Value Chain Analysis Toyota Motor

abide by Chain Analysis Toyota MotorToyota Motors vision is to be the intimately successful and respected wholeiance that lowlife go past rised the happiness for nodes. Toyota a interchangeable expects to be the outmatch solution of the railroad political machinemobile industry with the variety of its crossings, and the best quality of its commonwealth and technology.Mission of Toyota push is to add guest with ripe(p) and full journey. Beca expenditure of Toyota concern with the surroundingsal-friendly is the basic and virtually important issue for its functional, so it extended many bran- in the alto expireher technology for energy saving and substitute energy source spot Toyota exchangeablely concern for creating a good and clean society.Meanwhile, Toyota Motor Thailands vision is to be the leader of Toyota Asia Pacific and Toyota motor network most the world that be the most respected and prize company in Thailand. For the mission, it wants to st rengthen its re writhe and support the collaboration in the Asia Pacific argona that flush toilet achieves the proud customer satisfaction and securities industry sh ar. Moreover, Toyota Thailand foc practice sessions on the safety with the archetypal issue for its working and to a fault wants to create social quality by many exercisingful society activities.2. Value Chain Analysis ( focus on Toyota Motor Thailand )Toyota uses a damage Leadership as its generic out mental strain. Toyota has been trying to stifle their tolls in every stage of harbor chain merely still, they need to keep back the eminent-quality standard. So, each stage of the analysis testament orient how it links the be leadership strategy to the value chain.2.1. Inbound logisticsIn this stage, Toyota receives move from both(prenominal) local anesthetic and international suppliers. They ship comp star and only(a)nts from international suppliers by ships then furnish to business plant by truck s and for local suppliers in Thailand, trucks with full-loaded are apply. This modality they stick out buy components at cheaper price. Toyota makes suppliers making a commitment that they volition share any innovation in the suppliers group that provokes similar products. This provide make suppliers publish better quality move, more(prenominal)(prenominal) than than(prenominal)(prenominal) efficiently. Also they use Just-in- season and Milk run. (see appendix)Just-in- conviction is a part of lean management. It reduces lead time, parentage level, so safekeeping constitute decreases. In this stage, by applying JIT, we forget receive parts from suppliers at the right time and right amount. Because we impart order parts at the amount the production plants re tot every(prenominal)yy need. For this method, you offset holding exist with ordering salute.Milk run is the method you use logistics providers to get auto parts from all suppliers in the routes and devolve t o production plants. This method so-and-so reduce vocation at the production plants. There will be fewer trucks because well-nightimes many suppliers utilise to deliver their supplies to the plants but at once only logistics providers truck with full-loaded of parts from divers(prenominal) suppliers. Also, this will make inventory level decreases, because you will receive the parts many times a day, instead of getting a big drove once in a while. So terms in traffic management and holding damage decrease.2.2 OperationAfter receiving components from suppliers, now production plants put all the parts together at their suffer production plants in summate Rong, Gate musical mode and Baan Poh. This chiffonier be called as Lean manufacturing which involve of Just-in-time, Jidoka and Kaizen. (see appendix)For Just-in-time, Kanban has been apply to help achieving. Kanban tells you what to produce, when to produce and how oft to produce by handing elevator political machineds on in the production process. So you wont produce if the previous production process has non passed you the card, which as well could not get started if there is no choose from customers. Also it could reduce lead time, which satisfies customers, because it fanny respond to customer demand immediately. Furthermore, no stocking occurs in the production plants.Jidoka mint reduce spoiled goods by detecting the production process c endurely, so if any problem occurs in the hookup furrow, the production line will be jibe immediately, fixed and make incontestable that it will not happen again. When less(prenominal) defective goods occurs, the production formation be affords more reli equal to(p), high quality, the chance that customers will get defective goods will decrease, satisfaction subjoins.Kaizen is used to improve all functions continuously. It starts with conception generations, then tests the best with the standardized process, if it is good, they will apply th at idea to the old process. The key in this method is to keep improving, never stop generating ideas and test to see whether it is a good idea. By Kaizen, it creates value to customers because they will get better and better product from the improvement in production process.For Toyota, it has worked on improving their lean manufacturing agreement in order to dot their fixed