Assessment 7: Revising Organization and Establish Objectives

School of Business Administration and Accountancy, University of Baguio

STRAM 1: Strategic Management

Toyota’s Organizational Structure

A functional organizational chart is a structure used to organize workers. They human

resource and the management are grouped based on their specific skills and knowledge. It

vertically structures each department with roles from the president to finance and sales

departments, to customer service, to employees assigned to one product or service. Functional

organizations contain specialized units that report to a single authority, usually called top

management.

Organizational Chart

Image 1. Toyota Organizational Chart

Note. Image was captured to Google

 The Company has a Functional structure with 5- 6 Hierarchal Levels. It is breaking

into six (6) major parts which are leading by the Vice President reporting directly on the

President. Each division was arranged accordingly based on the importance of the position

assigned namely the Chief Finance Officer, the Head of Investor Relations and the Corporate

Communication, Head of Legal and Compliance, the Head of Human Resources and

Administration, the Chief Risk Department and the Chief Audit Executive.

Finance Department

According to the Organizational Chart of Toyota Motor Philippines Corporation, the

Finance Department are part of the company that manages its money. The business functions of a

finance department typically include planning, organizing, auditing, accounting for and

controlling its Company’s finances. They also produces the Company’s Financial Statements.

Head of Investor and Relations and Corporate Governance

The Company has Head of Investor and Relations and Corporate Governance has

Investor Relations and Corporate Communication Department that concern about the relationship

between the Company and the Investors if there are things that needed to know or clarify they

are the one who are handling this.

Head of Legal and Compliance

According to the Organization Chart of Company the Head of Legal and Compliance

who ensures that a Company complies with outside regulatory and legal requirements as well as
internal policies and by laws. Their objectives is to ensure that an organization has internal

controls that adequately measure and manage the risks it faces.

Human Resources and Administration

According to the organizational chart of the Company, the Human Resources

and Administration is the management of the overall employment experience of people working

in the organization. The team of Human Resources Management of Toyota is responsible of

implementing effective workforce management and Human Resource Training and

Development.

Risk Department

The Company risk management is the processes of identifying, analysis, and acceptance

or mitigation of uncertainty investment decisions. The risk management plan includes companies

processes for identifying and controlling threats to its digital and physical assets, including

proprietary corporate data, customer’s personally identifiable information and intellectual

property of the company.

Audit Department

The Audit Department is a unit within a Company that is responsible for the evaluation of

operational procedures, risk management, control functions and other government processes and

engagement. Reporting internally to the Audit Committee of the Board of Directors. The Audit

Department is supposed to be completely objective and receive no influence or interference from

the areas of the Company or organization examines.

 The Company’s organizational chart expressed the importance of each Department in the

Company and there role and contribution on each Department. They value each contribution On

the Company and also show the support and encouragement on each employees.

Recommended improvement towards company’s organizational chart

Company engages in the automotive industries seek to achieve continuous quality

improvement because it ensures the consistency of products delivered to customers and protects

against the competition. It also paves the path to compliance with industry-specific standards.

This is crucial in the automotive sector because defective vehicle parts may lead to expensive

recalls or worse accidents that cost lives.

Fortunately, continuous improvement has a long history in automotive manufacturing.

Many of the tools and techniques widely used by organizations worldwide were explicitly

developed to ensure the quality and efficiency of automotive manufacturing. Toyota was a

pioneer of many of the CQI approaches used today.

As you might imagine, the benefits of a successful continuous improvement program are

significant, including:

Product Consistency

It is essential that all automotive products that make it off the manufacturing line are

fully-operational. Also, the capabilities of each part produced need to match the needs of end-

users. An effective quality program introduces pro-active solutions to eliminate the delivery of

defective or unnecessary parts and products. Problems are identified quickly and immediately
resolved, well before the products leave the manufacturing line. Consistency is possible when

decisions are made based on real-time data rather than guesses.

Compliance with Standards

Automotive manufacturers must comply with the standards set by the International

Organization for Standardization (ISO). Manufacturing plants are certified only once all of the

conditions are met. The standards ensure the quality, safety, and efficiency of the products

produced. In addition, ISO requires continued training and development programs for staff,

enhancing their ability to participate in the effort to ensure every product meets the standards and

customers' needs.

Process Efficiency

With continuous improvement tools in place, producers can deliver products to customers

more quickly. Quality improvement processes mitigate issues that can lead to time-consuming

delays in the delivery of the parts manufactured.

