Organizational Behavior That Make Toyota Becoming Number One Foreign Company In Automobile Industry Essay

INTRODUCTION

Since the invention of T Model Cars by Henry Ford in 1908, humans are increasingly regards cars as one of the most important needs in modern life. Oxford Dictionaries noted the definition of cars as “a road vehicle, typically with four wheels, powered by an internal-combustion engine and able to carry a small number of people”. The Wikipedia free translation said that “An automobile, auto car, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor. Most definitions of the term specify that automobiles are designed to run primarily on roads, to have seating for one to eight people, to typically have four wheels, and to be constructed principally for the transport of people rather than goods”. From definition that mentioned, we can conclude that they are talking mostly the same things about cars or automobile. It must be transporting small number of people and it must have minimum four wheels so that we can call it cars. Nowadays, beside the main function as a transportations tool, many people behavior also use cars to measure a level of luxurious. So that’s why nowadays there is a lot of type of car that offered to human beings, diver from the main function and other function that actually only support the main things. Seeing that opportunity, it’s no wonder that car manufacturers are popping up.

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They present to provide various kinds automobile products based on a form, price and class to meet a demand market. That’s why there is a big competition between Automobile companies. As we already know that Henry Ford, a man born in the United States who first successfully introduced the car to the world. Until now, his company still play a role in the development of the automotive world through brands that we are familiar with the “Ford Motor Company”. The Ford Motor Company holds the automotive sector especially in United States. As a company which is the original of the United States, of course they have a distinct advantage in public acceptance and understanding of the needs of citizens of the United States. But that doesn’t mean that their existence does not get meaningful rivals. A foreign company from Japan are vying for the position that Ford Motor Company get now, and that company called TOYOTA. Ford and Chevy dominated the market when Toyota, a virtually unknown importer, opened its first American car dealership in California in 1957.

More than 50 years later, Toyota is now the world’s biggest carmaker, earning top marks from experts and customers alike for quality and innovation. They are one of the most successful Automobile Companies and successfully compete in the United States cars market. This paper will describe the factors that make Toyota can compete well and succeed as a number one foreign vehicle manufacturer in United States. With observation and in-depth understanding for this paper, the author choose a title, Organizational Behaviours that make Toyota becoming number one foreign company in Automobile Industry (case study in United States of America, based on sales). To answer and describe those issues, the authors tried to make some inquiries as guard line, which is: 1. What is Toyota and what is their achievement?

2. How did Toyota offered the product to United States citizens? 3. What is the Toyota’s biggest challenge recently?
4. How they formulate their Organizational Behaviour to cope the challenges? The authors understood that many of the factors actually support the success of TOYOTA. However, in this paper, the discussion will only discuss the organizational behavioural aspects that make Toyota becoming like nowadays.

HISTORICAL JOURNEY
This story starts from the year 1888, when a young Japanese boy named Sakichi Toyoda see his mother weaving and felt that he need to create an innovative findings in the world of weaving. For the work of all the people in his village is weaving, then this young man saw an opportunity to help his mother and at the same time make the profit from the condition. Finally he invented the famous steam powered weaving machine, a machine that can enhance productivity while pressing the costs incurred in weaving production. With his invention, Sakichi Toyoda start become an industrial Person in Japan and established his weaving company that very successful and well-known at that time. But his son, Kiichiro Toyoda has a different passion with his father. Kiichiro founds his passion in automobile rather than the weaving machine. At the beginning of the establishment, Toyota Motor Corporation is just as a division of Toyoda Automatic Weaving Company. In 1933, their Automatic textile machinery patents been sold to Platt Brothers ; Co., Ltd. from the United Kingdom. The fund that coming from sale of the patents is used to development capital in this case is used for the automotive division. When the automotive division commenced their operations, then a lot of things to be done directly by Kiichiro Toyoda. In a short time machine “Type A” was completed in 1934. And then a year later the engine grafted to their first prototype passenger car called A1. In 1936 they launched their first passenger car called “Toyoda AA”. This model was developed from the prototype model of the A1 have been found previously. The vehicle is expected to be the people’s car. It takes 4 years to end the division finally separated on August 27, 1937 to stand alone as Toyota Motor Corporation as to the present.