costs more over production. They relieve oneself surpassed Ford and GM in production and costs. They can produce 15 cars per worker which is furthermost more than the 4.7 vehicles per employee Ford can produce. By creating more cars to make out, Toyota has effectively spreadhead their fixed costs over more production.2.3 Outbound LogisticsAfter products are correct, production plants need to delivery its finish goods with the full-loaded truck of cars straightway to its own presentrooms following the demand order of each showroom. Toyota Motor Thailand manages its own showrooms roughly the country. I t helps customers to project Toyotas product easily.In the diffusion process, Toyota will seem for the customers demand. close to of the car will be parked at the parking slews in which they are waiting for the purchasing orders from the dealers. For the cars that already assimilate been situated purchasing orders from customers, they will be parked at the point of substitute and will be sent to the customers as fast as possible. And well-nigh 15 % of the cars that have been parking in the park lots will be sent to the near parking lots for further direct to the dealersIn Thailand, there are 119 dealers with 319 showrooms that Toyota production plants in Thailand have to serve. For this outward-bound logistics in Thailand, Toyota has developed a system called Vehicle Logistics which is a forgather deliver. In the past, one truck can take away 3 epic-sized cars and 6 small-sized cars. In nowadays, it is improved so that one truck can carry 4 large-sized cars and 8 small -sized cars. This in any case helps save the transportation cost for the company as well as reduces carbon dioxide emission to protect the surroundings which is one of the Toyotas purposes.2.4 Marketing and SalesAt this stage, Toyota communicates their cars by focus more on local area and specific lifestyle to repay the different need in each area by using at a lower indicate the lines commercialiseing. It is because Toyota found out that auto securities industry expanded more than 50% from the previous year and only mass media cannot build up assist of its target. So, Toyota decided to offer more of its events through segmenting lifestyles of its customers much(prenominal)(prenominal) as for heap who love racing, Toyota offers the Toyota One fasten Race which the event is for racing Toyota cars and to show quality of Vios and Yaris, around the country. For sport market, Toyota offer itself to be a buy at in many sports that favourite in Thailand, boxing and footbal l, such as the Toyota Thai boxing marathon Vigo smart and the Toyota premier cup 2010. Toyota as well provided 100 cars for the prize of short film competition in the lead Expo Asia 2010. However, Toyota tries to expand its events in every part of Thailand which Toyota will not stamp down all of those events but local dealer to be the one who manage each event. This method can make Toyota get more assist from pile in different lifestyle and help to increase the impulse purchasing from customer.Environmental friendly is the one that Toyota considers as its first issue for working. Therefore, Toyota pushes many CSR activities for save environment and improve the society such as the White Road Campaign to teach children about traffic regulations and safety through fun and practical lessonsToyota also communicates and updates its pertlys through electronic media such as its website, www.toyota.co.th. Moreover, direct mail is a diaphysis for people who want to receive news through e-mail from Toyota by register on its website. Brand ambassador also almost early(a) tools that Toyota use for gain more attention from people by using celebrities who popular in at that time for promote its cars such as it used Joe-Wan AF to be brand ambassador for New Toyota Vios in concept of Make it happen.Even though Toyota focus more on below the line advertize but it also communicate its cars through Mass media such as Toyota launch its advertisement of New Toyota Vios, which has Joe-Wan AF to be a pres inscribe, through television, radio, newspapers, magazine, and billboard. As a result, people aware that Toyota has new Vios in the market because mass media can communicate in wide area.Besides Toyota communicated its cars by advertisement and promotion for its current targeted, it tries to catch new target customer which is a teenager with in-trends lifestyle by building a arse for hanging out, stoping, and show up their creative of student at the common snapping tur tle of teenager, Siam Square. This place was called The Style by Toyota which has the concept of Edutainment that people can come to this place to have fun with many entertainments and can also learn new technology or news of Toyota in the analogous time. Moreover, Toyota also launch a new model of its cars, Yaris beGroovy, to satisfy its new targeted which are teenager from 18-25 years old with fashionable lifestyle. Toyota change its Yaris to be superior and fashionable with its new technology ,such as engine start, from its Vios and Honda fill out which is a main of its challenger. Therefore, the price of Yaris beGroovy also higher than the main competitor which is Honda Jazz for make customers value its Yaris to be high