of preparation, the first truck was produced. However, there were still many problems with its durability as it broke down several times on the way to its exhibition. Still the product line was broadened, now including busses, trucks and convertible cars. In order to decrease foreign competition in the Japanese market the government introduced the Automobile Manufacturing Industries Law in 1936. This law would only give license to car manufacturers with a higher throughput of cars than 3000 vehicles a year. Reasons for that measure were the problems with the balance-of-payment as well as the desire for independence from external supply especially in the truck production for military reasons. Finally only Toyota and Nissan were licensed. This gave them the opportunity to increase their production and to grow. This way the Toyota Motor Company was founded. During the Second World War Toyota experienced a time of prosperity, as many trucks were demanded by the military. The production of passenger cars was down to zero. However, the restriction of material supply frustrated Kiichiro a lot, as he was always focused on quality. Through closer supplier relationships he was able to increase quality and this gave him even in the future a competitive advantage over other producers. After a sharp downturn after the war, Kiichiro was able to revive the passenger car production in 1947. But economic trouble, the rise of labour unions as well as the renewed competition from foreign companies made the business more complicated. Layoffs and un-kept agreements with the labour unions forced Kiichiro to resign and Ishida overtook, still having Kiichiro in the background of the company. However, the labour unions continued being very demanding which finally led to the resolution of the only National Union and the rise of Labour unions for each car company. During the Korean War (1950-53) Toyota exported their trucks for the first time. Their national car industry was further protected by high import taxes. Only a slight appearance of liberalization in the small-engine vehicle industry took place, however this segment was not covered by any foreign company.
In the 50s, the Japan restricted the importation of cars, in order to encourage domestic automakers to form joint ventures with foreign firms, since it believed there was a huge technological gap between the two. However, Eiji Toyoda visited Fords facilities in the U.S. and disagreed with this opinion; nevertheless, he took valuable lessons home. From 1950 to 1965, Japanese annual vehicle production increased drastically, attracting new competitors; nonetheless the market was dominated by Nissan and Toyota. Although Nissan was the more experienced car manufacturer, possessed better production equipment, and was located in Tokyo, it was highly penalized during the Allied Occupation; their suppliers were geographically dispersed and they werent organized until 1949. Toyota, on the other hand, was located in rural areas, thus allowing them to cluster their manufacturing facilities with those of their suppliers with whom Toyota had close relations; there was a suppliers association organized hierarchically; it controlled a weaker labour union; it had a better distribution network;