The name chosen was a Toyota and not Toyoda as the name of the textile industry which had run their families. Three years after established as an independent automobile company, Toyota is busy developing the company entered the capital markets including Tokyo, Osaka and Nagoya. After World War II era, the 1950s is proving that Toyota as tough multipurpose vehicle manufacturer. Their Jeep vehicle is very useful for Japan at the time. Inspired by this car, they develop prototype of Toyota Land Cruiser which came out in 1950. Toyota Land Cruiser is one of Toyota’s ground breaking products so that they can be accepted in the market. Through this product, Toyota entered the market in different parts of the world. As example, in Africa, the model is used as the Toyota Land Cruiser Technical armed jeeps equipped submachine guns, heavy guns or bazookas and deployed throughout the armed conflict. Toyota is not only known through the Toyota Land Cruiser. They also developed a model that became the world’s favorite, a small sedan called “Corolla” that debuted in 1966. Entering 1975, the third generation of Corolla are established and sold more than 5 million units. The amazing thing is still continues until today. Starting 1990’s, Toyota has proved that Japanese cars can compete with European and American car until today. History of how Toyota’s entered The United States of America began when in 1955; there was little change in the lifestyle of the American people. After the end of the Second World War, many of those people lived in the suburbs. This resulted in the need for a second car to be increased, and the United States Automobile companies only produce big cars. Toyota is keen to see an opportunity to enter the small car into the American car industry as the second choice in second car demand.

In addition, Toyota also calculates that the estimated automobile import demand reaches 10% of total sales. And that figure is found far greater than the number of automobile demand in Japan. At the same year, two Toyopet Cars imported directly from Japan and Toyota expecting a big results that their small cars will be the new idol of second car that United States citizens want to. Unfortunately, it failed miserably and not able to be used for United States roads. Toyopet sales stopped in 1961. Land Cruiser then quickly got a reputation as an all-terrain vehicle, and managed to attract the attention of the United States to Toyota until 1965 when Toyota Corona arrived. Toyota Corona was Toyota’s first vehicle designed specifically for American drivers. With its powerful engine, the factory-installed air conditioning and automatic transmission, Toyota Corona made vehicle sales tripled in 1966 to more than 20,000 units. Corolla has been the best-selling passenger car in the world, with sales of 27 million in more than 140 countries.

TOYOTA ACHIEVEMENT
In this section we will look in depth that Toyota’s decision to expand sales to the United States was the right decision. Like we have been discussed earlier, it was a brave yet brilliant idea to look some opportunity selling a small car in United States while the others originally company only produce a big car. That is big challenge to bet to something yet they know with certainty level of success. They learn from mistakes and improve their ability to create something that is much needed by the people of the United States. Some data that present is in a web analysis based, and numbers that calculate is an exact numbers due to the United States sales data.

Figure 1: data sources from goodcarbadcar.com, Automotive News, thedetroitbeaureau.com, Reuters, Wall street journal

This data represent for the year of 2011, and it is proven the way of thinking of Toyota’s in 1955 that expand their sales come along to United States is a big opportunity rather than staying their comfort zone in Japan. The data showed us that sales in USA reach an amount of 12.775.356 units, which is worth more than 4 times than sales in Japan that only reach the amount of 2.689.074 units.

The data also declare that though the largest market is in China (18.350.000 units), but yet still for the total sales revenue The United States are higher than any country that already presented. It means that a lot of luxurious cars are sold in United States, and it changes Toyota’s original strategy when they first time entered the United States to offer a small car with an affordable prices. Now Toyota also can compete on the luxurious car.

Figure 2: data sources from goodcarbadcar.com, Automotive News, thedetroitbeaureau.com, Reuters, Wall street journal

Let focused on markets in United States of America, from numbers mentioned that Toyota’s sales in United States is reach on the big three after General Motors and Ford. That third positions allows Toyota sold their car for 19,3 % from 12.775.346 units. It means that Toyota sold more than 2.500.000 units in a year, while in Japan itself though they are the number one on sales with 64,4% but it is only equal to 1.731.800 units. From that figures we also can see that in United States, Toyota is a foreign manufacturer company who succeeded poke in board over car sales in The United States. From six regions that mentioned in figure 2, we can see thoroughly that Toyota always succeed to becoming the part of high level sales in many countries.