Maximum Resource Utilization

Continuous quality improvement is essential for the automotive manufacturing industry

because it allows for resource-effectiveness in terms of time and human resources, significantly

reducing manufacturing costs. Quality problems can lead to waste of raw materials, production

downtime, and expensive product recalls.

For these reasons, the case for a structured approach to continuous improvement in

automotive manufacturing is compelling. But how can it be achieved?

Here are six simple steps that any auto manufacturing organization can implement.

1. Adopt a Team Mindset

 Quality and efficiency won't be sustainably improved by individuals working on their

own. To implement lasting and meaningful change in manufacturing processes, a team-based

approach is required. By involving multiple functional areas in the search for improved quality,

you get various perspectives and areas of expertise. It is also essential to understand the history

of the process. Understanding why the process is the way it is today is an important first step to

uncovering improvement opportunities. Leaders should always include process operators in

discussions of positive change.

2. Define Value from the Customer's Point of View

It is common for automotive manufacturers to try to make a product "better" without

really understanding what better means to the customer. By increasing cost, producers can

almost always add features or functions to a product, but the additional cost may not be worth it

to the customer. As part of your continuous improvement program, someone should always serve

as an advocate for the customer.

3. Develop a Common Understanding of the Cost of Quality

The cost to fix a product defect once it reaches a customer is inordinately higher than the cost to

fix the problem's cause before the product is created. Automotive manufacturing staff must be

trained to understand the cost factors involved with warranty repair or replacement and the cost

of a damaged reputation. Once every team member applies this perspective, a desire to find the

root cause for problem-solving becomes second nature.

4. Solve Problems Completely

All too often, manufacturing quality improvements target the symptoms of process

failures rather than the root causes. This usually takes the form of adding quality inspection steps

or rework stations that make it easier to find and fix defects. Instead, the desire to find root
causes should be developed within teams. When teams develop the ability (often through five-

why analysis) to uncover the root cause of defects in the manufacturing process and a test that

verifies the capacity to turn-on and turn-off the problem, precise solutions to problems will be

implemented that will ensure that the problem does not return.

5. Practice Strong Process Discipline

Throughout the quality improvement process, teams must practice strong process

discipline. Depending on the product, deviation from Standard Work without a structured

improvement cycle could have serious quality repercussions. While the organization should

avoid the unnecessary bureaucracy that inhibits innovation, some structure must be employed to

maintain consistency.

6. Leverage Improvement Management Technology

One essential tool for structured improvement in the automotive industry is continuous

improvement software. With the right platform in place, employees can report opportunities for

improvement, manage projects to improve efficiency and reduce waste and measure the impact

of change over time. In addition, the software becomes the home for Standard Work, supporting

data, and institutional knowledge. With all of the relevant information about past improvement

work in one easily accessible online tool, everyone gets better at making good decisions faster.

Business Objectives

Since the placing of the business objectives that was adopted on August 27, 1937, it has

been revised ten times so that Toyota can further improve their business. In the most recent

revised of Toyota's business objectives on June 23, 2009, here is the layout of said objectives:
1. The manufacture, sale, leasing and repair of motor vehicles, industrial vehicles, ships,

aircraft, other transportation machinery and apparatus, space machinery and apparatus,

and parts thereof;

2. The manufacture, sale, leasing and repair of industrial machinery and apparatus and other

general machinery and apparatus, and parts thereof;

3. The manufacture, sale, leasing and repair of electrical machinery and apparatus, and parts

thereof;

4. The manufacture, sale, leasing and repair of measuring machinery and apparatus, and

medical machinery and apparatus, and parts thereof;

5. The manufacture and sale of ceramics and products of synthetic resins, and materials

thereof;

6. The manufacture, sale and repair of construction materials and equipment, furnishings

and fixtures for residential buildings;

7. The planning, designing, supervision, execution and undertaking of construction works,

civil engineering works, land development, urban development and regional

development;

8. The sale, purchase, leasing, brokerage and management of real estate;

9. The service of information processing, information communications and information

supply, and the development, sale and leasing of software;

10. The design and development of product sales systems that utilize networks such as the

Internet; sales, leasing, maintenance of computers included within such systems, and

sales of products by utilizing such systems;

 11. The inland transportation, marine transportation, air transportation, stevedoring,

warehousing and tourism businesses;

12. The printing, publishing, advertising and publicity, general leasing, security and workers

dispatch businesses;

13. The credit card operations, purchase and sale of securities, investment consulting,

investment trust operation, and other financial services;

14. The operation and management of such facilities as parking lots, showrooms, educational

facilities, medical care facilities, sports facilities, marinas, airfields, food and drink stands

and restaurants, lodging facilities, retail stores and others;