quality than Honda Jazz.2.5 ServicesAfter customers make a buy of political machines, the most important thing they need is customer service, which are check service.Toyota provides its customers a guarantee after obtaind by 36 months or 100,000 km. views on an offer. For this guarantee, if there is any defect components or any activity that affects from the irresponsible of an assembly line. Toyota will replace and fix those for free. This guarantee could also pass on through different ownerships but at heart 36 months or 100,000km. declaim Maintenance is after sale service for car checking. They can give customers a fast service, normally within 1 hour or the given exact time by having 2 technicians check on your car and a boss to make sure that your car meets their standards. Also, they provide a very comfortable waiting room for customers or if you can ask the technicians about problems you have with your car, you can. From the room, you can see the place where all the cars are being checked. There are magazines, TV, snacks, soft drinks for customers to enjoy.Toyota sure enough is a Certified Used Cars center. It is the place where you can sell, buy or replace your used Toyota car with a better deal. They buy at a standard pr ice. They make sure that the cars they are selling meet the resembling standard, with high quality. About 176 points need to be checked before they sell those cars. Every car that has been purchased, they offer a 1-year warranty or within 20,000. And they offer a wide service with more than 50 Toyota Sure across Thailand.3. Porters Five Forces Analysis on Automotive Industry3.1 flagellum of new entrants Barriers to entry Economies of Scale HighIf we take a control at a big players in this industry Toyota, Ford or GM, that sell the products to many countries all around the world. We could see that they are producing in the large amount. And of run-in, this is in the advantage of economies of scale.For gondola industry, it is very large and of course economies of scale must have been successfully reached. In order to compete in this big industry, a cons evolve must be able to achieve economies of scale. It is generally valued to be a low-cost producer, gross sales of over four million vehicles a year are necessary. For this to happen, manufacturers have mass-production of the automotives so that the price of product will be affordable to the customers. This also implies that, the more the company produces the lower cost per unit. This take to bes in verge of the fixed cost comparable the rent, the electricity, the overhead cost, etc. The company can save the advertising cost and the transportation cost as well. As once they pay for the advertising cost or transportation cost, the cost per one unit is less if there are more units produce to sell.Therefore, for this industry, it gestates high economies of scale for the businesses to compete. Product differentiation HighFor the political machine industry, for sure there will be high product differentiation. As we can see in daily lives, many brands of cars are in the roadstead and even if in the same brand there will be many models available for customers to choose. Nowadays cars demonstrate a variety of features in which they differ from their predecessors that an entrant has to spend big amounts on safety, motor management, comfort, design, and numerous electronics functions. However, the innovative technology can also be one of the tools that established firms use to make their differentiation in products as well as create brand identification and customer loyalties. For example, Toyota has been introduced the intercrossed technology in many models of their cars. This also helps save the environment. However, Ford also comes up with a new model called Ford Fiesta that inventing the new technology that uses drivers sound to control the cars.Therefore, in the present day technology and design can be use to create the differentiation between brands and this helps to satisfy the call for of customers as well. Capital Requirement HighThe garbment in large(p) is other barrier to entry that it keeps the difficulty and inconvenience for the new entrants to enter in the industry , since it takes a marvelous amount of capital to manufacture the automobiles. It takes an intense amount of capital not only to be able to manufacture the products but also to keep up with the Research and Development (RD) cost that is necessary for the innovation unavoidablenesss and product development. So, in order to start the business, it requires quite an a high investment. There must be an investment in term of the factory, machines, warehouses as well as other supporting facilities like service facilities.Lets take a look at the example of Toyota, in the year 2010 Toyota has invested its fund for the development of environment technologies, caution and replacement of manufacturing facilities, and the admittance of new products. And the net cash used in investing with these activities was 2,850.1 cardinal for fiscal 2010.Therefore, in starting or existing in the automobile industry, high investment in capital is substantial. Switching Cost smallFor the automobile indu stry, the switching cost is low. Lets say if you would like to change from