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Innovation in Toyota

Paper Type: Free Essay Subject: Marketing
Wordcount: 3167 words Published: 20th Apr 2017

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Executive Summary:

The report starts with the description of origin of the Toyota Motor Corporation (TMC), which is the world’s largest automobile manufacturing company, whose headquarters are situated at Aichi, Japan. Toyota has also got the financial services and research labs on Bio-Technologies. It has got the Robotic wing, which invents Robots. It also talks about the vision and philosophy of the company, which underpin the purpose of innovation and growth statistics in terms of quality and efficiency of the products.

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Later, the report focuses on the best innovative process, Toyota Production System (TPS), which is being implemented not only by TMC, but also by several other car manufacturing corporations. The TPS mainly follows a principle called kaizen, a constant and continuous improvement; either it can be in the production processes or the implementation procedures. Also, TMC takes constant feedback and suggestions about the procedures for a job to be done from its employees and manifest in the regular cycle.

Toyota strives for the best and even quality for every product it manufactures and provides only the facilities needed by their customers. It has created a sustainable growth and has left its competitors behind with its innovation-driven policies and procedures.

Toyota has adapted the incremental innovation technique and got a few of the innovative break-through in terms of manufacturing cars. It has manufactured the most efficient hybrid car, The Prius, which is very energy efficient and healthy for the environment.

The report also focuses on the creative and developing opportunities provided by Toyota as the company treats their employees as the assets for the company. With the help of TPS, it has managed to reduce the industrial wastes and improve the quality. It strives for the development of their employees by making them well-versed with their subject or area of interest.

The rest of the report discusses about Toyota behaving as an entrepreneurial organization. It always innovate the pre-existing model or the layout by making some modifications and implements it to the utmost precision to get the required results.

Each topic illustrated above will be discussed in detail in the later parts of the report.


About Toyota Company:

Toyota Motor Corporation, commonly known as Toyota and abbreviated as TMC is a Japanese Multi-national company headquartered in Toyota, Aichi, Japan. TMC is the world’s largest automobile manufacturer by sales and production.

Toyota Motor Co., Ltd. was established in 1937 by Mr Kiichiro Toyodo, at Koromo Plant (currently Honsha Plant) where he started the operations. Toyota Motor Corporation not only the manufacture the automobiles, but also provides the financial services, conducts research in Biotechnology and has a robotic division, which builds robots. (Company, Toyota Motor Corporation. 2010)

Toyota is mainly engaged with the automobile and financial service sectors. The automobile sector is mainly involved with the design, manufacture and sales of car products like the mini cars, trucks, vans and related parts and accessories.

Toyota vehicles can be classified into 2 kinds: conventional engine vehicles and hybrid vehicles. Toyota’s product line-up includes subcompact and compact cars, mini vehicles, luxury, sports, sport-utility vehicles, and buses.

In North America, Europe and Japan, Toyota’s luxury line up vehicles are sold under the brand ‘Lexus’.

Toyota Motor Credit Corporation provides a range of financial services, including retail financing, retail leasing, wholesale financing and insurance. Toyota Finance Corporation also provides a range of financial services like retail financing, retail leasing, credit cards and housing loans.

Toyota is involved in many other non-automobile business activities. It manufactures and sells the prefabricated housing items. It also operates a Japanese Language website ‘gazoo.com’. Toyota offers the theft detection service, the vehicle tracking service and offers the safety and security for G-BOOK and G-Link users.

This company’s major competitors are General Motors, Ford, Chrysler, Honda, Nissan, Volkswagen, Opel, Renault and Peugeot. (Reuters, Toyota Motor Corporationâ„¢. 2010)

The latest innovative and technological break-through achieved by Toyota Motor Corporation is with the hybrid vehicle, the Prius, and the company has managed to reduce the energy consumption by 30% with the help of single production line. (Walsh B., How Business Saw the Light. 2007)

Vision and Philosophy of TMC:

“Toyota has sought harmony between people, society, and the global environment, as well as the sustainable development of society, through manufacturing. Since its foundation, Toyota has continuously worked to contribute to the sustainable development of society through provision of innovative and high-quality products and services that lead the times. Information on the guiding principles, which serve as the foundation of this approach, as well as Toyota’s CSR policies, production system, and manufacturing philosophy, can be found here.”

(Toyota Motor Corporation, Vision & Philosophy. 2010)

Managing Innovation:

Toyota Motor Corporation has become one of the world’s greatest companies because of the Toyota Production System (TPS). It has enabled Toyota, the planet’s best automobile manufacturing company, to produce automobiles at the lowest cost and develop new products quickly. This system has been copied by the other car manufacturing companies globally. One of the visiting professors of Hitotsubashi University in Tokyo sates that, “Our research shows that TPS is necessary but is by no means sufficient to account for Toyota’s success” (Takeuchi H. et al., 2008). Further, they say that TPS is a hard innovation that allows the company to keep improving the way it manufacture its products, Toyota has developed soft innovation method which relates the corporate culture.