15. The non-life insurance agency business and life insurance agency business;

16. The production and processing by using biotechnology of agricultural products including

trees, and the sale of such products;

17. The sale of goods related to each of the preceding items and mineral oil;

18. The conducting of engineering, consulting, invention and research relating to each of the

preceding items and the utilization of such invention and research; and

19. Any businesses incidental to or related to any of the preceding items.

Toyota’s corporate goal is to keep its position as a market leader in the automotive

industry and to maintain its growth while enhancing profitability and shareholder returns. Aside

from the goal set by the company, there is the strategy to so to get the said objective. In order to

achieve this corporate goal, Toyota struggles to enhance its technology, production and

marketing, supported by improvements in quality control, strengthening of cos-competitiveness

and personnel development. Among these, technology is the vital element of growth. As
environmental awareness continuous to grow in the market, Toyota is improving its unique

hybrid technology in order to develop environmentally-friendly products.

Toyota realizes that it should satisfy specific needs of each region in order to expand

globally. The following factors are the reason of Toyota’s growth in the United States, Japan and

Eurpe and its overall position as one of the world largest automobile producers: 1. its timely

introduction of new products that meet consumer demands and incorporate superior design and

environmental and safety technologies, 2) its continuing focus on manufacturing high quality

products at low-costs, 3) its commitment to investment in research and development and its sales

and production infrastructure, 4)its financial strength, which enables Toyota to achieve the above

objectives.

Objectives communicated to Individuals

A quality culture is defined as behavior that encourages trust and respect

among individuals, shared belief of membership of an organization and a belief that constant

improvement is for a common good to all (Dale, 2003, P. 184). According to Dale (2003, P.

184), quality culture in an organization is where all members share a common view of

continuous improvement aimed at customer satisfaction. The change of culture in many

organizations has been difficult but it is an important part in ensuring that all members have

similar desires to achieve.

The culture of Toyota has been continuous training and improvement of its employees

over time withthe intention of ensuring that they offer excellent service to customers (Liker and

Hoseus, 2007, P.112). They have been taking its employees to classrooms for further trainings.

Although, Toyota has alot of employees it is important for it to develop detailed policies that
encourages customer focus and constant improvement of employee performance. The need for

a culture is important for future continued success of the company.

Toyota-Worker and Operation-Process: Quality

Quality audit is a process whereby an analysis of a system is carried out to check on its

accuracy levels, functioning and effectiveness in carrying out the required tasks. The process of

review is the act of confirming whether a system is performing required tasks as per set

standards. According to Mills (1989, P. 17), a quality system review is a formal evaluation by

management of the status and capability of a system in relation to quality policy and new

objectives occurring from changing situations. 

A system used by Toyota is called Toyota production system. The process starts from

raw materials transformation to the point of finished products. The good quality audit should be

able to examine the process analysis as well as operation analysis. The process analysis is the

examination of the movements of raw materials or products from one point to the next. The

operation analysis examines the job done by people and machines (Shingo, Shingō and Dillon,

1989, P. 4). Thus a good quality audit system should be able to review all the processes involved

in Toyota production system.

The Toyota production system is based on lean manufacturing. Therefore an effective

audit should be aimed at meeting lean manufacturing requirements. It includes an audit system

which focuses on ensuring that the products meet the value expected by the customer. The audit

should be able to identify areas where value is compromised and corrective measures

recommended immediately (Russell, 2005, P. 237).

The audit system should also be able to monitor the value stream. This is the process

where the audit tests the value of the product as it passes through the various production
processes and should be able to detect any variance as soon as possible. The audit system should

also be able to monitor the product movement in the Toyota production system. There should be

a continuous flow without stoppage and the audit should be able to detect any such interruptions

and recommendations suggested. In addition appropriate quality audit system should ensure that

customers are supplied with the product only when they need to avoid dumping process which

may cause excessive supply hence pulling the prices down (Russell, 2005, P. 237).

The other important factor for quality audit system appropriate is a system that ensures

perfection is achieved by Toyota production system always. The system should ensure a

continuous test process to ensure only improvements are accepted and any retrogressive

happenings corrected immediately(Russell, 2005, P. 237). The quality audit system should be

able to ensure a normal functioning of Toyota production system as expected and any technical

errors detected should be corrected.

The quality system described above is important because is ensures the competitiveness

of Toyota by ensuring that it achieves its strategic objectives without being affected by errors

that may affect their system. This is because effective quality audit ensures that such errors are

limited as possible. The system can be adapted by hiring experts who can develop such a system

and then put in place at all times. This quality audit should be able to run concurrently with

production process at all times for it to be effective in ensuring that Toyota production system

achieves its performance objectives.