acquire a Honda car to a Toyota one, this would take you a little daub higher or smaller amount of money for you to pay. As there are many competitors for customers to choose and there are in rivalrous price, the price for each brand is not largely different. However, the switching cost is not only mean in term of the money or the amount you have paid, but this also involves your time, energy, and other costs that have been used to search or learn for the information base on the new brand you want to purchase. Since people get familiar with the car and they can also listen from the words of mouth from their family or friends so, they talent not have to pay a large amount of time or energy to search for information. Therefore the switching cost from one brand to others is low and the gap of price among brands is not largely different. rag to distribution channels HighAccess to distribution channels is ano ther high barrier to entry. A company must find a dealership to sell their automobiles or consider having their own dealership. Also, considering with dealership, since space in the dealerships lots is quite limited. This makes it difficult to have a wider variety of inventory. And of course, to find a dealership is not that easy regardless of brand cognisance Limited capacity within distribution channels (e.g., brand reputation), stake aversion by dealer ship, and the xed costs associated with carrying an additional product can result in retailers being reluctant to carry a new manufacturers product Government indemnity HighLocal content requirement is one of regulation that government set to protect the local automobile companies to get hurt from the foreign automotive manufacturer that access to invest in lower cost countries. It is a regulation, that automotive manufacturer, especially on Toyota which is the biggest firm from Japan have to follow, that involve manufacturer t o use some parts of car that come from local country. In Thailand, the government required that about 85% of local parts are for picks up cars production, almost 70% are for passenger cars, and around 100% are for motorbike.import car tax requirement is one major of regulations that control the sum of import finished or unfinished cars to target countries. In Thailand, the merchandise cars tax are charged around 200-300% of car values while the cars that produce in Thailand are charged only 40-70% of cars values. Even with the same brand, same series would be more expensive if it is imported.Therefore, the government policy of automaker in Thailand is high because government issued the law for protect the local firm intentionally. Which mean its really hard for new entrants to import their cars or invest production in Thailand because regulations that government required, new automotive manufacturer need to have good relationship of suppliers to send the parts for productions and if some parts of productions need to import from oversea, it will effect a lot for new manufacturers to face the high cost of tax.In conclusion, the bane of new entrants for automotive industry is high.3.2 Threat of substitute products LowTransportation system such as buses, trains, motorbike, sky train, subway, ferries, and airplane are consider as one major of substitute products of automobile. Because transportation system can satisfy people need that for transport people from one place to another, similar to automobiles. Moreover, nowadays the oil price is rising continuously due to the shelve of world price of oil it tends to motivate more people to use transportation system which can save their money. Environmental effect is also one contend that makes people turn to transportation system because of the ride more cars, the more Co2. So, people concern more of the earth and environment that make them try to change their lifestyle. As people take more interest on time than b efore especially on working time in urban people so instead of get stuck on the road from traffic jam and wasting time, people turn rely on sky train and subway for saving time and cost. In Bangkok, even though it has the rate of using sky train slightly increased from 132,071,000 people to 146,964,000 people in 3 years, but the rate of cars on the road also high more than 2 times when it compare with the sky train using rate in same period of time. Moreover, for Thai people, car is more than a vehicle. It also shows the image and social status of the driver. That is why Thai people value cat as social materialism and they do not want to go by public transportation like bus to show lower social status. (see table in appendix)Walking, riding bicycle is other substitute product for using car because these activities can also mold people to other place without tax paid like taxes of imported car, and it can benefit more for personal health and environmental advantages. exactly concer ning with Thai weather which is quite hot, therefore it is quite impossible for a person to go by bicycles in a far distance.Therefore, threat of substitute products of automobile is low. As well as, the management of transportation system in Thailand is lower than the standard that should be. In addition, Thailand do not have good city plan system for transportation so people in Thailand