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Toyota's New Business Model: Creating a Sustainable Future

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Many companies study the management strategies of others, adapting and learning from the experiences of large multinationals. But global corporations also need strategies that are capable of adapting to changing markets and profitability. Is it possible for these corporations to develop new and powerful insights from smaller firms?

The Toyota Motor Corporation’s philosophy and business strategy, known as the “The Toyota Way” is globally recognized as an industry leader, and its managerial values and business methods are regarded as benchmark practices, guiding the processes and strategies of organizations worldwide, e.g., Toyota’s Kanban method, of inventory control which facilitates just-in-time manufacturing, is seen as the optimal approach to inventory control.

Founded in Japan in 1937, the company grew rapidly. But a series of issues, resulting in a drop in vehicle sales and profitability left Toyota’s president, Akio Toyoda, considering how the company could find a more sustainable way of growing and how to incorporate this new philosophy into its existing business model.

Toyoda is now a strong advocate for an alternative philosophy known as the “Nenrin or tree ring” strategy. He credits a small company, Ina Food, which makes agar, a traditional ingredient in Japanese food, as the source of Toyota’s ongoing success.

Finding inspiration in Ina Food’s 55 years of sustainable growth and profit, Toyoda now follows many of its key initiatives.

The corporate giant has become one of the largest corporations globally, while still promoting the virtues of slow and steady growth on an ongoing basis.

Learning Objective:

1. To provide students with a basic understanding of corporate sustainability.

2. To help students understand why corporate sustainability is a concept that is continually evolving and why it attracts significant attention from management, researchers, academic experts, and the media.

3. To provide an opportunity for the class to discuss how the challenges that corporate entities encounter can potentially be overcome by learning from the strategic management approaches adopted by smaller companies.

Year of Publication: 2019
Ref. No.: 17/595C
Discipline: Strategy & General Management
Industry: Automobiles & Components
Country: Japan
Company: Toyota Motor Corporation
Languages: English
Pages of Text: 9