COLLEGE OF ACCOUNTANCY

ASSIGNMENT IN
BUSINESS POLICY AND STRATEGY

Submitted by:
Alenor I. Jarin
Kimberly L. Kilayko
Maria Cristina D. Ramirez
Ricci Jan Mae B. Roca
Nowell S. Silla
Ellaine Tumalon

5 - BSA

Submitted to:
Mr. Benjamin Bunyi
 Local: NESTLE

1. Make a research of your chosen companies as follows:

a. Company Profile

About Us
Over a hundred years after it first started operations in the country, Nestlé
Philippines, Inc. (NPI) today is a robust and stable organization, proud of its role in
bringing the best food and beverage throughout the stages of the Filipino
consumers’ lives.

Our purpose

Inspired by the scientific breakthrough of our founder, Henri Nestlé, guided by our
values and with nutrition at our core, we work alongside partners to enhance quality
of life and contribute to a healthier future.

Our ambitions

We have defined three overarching ambitions which will guide our work towards
achieving our 2020 commitments and supporting the achievement of the UN
Sustainable Development Goals.

Help
50 million
children live healthier lives
Help to improve
30 million
livelihoods in communities directly connected to our business activities

Strive for
zero
environmental impact in our operations
Our history

We want to shape a better and healthier world. This was how we started more than
150 years ago when Henri Nestlé created an infant cereal that saved the life of a
child.

Our values

Our values are reflected in the way we do business, always acting legally and
honestly with respect both for our own people and those we do business with. Read
more about our business principles.

Nestlé
Enhancing quality of life and contributing to a healthier future
According to Ads:

Nestle Philippines Inc. produces different kinds of foods and beverages in the
Philippines. The company's products include brands such as Chuckie, Milo,
Nescafe, Nestea, etc. Nestle Philippines was established in the country in the year
1911,and by the year 1960 it entered into a partnership with San Miguel
Corporation resulting in the formation of Nutritional products Inc. (NutriPro). The
company has its registered office located in Laguna.

Headquarters
Km 46 Barangay Niugan, Cabuyao Laguna
Laguna; National Capital Region; Postal Code: 4025

Contact Details: Purchase the Nestle Philippines Inc report to view the information.
NESTLE BRANDS

Nestlé's Corporate Business Principles

The Nestlé Corporate Business Principles are at the basis of our company’s culture,
which has developed over the span of 140 years.
Download the fully revised new version of the Nestlé Corporate Business
Principles (pdf, 2Mb) Also available in more than 50 languages.
Since Henri Nestlé first developed his successful infant cereal “Farine Lactée”, we
have built our business on the conviction that to have long-term success for our
shareholders, we not only have to comply with all applicable legal requirements
and ensure that all our activities are sustainable, but additionally we have to create
significant value for society.
At Nestlé we call this Creating Shared Value.
The latest version of our Corporate Business Principles, updated in June 2010, has
been handed over to our employees around the world and accompanied by basic
learning and training tools.
Since 2011, a systematic and comprehensive modular training programme is being
rolled out on the various components of the Corporate Business Principles. The
depth and focus of the trainings is established in accordance with the materiality
for the different functions within the company. For example, in 2011 the first step
of the training on the human rights components focused on managers and
employees in countries of higher human rights risks as a priority. In 2012 and 2013,
major efforts were made on training programs related to Management and
Leadership, Conditions of Work and Employment and Compliance.
Our Corporate Business Principles will continue to evolve and adapt to a changing
world, our basic foundation is unchanged from the time of the origins of our
Company, and reflects the basic ideas of fairness, honesty, and a general concern
for people.
Nestlé is committed to the following Business Principles in all countries, taking
into account local legislation, cultural and religious practices:
1. Nutrition, Health and Wellness

Our core aim is to enhance the quality of consumers lives every day, everywhere
by offering tastier and healthier food and beverage choices and encouraging a
healthy lifestyle. We express this via our corporate proposition 'Good Food, Good
Life'. Nestlé Nutritional Profiling System (pdf, 524 Kb)
2. Quality Assurance and product safety

