Creating Sustainable Competitive Advantage: the Toyota Philosophy and Its Effects

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Creating Sustainable Competitive Advantage: The Toyota Philosophy and Its Effects

What is Toyota Philosophy

Toyota is Japan's biggest car company and the second largest in the world after General Motors. The fundamental reason for Toyota's success in the global marketplace comes from their corporate philosophy, the set of rules and attitudes that govern the use of its resources. The Toyota philosophy is often called as the Toyota Production System. The system depends in part on a human resources management policy that stimulates employee creativity and loyalty but also, on a highly efficient network of suppliers and components manufacturers. Much of Toyota's success in the world markets can be attributed directly to the synergistic performance of its policies in human resources management and supply-chain networks.

Toyota philosophy in Human Resources

Although many other Asian automobile manufactures have earned a reputation for building high-quality cars, they have been unable to overcome Toyota's advantages in human resource management, supplier networks and distribution systems in the highly competitive US market.

The evolution of Toyota's advanced human resource management can be traced to the period immediately following the Second World War when the economic outlook was uncertain and human, natural and capital resources were in limited supply. The company developed a highly efficient production system, called lean production to utilize human resource more efficiently. Today, Toyota's philosophy of empowering its workers is the core of a human resources management system. It grows creativity and innovation by encouraging employee participation, and brings high levels of employee loyalty.

Toyota Philosophy in Supply chain management

In-house production has been decreasing for a number of years. Among US car makers, General Motors continues to manufacture a high percentage of components in-house, while DaimlerChrysler outsources more...
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