Business

Written Assignment 1 Toyota Motor Corporation is a Japanese company which originated in Japan and which produces automobiles. It currently ranks first among automotive companies in net worth, revenue and profit. Toyota has grown to a large multinational corporation and expanded to serve worldwide market. Today, Toyota constitutes one of the most known worldwide retailers. The history of Toyota begins in the end of 19th century, when Sakichi Toyoda invented the first electrically driven loom in Japan; with this, he created a revolution in the textile industry. In 1918, the Toyoda Spinning and Weaving Company were created. And for 1926, with the help of his son, Kiichiro Toyoda, Toyoda Automatic Loom Works was founded. Driven by his interest for the car industry, Kiichiro Toyoda sold the textile manufacturer, and in 1937 he created Toyota Motor Corporation TMC (automaker). [ (Toyota Motor North America, 2010) ] “For more than 25 years, Toyota Technical Center (TTC) has been the driving force behind Toyota's North American Engineering and Research and Development activities, administrating the design and development of vehicles. TTC is a division of Toyota Motor Engineering & Manufacturing North America, Inc.” (Toyota Motor North America, 2010) “Headquartered in Ann Arbor, Michigan, TTC is engaged in engineering design, prototype building, vehicle evaluation, evaluation and design of parts and materials, regulatory affairs, emissions certification and technical research. Throughout our North American facilities TTC is committed to utilizing teamwork to bring all facets of the TTC operation together. TTC is widely regarded as Toyota's leading technical center outside Japan.” [ (Toyota Motor North America, 2010) ] Toyota, being one of the world’s leaders in car manufacturing, needs to take into consideration the recent economic trends and the recent global recalls made by Toyota, and modify its production to new conditions defined by the process of globalization, which will open the way to the global expansion even more. Although, it will also bring new challenges to cope with. Toyota has been attempting to develop its production chain worldwide because it realized that ignoring the potential that a new market can offer can negatively rub off on the current market position. The company has always relied greatly on its strategy of international market growth. A long time ago Toyota realized that it is better to localize production in order to succeed in the new market and become cheaper and more accessible to the local buyer. Localizing production may also be viewed as outsourcing. “The primary reason why Toyota outsources is that Toyota is a master of cost reduction internally and expects its suppliers to master this discipline as well. Toyota makes use of functional outsourcing which is thrusting of certain services towards partners or providers. The advantages of functional outsourcing for Toyota are superior leveraging of market, redundancy-capable and maintenance of outsourcer’s control over processes though this process can result to a non-existence of end-to-end management.” (Why Toyota outsource, advantages and disadvantages, 2009) “One of the disadvantages of outsourcing is supplier failure. Failures of the suppliers, in effect, are equated to failure of the company are serious risks, not to mention, confidential information sent by the businesses adds up to the constraints since suppliers are given the right and control over crucial information. The future changes in supplier circumstances also disadvantaged the position of Toyota. Changes in the operations of suppliers (e.g. financial difficulties, technology requirements of services) might alter the outsourcing relationship. Nonetheless, the risk can be diminished through inclusion of termination clause in contracts. Third are perceived risks which could be either higher or lower in actual. The bandwagon effects of outsourcing are inclined to success to stories whereas, in reality, outsourcing is problematic and conflict-laden.” (Why Toyota outsource, advantages and disadvantages, 2009) International trade has always been an attractive idea for businesses and merchants. It is viewed as an opportunity to sell more, increase profits, market shares, increase productivity. However there are some negative aspects that are not right away visible. “Even though trade tends to increase employment in one nation it may lead to job cuts in another. As businesses shift manufacturing for instance from richer nations to third world or developing nations, they take advantage of the cheap labor, weaker labor policies, weaker environmental policies, and support of the governments in these countries. They are able to recruit more and thus produce more for less. But this leads to job cuts in the parent rich nations. Trade also leads to job cuts in the developing and third world countries due to competition with multinationals from developed nations and also due to exposure to automation and modernization.” [ (Prabhakarit, 2008) ] In the past year Toyota has encountered many problems and issues that damaged its once bulletproof engineering, reliability, and quality control record. There was a huge recall action that revolved around sudden acceleration on its most popular model in the United States, the Toyota Camry. The total number of recalls related to the gas-pedal issues, reached 8.1 million vehicles. However, Toyota barely missed a beat even as it had problems in the United States with recalls. The power of global markets can’t be underestimated when examining the number one position that Toyota holds even with the recall incidents. (Pollard, 2011) Works Cited Pollard, D. (2011, Jan 24). Toyota Bestselling Cars Worldwide, General Motors Close Second. Retrieved march 9, 2011, from www.suite101.com: http://www.suite101.com/content/toyota-bestselling-cars-worldwide-general-motors-close-second-a337419 Prabhakarit. (2008, december 24). Understanding advantages and disadvantages of International Trade – China. Retrieved march 9, 2011, from www.wordpress.com: http://prabhakarit.wordpress.com/2008/12/24/understanding-advantages-and-disadvantages-of-international-trade-china/ Toyota Motor North America. (2010). toyota. Retrieved March 8, 2011, from www.toyota.com: http://www.toyota.com/about/our_business/our_history/timeline.html Why Toyota outsource, advantages and disadvantages. (2009, July 13). Retrieved March 8, 2011, from Thinking Made Easy : http://ivythesis.typepad.com/term_paper_topics/2009/07/why-toyota-outsource-advantages-and-disadvantages.html