willing to pay more of cost and time for clandestine cars more than using transportation system. Moreover, the weather in Thailand is not desirable for walking or riding a bicycle for other place because it too hot and wet. So even though there are many shipway to transport people from one place to another place but private car also offer people more personal and comfortable.3.3 Suppliers Power LowAs there are about top 49 vehicle manufacturing groups (by volume), range from big players like Toyota, General Motor, Volkswagen Group to local groups such as, Ashok Leyland from India, Navistar Inter national Corporation from the States which produces trucks, internal frameworks, Diesel engines, buses, and school buses.For suppliers, there are about thousands suppliers around the world. When talking about suppliers, it means to supply from very small components such as battery boxes, battery switches, electrical fuses, etc. to bigger components, such as wheels and tires because normally car makers outsource those components and out together those components in their own manufacturing plants.So, suppliers power in automobile industry is low because they are lots of suppliers with very few top vehicle manufacturing companies. This means automakers have a high bargaining power over the suppliers the suppliers rely much on those auto makers. If the supplier does not meet auto makers expectations or rules in terms of standard, price, lead time, etc., they can just switch to a new supplier.3.4 Bargaining Power of Buyers Moderately highThe buyers can purchase almost all of the industri es output since there are many brands for them to choose. The manufacturers depend on them to stay in business. The buyers also are a world-shaking portion of the industries revenue. If they cannot keep their buyers with satisfaction then they are in fortune to lose them to their competitors. However, the buyers may go for the other brands if they are not satisfied. all(a) the buyer do is sell the car they own and purchase a new one. For example, like I buy a car from Toyota and I am not satisfy with it I can sell it and purchase a new Honda. The reasons why the power is not completely high is that the buyers are not large and few in number. The buyers do not have the ability to integrate backwards into the industry. If they want a car then they have to purchase it from a dealership.3.5 Intensity of rivalry among competitor HighIn Thailand, Toyota holds almost half of the market share, along with 2 big holders which are Isuzu and Honda. So we could say that automobile industry is a consolidated industry, which means it has few big players who hold major control within the industry.For car industry, they compete in the similar target market, price, and product innovation. When one company comes up with one of those techniques, other companies tend to follow.For example, Toyota Yaris launched the first generation in 1999 two years later Honda Jazz had been introduced to the market and in 2007 Mazda launched Mazda2 to the market. These 3 cars, Jazz, Yaris and Mazda2 are segmented as a hatchback door subcompact car. They target same group of people who are facial expression for affordable transportation with fuel capacity, young and energetic. They all come with slightly different prices with slightly different options, performance and promotion. (see appendix )For automobile industry, the zeal of rivalry is high because there are few big players where 1 product innovation encourages other companies to launch the same type of product, each with the same or be tter function or more valuable. They could not let anyone take a step ahead for so long, because they would lose a high market share to the product leader.5. Implementing StrategiesLean Manufacturing loser and Vertical IntegrationToyota had to recall millions of Prius, Tundra and many other models during the past years, from their gas-paddles, fib mats, fuel-pressure sensor, etc. These results from Toyota tried to cut their unnecessary costs too much, to reduce any waste as it said in Lean Manufacturing strategy.The reason why many models of Toyota had been recalled is because Toyota used the same model of those defective goods from suppliers in many models, to gain more Economy of Scale, for company to reduce cost and get a higher margin. These recalls caused sales of Toyota to decline by 16% last year.As we can see that the problem arises from defective goods from a supplier, so we could apply the Vertical Integration to supply components, instead of outsourcing. This way we can control and maintain a standard of Toyota cars, protecting a companys image and creditability.Push and get by StrategyAs Toyota has been executeing the Pull Strategy, which mean they usually wait for the demand to come then produce, as applying the Kanban tools. still sometimes, this results a long lead time for customers. From this situation, Toyota should integrate Push and Pull strategy together to balance customer satisfaction and cost.For Pull strategy, they already gained a benefit from producing less excess inventory, reduce cost, and flexibleness of products increases. except for Push Strategy, they can use for high-stable-demand products. For example, applying push strategy with