Everywhere in the world, the Nestlé name represents a promise to the consumer
that the product is safe and of high standard. Nestlé Quality Policy (pdf, 85 Kb)
3. Consumer Communication

We are committed to responsible, reliable consumer communication that empowers

consumers to exercise their right to informed choice and promotes healthier diets.
We respect consumer privacy.
4. Human rights in our business activities

We fully support the United Nations Global Compact’s (UNGC) guiding principles
on human rights and labour and aim to provide an example of good human rights’
and labour practices throughout our business activities. International Labour
Organisation
5. Leadership and personal responsibility

Our success is based on our people. We treat each other with respect and dignity
and expect everyone to promote a sense of personal responsibility. We recruit
competent and motivated people who respect our values, provide equal
opportunities for their development and advancement, protect their privacy and do
not tolerate any form of harassment or discrimination. Nestlé Management and
Leadership Principles (pdf, 533 Kb), Nestlé Code of Business Conduct (pdf, 76
Kb) and Guidance on Nestlé's Commitment against Bribery and Corruption (pdf,
750 Kb).
6. Safety and health at work

We are committed to preventing accidents, injuries and illness related to work, and
to protect employees, contractors and others involved along the value chain. Nestlé
Policy on Health and Safety at Work (pdf, 2 Mb)
7. Supplier and customer relations

We require our suppliers, agents, subcontractors and their employees to

demonstrate honesty, integrity and fairness, and to adhere to our non-negotiable
standards. In the same way, we are committed towards our own customers.
8. Agriculture and rural development

We contribute to improvements in agricultural production, the social and economic

status of farmers, rural communities and in production systems to make them more
 environmentally sustainable. Nestlé Policy on Environmental Sustainability (pdf,
349 Kb)
9. Environmental sustainability

We commit ourselves to environmentally sustainable business practices. At all

stages of the product life cycle we strive to use natural resources efficiently, favour
the use of sustainably-managed renewable resources, and target zero waste. Nestlé
Policy on Environmental Sustainability (pdf, 349 Kb)
10. Water

We are committed to the sustainable use of water and continuous improvement in

water management. We recognise that the world faces a growing water challenge
and that responsible management of the world’s resources by all water users is an
absolute necessity. Nestlé’s commitment to Water, Creating Shared Value.
Nestlé continues to maintain its commitment to follow and respect all applicable
local laws in each of its markets.

b. Mission/Vision Statement (evaluate using the Nine Essential Components)

Mission
“the world’s leading nutrition, health, and wellness company. Our mission of “Good
Food, Good Life” is to provide consumers with the best tasting, most nutritious choices
in a wide range of food and beverage categories and eating occasions, from morning to
night.”

Our vision and values

“to be a leading, competitive, Nutrition, Health and Wellness Company delivering
improved shareholder value by being a preferred corporate citizen, preferred employer,
preferred supplier selling preferred products.”

Nine Essential Components:

1.Customers. Who are your customers? How do you benefit them?
-The mission statement does not depict their exact target customers as per their brands
scopes almost everyone’s necessity. Customers are benefited with food and beverage
products containing best tasting and nutritious choices and according to their slogan of
“Good Food, Good Life” which is also stated in their mission
2.Products or services. What are the main products or services that you offer? Their
uniqueness?
-Their main products are food and beverages offered in a wide range category.
3.Markets. In which geographical markets do you operate?
-Their market is across the world since their mission started with “the world’s leading
nutrition, health and wellness company.
4.Technology. What is the firm’s basic technology?
5.Concern for survival. Is the firm committed to growth and financial soundness?
The firm, as a leading company of their industry is a sufficient proof of their financial
soundness. They cannot top if they are not. And they are growing continuously since they
have large geographical market.
6. Philosophy. What are the basic beliefs, values, and philosophies that guide an
organization?
-“Good Food, Good Life” – This slogan is that stands as their philosophy and values to
guide them with their advocacy of providing health products as they believe when they
produce good food, it could bring good life. This will be a attention directing statement
with regards to their mission of establishing their business.
7.Self-concept. What are the firm’s strengths, competencies or competitive advantages?
-Their competence was proven from being the leading brand, the range of product they
can provide to their customers any time, since they stated their feasibility from morning
to night. Also, the content of their products which was also in their mission statement.
8.Concern for public image. Is the firm socially responsible and environmentally
friendly?
The firm is socially respomsible the way they are providing healthy foods. The benefit of
their products for the sake of their consumers is one of a good source of public image as
they have established and formed for the said advocacy.
9.Concern for employees. How does a company treat its employees?
*Their mission statement disregards to answer about their technologies, and concern for
employees which are attributes internally of their company. The mission focused on
external factors which it became customer-oriented statement.

c. SWOT Analysis
Strengths

 Worldwide fame of Nestlé.

