Background to the company
The Toyota Motor Corporation is based at Toyota at Aichi in Japan. The multinational company is an automaker with a large employee base of over 400000 employees with the largest manufacturing capacity of automobiles and specifically the famous vehicle brand ‘Toyota’. It terms of world revenue, the Toyota Company sits at the eleventh position and had manufactured an estimated 200 million vehicles in July 2012. Founded in 1937 as a family company by Kiichiro Toyoda, the company has been keen to strategically manage its businesses. The Toyota Company has had a choice of leadership that has embraced the benchmark of quality, perfect practices and corporate responsibility in the wake of stiff competition and technological advancement in the global market. The strategies of the company have been deeply rooted in principles that have continued to improve the respect for people, their strategy framework as been gearing towards waste cutting, positive attitude building and maximum utilization of the inherent talents of the workers. The Toyota Company has managed to create an impression of social responsibility in the global market. The company has exploited a number of strategies with a view of being the best company in terms of product quality and service provision vis-Ã -vis matching growing customers’ needs and technological advancement. The management board of the Toyota Company has been vigil to clinch any opportunity in developing and growing the company’s worth, a strategy that has gone a notch higher to see the company explore options of developing hybrid cars among other market strategies. The underlying strategy of the Toyota Company is rooted in rewarding merit and identifying faults in an attempt to perfect the product and service delivery. Through this basic strategy, the Toyota Company has managed to propel its influence and achieve an extensive customer base.
Strategy and management
The success of the Toyota Company is attributed to its strategic management formula that has made them to remain competitive in the automobile market while maintaining the quality and efficiency of their products. The philosophy of management at Toyota Company has continued to evolve over a long period of time. This management philosophy has been built on the original value of the company which was centered on ‘Lean manufacturing and the concept of production in time. These two concepts have been vital in the development and growth of the company. The Toyota Company strives to produce designs of cars that are exclusively ideal and perfect. In its lean manufacturing policy, the company aims at achieving a customer ideal production which will eventually cumulate to customer satisfaction. In this quest, the Toyota Company has been producing different models of cars in order to meet the demands, taste and different preferences of its customers. This has enabled the company to remain competitive and to have a wider market area. The business strategies and managerial values have been collectively convened into a single structure referred to as the ‘Toyota Way’.
Processes, products and policies
The ‘Toyota Way”
The ‘Toyota Way’ was one of the strategies that the Toyota Company adopted in order to help them stay ahead in the automobile industry. It is a set of values guidelines of conducts that all the employees at Toyota are expected to embrace. The strategy had two main pillars; Continuous improvement and Respect for People. All the conduct guidelines and values of the Toyota Company are summarized into major principles of embracing challenge, striving to improve their services and products, respect to customers, teamwork and a ‘go and see’ slogan. This is a strategy that the company has employed to ensure that the employees not deviate from the main objectives of the company thus enhancing success in business thus working as a driving force towards an achievement. The strategy has also aided the formation of identity and has kept the spirit of quality and service which has helped the company to be outstanding among other automobile manufacturers. Alongside the Toyota Way are four other components that complement the strategy. These components include management decisions that are based on long term deliberations and a comprehensive problem solving process. Further, the aspect of focusing on the development of the people has added a lot of value to the organization. Consequently, the Toyota Company has embraced the art of organizational learning through solving the root problems continuously in the organization.
Electric technology
Strategic management is all about exploring the possible options that can assist a company to be elevated above its competitors. This means that every implemented strategy needs to be suitable to effectively achieve the mission, feasible to ensure that it is applicable and that the strategy is accepted by the stakeholders. The management team at Toyota Company has explored the application of electric technology which is feasible, acceptable and suitable. In this respect, the Toyota Company has gone a long way in releasing hybrid electric vehicles into the automobile market. It has been the first company to introduce and sell hybrid electric vehicles, thus shaping the face of the automobile industry. In 1997, the company introduced the Toyota Prius and started producing vehicles that were smaller but maintaining the luxurious touch. Such cars like Lexus and Camry were received into the automobile industry with excitement, a sign of an effective strategic management implementation. In 2012 October, the Toyota Prius became the hybrid car that was best sold in the whole world and this earned the Toyota Company about 2.8 million units. This high sale was replicated in most parts of the world. Later in 2012 October, the company was the first to manufacture a passenger car that was hybrid and a motor vehicle hybrid that was one plug in model. This model was availed to around 80 regions and countries worldwide. The company has an aim of achieving the launch of a 20 hybrid vehicles models at the end the year 2015.