How often your business objectives revised?

Toyota has had its systems in place and has been developed over time. However, there have

beenproblems which have caused losses to occur in 2009. Although it has been affected

by economic crisiswhich hit world economies the system was not able to respond appropriately
to avoid the loss.Therefore Toyota production system failed as indicated by recent activities of

recalling defectivevehicles. The intended purpose of the system was to detect and rework on

several parts as it carriesrepairs to ensure what goes to the market is fault proof. Therefore the

core strategic objective of producing quality and safe vehicles has been badly affected by recent

activities of the company.The major problem affecting the system is failure to deliver on its core

purpose of detecting errors. Thishas led to failure to eliminate detective products and has caused

wastage of time and resources inrecalling the defective vehicles. This has caused loss of sales

and focus thus reducing profits andmaybe forced to situations of loss. The manpower used to

repair defective vehicles has been divertedfrom its core duties of manufacturing to repair thus

reducing the quantity produced.The opportunity that Toyota can avail to improve its business

process is to work on getting back thecustomer confidence on its products. This calls for systems

improvement to make it error proof in thefuture and thus no problems pass without the notice of

the company. The move to recall all thedefective vehicles was wise in showing Toyota’s concern

on safety. The system should be focusedmore on safety improvement to eliminate serious errors

like brake system failure which puts off prospective customers.

Based on the strategic objectives of Toyota the recommendations are directed toward

achieving these goals. The safety should be prioritized by Toyota by all means possible. This is

part of the core objectives that the company should make vehicles of high safety. The problem

that has befallen the company is because of safety. Thus I recommend that the company engage

experts in improving the safety of all produced models. 

Another core objective of Toyota has been low cost production. This has been affected by

globally rising prices which may make it impossible for Toyota to maintain low cost. I would

recommend that Toyota improve the quality standards of accessories so that customers

will notice appreciating quality of the vehicle and may not respond negatively to upward price

adjustment but rather appreciate added quality. This may be a good option to maintain both

market share and make profit to sustain its future growth and development prospects.

The company should aim to use its flexibility performance objective effectively to be

able to adjust to the changing business environment to avoid being found in scenarios where it

cannot absolve itself from losses out of worsening market environment. They should use their

diversification techniques to try new markets in the world through aggressive marketing which

may bear fruits. They may go an extra mile by offering after sale service maintenance for extra

duration or miles covered. This will raise their image and will work well to achieving their core

objective of producing and selling the highest number of vehicles. This achievement will

translate to high profit margins.

The system should be integrated to be able to accommodate above recommendations so

as to be able to integrate the whole costs and processes involved. The opportunities available for

Toyota is to carryout further research on its system of production to enable it carry out available

adjustments in order to continue being competitive in the motor vehicle manufacturing industry.

Thus the company should invest on further research activities on it business processes.

The recommendations will be possible to be implemented by the company because it

is an already established in the sector and improving on available systems will be a success. The

implementations and further engagement in research as the system is improved will turn the

company to its profitability status as it was and customer satisfaction achieved. The core vision

of the company will be attained in the long run.

Rationale and its Objectives

 In this Toyota SWOT analysis, I will establish the triumphs and struggles of Toyota, one

of the top 10 largest companies in the world. Specifically, I will use the SWOT analysis tool to

dive into the following:

 Toyota’s Strengths

 Toyota’s Weaknesses

 Toyota’s Opportunities

 Toyota’s Threats

Table 2. SWOT Matrix of Toyota

Internal factors Strengths Weaknesses

1. Having a strong brand 1. Recalls

name

2. Depending on suppliers

2. Having big financial

External factors
resource

3. Equipped with latest

technology

4. Having a good production

system

Opportunity Strategy (S4,O1) Strategy (W1, O1)

1. Focusing on the developing Toyota has a good Lots of cars from Toyota

countries production system. They were been recalled in last

manage their waste very years. Because of that media

2. Investing on new efficiently. Also Toyota spread lots of negativity

technologies focuses on developing about the company. But

3. Green countries. So they should Toyota has the latest

Vehicle make low cost vehicles by technology. So they must

technology improving their production build new machines to

system and developing check the quality of their

countries will buy more vehicles. In a situation

vehicles for a lower price where the automotive

industry is quite competitive

then Toyota should make

efforts to further strengthen

its market towards

developing countries.

Threats Strategy (S1,T1) Strategy (W2,T4)

1. Having lots of competition There are lots of competitors Most of the times Toyota

for Toyota. Honda and depends on their suppliers.