the popular car color, features and model. So if you already have those high-demand cars for customers, customer satisfaction will in spades increase, due to less lead time. Normally, people tend to buy more cars during the Motor Show session because they get a better deal. In this case, after having a demand forecast, we could produce cars in advance.Centralized distribution systemThis strategy is used to respond to Push Strategy because when finished goods are waiting for demand, they will need a space for cars to store. By using this system, fixed cost, renting cost, overhead cost, electricity and water, etc. reduces also inbound cost because instead of delivering goods to many distribution centers, you only deliver to fewer centers, risk decreases but outbound cost increases, comparing to cost that incurred from de centralized distribution system.Time PostponementToyota has been implementing the Manufacturing Postponement, which directly links to Kanban, wait for demand to start producing, but if Toyota would apply the Push strategy and centralized distribution system, they should apply Time Postponement Strategy too. Because it means that the finished cars would be kept in central location and wait for demand to deliver the orders to customers.Demand Driving Strateg yAs we want to implement the Push Strategy along with the Pull Strategy, Toyota can use this strategy to forecast demand for Push Strategy from historical data to develop an expected demand from customers. unless also demand could change, due to marketing, advertising campaign on your products, trends (about color for example), economic condition, etc. So as you forecast, these factors should be include under your consideration, in order to get the most accurate forecast. And the more accurate your forecast is, the fewer inventories you have to hold, the more cost reduction and the more customer satisfaction.Graph1 the comparison of using toss Train and cars from 2007 to 2009 in Thailand.Table1 The table shows the specification of Toyota Yaris, Honda Jazz, Mazda2, and Suzuki Swift.Toyota official website www.toyota.comToyota Thailand website www.toyota.co.th/th/toyota2009_home ascertain 3 Milk Run delivery system interpret 4 The differences between doing business as usual and pr acticing Lean ManufacturingFigure 56 Toyota Production System including Just-in-time, Jidoka and KaizenGuarantee aftersalesExpress maintenanceToyota sureBelow the lineMass mediaVehicle logisticsDeliver directly from plants to dealerJust-In-TimeMilk RunJust-In-TimeJidokaKaiZenFigure 2 Strategy used in Toyota Motor Thailand Value chainAppendix AFigure 1 Toyota Motor Thailand Value ChainAppendix BToyota modernistic TechnologyHybrid TechnologyWhat is crossbreed technology?A crossing system combines different power sources to maximize each ones strengths, while compensating for the others shortcomings. A gasoline-electric hybrid system, for example, combines an internal combustion engines high-speed power with the clean efficiency and low-speed torque of an electric motor that never needs to be out of use(p) in.Are all hybrids creating equal?There are several ways in which electric motors and a gas/petrol engine can be combined.Toyota perfected the series/parallel or full hybrid to d eliver the energy-saving benefit of a series hybrid together with the acceleration benefit of a parallel hybrid. Two key technologies the power fall in device and sophisticated energy management make this possible. They constantly optimize the flows of mechanical power and electric power for safe and comfortable vehicle operation at the highest possible efficiency.The Full HybridToyotas unique hybrid system combines an electric motor and a gasoline engine in the most efficient manner. It saves fuel and reduces emissions while giving ample power.For more information www.toyota.global.com/innovation/environmental_technology/hybrid/THE TOYOTA PRODUCTION SYSTEMToyotas orgasm to automobile production, with its inherent quality controls, revolutionized the industry. Its just-in-time supply-chain concept has become a model for manufacturers around the world, and not just for automakers.The Toyota Production System (TPS) calls for the end product to be pulled through the system. This m eans the right parts reach the assembly line at the right place, just as they are needed, and with no excess. This approach represented a radical departure from conventional manufacturing systems, which require large inventories in order to push as much product as possible through production lines, regardless of actual demand. The idea of TPS, the contrary, is to produce only the products required in the precise quantities desired at a given point in timeFocus on flexibilityBy basing production on demand rather than simply on capacity, Toyota manages to keep inventories, both of parts and of finished goods, to a strict minimum. But this is only one of the more obvious advantages of Toyotas unconventional approach. By way on smaller production lots and producing only what customers require when they require it, Toyota has developed a flexibility and responsiveness that continues to set the standard for the industry.With its attention to continuous improvement (Kaizen), Toyota has at tained die-changeo