 Efficient milk collection system.
 Keeping high quality standards.
 Integrated distribution and warehousing facilities.
 Large market share of innovative.
 Having Good reputation in the market by strong brand name i.e. Nestlé.
 Strong R&D.

Weaknesses

 Unable to compete in price sensitive segment of UHT milk market.

 Under-utilization of the capacity.
 Unable to fulfil the demand of local powder milk market.

Opportunities

 Improving Economy.
 Population growth rate.
 High urbanization rate.
 High literacy rate.
 Flexible government policies for food industry.
 Have significant growth opportunities.
 May merge with other global businesses to eliminate competitors.
 Having Capable of expanding into other markets of the world.
SO

 Increase production of quality milk to cater the unsatisfied demand.

 They should go in the product line of powdered milk.
 They should increase their exports.
 They should cater the wide range of unsatisfied demand by improving their
distribution networks.

WO

 As per the increase demand of the milk they should fulfill the demand as Nestlé
have the ability to expand.
 They should make a strong distribution system to cater to avail the full benefit of
the growing market.
 They should adopt affective marketing strategies for the promotion of their product.

Threats

 High inflation rate.

 Low purchasing power.
 Decrease in GDP growth rate.
 Increasing interest rates.
 Recessionary period in business cycle.
 Competition with the new entrants.

ST

 Invest more on the dairy product line as there is still a large chunk of the market
which require modernization.
 Introduce new technology for quality assurance and better productivity.
 WT

 The co-ordination between different departments should be improved it will lessen the
bureaucratic cost and increase the efficiency of the company.

d. Strategies used by your chosen companies in order to achieve competitive advantage

in the industry where they operate. (to indicate the strategic decision matrix, tools,
techniques used in choosing alternative strategies)
Nestlé Competitive Advantage

As the 'Good Food, Good Life' company, Nestlé enhance quality of life and contribute to a healthier
future. Winning with consumers is the source of Nestlé sustainable financial performance and their way
to earning trust and maintain market leadership. Based on a compelling Nutrition, Health and Wellness
strategy, our company delivers sustainable value over the short term and the long term.

Nestlé has many distinctive strengths that keep them at the top of their industry. Our people are our
greatest strength. Nestlé have an attractive product portfolio in growing categories with leading market
positions. they are a global company with deep local roots, which gives them a unique ability to
understand local consumers and adapt fast to their preferences. They have powerful, valuable brands,
which consumers trust. They also have industry-leading R&D capabilities that support their Nutrition,
Health and Wellness strategy and our innovation initiatives.

 Nestlé Nutrition, Health and Wellness strategy

Our success is built on our Nutrition, Health and Wellness strategy. Food and beverages are core to
Nestlé. We aim to provide the tastiest and healthiest choices, for all times of the day and for all stages of
life, delivered in a convenient manner. We aim to capture premiumization opportunities and, at the
other end of the spectrum, offer affordable, high-quality nutrition. We add value to our brands and
products through meaningful differentiation and innovation. We do this by continually improving the
taste, convenience and nutritional qualities of our products. We are also well-positioned to build and
share nutrition knowledge from the first 1000 days of life through to healthy aging, and benefit from
increased interest in nutrition to support good health.
  Innovation