Focused on sales competition in United States, the data mentioned that 5 top brand or company that Ingratiate the United States citizens to purchase their product. The 5 Company are General Motors, Ford, Toyota, Nissan/Renault and Volkswagen. The United States still occupy the top sales by relying on 2 top their original company, which is General Motors and Ford. Beside Toyota, the rest is also coming outside from The United States; Nissan/Renault is a Japan-France company while Volkswagen is originally from Germany.

Contention in car sales in the United States yielding statistics that from the big five, three of them is a manufacture that originally from outside the United States. And from these three companies, Toyota is occupying a
number one foreign company that successfully perform according to the sales in United States.

Some data will be presented as a supporting statistic on a statement that was mentioned previously.

Figure 3: www.goodcarbadcar.com

Specifically, the 2011 data presented show that the mapping-selling automobile brands sold in the United States are dominated by local products and products from Japan. 34,8 % which is equal to 2.943.192 stands for their sales. 14 % above them is the local products. Local products in this case are the manufacture that originally from United States. Most of the products actually already been produced locally, it means that most of the companies have their manufacture field in the United States. But each of the brands still brings their original uniqueness though they are required to suit the needs of automobile users in the United States.

Figure 4 : www.goodcarbadcar.com

These data focused on products made in Asia, which is in this case is Japan and South Korea. As we already know that in those two countries is based Asia strength to compete or even lead the automotive world competition that usually dominated by the United States or Europe producers. And Toyota is absolutely win on this “Asia competition” with 24,7% of the Sales.

Figure 5 : www.goodcarbadcar.com

Figure 5 is the new data according to April 2013. We also can see that Toyota is still on their high level on Market Share in United States as an implication for their product is highly bought in the United States market. This data further strengthen the fact that even the discussion of this paper will talked a lot about the aspect of a sale, but the data the market share can also be used as reference that actually Toyota indeed being a very successful automobile foreign company in the United States.

Figure 6: www.bnet.com, www.cars.com, www.nytimes.com, www.autosaol.com

As mentioned earlier that the majority of cars manufacturers in the United States have had their own factory to manufacture or to assembly their automobile. But there are still some productions that still using or imported tools from outside the United States to maximize their automobile useness. The data presented above is the data that shows the car which in the production process uses almost 100% of all those resources that exist in the United States. And as presented there, Toyota puts their 3 products in the top 10 American Made Cars and one of the product even succeed to reach the number one position.

THE CHALLENGE
We have talked about a lot of things from how Toyota plans to start exporting their cars to the United States, and they are slowly but surely getting better attract the automobile owners from the price, models, and quality. Until in the end as it has been explained that they have occupied the honorable position in car sales in the United States. Position that put them into the big 3 foreign automaker (automobile company) in The United States. This position also mentioned before as the number one for the foreign automobile company. The long journey has begun against a lot of challenges since Toyota wanted to expand into the United States. In fact it was not a safe position in Toyota’s local sales of cars in Japan. It happened because on that time Honda is also doing a lot of innovations and achieves great success in their sales in Japan. Instead of being stuck thinking about local opportunities, Toyota’s maneuver by increasing sales opportunities by trying to “bet” to sell their products worldwide. At first this idea sounds too bold, and certainly though not necessarily immediately bring in a huge profits. But what we see now, that according of many things including the sales, we can conclude that the decision to enter the United States is a very good decision. Nowadays, though it has been successfully answered many doubtful question especially in the United States, does not mean that Toyota will smoothly dominated the car sales in the United States.
It must be remembered that the two major competitors still be there (General Motors and Ford). And Toyota has to do a lot of things to catch up their sales. As one of the major challenges that make it feel heavier to pursuit, is that Toyota should be able to change the minds of people about cars made that made in Asia, especially Japan. There are many United States citizens who are too in love with their “original” product and they also still argues and give a stigma that Asian-made vehicles are the vehicle for the medium people in which the quality of Asian cars (Japanese in this case) were also considered not as good as the cars made in United States or Europe. To answer that stigma, Toyota still should do a lot better in terms of the production process, post-production, quality assurance, marketing methods that continuously brainwash the United States citizens from this stigma, as well as the launch of the company culture that reflects answers to the stigma.

