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?




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?




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?




Apple is Taking Over China


Throughout this quarter, I have learned how firms keep their OM decision areas in line with their completive strategy. That reminds me a firm from global market and it shows us how they do business in other countries.  This is an example from an IT legend-Apple.



On September 26th in 2011, Apple opens its first retail stores in Hong Kong and Shanghai. Apple realized that Taiwan, Mainland China and Hong Kong are the great market which has a lot of opportunities to expand Apple businesses. Because in Hong Kong, people have vey high demand of smart phones such as iPhone and most Hong Kong people like the Apple products as much as Americans do. However, there were no any Apple retail stores, so people can only buy the Apple products from other local retailers or online stores. Since Apple has slowed the pace of large-store opening in China because there are too many copycats’ stores in the region. Apple also found some fake retail stores in China, but those stores are still cannot impact the sales of Apple.

However, Apple has competitor such like Sony Ericsson, Samsung are the tough for Apple since they already have large market share in mainland China. Even though Apple is a very large company in the global market; they still struggle to expand their businesses in other countries where have too many competitors. In the economic environment, since the Apple retail stores open in Hong Kong, it affects the resellers businesses. It is because the Apple retail store is too powerful in the market. Therefore, the small businesses may be bankrupt because of the new Apple retail stores opened. Nowadays, Apple is one of the well-known and successful companies in the global market; they created many new products which people would follow their idea to develop their businesses. Apple is an example of licensing strategy. They are using the resources from Hong Kong and China such as human resources; Apple established the factories to produce Apple products in China. Moreover, in the sociocultural environment, Apple has a successful strategy to cater for the Hong Kong culture. Hong Kong people require higher demand of great quality services and problem solving efficiency. Thus, Apple provides fast respond for customers’ problems and quality warranty for any Apple products. The strategy of Apple reflected that they have a great sense of Hong Kong culture. In the economic environment, Hong Kong and Shanghai are the developed cities; there have a lot of opportunities for foreign companies. Since there have intense competitions, foreign companies have to face risks and challenges, but they still stand to reap huge benefits in the future. Apple is the one of the big company that wants to reap the benefits from China market.

If you are an operation manager of a famous firm, how could you expand the business in global market? What issue should you concern about? And what competitive strategy will you apply to the global market but except develops the location/competitive strategy, design of goods and services, supply-chain management and managing the quality of products, what else?


Source: The Wall Street Journal by Jason Chow, September 26, 2011




Cultural Awareness in a Global Market

       One of the most interesting courses I took in the preceding quarter was an economics based class concentrating on the effects, both negative and positive, of globalization. The outlooks on globalization were formed on the premise that, as a system, globalization is powerful and inevitable. As technology, communication and international trade continue to expand so to will global markets and it is becoming less and less of a possibility for nations to remain uninvolved in these global markets. It is with this acknowledgment that a balance must be struck between how systems of international trade and business interact with other nations, and how the system can strive to benefit the most nations and people possible, not just those that are most powerful.

       It is with the background in the course that I found our class discussion on global business strategies so fascinating. In the previous course we concentrated much more heavily on the negative impacts of globalization for less developed nations, and I realized I had studied a lot less the positive impacts it can have on businesses, particularly when they are implemented in a knowledgeable, culturally conscious way. We examined many of the reasons a business would be driven to globalize, including to reduce costs, improve their supply chain, provide higher quality goods and services, understand markets, improve operations, and attract global talent. While these are all excellent reasons for an industry to expand towards a more international outlook, I think there are specific ways that these developments can be done in the most culturally sensitive, beneficial way possible, which were also touched on in our class discussion.

        In a recent New York Times article, there is an interview conducted with the author of “All Business is Local: Why Place Matters More Than Ever in a Global, Virtual World.” He concentrates, specifically, on how global markets have directed business ventures towards trade and expansion within China. In one segment of his interview, he argues that are huge benefits to expanding industries being knowledgeable about how to localize their products depending on where they are being implemented. “What we argue is that all great global brands are also great local brands. McDonald’s, for example, adapts its menus and store designs, appoints local business people as franchisees, relies on local raw ingredients and talent, gives to local community organizations. In a large market like China, the upside profit potential of getting the formula right locally is very attractive relative to the extra costs of adaptation.”

       For a company to be successful and powerful in a global market, they need to be strategic and aware of where exactly they are trying to incorporate their product. Cultural awareness and tact are becoming increasingly more important, whether it be through communication strategies or foreign consumer advertising, it is always beneficial to be knowledgeable of the cultures you wish to open trade with. Do you agree that cultural influences are not only ethically important but also important from a business standpoint? If not, what should take precedence when concentrating on implementing a business into a global market?