Through the research and development (R&D) capabilities allow Nestlé Company to lead the way in
innovation and provides for maximum portfolio flexibility. The extraordinarily large scope of Nestlé’s
business provides for significant economic of scale in manufacturing, marketing, and administration. For
example, Nestlé established a number of ventures for growth into new areas related to wellness and
nutrition. Nestlé moved into the area of nutria cosmetics, under the brand name Inneov a joint venture
by Nestlé and L’Oreal. This strong brand reputation is built due to high quality of the products and
customer satisfaction. Innovation is one of Nestlé’s key competitive advantages. They have more than
140 years of research, development and scientific expertise. While there is a great deal of pure and
applied science research that takes place in their global R&D centers, Nestlé ensures that the consumer,
and the consumer benefit, remains at the core of all their activities.
 International: TOYOTA
1. Make a research of your chosen companies as follows:
a. Company Profile
Company Description
Toyota Motor Corp. engages in the manufacture and sale of motor vehicles and parts. It
operates through the following segments: Automotive Operations, Financial Services, and All
Other. The Automotive Operations segment designs, manufactures, assembles and sells
passenger cars, minivans, trucks, and related vehicle parts and accessories. It is also involved
in the development of intelligent transport systems. The Financial Services segment offers
purchase or lease financing to Toyota vehicle dealers and customers. It also provides retail
leasing through lease contracts purchase by dealers. The All Others segment deals with the
design and manufacture and sale of housing, telecommunications and other businesses. The
company was founded by Kiichiro Toyoda on August 28, 1937 and is headquartered in Toyota,
Japan.
Native name
トヨタ自動車株式会社
Romanized name
Toyota Jidōsha kabushiki gaisha
Industry Automotive
Founded 28 August 1937; 82 years ago
Founder Kiichiro Toyoda
Headquarters Toyota City, Japan
Area served
Worldwide
Key people
Takeshi Uchiyamada (Chairman)
Shigeru Hayakawa (Vice chairman)
Akio Toyoda (President)
Products Automobiles, luxury vehicles, commercial vehicles, engines
Divisions
Toyota
 Lexus
Ranz
Scion (defunct)
TRD
Gazoo Racing
Daihatsu
Subsidiaries 606
b. Mission/Vision Statement (evaluate using the Nine Essential Components)
Toyota Mission
Toyota will lead the way to the future of mobility, enriching lives around the world
with the safest and most responsible ways of moving people. Through our commitment
to quality, constant innovation and respect for the planet, we aim to exceed expectations
and be rewarded with a smile. We will meet challenging goals by engaging the talent
and passion of people, who believe there is always a better way.
Vision & Philosophy
Since Toyota's foundation, we have acted in accordance with our Guiding Principles to
produce reliable vehicles and the sustainable development of society through ever-
changing innovation and the provision of high-quality products and services.

Guiding Principles at Toyota

Toyota's unique management philosophies, values, and methods.

Toyota Way 2001 / Toyota Code of Conduct

Outline of the tenets employees should embrace to carry out the Guiding Principles.

Toyota Global Vision

A closer look at who we are, our roots, and the kind of company we aspire to be.

Toyota Production System

This all-encompassing production system is at the very heart of Toyota's corporate
philosophy and is characterized by continuous improvement.
 Nine Essential Components:
Being a multinational company that serves people around the globe, Toyota is
committed in providing their customers safe automobiles that will surely exceed the
expectation of their customers through constant innovation, which as we all know,
requires investment in research and development that may help them not only to outdo
their competitors but also their own products. That gives rise to their financial growth
and increased market share.
Known as one of the leading automotive company that produces most cars that we
usually see in the roads, they expressed their commitment to quality as well as having
products that pays respect for the planet. In this way also, they were also able to
contribute in protecting the environment, which is one of the social responsibility of
every human being. Also, by mentioning how their people will contribute to the
attainment of their mission, boosts their employee morale. Overall, although there are
some essential components that were not mentioned, they do have an effective mission
statement. Not only that it appeals to the customers interest, but it also covered some
of the important aspects that needs to be considered.

c. SWOT Analysis

Toyota’s SWOT analysis shows that the company remains strong in the global
automobile market, although issues related to competition, organizational structure,
and corporate culture must be addressed.

