Toyota in 2004: Managing Innovation in the New Millennium
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Case Details:
Case Code : BSTA025
Case Length : 11 Pages
Period : 2000 - 2004
Organization : Toyota
Pub Date : 2005
Teaching Note :Not Available
Countries : Japan
Industry : Automobile
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Introduction
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In 2004, Japanese car maker Toyota was considered by most analysts to be the strongest player in the global automobile industry.
During the period 2000-2004, the output of the global industry had risen by about 3million vehicles to some 60million. Of that increase, half came from Toyota alone. Toyota's global production had overtaken that of Ford.
Toyota was set to pass Chrysler in sales to become one of America's Big Three. Toyota's market capitalization was more than that of the American Big Three put together, and more than the combination of its successful Japanese rivals, Nissan and Honda.
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In the early 2000s, Toyota continued to introduce improvements in its manufacturing and logistics processes, to build greater flexibility and facilitate mass customization. Toyota also maintained the tempo in new product development.
Toyota had been revamping its ordering, manufacturing and distribution to make it easier for dealers and customers to make changes right before production. The goal was to reduce the average time between dealer order and delivery at Toyota's North American factories from 70 days to 14. That would not only improve customer satisfaction but also cut dealer inventory costs and the need for Toyota to offer rebates for slow-selling vehicles. The system had gone into full operation early in 2004. Toyota dealers were customizing 16,000 of the 135,000 vehicles they sold every month. Toyota's U.S. factories were able to accept nearly 90% of the changes requested by customers and meet their specific requirements.
Toyota also focused on product innovation to effectively serve niche segments with specialized requirements. The company strived to improve its designs, even as it sought to make the product development process more efficient...
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