THE ORGANIZATIONAL BEHAVIOR STRATEGY
As outlined before, that to export their products to the United States it because Toyota was seen opportunity to gain their sales with bigger numbers rather than only stayed in Japan. To start comparing the behavior that should be adjusted in addition to be able to sell products to people who come from different cultures and countries, then we need to consider about ORGANIZATION CULTURE DIMENSION delivered by Professor Geert Hofstede. Professor Hofstede conducted one of the most comprehensive studies of how values in the workplace are influenced by culture, he analyzed the data base of employees that is collected by IBM, this large project used data between 1967 and 1973 covering more than 70 countries. The research also always validate the results of previous research, and have included commercial airline pilots and students in 23 countries, civil service managers in 14 counties, to the consumer market ‘in 15 countries and’ elites’ in 19 countries. In his research since 2001, registered scores for 76 countries and regions, partly based on replications and updates from the IBM study on different international populations. Because cultural changes occur very slowly, scores can be considered up to date.

The following data are presented on Hofstede’s dimensions for the United
States and Japan: NU
DIMENSIONS
USA
JAPAN
1
Individuality
91
46
2
Masculinity
62
95
3
Uncertainty Avoidance
46
92
4
Power Distance
40
54
5
Long Term Orientation
29
80
Figure 7: Geert Hofstede, Culture’s Consequences: Comparing Values, Behaviours, Institutions, and Organizations across Nations. Second Edition, Thousand Oaks CA: Sage Publications, 2001

Individuality: can briefly be defined as a preference for the social framework in which individuals are expected to take care of themselves and their families only. In contrast, collectivism is a framework in society in which individuals can expect certain relatives or members of their group to keep them in exchange for unquestioning loyalty. This is usually reflected in the use of the term “I” or “we.” Toyota as a company which was set in back of Japanese culture, still retaining this tradition until nowadays.
This is reflected by the absence of a very prominent figure in the history of Toyota’s except the founder itself. Toyota executives don’t see themselves as bigger than the company or the customer or the product. Team work is something that is highly valued in a work process in the company. Masculinity: the two countries actually have higher levels of masculinity. But does Japan have a much higher value than the United States. Usually the more masculine countries will be more competitive in every way, and this is reflected in the work culture of Toyota. As we know that the market break through to the United States is a form of competitive nature in which Toyota is not satisfied if only being the market leader in Japan or Asia. Uncertainty Avoidance: Countries with low uncertainty avoidance is usually more relaxed, more open and high creativity as they practice counts more than principles. Toyota it’s changing their mindset to be more lower uncertainty avoidance of the number 95 in the Hofstede’s study. This is evidenced by how they always make great innovations in automotive terms, One of Toyota’s key company values is known as “kaizen,” a Japanese term that means “continuous improvement.” as an example how the concept of “Just In Time” that they created becoming a reference for many other companies in producing something. Power Distance: This dimension reveals the extent to which the less powerful members of society accept and expect that power is distributed unequally. Although Japan has a higher value than the United States, but they have a range that is not too far away. So Toyota is not too much to make adjustments in terms of power distance, as a highly visible example of how the team work that is highly valued, and no figure of Toyota’s executive or even a Toyoda family is too prominent as happened to Steve Jobs at Apple or Bill Gates at Microsoft. Long Term Orientation: As befits The Asian countries that have a long-term orientation, then Toyota in this case believe that the truth is very dependent on the situation, context and time. They demonstrate the ability to adapt to changing conditions traditions, a strong tendency to invest and perseverance in achieving results. As an example of how in summer 1983, Toyota wanted to create cars that elite and luxurious as competitors for BMW Serie 7 and a Mercedes Benz S class. So they chose a team that contains 3 engineers from Japan, these three men did a lot of research in Japan, after that they are in send to the rental house in the most elite and expensive area in the United States to be
able to understand what and how the needs of the rich people. They are also given the opportunity to shop in the most elite shopping center in the United States, only to be getting better in understanding what is really needed to make a car for the upper class. Then with the observations they repeated many trial and errors. That is a braveness of making investments. Other Behaviour