Toyota’s Strengths (Internal Strategic Factors)

Toyota’s strengths indicate that the firm is capable of keeping its position as one of the
top auto manufacturers in the world. This element of the SWOT analysis model
identifies the internal strategic factors that serve as capabilities of the firm. Toyota’s
main strengths are as follows:

1.Strong brand image

2.Global supply chain
3.Rapid innovation capabilities

Toyota has one of the strongest brands in the global automotive industry. The
company’s global supply chain is also a strength that enables resilience and market-
based risk minimization. Furthermore, Toyota has an organizational culture that
facilitates rapid innovation, which is crucial for long-term competitive advantage. This
part of the SWOT analysis shows that Toyota’s strengths support its position as one of
the biggest automobile manufacturers in the world.

Toyota’s Weaknesses (Internal Strategic Factors)

Toyota’s weaknesses point to possible inefficiencies in the organization. This element
of the SWOT analysis model determines the internal strategic factors that serve as
obstacles to business growth. Toyota’s main weaknesses are as follows:

1.Hierarchical organizational structure

2.Secrecy in organizational culture
3.Effects of product recalls in recent years

Toyota’s global hierarchical organizational structure prevents maximum flexibility of

regional operations. Also, the company’s culture of secrecy is a weakness that reduces
response times in addressing emerging problems. In addition, Toyota implemented
massive product recalls starting in 2009. These recalls weaken the firm because the
recall processes consume business capacity that could be used for product distribution
instead. This part of the SWOT analysis shows that Toyota could improve its
performance through adjustments to reduce the weaknesses based on its organizational
structure and culture.

Opportunities for Toyota (External Strategic Factors)

Toyota’s opportunities are mainly based on technological and economic trends. This
element of the SWOT analysis model identifies the external strategic factors that the
firm could use to improve its business. Toyota’s most significant opportunities are as
follows:

1.Growing markets in developing countries

2.Rising demand for fuel-efficient automobiles
3.Growing interest in advanced electronics in vehicles
4.Weak Japanese Yen vs. U.S. Dollar

Developing markets present the opportunity for Toyota to increase revenues by further
penetrating these markets. Also, the current trends of increasing demand and interest
for higher fuel efficiency and advanced electronics present the opportunity for Toyota
to focus its innovation on these directions. In addition, the weaker Japanese Yen versus
the U.S. Dollar means higher competitiveness of products and components exported
from Japan to the U.S. This part of the SWOT analysis shows that Toyota must
emphasize market penetration and innovation to exploit its opportunities.

Threats Facing Toyota (External Strategic Factors)

The threats to Toyota’s business are based mainly on the competitive landscape. This
element of the SWOT analysis model determines the external strategic factors that
could reduce the firm’s performance. In Toyota’s case, the main threats are as follows:

1.Growing market presence of low-cost competitorsq

2.Rapid innovation of competitors

Toyota faces the threat of competition with low-cost automobiles from Korean,
Chinese and Indian manufacturers, which have been increasing their presence in
foreign markets. Toyota also experiences the threat of rapid innovation of competitors
like GM, Honda, and Ford. This part of the SWOT analysis shows that Toyota must
ensure competitive advantage, such as through innovation.
 d. Strategies used by your chosen companies in order to achieve competitive advantage
in the industry where they operate. (to indicate the strategic decision matrix, tools,
techniques used in choosing alternative strategies)

COMPETITIVE ADVANTAGE: THE TOYOTA WAY

Toyota is one of the top 10 automobile companies in the world both in terms of
revenue and in terms of production. Toyota was the first among the top 10 car
companies in the world to reach an annual production capacity of 10 million cars in
2012, the same year Toyota also manufactured its 200th million car. Toyota is a
major player that even outperforms its national rivals and is widely considered as the
epitome of an automotive success story. Toyota has been, therefore, considered
successful in applying strategies, tools and techniques in identifying potential success
factors and achieving competitive advantage through years.
I. Toyota’s Business Policy
The heart and spirit of Toyota’s manufacturing is the Toyota Way. The Five Main
Principles of Toyoda (Professional Excellence, Challenge to Change, Teamwork,
Customer Oriented and Globalism) have been passed down since Toyota’s founding
as the core of its management. These principles embody the thinking of the Toyota
Group’s founder, Sakichi Toyoda. In 1992, they were reorganized in light of changes
in society and business structure to create the Guiding Principles at Toyota. The
Guiding Principles at Toyota lay out the kind of company they want to be. Building
on this, the Toyota Way 2001 or otherwise called the “Toyota Way” was established
in 2001, laying out values and business practices that everyone working at Toyota
around the world should embrace. The Toyota Way thus clearly articulates and
facilitates the global sharing of values and practices that have been previously passed
down only as implicit knowledge. The Toyota Way’s main pillars are the concepts of
continuous improvement and respect for people, with the keywords of taking on
challenges, Kaizen, and Genchi Genbutsu (onsite, hands-on experience) under the
former and respect and teamwork under the latter. Continuous improvement means
never being satisfied with the status quo and always doing their utmost to create even
 greater benefit. Respect for people entails respect for all our stakeholders and
working to achieve business success by promoting the growth of employees.