2. Passenger Safety Issues Mitsubishi are some of their Also raw materials having a

Japanese competitors and very high price. Because

 3. Changing the price of fuel Toyota also has Indian and Toyota have a good

Chinese competitors too. financial resource and a

4. Raw materials having high But it’s hard to compete good production system,

prices with Toyota especially they can start making some

because of their strong materials that they are

5. Negative health brand name. In order to keep buying from their suppliers

implications their brand name stronger or they can buy some

they should try new vehicle companies who are selling

models and improve the raw materials. It will reduce

quality of their vehicles.  their costs.

The Toyota company’s SWOT matrix presented in Table 2 reflects the strengths, weaknesses,
opportunities and threats of this company. The advantages of the Toyota brand are: having a
strong brand name, having big financial resources, equipped with latest technology, and
having a good production system. Some weaknesses of Toyota are: recall and productions
depends on suppliers. Opportunities that Toyota can take advantage of are: Focusing on new
technologies, Investing on new technologies, and Green Vehicle Technology. The threats to
the Toyota are: having a lots of competition, passenger safety issues, changes in the price of
fuel, high price of raw materials, and negative health implication caused by carbon emission.

Toyota SWOT Analysis: Conclusion

90 years of dedicated pursuit of excellence has propelled Toyota to the forefront of the

auto industry. A leader in production, sales, and research, Toyota plays a vital role in bridging

the gap between the fossil-fuel era and the clean-energy era.
However, a traditional organization at its core, will Toyota’s rigid hierarchy enable it to adapt to

a new future? Also, how will Toyota handle the rapid rise of Tesla? Time will tell whether

Toyota overcomes these weaknesses and threats.

Proposed Three Business Objectives

1. Customer Focus

Toyota in the field of automotive industry have long recognized the importance of

identifying and addressing the demands of a target market. It’s critical for Toyota to determine

who their customers are and the types of vehicles and experiences they want.

Those assessments must be based on data. Toyota can collect operational data from

connected vehicles, but it’s just as important to leverage customer touchpoints and

demographics, social, and other external sources of data to develop a better understanding of the

customer experiences vehicles provide. With this analysis, Toyota can invest their time and

resources in improving vehicle performance, as well as the customer experience their products

deliver.

Customer interactions directly with automotive manufacturers also impact customer

experience, so Toyota should looked ways to enhance those engagements, including utilizing

artificial intelligence (AI), chatbots, and augmented reality (AR) to provide consumers with the

convenience, personalization, and service they expect.

2. Building an ecosystem

One key to surviving in the changing automotive industry is to form partnerships that

align with the goal of transitioning from “automotive manufacturer” to “mobility company.”
Toyota should make way for partnering with cities, hotels, or businesses in the transportation

industry to provide mobility.

Toyota should also need the support of partners as they branch out into new business

models. Those adopting the subscription model will need to build a coordinated team of dealers

and technicians as well as, perhaps, insurers and roadside assistance providers.

Technology will enable Toyota to create connected ecosystems that provide access to

real-time data, coordinate with suppliers and partners, and optimize production.

3. Manufacturing Excellence

Although Toyota must move forward in new directions to stay competitive, businesses

can’t lose sight of the fact that manufacturing excellence must remain a priority. Toyota need to

continually look for ways to improve their operations, maintain supply chain visibility, and meet

each customers’ individual requirements, serving “a segment of one.” New technologies,

including co-bots, AI, AR, and conversational user interfaces (UIs), will provide automakers

with the agility, automation, and efficiency they need to meet new demands.

A state-of-the-art manufacturing operation also plays a pivotal role in attracting and

retaining engineering talent. In addition to improving efficiency and productivity, a more

automated “intelligent” enterprise can also enhance workspaces, support innovation, and increase

employee satisfaction.

Reference

https://lionheartcommercialcapital.com/how-to-improve-your-organizational-structure/
https://www.toyota-global.com/company/history_of_toyota/75years/data/

company_information/management_and_finances/management/business_objectives.html

https://www.bioprocessonline.com/doc/why-you-need-a-world-class-quality-culture-and-how-to-

build-one-0001#:~:text=At%20its%20core%2C%20the%20world,and%20delivering%20record

%20business%20results.

https://www.toyota-industries.com/csr/reports/items/25-28e.pdf

https://www.cnbc.com/2022/10/19/wall-street-eyes-auto-industry-earnings-for-signs-of-demand-

destruction-.html

https://www.reportlinker.com/automotive/trends/evolution-of-demand.html