Political Factors

Political stability in most of Toyotas major market serves as an opportunity for

the corporation with less uncertainties that may affect decision making. This
allows Toyota to grow with minimal political tension. In addition, current free
trade agreements allow Toyota to benefit from reduced cost and in turn price
their products more competitively with its rival firms. (Car advice Australia, 2015)
With the recent Trans-Pacific Partnership trade agreement, it provides even more
opportunities for improved market penetration within the region. (The Guardian,
2015)
http://www.caradvice.com.au/328150/toyota-passes-on-free-tradeagreement-cuts-to-more-than-100000-customers/
http://www.theguardian.com/business/2015/oct/05/trans-pacific-partnership-dealreached-pacific-countries-international-trade
Economic Factors
The Japanese Yen has weakened against the US dollar in recent years, from
0.0125 in 2012 to 0.0083 in 2015. (Google. 2015) This presents an opportunity to
Toyota to increase its sales by improving its exports from Japan based on the
weaker Japanese Yen as seen in its Financial Year 2015, where there was an
increase in operating income of 26 Billion Yen in Asia due to favourable exchange
rate even though less vehicles were sold. (Toyota Global, 2015)
http://www.toyota-global.com/investors/financial_result/2015/

pdf/q4/presentation.pdf
Social Factors
With increasing interest in hybrid cars, it provides Toyota with the opportunity to
produce more products that satisfy these needs and wants. The worldwide
number of hybrid and electric vehicles has increased from a mere 53.7 Million to
80.4 Million within a short span of 6 years, from 2009 to 2015 and forecasted to
reach 88.4 Million by the year 2020. (Statista, 2015)

http://www.statista.com/statistics/270603/worldwide-number-of-hybrid-andelectric-vehicles-since-2009/
Technological Factors
Technology advances rapidly with research and development and without a
sturdy research department might result in a reduced competitive advantage for
Toyota. For example the self-driving car from Google may be a risk in the future
by catering to needs that Toyota cannot satisfy.
However, technology also allows for improvements in e-commerce capabilities
for efficient means of reaching out to the market. This also helps Toyota to build
and develop a capable and direct platform for customer service.

Internal distrust and flawed communication

Toyota had no more loyal or forceful advocate than Jim Olson during the nearly two decades he
served as the company's chief American spokesman. But Olson now believes the company has
mismanaged its success. In a book to be published in November, The Little Red Box of
Management Tools, Olson writes that "internal distrust and flawed communication are the root
causes of its current crisis." Toyota, he argues, did not delegate authority to overseas divisions

commensurate with their responsibility. "This division between decision-making and execution,"
Olson writes, "slows the company down and prevents communication and planning."
Nowhere is that tendency clearer than in Toyota's U.S. business, which has grown into a vast
engineering, manufacturing, and sales operation that ranks not only as the third-largest
automobile company in the U.S. but also as Toyota's most successful unit. The U.S. now provides
an estimated two-thirds of the company's profits, which were $2.3 billion last year. But Toyota
has blocked the U.S. operations from becoming too powerful by using the ancient principle of
divide and conquer. Rather than organize around a single headquarters, like its major
competitors Honda and Nissan, Toyota kept its operations separated in a functional structure
that forced each to report back to Japan.
In the past, Toyota's strong operational skills obscured the need for any change in this structure.
The company was growing steadily, produced high quality ratings, and was consistently
profitable. But when the recall crisis hit and Toyota dealers relayed customer complaints, their
reports had to make their way through the U.S. operation and over to Japan, where they were
adjudicated by a special committee, which then communicated its decisions back to the U.S. -- all
before a recall could be issued.
Leadership issues that may have led to poor decision making and reporting of
manufacturing. Too much red tape because every action requires direct approval from
Japans Headquarter.

1) Clan control: (Zenjidoka) With a common shared vision, empowerment of

suppliers, customers and manufacturers that allow them to voice out and
take actions would impact quality management (across the supply chain).
A possible alternative to improve quality management would be implement clan
control. The objective would be to create a culture whereby employees are
empowered to make decisions of how they would like to work around within
certain parameters. Although there is currently some form of empowerment
involved as mentioned in Toyotas current strategy where they adopted Jidoka,
we hope to further extend this through Toyotas supply chain, by implementing
Zenjidoka, a more complete form of involvement within the supply chain.
Therefore, involving stakeholders within the whole process starting from the
moment of concept, design and until the end of the products useful life. For
example, this would empower front line employees and manufacturers to voice
out their worries and allow them to impact on the quality of the product from
various perspective of the supply chain.
Evaluation:
By empowering more employees within various points of the supply chain, it
would allow them to take immediate actions more promptly to respond
unforeseen events. This would also provide a better quality of Toyotas products
and services as better involvement becomes a competitive advantage. Moreover,
this would be a solution for the long run as the culture of Toyota and its

employees would have transformed to better focus on the quality management

of their products by taking into account more perspectives.
However, implementing clan control within an organization would require a long
time span that may not prove to be an immediate solution to the quality
problems that Toyota faces. Furthermore, to empower employees to make such
critical decisions would require them to be skilled enough and trusted with the
authority to identify and solve problems. In order to develop such excellent
employees, it will be necessary to provide trainings.
http://www.isixsigma.com/community/blogs/zenjidoka-take-six-sigma-newheights-uplifting-expertise-people/
Feasibility
Adopting clan control would require a large scale of empowerment within its
employees which Toyotas current management structure does not easily allow
for. Currently, Toyota has a more centralized organizational structure where
decision makings are under control by officials in Japan. Therefore, they would
not easily empower their employees to make crucial decision on behalf of the
company as soon as they are aware of an issue. Hence, clan control would not be
feasible unless there is a change to the organizational structure.
Next, large amounts of resources and work hours would be required for the
development of highly qualified employees. The opportunity cost for these
resources may be better utilised if allocated to other departments of the
company.
Action Plan
Training Process
Step
1. Conduct Training
Needs
Assessment