The crucial element of TPS was the philosophy of kaizen, or continuous improvement. At Toyota, this element has been developed itself in the incremental and constant improvement on a day-today basis of Toyota’s procedures. All the employees of Toyota have participated in the process of improvement of the company’s procedures. Improvements that were developed at other times will be implemented right away or bundled together at one point of time. (Ireland D,. 2009. Pg C-236)

Toyota believes that efficiency alone cannot guarantee success. It heavily invests in the people and organizational capabilities, which gathers ideas from everyone and everywhere. It critically evaluates the contradictions in the views within the organization and comes up with the effective solutions. Hence, Toyota fosters on different viewpoints deliberately by the employees rather than restoring to compromises. This generates the innovative ideas that Toyota implements to surpass the competitors. (Takeuchi H. et al,. The Contradictions That Drive Toyota’s Success. 2008)

Toyota Production System, which is actually the innovation that made the company successful globally. The secret behind this system is the strong and constant devotion to the highest quality. If there is any problem occurred in the production process, the manufacturing system automatically stops in order not to be defective products manufactured.

Another principle that Toyota relies on is that the company should produce only what is demanded, at the exact time, when it is needed and in the needed amount.

In this 21st century, most of the car manufacturing companies are facing the issues like the environmental and natural resources issues. Toyota has come up with the vehicle which complies with the sustainable abilities which addresses the above mentioned issues. It has used the number of existing development processes and different hybrid solutions to innovate the engine concept. With these parallel developments in the processes, Toyota stood ahead of the competitors by creating the innovative-driven business growth with the help of sustainability. (KPMG Global Sustainable Services, 2007)

One of the competitive advantages that Toyota got on the other manufacturing companies, it is adaptable to change and innovates easily. Among Toyota’s most famous innovations is their greater investment in the research of cleaner-burning automobiles that combine gas engines with an electric motor.

Toyota has not only got good relations with its suppliers but also innovates constantly to improve these relations and making the supplier’s work easier. It believes that the company’s success depends not only on the quality of its inner process, but also on the quality of its cooperation with other companies and suppliers. No matter where the manufacturing unit is located, it strives for the same high quality. (Kondrat A., 2009)

Toyota follows incremental innovation, which is concerned with the minor improvements to an existing technology with limited market ambitions.

Innovative Break-through by Toyota:

Toyota Optimal Drive:

Toyota Optimal Drive is an entire range of new engines, design innovations and transmissions that is bringing in a step-change in fuel economy and emissions across the Toyota range. Here are just a few of the new innovations in Toyota Optimal Drive:

Toyota Optimal Drive is designed to save the money and reduce the carbon emission. It enhances the performance.

The Start & Stop technique saves fuel and emissions in urban conditions by seamlessly stopping and restarting the engine at lights or in stationary traffic.

The new engine is low weight and lower internal friction, which in turn offers a significant boost in terms of fuel economy and emission, without loss in power.

The improved transmission has improved the efficiency and torque capacity.

Some of the models come equipped with gearshift timing indicators (manual transmission only), showing the optimum time for gear changes and in turn saving fuel and emissions.

Toyota Hybrid Synergy Drive wins best fuel economy and best engine which is named Green Engine of the year. (Toyota, 2010)

Creating and Developing Opportunities:

Toyota is creating the opportunities by practicing the kaizen with the help of TPS. It strongly believes that the a few expert opinions, which are multiplied by kaizen, will help the organization to get the process visibility. This will in turn help Toyota to solve the problems in more efficient way and quickly.

Toyota’s Resource Utilization Subcommittee has dedicated to reduce Toyota Industries impact on the environment through improved technologies that help the company to better utilize limited resources through reduced consumption with reduced industrial wastes, which in turn reduce costs and strengthen the company by creating new business opportunities.

For any organization, a leader should devote a major portion of their time to the development of every employee. People or the employees with more abilities are able to support the leader and the company more effectively. When people are able to utilize their talents, they provide greater benefits to themselves, the company and to their work team. It is impossible to separate the performance of the individual from the success of the team or company.

A good development plan will help identifying jobs and skills that a company want an employee to learn, or improve weak areas in performance. There are three considerations when creating employee development plans. They are:

Ensuring that employees learn the necessary job skills or perform their work;

Planning for the development of related job skills such as becoming a trainer, learning problem-solving skills, or becoming proficient with specific tools and equipment such as computers or programming machine tools; and

Considering the personal growth and development of each employee in areas such as leadership development or pursuing other objectives such as acquiring a degree or pursuing opportunities in another department of the same company.

In one instance, at the Toyota Plant in Georgetown, a production team member indicated that he had aspirations of becoming a skilled trades member (maintenance). The leader saw this as an opportunity to benefit the team in the short term, the employee and company in the long term. As a part of his development plan, the team member was asked to participate in continuous improvement efforts within the team. The team has benefited because it had one of its own members who could assist with the development of their ideas. The team member has benefited because he was more engaged in his work and more satisfied overall. The company benefited because the spirit of continuous improvement was developed and a skilled team member was being developed.

