Toyota's green investment in hybrid vehicles has positioned it as a leader in the automotive industry and creates a sustainable competitive advantage through value of its green image and reputation. ... ... "As Toyota prepares to motor past Ford as the world's second-largest carmaker, it has become a textbook case on how a green reputation delivers a competitive edge. " ... Via Business Week: Toyota Hybrid Advantage
Issue 7, October 2001, and was republished in the September 5, 2002 issue of FT.com. CREATING SUSTAINABLE COMPETITIVE ADVANTAGE:
THE TOYOTA PHILOSOPHY AND ITS EFFECTS
By M. Reza Vaghefi
The rise of the Japanese car manufacturers to positions of global dominance in the decades following the second world war is well known. In recent years, despite the well-publicised troubles of some companies such as Nissan, other Japanese car makers, most notably Toyota, have sustained and even increased their global competitive advantage. As M. Reza Vaghefi and his colleagues explain, this competitive advantage is based on a corporate philosophy known as the Toyota Production System. The system depends in part on a human resources management policy that stimulates employee creativity and loyalty but also, importantly, on a highly efficient network of suppliers and components manufacturers. M. Reza Vaghefi is Professor of Strategic Management and International Business, and Louis Woods is Professor of Economics and Geography, at the University of North Florida. Michael N. DaPrile is Vice President of Toyota Motor Manufacturing, Inc., Georgetown, Kentucky. In October 2000, Fortune published its annual rating of the most admired car makers in the world. Toyota was ranked first in the list, which included 14 manufacturers such as Ford and General Motors. This article investigates the factors that have been instrumental in advancing the productivity of such companies as Toyota, Honda and others in an industry that touches so many lives. The fundamental reason for Toyota’s success in the global marketplace lies in its corporate philosophy - the set of rules and attitudes that govern the use of its resources. A corporate philosophy, in the words of Fred J. Borch, former chief executive of General Electric, ’is the umbrella policy that guides all of the decisions and activities of the organisation.’ The Toyota philosophy is often more generally known as the Toyota Production System.
Toyota and other foreign car makers have successfully penetrated the US market and established a world-wide presence by virtue of its productivity. Toyota’s philosophy of empowering its workers is the centrepiece of a human resources management system that fosters creativity and innovation by encouraging employee participation, and that likewise engenders high levels of employee loyalty. Although Honda and Nissan 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. Much of Toyota’s success in the US - and other world markets - can be attributed directly to the synergistic performance of its policies in human resources management and supply-chain networks.
The evolution of Toyota’s network system approach 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. Toyota’s president, Toyoda Kiichiro and, later Ohno Taiichi, the real architects of the Toyota Production System (TPS), developed a highly efficient production system later characterised as ’lean production’. Toyoda’s methods paralleled those of Henry Ford several decades earlier, although Toyota’s approach to both product development and distribution proved to be much more consumer-friendly and market-driven.
Supply chain management