How Toyota Has Managed to Remain Relevant and Competitive in Car Manufacturing

The Toyota Way
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The Toyota Way
Book Citation: Liker, J. K. (2004). The Toyota way: 14 management principles from the world’s greatest manufacturer. McGraw-Hill.
Toyota Motor Corporation is one of the largest automakers worldwide. The company caught the attention of the world in the 1980s due to the efficiency and quality of its cars. In particular, individuals noted that Japanese vehicles lasted for an extended period compared to American cars and they needed less repair. Toyota manufactures vehicles with good designs and performance. The engineering used by this company’s cars has unbelievable consistency and reliability. However, it does not mean that Toyota does not encounter problems. However, the company addresses its issues or weaknesses and has managed to remain competitive in the automotive industry for a long period. The book report focuses on Jeffrey Liker’s “The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer.”
Toyota is a more profitable company than its competitors. In the fiscal year 2003, the company made an annual profit of about $8.13 billion, which was larger than the earnings of General Motors (GM), Ford, and Chrysler combined. Toyota’s market capitalization was $105 billion in the same year (Liker, 2004). The company had a return on assets 8 times higher than its industry average. Toyota makes profits every year and has managed to remain highly competitive for a long period since people like its cars due to their reliability and less maintenance cost. In August 2003, Toyota sold more cars than Chrysler in North America. Lexus is Toyota’s brand name that makes luxury cars and competes with Cadillac, Mercedes-Benz, and BMW (Liker, 2004). Toyota has a fast product development process globally. New trucks and cars are designed in less than a year, while their competitors typically take at least two years. The success of the company comes from its good reputation in the quality of its products. Consumers are confident that when they buy a Toyota vehicle it will serve them well.
Toyota Production System is what makes the automaker remain highly competitive in the automotive industry. Indeed, this production system was developed after the Second World War. During this period, Toyota faced distinct business conditions compared to GM and Ford. In post-war Japan, Toyota’s market was small. GM and Ford used big production equipment, economies of scale, and mass production. As such, Toyota had to manufacture a variety of cars on its assembly line so that it can satisfy its customers. The primary key to its operations was being flexible. During this time, Toyota critically discovered that when it makes lead time short and fully focuses on keeping flexible production lines, it got better productivity, customer responsiveness, space and equipment utilization, and higher quality (Liker, 2004). Toyota has managed to decrease the waste of material and time in its production process, overcoming challenges that many automakers face today. As such, the company has a fast and flexible production system that give its clients what they w...