Toyota’s Management accounting
Management accounting refers to a process which entails the preparation of the management reports and the accounts that contain information that is timely and accurate. The information therein does have the statistics that are useful to the managers in making of decisions on a day to day basis. Management accounting reports are usually produced on a weekly or monthly basis, unlike the financial accounting reports. The management account reports are purposed to be used by the organization’s internal audience which includes the chief executive officers and the various departments.
Contents of managerial accounts
The managerial accounts do contain variance analysis which may include the use of trend charts. Raw materials and inventories, outstanding debts and the state of account receivables and the accounts payable are also included. The report does contain the orders that are at hand, the revenue generated from the sales and the amount of cash that is available at the disposal of the organization.
The main Functions of the Toyota Management Accounting:
Cost analysis
This is intended to do an analysis based on the cost. This includes the cost that is incurred during the performance of a specific task or a project in a particular time span. The analysis is also based on establishing whether there is some effectiveness as far as the costs are concerned. Areas where cost controls are needed are highlighted.
Budgeting
Through budgeting, the management accounts tries to project the expenses and revenues for the future, and sets up a general budget on the same. This is a function that is crucial in as far as management accounting is concerned.
Increasing efficiency
Through the management account, there is an identification of the inefficiencies in the management. This is done through the identification of high cost areas and places where there is an excessive use of resources. A clear analysis of the same is therefore given.
Planning and controlling.
One of the management accounting’s main functions is to plan and control. This is achieved through the preparation of sales backlogs and revenue reports in trying to offer a clear direction to the company.
Coordinating
Management accounting is responsible for the coordination of various departments in the organization. This is done through an integrator process whereby the management accounting takes the future needs and works towards allocating resources towards them by means of budgeting.
Suggested Management Accounting Techniques
The Invest Appraisal
This is one of the tools that are vital in the measurement of the effectiveness of the domestic and overseas performance of a country. This aspect is then used to establish the potentiality of future investment by the company and to determine the extent to which the company needs to invest in new projects. Such investments do have long term benefits hence there is always need to use techniques that are proper in their establishment. An example of this includes the payback period calculation for a specific project and the various costs that are involved in giving the company an appraisal. Multiple projects can have their paybacks calculated and an individual performance of each project reviewed hence giving the company a clear picture with regards to the performance of the project over a given time frame.
Market Orientation
Market orientation is very important for the Toyota Company. This is especially because the needs and wants of the various target markets do change over a period of time. This change can be expressed through the profits and losses statements of the company. The market orientation can be analyzed in respect to the profit and loss statements of the various territories or markets. Future planning and budget allocations greatly rely on the market orientation.
Cost Management
Getting good results in line the costs that have been incurred in various activities of departments depend on the analysis of the costs. The costs include costs of designs, marketing, distribution, resource planning, customer service, production, purchasing, development, research among others. The management of costs helps the management to establish whether there is wastage on the costs and on how the costs can be cut down for efficiency.
Stock valuation
The Toyota Company needs to carry out a valuation of its stocks due to the fact that it is a business that is based solely on manufacturing. The company has a lot of competition and the stock valuations should be done often in order to avoid the excessive costs.
Capital budgeting
Through capital budgeting, a company can be able to access the inflow and the outflow of the cash for effective usage. The capital budgeting technique that is deemed to be the best is referred to as the company’s Net Present Value. This is the cash flow value of the company minus the cash out flow present value.
The Strengths and Weaknesses of Analysis
Management accounting needs to be done on a regular basis in a company as it is crucial in advising on the decisions to be taken by the management of the company. The report from the management accounting may reveal very important aspects necessary for the management of the company.
Management accounting report works on the basis of real time data and is always done on a monthly or a weekly basis. The management accounting is usually done through the internal employees in the company that are in the department of accounting.
The company has to continue spending its money as characterized by the constant rise in the price of the crude oil, thus, causing a rise in the prices of spares and raw materials.
Despite the fact that cost management is essential in the company, at some instance it may not be possible to cut on the costs as there is need for an intensive marketing by the company in order to stay ahead of the potential competitors.
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