II. Toyota Production System

The Toyota Production System is the Toyota’s method to develop things. The Toyota
Production System is unique to Toyota and it defines its management style. The main
objective of TPS is to produce goods synchronously to customer requirements, thus
designing out overburden and inconsistency and eliminating waste for instance caused by
overproduction, unnecessary transports and waiting times.
One of the greatest advantages of TPS is its strong focus on lean production. Lean
production is aimed at the elimination of waste in any area of production including
customer relations, product design, supplier networks and factory management. Its goal is
to incorporate less human effort, less inventory, less time to develop products, and less
space to become highly responsive to customer demand while producing top quality
products in the most efficient and economical manner possible. In order to achieve these
goals, Toyota pioneered and implemented several highly efficient strategies. For instance,
during the 1970s Toyota invented Just-in-Time (JIT), an inventory strategy that strives to
improve a businesses return on investment by reducing in-process inventory and
associated carrying costs, following the simple philosophy that inventory is waste. To
meet its objectives, one of the primary tools of a JIT system are signals (jap. Kanban)
between different points in the process, which tell production when to make the next part.
Such signals maintain an orderly and efficient flow of materials throughout the entire
manufacturing process, improving a manufacturing organization’s return on investment,
as well as quality and efficiency. Closely linked to Toyota’s JIT principle is the
company’s outstanding supply chain management, as the high efficiency and
effectiveness of a JIT inventory system is heavily dependent upon the smooth co-
ordination of a company’s supplier network. Toyota as well as other Japanese car
manufacturers are able to ensure such a smooth co-ordination and close and trustful
cooperation with their suppliers through the so called keiretsu. A keiretsu is a traditional
Japanese institution and can be defined as a set of companies with interlooking business
relationships and shareholdings.
One of the most important aspects when working with a minimum stock of materials and
JIT inventory systems is to ensure that each part entering the next step of the production
process meets the highest possible quality standards.
At Toyota, this is ensured by the so called Total Quality Management (TQM) approach.
It can be defined as a set of management practices throughout the organization, geared to
ensure the organization consistently meets or exceeds customer requirements. At Toyota,
Total Productive Maintenance is also being applied. TPM is a proactive approach that
essentially aims to prevent any kind of slack before occurrence and has been the first
methodology Toyota used to improve its global position in the 1950s. According to the
motto “zero error, zero work-related accident, and zero loss”, in TPM the machine
operators perform much, and sometimes all, of the routine maintenance tasks themselves.
This auto-maintenance ensures appropriate and effective efforts are expended since the
machine is wholly the domain of one person or team.
The Toyota Production System (TPS) is based on the concepts of Jidoka (automation
with a human touch) and Just-in-Time. Aiming to make only what is needed, when it
is needed, and in the amount needed and to make ever-better products at lower cost,
we work to reduce costs through the complete elimination of waste. At Toyota, they
believe that if they’re not moving forward, they’re moving backward, and that what
comes after Kaizen (improvement) is Kaizen—in other words, Kaizen never ends.
Accordingly, developing human resources who can independently identify issues,
think of solutions, and continuously work toward improvement is essential. For
Toyota, Jidoka means that a machine must come to a safe stop whenever an
abnormality occurs. Achieving Jidoka therefore requires building and improving
systems by hand until they are reliable and safe. First, human engineers meticulously
build each new line component by hand to exacting standards, then, through
incremental Kaizen, steadily simplify its operations. Eventually, the value added by
the line’s human operators disappears, such that any operator can use the line to
produce the same result. Only then, the Jidoka mechanism incorporated into actual
production lines. Through the repetition of this process, machinery becomes simpler
 and less expensive and maintenance becomes less time consuming and costly,
enabling the creation of simple, slim, flexible lines that are adaptable to fluctuations
in production volume. Craftsmanship is achieved by learning the basic principles of
manufacturing through manual work, then applying them on the factory fl oor to
steadily make improvements. Employees continually hone their craftsmanship while
striving to weave the insights and techniques that doing so provides into machines to
create new technologies and manufacturing methods that, in turn, lead to new insights
that improve their skills. This virtuous cycle of improvement in both human skills and
technologies is the essence of Toyota’s Jidoka. I think that advancing Jidoka in this
way helps to reinforce both our manufacturing competitiveness and human resource
development.
III. Developing People: The True Source of Toyota’s Competitiveness
Toyota’s dedication to developing its people makes attaining their goals possible and
is the true source of the Company’s competitiveness. To get through this once in-a-
century period of profound transformation and continue growing, it is necessary for
them to continually nurture their people, create strong manufacturing teams that can
handle each difficulty and change by taking on challenges with skill and
perseverance.
According to the Toyota’s Chief Financial Officer, Koji Kobayashi, the Toyota
Group has grown by building on the foundation laid by Kiichiro Toyoda and
constantly pushing to do better. The strength of the Toyota Group is in its shared set
of basic values. He said, “As we prepare to take on new rivals in as-yet unknown
arenas, it is more important than ever to return to the roots of the Group and gather
our full strength. By having each Group company focus on its particular areas of
expertise, we will further enhance our competitiveness.” Toyota believes that their
ways to develop people will lead to not only to management that operates with
respect for people, but to customer satisfaction and social contribution and thus to the
sustainable growth of both the company and society.

