World’s Largest Vehicle Manufactures

Toyota Motor Corporation is Japanese globally automaker headquartered in, Japan. Toyota Motor Corporation has about 325,905 employees working worldwide and was third-largest automobile manufacture in 2011 by production behind General Motors and Volkswagen Group. Toyota Motor Corporation is in top eleventh largest company in the world by revenue. The world’s largest vehicle manufactures, Toyota Car Company was having issues with recall. This issue is going around all over the world as well as in USA, Europe and China. This issue makes the consumer loss their confidence and as well as corporate image dropped. Toyota Motor Corporation their recall was nearly one million vehicles around the world, on top to replace damaged parts that could cause drivers to lose control of the steering wheel. There were total of 10 models affected, including the popular Prius. Prius recall more than 200,000. Due to defective gas pedals Toyota lost a lot of customers. But, to be in market and not to lose customer they are still in game.

Toyota Motor Corporation blamed that the floor mats was the problem, then it came to the gas pedal was the actual cause. But, when car owners they don’t know personally what was causing the gas pedal to accelerate and stick, without releasing. Not only Toyota had recall problems, but cars like Honda and Nissan recall over 3 million vehicles globally due to air bag problems. Not only these two cars had recall problems with their airbag, Toyota recall 1.3 million cars due to this airbag problem. Toyota FJ Cruiser recall affects seat belt retractors on 209,000 vehicles. Still, the numbers are getting bigger and bigger.

To chase the maximum profit and cost minimization, suppliers pay more attention on how to reduce cost. By using raw materials quality Toyota Motor Corporation was over confidence with their suppliers, that they changed their design without taking permission. Toyota Motor Corporation their biggest suppliers changed the pedal design that leading to the pedal problem.

Toyota Motor Corporation lack of an effective quality control cause them recall happening. They did not do enough test of their design before they produced. Their biggest mistake was they did not use quality check after the production they did not even do better quality check. This is a big embarrassment for the world’s largest automobile manufacture, that lack of negligence and having over confidence could cause them big problem in future.

Now the big question is that, let’s see that tomorrow morning you sit in your car to drive to work or anywhere and you are driving, down the road and suddenly you notice that your car breaks are not working fine. What would be your reaction? Are you still going to keep buying the same car brand you were buying before? What do you think that Toyota Motor Corporation should do to keep their name back in world’s largest automobile manufacture?

Sources:

  1. http://www.caranddriver.com/news/toyota-recall-scandal-media-circus-and-stupid-drivers-editorial
  2. http://money.cnn.com/2013/06/05/news/toyota-recall/index.html
  3. http://en.wikipedia.org/wiki/Toyota
  4. http://www.nydailynews.com/news/money/toyota-recalls-2-17-million-cars-jammed-accelerator-pedals-article-1.135025
  5. http://crownheights.info/general/25720/toyota-recalls-sienna-minivans/
  6. http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html

 

My Old Kentucky Home: Lexus Production Moves to US

This past week Toyota announced that it will begin producing its Lexus luxury car in the United States for the first time. The company will invest over $500 million to move production of the Lexus ES 350 luxury sedan to its existing plant in Georgetown, Kentucky. Until now the plant in Kentucky, Toyota’s oldest and largest in the United States, produced the flagship Toyota Camry, as well as the Avalon and Venza. The Lexus ES 350 shares underpinnings with the Camry and Avalon, making the transition somewhat easier. This aspect is just one of several strategic implications of the move of Lexus production to the United States.

While it’s parent is fully Japanese, Lexus is an American child, for many years the luxury car was available only in the United States. This focus on the American market led Lexus to the top of luxury car sales every year from 2000 to 2010. In recent years, however, Toyota has watched BMW and Mercedes Benz pass it in luxury car sales and showing little evidence of slowing down. In my opinion this factor played a role in Toyota finally deciding to move the production of Lexus to the United States. As the president of Toyota, Akio Toyoda, said, the company plans to “give regions greater autonomy to make the products their customers want.” By moving the production of the ES 350 to the United States, I believe Toyota will be able to more closely monitor how Lexus is doing compared to BMW and Mercedes Benz. The company can also make production changes more effectively and efficiently at its plant in Kentucky. This high involvement with its target consumers should aid Lexus as it tries to regain its spot as the top luxury car in the United States. The move of production also helps protect Toyota from the Japanese economy and possible disastrous production issues.