2. Design Training
Program

Process
Soft Skills
Communication
skills
Leadership skills
Management skills
Hard Skills
Experience within
industry
Knowledge
pertaining to
companys
operations and
products

Objectives
Accumulate a

Explanation
For an employee to be
empowered to make
certain decisions, it
would require a
minimum degree of
expertise in the skills
mentioned so that
decisions will be
properly made.
It will be important to
have experience and
adequate knowledge so
that they are able to
handle the issue
accordingly by tracing to
the respective sources.
Therefore, such training
needs will be required.

minimum of 5 years
of experience
within the company
such that there will
be a good
understanding of its
operations
Ability to manage a
small team and also
to communicate
effectively with the
consumer level
Ability to make
prompt decisions
and resolve the
problem effectively,
by tracing to its
source and working
it out with the team

http://panmore.com/toyota-organizational-structure-analysis
Kotters 8 steps to implementing change
Randolphs Empowerment Model
http://www.nptel.ac.in/courses/110105034/SM_Web/Ch17modified.pdf
Share Information
Sharing of Company Performance information
Helps employees to understand the business
Builds trust through sharing of sensitive information
Create self-monitoring possibilities
Create Autonomy Through Structure
Let Teams Become the Hierarchy
Create a clear vision and clarify
Provide direction and training
the little details
for new skills
Create new decision making
Provide encouragement and
rules that support
support for change
empowerment
Gradually have managers let go
Clarify goals and roles
of control
collaboratively
Work through the leadership
Establish new empowering
vacuum stage
performance management
Acknowledge the fear factor
processes
Use heavy doses of training
Action

Resources
Required
Solution: Empowering
Employees

Details

Month 1

W
1

Sharing

Top Management

Top management has to

Information

and employees
under Toyota

Create
Autonomy
Through
Structure

All Management
and employees
under Toyota

provide employees with

information regarding
business operations
other than employees
respective departments.
This could be achieved
through newsletters, email attachments and
official company
directives.
Employees should
properly digress the
information that is
provided to them and
obtain a better
understanding of the
business. This would
allow them to critically
think while making
future decisions.
With a better
understanding of the
business, it would allow
employees to better
monitor their own
performance and
actions, through
knowing the cost and
benefits of their
decisions towards the
company.
The vision and goals of
the company needs to
be clarified and let
known to the employees
so that, decision making
can be based on the
vision and goals of the
organization.
New employee-focused
decision making rules
need to be implemented
in the companys
standard operating
procedures and
directives. This would
provide a better
guideline and
framework for
employees that are
empowered to make
decisions.
Employee

Let Teams
Become the
Hierarchy

Middle
Management and
employees under
Toyota

communication
platforms are required
to be established which
allows employees to
clarify details and can
also act as a
performance
management system for
employees.
Training needs to be
present to develop the
employees to have
belief in their decision
making and reduces the
stress that they might
face in their initial
phases of being
empowered.
Direction needs to be
set by the various
departments for
employees to know
what to base their
decisions on
Compulsory training
should be provided to
provide employees with
the new skills required,
e.g. communication
skills, customer service
skills.
Managers need to
constantly provide
encouragement and
support the change so
that employees are able
to accept the change
positively.
In order to empower the
employees, managers
should gradually let go
of control whilst acting
as mentors to
employees in their
initial phase of decision
making process.

A possible alternative to improve quality management would be implement clan

control. The objective would be to create a culture whereby employees are

empowered to make decisions of how they would like to work around within
certain parameters. Although there is currently some form of empowerment
involved as mentioned in Toyotas current strategy where they adopted Jidoka,
we hope to further extend this through Toyotas supply chain, by implementing
Zenjidoka, a more complete form of involvement within the supply chain.
Therefore, involving stakeholders within the whole process starting from the
moment of concept, design and until the end of the products useful life. For
example, this would empower front line employees and manufacturers to voice
out their worries and allow them to impact on the quality of the product from
various perspective of the supply chain.
Evaluation:
By empowering more employees within various points of the supply chain, it
would allow them to take immediate actions more promptly to respond
unforeseen events. This would also provide a better quality of Toyotas products
and services as better involvement becomes a competitive advantage. Moreover,
this would be a solution for the long run as the culture of Toyota and its
employees would have transformed to better focus on the quality management
of their products by taking into account more perspectives.
However, implementing clan control within an organization would require a long
time span that may not prove to be an immediate solution to the quality
problems that Toyota faces. Furthermore, to empower employees to make such
critical decisions would require them to be skilled enough and trusted with the
authority to identify and solve problems. In order to develop such excellent
employees, it will be necessary to provide trainings.
http://www.isixsigma.com/community/blogs/zenjidoka-take-six-sigma-newheights-uplifting-expertise-people/
Feasibility
Adopting clan control would require a large scale of empowerment within its
employees which Toyotas current management structure does not easily allow
for. Currently, Toyota has a more centralized organizational structure where
decision makings are under control by officials in Japan. Therefore, they would
not easily empower their employees to make crucial decision on behalf of the
company as soon as they are aware of an issue. Hence, clan control would not be
feasible unless there is a change to the organizational structure.
Next, large amounts of resources and work hours would be required for the
development of highly qualified employees. The opportunity cost for these
resources may be better utilised if allocated to other departments of the
company.