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The Toyota Structure

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The Toyota Structure

Toyota Motor Corporation has often assumed the gold standard in the automotive industry. Thus, it did not come as a surprise when the company overtook General Motors as the worlds leading automaker in sales in 2007 (Imai, Matsuo, & Monden, 2012). In part, Toyota reached the highest level, because of its production of quality automobiles. Despite registering profits in 2009, when other companies were facing crises, the company entered a tumultuous period when it was forced to recall roughly eight million cars (Imai et al., 2012). This was a clear indicator that the companys Toyota Production System (TPS), which had defined its traditional structure for a long time, had come under scrutiny.

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TPS captures the principle of just-in-time production. Under the approach, supplies and raw materials are brought to the assembly at the exact time they are used (Boschert, 2006). The implication is that the system has no room for slack resources that may lead to wastage. The principle gave powers to the front line employees in guiding the production process. Hence, the principle of centralization was not a part of the culture in the Toyota Company. On the contrary, President Katsuaki Watanabe introduced centralization into the company. This became clear as the President took such unilateral decisions, as highlighted in the case study.

From the case, it is clear that the Toyota Company chose to sacrifice its core values relating to organizational structure and job designing. Partly, the change in strategy may have led the company into incurring operational losses in 2009. This was the first loss since 1938. As it emerged, the economic crisis of 2008 played a role in the state of the company. Some observers such as Tokai Gakuin conceded that the obsession of Toyota to become the number one automaker played a significant role in obscuring the company from cutting down production early enough to avoid such losses.

Following major safety concerns in the year 2010, centering on acceleration of three cars of the automaker, the organizational structure of the company came under intense scrutiny. After a public outcry, Toyota took steps to restore its status as a reliable automaker by recalling faulty cars (Imai et al., 2012). However, most notably, the company was focused on returning to profitability. In the process of pursuing profits, Toyota focused its reforms on organizational design and job design. Regarding manufacturing jobs, expansionary plants in Japan and the US were purchased at lower quality standards. The company streamlined jobs, revised job descriptions, and enhanced education programs leading to a slowdown in production, although the quality improved.

Traditionally, the Toyota Company structure focused on consensus based decision-making at the managerial level (Boschert, 2006). This meant that the decision-making process was slow although critical in envisioning long-term effects of the decisions made. In the recent times, the Toyota tradition was discarded as President Katsuaki Watanabe made too many decisions single-handedly. For instance, he made decisions on where to build factories, increasing production, and ignoring the strength of the Yen in arriving at production decisions.

Departmentalization is a widely used principle in organizations. As Sine, Mitsuhashi, and Kirsch (2006) observed, the level of departmentalization differs across companies. From the case in point, the Toyota Company has various departments such as managerial, manufacturing, inspection, sales and others. The managerial department is on the top, headed by the companys President. It is the department that initiates and makes important decisions. The manufacturing department is charged with the production of automobiles based on directives from the managerial and sales departments.

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Traditionally, the Toyota Company operated a decentralized form of structure. However, the structure was altered in the pursuit of market leadership. The implication is that centralization of authority limits the level of departmentalization. This comes clear as the role of sales department was reduced leading to the need to employ person SWAT teams in order to help the department. Thus, the number of departments increases although their powers decline. Such developments were in contravention to the Toyota tradition.

As already explored, the changes on the companys structure led to the pursuit of different goals. From the first point, it is clear that the company put aside some of its core value in the hope of securing high levels of expansion. In this regard, the President altered the traditional decentralized structure to a centralized structure. In the process, the consensus-guided decision-making process was discarded. This allowed the President to take poor decisions on expansion and building foreign plants, which were later sold at a loss. Overall, the changes in structure led the Toyota Company to compromise on quality for the sake of quantity. As the case of recalling Toyota vehicles show, deviating from the traditional structure was a costly affair for the company. Similarly, the Toyota Company strayed from the TPS policy. This led the company to incurring many losses due to wastage.

When doing job analysis and redesign, trade-offs are inevitable (Adair, 2007). Job analysis is supposed to identify tasks and skills involved in job execution. Consequently, the process is supposed to identify an efficient way of doing work. However, when Toyota did redesigning, the focus was on ensuring profitability, leading to a reversal to the traditional approach. Typically, when redesigning jobs, if some employees are relinquished part of their responsibilities, there is a big possibility that quality would be undermined (Adair, 2007). This happens when companies take away responsibilities, but retain the same production targets without making adequate arrangements. Therefore, the only way to manage trade-offs through job analysis and redesign requires an objective appraisal that identifies appropriate skills and redundancies. In addition, transferring responsibilities to the right employees may become necessary if the same production levels are to be maintained. Similarly, job redesign should be done alongside a companys tradition. This is supported by the case of Toyota where redesigning went awry, because the top leadership sacrificed the companys traditional structure for the sake of quick profits.

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