IV. Combination of cost leadership and differentiation strategy

 Toyota Motor Corporation has successfully managed to combine a cost leadership
and a differentiation strategy, creating superior value by meeting or beating customer
expectations on product attributes and beating their price expectations. Toyota’s
production is reportedly the most efficient in the world, and that efficiency allows the
company to follow a strict low cost strategy in the global car industry. At the same
time, over the last decades Toyota has also started to differentiate its cars from those
of rivals on the basis of superior design and quality. This superiority allows the
company to charge a premium price for many of its popular models, with the Toyota
Prius representing only one of many other examples.
V. Risk Management
Toyota has been working to reinforce its risk management systems since the series of
recall issues in 2010. In June 2010, Toyota established the Risk Management
Committee (now the Sustainability Meeting and ESG Committee) and appointed risk
managers for the global group and each business division as part of global measures
to prevent and mitigate the impact of risks that could arise in the course of business
activities.
Based on its strong resources and capabilities, Toyota has managed to become the
most efficient automobile manufacturer in the world, with the highest overall
productivity. In addition, these competitive advantages allowed Toyota as one of only
very few automobile manufacturers to successfully implement a strategy that may in
fact be the true basis for Toyota’s global success. Toyota has a strong commitment to
continuous improvement. As a matter of fact, in its 2018 annual report, they highlight
that to strengthen their competitiveness, they aim to deliver ever better mobility to
customers around the world. According to Didier Leroy (EVP), “As Toyota works to
reinforce its efforts related to a wide range of mobility services, its approach of
seeking to be the “best in town” will be essential. When creating new services, the
business environment, particular challenges, and distributors in each region vary
greatly. Toyota must provide cars and mobility services that are closely tailored to
customer lifestyles and regional characteristics and make itself an indispensable
presence in local communities. Seeking to be the best in town is an approach that
reinforces competitiveness and thereby leads to sustained growth.”
Toyota is clearly an epitome of an automotive success story. Based on its unique
corporate philosophy, its impressive production system as well as its highly efficient
and effective supply chain and human resource management resulting in sustained
competitive advantages, it is without doubt that Toyota will still continue to foster
and grow through many years.