Toyota also proved that they had managed to achieve their success now with persistence and not in a hurry to quickly get the great results. A fact is that the working atmosphere in the Toyota is everyone in the company is part of the innovation progress that will Toyota achieve. They not only perform their daily tasks that they have to do, but also given the confidence to think of new things that will likely improve the performance of Toyota in the future. Like playing baseball (a game which United States also played in Japan), Toyota did not expect someone would create a homerun punch and immediately get a big score, but they expect every player give their best punches and contribute “safe” at each base and ultimately their collective together will produce a great score. Get everyone in your organization to be devoted to coming up with new ways to do things and serve customers better. Think like Toyota: don’t seek the single big idea that changes everything. Instead, look for ‘the elegant solution – the singular and deceptively simple idea with huge impact. Because its more to be a group work, so the employees are motivated by the company expectancy model. They are motivated to work because they believe that they can achieve things that they want from their jobs. Excitement of doing challenging task and ability to set a difficult goal with the team is included in this expectancy model.

Toyota also managed to continuously make improvements to the condition of their company. In terms of product and corporate culture. They have done a lot in research and development, and that is the proof that even though they have their best engineers, but they did not reflect the behavior of “group think” which is potential to dysfunctions the team. It always closed their eyes, heart and ears for the development is going outside. With a lot of numbers of research they do, then it is their window to find out what the demands and conditions required by consumers or Toyota’s employees in term
of developing their quality or numbers of sales. Toyota learned many of its early lessons from Americans, studying Ford Motor Co.’s production lines. That helped Toyota gain a foothold and even becoming number one in sales as outsider in the United States, the world’s biggest car market.

One of the Japanese culture that applied at Toyota are “genchi genbutsu,” expression can be interpreted as “go to the spot”. This is a unique way to really understand the problem by confirming the information through personal observation. Frequently a manager went to the factory floor to observe the process and interact with the workers to understand the situation rather than just relying on computer data. This practice applies to executives and managers. Toyota CEO Akio Toyoda has been known to personally visit car dealers and checking vehicles outside the factory in suddenly. This is a reflection of how Toyota applying a combination of Theory X and Theory Y for type of leadership. They really apply Theory Y when freeing the workers to do anything that can positively contribute the company, as we know that in some occasion Toyota often ask what you can give to the company instead of preparing a series of goals for them. However, as one form of real control, Toyota’s leaders also implement the Theory X to understand what happened, and management believes that workers sometimes need to be closely supervised with comprehensive systems.

The last thing that can be presented in this assignment is one of Toyota’s secret, which is they applying the Hygiene Factors in motivating their employees. In any Toyota car manufacturing plant, there is always a big button in the middle of the factory that allows you to stop the whole production process right away. This button is open to anyone, not just for CEO, Managers, Supervisors or other Toyota higher officials, but this button can also be pressed by the low level employee. Anyone is allowed to suddenly press the button if they see there is something wrong in the process of manufacture of the car and will eventually result a decline in the quality of automobile produced. It does seem too risky if the low level employees allowed to pressed it without any orders from superiors. But Toyota want to demonstrate two things, that they are very concerned with the quality of the products they make, so they are not tolerated for any slightest mistake and
they also want to motivate employees and make them feel that they are given autonomy, has always been challenge for work optimally and always have the maximum responsibility to participate in maintaining the quality of the products that Toyota make.

Those things really give a high impact on the employee sense of belonging to Toyota. When the employees already have a high sense of belongings, then they will work their best for Toyota, and will produce the best results in any aspect in their work. Even beside the best results, they will proudly tell everybody how “inside of the Toyota”, many positive things about being part of Toyota, how Toyota give a strong commitments in quality control and it would be an excellent product recognition to give Toyota better positioning in United States citizens perspective.

With this we can conclude that because of those mentioned organizational behavioral that applied in Toyota is increasing the employees performances, so that because of that performances affect to the value of the automobile produced, and that high value automobile produced are demand by many prospective car owners in the United States. So that’s why Toyota can be the number one foreign company in automobile industry.

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