Reference no: EM133046225
Using the text below explain proprietary knowledge (in your own words), then explain why it's important to corporate strategy
From the text book:
In some cases companies are able to achieve a cost advantage due to proprietary knowledge that is independent of scale or output. As described in the opening case, Tata designed the Nano in a unique way, for example, using a specially designed 35-horsepower, rear-mounted engine. Tata developed some important proprietary knowledge in designing the low-cost vehicle, some of which is protected by the 34 patents it applied for when it completed the design.24 Patents are often important sources of proprietary intellectual property. Another auto manufacturer, Toyota, has long been known to have lower production costs than its US competitors in the auto industry-GM, Ford, and Chrysler-because it has pioneered flexible production techniques (sometimes called the Toyota Production System, or TPS), while US firms have historically used mass production techniques.25 These techniques are not protected by patents but by trade secrets.
Proprietary knowledge Information that is not public and that is viewed as the property of the holder.
The architect of the Toyota Production System was Taiichi Ohno, a Toyota engineer who realized that Toyota simply didn't have the volume of production required to compete with US automakers on the basis of economies of scale. So, Ohno invented a set of processes that allowed Toyota the flexibility to make three to four different car models within the same plant. US automakers, in comparison, could typically only make one or two different car models within the same plant. A key principle of the Toyota Production System is "just-in-time" delivery of components, both from outside suppliers and from different manufacturing stations within the plant. Delivering components close to the time they will be used keeps inventories at plants low and minimizes waste.
Studies have shown that the Toyota Production System comprises roughly 30 key processes, including its "just-in-time" delivery. Although US automakers have tried to imitate many of the practices of TPS, they have been relatively unsuccessful at understanding the full proprietary system and how it works. As a result, Toyota has been able to maintain a cost advantage and quality advantage over many competitors.