Creating Sustainable Competitive Advantage: the Toyota Philosophy and Its Effects

1202 Words Dec 8th, 2005 5 Pages
Creating Sustainable Competitive Advantage: The Toyota Philosophy and Its Effects

What is Toyota Philosophy

Toyota is Japan's biggest car company and the second largest in the world after General Motors. The fundamental reason for Toyota's success in the global marketplace comes from their corporate philosophy, the set of rules and attitudes that govern the use of its resources. The Toyota philosophy is often called as the Toyota Production System. The system depends in part on a human resources management policy that stimulates employee creativity and loyalty but also, on a highly efficient network of suppliers and components manufacturers. Much of Toyota's success in the world markets can be attributed directly to the synergistic
…show more content…
Outsourcing is increasing the importance for car makers because 85 percent of the direct cost of car production comes from engineering and component fabrication. The companies try to externalize many of these direct costs and minimize market risk. They also can receive the benefits of using specialized suppliers.

In Japan, supply chain relationships of Toyota are based on a complex system of co-operation and equity interests. Co-operation and asset concentration are encouraged, and antitrust prohibitions are far less restrictive than in the US.

It is also important to understand that both government and culture play a major role in Asian manufacturing and distribution practices. Asian values, more so than in western cultures, traditionally emphasize the collective good over the goals of the individual. This attitude clearly supports the Toyota's synergistic approach of supply chain management and has encouraged concern for quality and productivity.

Toyota has been able to transcend western cultural and institutional barriers and superimpose Asian models of supply chain management and co-operation elsewhere. The company realized real advantages in both production and customer satisfaction in the US. In contrast, Some Asian companies such as Daewoo were unable to transcend these cultural barriers and performed poorly in the US market.

Determining factors in productivity

Toyota decided to differentiate itself among foreign

Related Documents