From an operations management viewpoint, I think that Toyota is much better off by moving the production of the Lexus to the United States. The ES 300 is essentially an American car, it is not nearly as popular in Japan as it is in the US, therefore it made little sense to have it produced half a world away from where it was being sold. There are no economic benefits since there is an exchange rate penalty for Japanese automakers. Additionally, the 2011 earthquake and tsunami in Japan had devastating effects on production. This disaster revealed just how vulnerable Toyota and other Japanese automakers are, and in my opinion, played a key role in Toyota moving the production of Lexus to the United States. By having all of it’s operations and production in one place, Toyota can become more efficient and continue being a leading automaker.

Do you think it was a good decision by Toyota to move the production of Lexus to the United States?

Will this lead other foreign carmakers to move to America and what affect will that have on the production of American cars?

 

Sources

http://www.nbcnews.com/business/toyota-investing-over-500m-launch-us-lexus-production-1B9519106

http://www.nytimes.com/2013/04/20/business/toyota-will-make-lexus-es-350-in-kentucky.html?_r=0

http://www.bloomberg.com/news/2013-04-19/toyota-to-make-lexus-in-kentucky-amid-localization-push.html

 

GM + China = The New Largest Car Manufacturer?

As technology advances, new cars continue to be introduced. Within the car industry, the multiple manufacturers make it a highly competitive market. Some of these manufacturers include: Ford, Honda, Nissan, Hyundai, Toyota, Volkswagen, General Motors, and many more. Each manufacturer has their personal strengths and weakness as well as targeting various segments of customers. As competition continues to increase, these manufacturers need to develop new strategies in order to obtain a larger share of the market. General Motor’s take on this new strategy is by increasing their capacity in China.

General Motor’s expansion in China will be a three year process. Within these three years, GM plans to open four additional plants, which will also create “approximately 6,000 new manufacturing jobs” (GM). With this expansion, GM and their joint ventures in China continue to increase in quality and quantity. Bob Socia, the president of GM China, stated that ““GM is a car company, but we are also a people company. You can’t build great vehicles without great talent.” GM and their joint ventures currently have 55,000 employees in China, and this number will continue to rise. By expanding in China, GM is able to find local talent “with a focus on design, engineering, R&D, manufacturing, purchasing, and sales and marketing” (GM). This emphasizes GM’s attempt to retain global talent along with learning to improve their operations with the help of China. By locating facilities globally, GM is able to provide better goods and services for their consumers as well as improving their supply chain.

Along with the increase in plants and employees, this partnership with China has pushed General Motors in a new direction. Over the next five years, GM plans to focus on SUV’s and luxury models. Bob Socia believes that

 this new focus along with the expansion in China will result in a positive reaction from consumers. Socia stated that “We expect Cadillac sales to go from 30,000 last year to 100,000 in 2015” (WSJ). Although this may seem very ambitious, the new global strategy of General Motors may end in a positive result. Along with the increase in sales, GM also plans on introducing 17 new and upgraded models in China.

This expansion allows GM to improve on their manufacturing capability through the new plants, employees, and other opportunities within China with their joint ventures. Although these articles don’t include all the parts of the strategic process, they emphasize on GM’s operations process for their new strategy. However, with GM being such a large car manufacturer globally, it’ safe to assume that the other parts of the strategic process which include marketing and finance/accounting are being handled properly as well.

Currently, according to “Spot On Lists”, General Motors is ranked second in the list of the top 10 biggest car manufacturers in the world. The Volkswagen Group is number one on the list. Will GM’s expansion in China allow them to overtake Volkswagen as the largest car manufacturer in the world? Is GM’s new strategy going to result as highly as they forecast? Although the details of their strategy may seem strong on paper, will this plan be executed correctly?

