Reference no: EM132290646

Instructions: Please read the following case description of "Organizational Structure and Design at Toyota". After reading this case, you should prepare your analysis following the guidelines posted under "Course Requirements". The purpose of this assignment is for you to demonstrate that you can apply the concepts, principles, and theories presented in the course readings. Your analysis must employ only the facts presented in the case description below. You must resist the temptation to introduce facts not in evidence in the case description by searching the internet for updated information. The company’s present situation is not necessarily the ideal solution that could be derived from a careful analysis of the facts as presented here.

Organizational Structure and Design at Toyota

Toyota Motor Corporation (TMC) has been enjoying the enviable position of being referred to as the gold standard of the automotive industry. As of 2014, the company was the largest automaker in the world, had over 300,000 employees, and was among the top 20 companies in the world based on revenue. Headquartered in Tokyo City, Toyota Motor Corporation is the maker of Toyota, Lexus, and Scion, with its hybrid electric Prius brand becoming a status symbol in affluent and environmentally conscious neighborhoods.

Toyota owes its success largely to its manufacturing system, based in large part on the Total Quality Management (TQM) principles W. Edwards Deming brought to Japan shortly after the Second World War. Toyota Production System (TPS), originally named “just-in-time” production, allows Toyota to deliver raw materials and supplies to the assembly line exactly at the time they are to be used. TPS is now commonly known as lean manufacturing, and its principles transformed businesses including the retail giant Amazon, hospitals, banks, and airlines. The system has a lot of components, including Kaizen, or the idea of continuous improvement and always questioning how things are done; Kanban, or just-in-time production; and the Andon Cord, where assembly line workers are empowered to pull a cord and stop the manufacturing line when they see a problem. What this mean is that at the company’s plants throughout the world, every worker is empowered to shut down the production line if there's a problem, no matter how small. Ultimately, the fundamental idea behind TPS is respect for customers and employees, where front-line employees are empowered to provide the best products and services with minimum waste.

The belief that good enough is never enough permeates all levels. One Toyota executive attributes that mindset to paranoia about what the competition is doing. It is a healthy paranoia that is valuable to an organization, even when it has reached the top, as Toyota did when it passed GM to become the world's largest car manufacturer.

A big part of the Toyota system is being a learning organization. Management seeks input, listens, and spreads knowledge quickly throughout the organization to make improvements. When its plant in Vietnam found a less-costly way to keep the parts of a car together as it is being welded, Toyota installed the new assembly process in its factories around the world within six months.

In the end, though, production systems are only as good as company cultures, and the success of a business requires both. The years 2009 and 2010 were fraught with safety crises for Toyota, resulting in the recall of more than 6 million vehicles due to accelerator pedals that got stuck. The resulting criminal investigation led to an eventual settlement of $1.2 billion in 2014 with the Justice Department. The recall crisis (and the slow response to it) was a major hit to the reputation of the company. The year 2011 saw Toyota struggle with the aftermath of an earthquake in Japan that derailed production. The global financial crisis was a hit to the company’s profits as well.

What happened? One key issue was the rapid growth of the company. Expansion strained resources across the organization and slowed response time. Toyota’s CEO, Akio Toyoda, the grandson of its founder, conceded, “Quite frankly, I fear the pace at which we have grown may have been too quick.” The company had begun to put growth-related goals in front of quality goals, rewarding those who reached their growth-related metrics. Rapid growth also meant that the company had to hire new employees quickly with little time spent on training them on the “Toyota way,” and had to hire a large number of contract employees. These changes in the composition of employees meant that communication, coordination, and trust suffered.

Another key problem was the centralized, Japanese-controlled organizational structure. At the time of the crisis, Toyota was a highly centralized organization that did not delegate much authority or decision making power to its operations in the United States, even though the U.S. market provided two-thirds of its profits. Every time there was a quality issue that necessitated a recall, the problem needed to be communicated to headquarters using a highly bureaucratic process, and then headquarters would provide the solution. All U.S. executives were assigned a Japanese boss to mentor them, and no Toyota executive in the United States was authorized to issue a recall. Most information flow was one way, back to Japan where decisions are made. Often, the upper management dismissed quality concerns raised by lower management. In short, Toyota had become too bureaucratic, too centralized, and too big for the challenges it was facing.

Assignment: You are a management consultant who specializes in helping companies determine how best to design their organizational structure and, as such, you have been hired to evaluate Toyota’s current structure and make a recommendation as to which structural design will be most appropriate now and in the future as changes in the external environment affect the company. Your analysis should yield at least two alternatives for Mr. Toyoda to consider, but you must recommend one to him. The recommended design should be the one you believe will help the company operate more efficiently and effectively without disrupting its current TQM-based culture.

CASE ANALYSIS REQUIREMENTS

The following steps should be helpful to you in preparing your case analysis:

Identify the relevant problem(s), stating assumptions if appropriate. The emphasis at this stage is on getting an overview of the issues involved. Students often get bogged down in recounting details, many of which may be irrelevant, rather than identifying the issues.

Identify or select the most important problem(s). For example, “The problem in this case is a poor fit between the organization and its environment”. It is important that you are identifying the real problem and not just one or more symptoms.

Analyze the problem and its causes in terms of the theories and concepts discussed in the text and in class.

Identify and weigh alternative actions to “solve” or “improve” the situation.

Select the best alternative and explain why you chose it.

State how and when the recommended action should be implemented.

Your written analysis should be formatted into three major sections as follows:

Statement of the Problem – In this opening section, you should clearly and succinctly state the issue or issue you believe needs to be addressed or solved. This section should be a few sentences or a paragraph at most.

Analysis and Evaluation – This is the most difficult part of the assignment because analysis is hard work. You should offer analysis and evidence (hard facts) to back up your conclusions. Try to inject balance into your analysis and to avoid emotional rhetoric. Since your papers must be written in third person point of view, you must not phrases such as “I think,” “I feel,” “I believe”, or similar phrases. This section should include discussion of two or, at most, three alternative methods of addressing the issue.

Recommendation – In this section, you will select what you consider to be the best alternative, discuss why you believe it to be so, as well as how and when it should be implemented.

Your case analysis should be in APA format, four to six pages in length, not counting the title page and references page. The paper should be double-spaced, 12-point font (Times New Roman), with one-inch margins at the top, bottom, left, and right of each page. An Abstract is not required. The title of the case analysis must be the same as the title of the case description. Points will be deducted for errors in spelling, punctuation, and grammar. A formatting template, which is in APA format, has been posted in the “Course Materials” module.