The development opportunities at Toyota are inter-related as in one way or the other the company, the team and the team member is benefited.

Toyota behaving as an Entrepreneurial Organization:

What is entrepreneurship?

In the day-to-day scenario, the word ‘entrepreneur’ is widely used in the business and economic terms. An entrepreneur can be defined as an individual commissioned to undertake a particular commercial project by someone with money to invest. A number of concepts have been derived from the idea of the entrepreneur such as entrepreneurial, entrepreneurship and entrepreneurial process.

Entrepreneurship is what the entrepreneur does and Entrepreneurial describes how the entrepreneur undertakes the task which he does. The Entrepreneurial process is the way the entrepreneur engages or uses the means through which a new value is created as a result of the project. (Wickham P. 2004. Pp 5-6)

Effect of Innovation on the Entrepreneurial Process:

Innovation is the crucial part of the entrepreneurial process. Peter Drucker proposed that innovation is the central for the entrepreneur-manager in his seminal book Innovation and Entrepreneurship (1985). Entrepreneur must do something new or there would be no point in their entering a market. Innovation, in the business terms, can mean lot more than developing a new product or technology. It is a new way of doing something so that value can be created. It can mean a new product or a service, but it can also include a new way of delivering an existing product or service, marketing the product or the service in a new method, the way it get promoted or even approaching to the other organizations. These all are sources of innovation which have been successfully exploited by the entrepreneurs. (Wickham P. 2004. Pp 9)

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Toyota’s Behaviour towards Entrepreneurship:

Toyota’s accessing knowledge and nurturing the innovative R&D subsidiaries is vital for on-going competitiveness. The knowledge intensive R&D cell within the TMC and the outstanding product development techniques are the key agenda behind the efficient products of TMC. The organization itself considers itself as a learning organization through constant self-assessment and continuous improvement. At every point of process is standardized with quality; the availability of the diversified products helps in satisfying the needs of different customers of various financial status. Also, the organization management has coordinated all the sectors, which provides flexibility in the functioning of the corporation. TMC always encourages its employees to think out of the box and come up with the new innovative ideas.

In customer’s view, the best product is defined in terms of cost, efficiency, compatibility and product lifetime. Since TMC aims in fulfilling the needs and demands of their customers to the greater extent, it has been the benchmark for manufacturing for at least the last two decades. Hence, the success of TMC is determined by the extent to which its leaders can develop intellectual capital through knowledge creation and sharing on a goal basis and emphasize on the view of the customers towards Toyota’s products.(Toyota: Story So Far..2010)


From the above evidences and the information, no doubt Toyota Motor Corporation is one of the most innovative companies around the globe. The Toyota Production System has been imitated by many other car manufacturing companies but they are not able to beat TMC in the grounds of Quality and efficiency. Also, it is much closer to the customer views as it delivers exactly what they needed. The marketing strategy works well for TMC as it got healthy relationships with the different suppliers and the other companies around it. Even the company manufactures some of the cars which are eco-friendly like Prius, which does not emit the Carbon Monoxide contents into the environment. It is one of the kinds as it also reduces 30% of the power consumption while manufacturing.

Having a healthy relationship with the employees within the organization is always a competitive advantage over the other manufacturing companies as it gives edge not only to the company’s reputation, but also the personal growth of their employees.


Entrepreneurship at IIT-Delhi, Toyota: Story So Far..,. 2010[Online]. [Accessed on 06th Dec 2010]. Available on World Wide Web at: http://edcatiitd.wordpress.com/2010/10/14/toyota-story-so-far%E2%80%A6/

Reuters, Toyota Motor Corporationâ„¢. 2010[Online]. [Accessed on 05th Dec 2010]. Available on World Wide Web at: http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=TM

Takeuchi H., Osono E and Shimizu N., The Contradictions That Drive Toyota’s Success. 2008[Online]. [Accessed on 05th Dec 2010]. Available on World Wide Web at: http://hbr.org/2008/06/the-contradictions-that-drive-toyotas-success/ar/1

Toyota, Toyota Optimal Drive. 2010[Online]. [Accessed on 05th Dec 2010]. Available on World Wide Web at: http://www.toyota.co.uk/cgi-bin/toyota/bv/generic_editorial.jsp?navRoot=toyota_1024_root&fullwidth=TRUE&edname=TOD-Landing-Sliding&catname=/toyota_1024_root/main_nav/TOD&menuid=315428&zone=Zone+See+the+Range&id=TOD_mainnav

Toyota Motor Corporation, Vision & Philosophy. 2010[Online]. [Accessed on 05th Dec 2010]. Available on World Wide Web at: http://www2.toyota.co.jp/en/vision/index.html

Wickham P., Strategic Entrepreneurship. 2004. 3rd Ed. England: Pearson Education Limited.


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