 

 

Source:  


http://media.gm.com/media/us/en/gm/news.detail.html/content/Pages/news/cn/en/2013/Apr/0420_Growth.html

http://online.wsj.com/article/SB10001424127887324493704578434393384075744.html?mod=googlenews_wsj

http://spotonlists.com/misc/facts/top-10-biggest-car-manufacturers-world/

High-Speed Internet: Is it Still High-Speed?

This past week Google announced that they are expanding Google Fiber to Austin, Texas. Google Fiber is Google’s version of high-speed Internet, which can download at up to 1000 Mb per second, and digital cable television service. This is 100 times faster than any other Internet provider. Google Fiber also gives you one terabyte of storage, which can be used to record up to eight HD TV shows simultaneously. Google provides you with a brand new Nexus 7, that you use as a remote to control your TV.

Google Fiber is currently only being provided in Kansas City, KS and Kansas City, MO. Future cities that will have Google Fiber are Westwood, KS, Westwood Hills, KS, Mission Woods, KS, Kansas City North, MO, and Kansas City South, MO. Google offers three prices for Google Fiber:

Google Fiber Network Box
  • Gigabit + TV: $120/month ($300 construction fee waived)
  • Gigabit Internet: $70/month ($300 construction fee waived)
  • Free Internet (5 Mb): $0/month (for at least seven years) + $300 construction fee

These higher Internet speeds would eliminate those irritating YouTube buffers and would speed up downloading/uploading files. However, are the benefits of Google’s high-speed Internet worth the cost? It is estimated that it cost Google $11 billion to install Google Fiber nationwide, 20 million homes. That comes out to roughly $550 per home. With Google waiving the $300 construction fee, it would take five monthly payments of the highest-priced service, Gigabit + TV, to pay for the installation of Google Fiber to a home. Google would not start making a profit until five months after installing the service to a home. That is a long time to make a profit. This could prevent expansion to other cities.

In order to receive support from city politicians and residents, Google will install Google Fiber to public institutions for free. Hospitals, schools, community centers, and libraries will get Google Fiber installed for free. The rollout of Google Fiber also creates jobs in the Austin area and creates economic growth.

But is Google Fiber really necessary? The current U.S. average Internet speed is 7.2 Mb per second. While 7.2 Mb is not ultra-fast, it is still quite fast. Should Google not be focusing on expanding Internet access globally? Google should focus their Internet operations strategy on providing access to areas where it does not exist. We can wait for Google Fiber until everyone has access to the Internet first.

Should Google be waiving the $300 construction fee? Is this a smart way to gain customers or is Google only increasing its own expenses? Why is Google only expanding Google Fiber from town to town and not expanding nationally at one time? How are other Internet service providers going to compete with Google Fiber and its amazingly fast speed? What would you do with download speeds of up to 1000 Mb per second? Overall, does Google have good product strategy and project management in regards to the rollout of Google Fiber?

Sources

Analyst: Google Will Spend $84M Building Out KC’s Fiber Network To 149K Homes; $11B If It Went Nationwide: http://techcrunch.com/2013/04/08/google-fiber-cost-estimate/

Austin Next City for Ultra-fast Google Fiber: http://www.businessweek.com/ap/2013-04-09/austin-expected-to-be-next-stop-for-google-fiber

Google Fiber: https://fiber.google.com/about/

Google Fiber Expands TV, Internet to Austin, Texas: http://www.abcnews.go.com/blogs/technology/2013/04/google-fiber-expands-tv-internet-to-austin-texas

Residents and Businesses Excited for Possibilities Google Fiber Brings: http://www.kxan.com/dpp/news/local/austin/residents-excited-for-possibilities-google-fiber-brings

US Internet Speed Lags Behind S. Korea, Latvia: http://www.abc15.com/dpp/news/science_tech/us-internet-speed-lags-behind-s-korea-latvia