Toyota Motor Corporation

History:
Toyota started in 1933 as a division of Toyoda Automatic Loom Works devoted to the
production of automobiles. Its first vehicles were the passenger cars in 1935. Toyota Motor
Co. was established as an independent company in 1937. The company was founded by
Kiichiro Toyoda in 1937 as a spinoff from his father’s company Toyota Industries to
create automobiles. Three years earlier, in 1934, while still a department of Toyota
Industries , it created its first product, type A engine , and, in 1936, its first passenger car, the
Toyota AA.

Company overview:
Toyota Motor Corporation is a multinational corporation. Its headquartered is in Japan, and it

is the world's largest automaker. Toyota employs approximately 320,808 people worldwide.

The company strives to sustain its profitability position and growth in the long term by

improving its business in North America, other parts of the world. Further, Toyota aims to be

an ecologically sensitive car manufacturer. Toyota also owns and operates Lexus and Scion

brands and has a majority shareholding stake in Daihatsu and Hino Motors, and minority

shareholdings in Fuji Heavy Industries Isuzu Motors, Yamaha Motors , and Mitsubishi

Aircraft Corporation. The company includes 522 subsidiaries.

Toyota is headquartered in Toyota City and Nagoya (both in Aichi), and in Tokyo. In

addition to manufacturing automobiles, Toyota provides financial services through

its division Toyota financial services and also builds robots. Toyota Industries and Finance

divisions form the bulk of the Toyota Groups, one of the largest conglomerates in the world.

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On May 8, 2009, Toyota reported a record annual net loss of US$4.4 billion, making it the

latest automobile maker to be severely affected by the 2007-2009 financial crises.

Vehicles were originally sold under the name "Toyoda", from the family name of the

company's founder, Kiichiro Tyoda. In September 1936, the company ran a public

competition to design a new logo. Out of 27,000 entries the winning entry was the three

Japanese katakana letters for "Toyoda" in a circle. But Risaboro Toyoda, who had married

into the family and was not born with that name, preferred "Toyota" because it took eight

brush strokes (a fortuitous number) to write in Japanese, was visually simpler (leaving off

two ticks at the end) and with a voiceless consonant instead of a voiced one (voiced

consonant is considered "murky" or "muddy" sound compared to the voiceless consonant,

which is "clear"). Since "Toyoda" literally means "fertile rice paddies", changing the name

also helped to distance the company from associations with old-fashioned farming. The

newly formed word was trademarked and the company was registered in August 1937 as the

"Toyota Motor Company".

From September 1947, Toyota's small-sized vehicles were sold under the name "Toyopet”

The first vehicle sold under this name was the Toyopet SA but it also included vehicles such

as the Toyopet SB light truck, Toyopet Stout light truck, Toyopet Crown and the Toyopet

Corona . However, when Toyota eventually entered the American market in 1957 with the

Crown, the name was not well received due to connotations of Toys and pets. The name was

soon dropped for the American market but continued in other markets until the mid 1960s.

Toyota’s financial services business consists primarily of providing financing to dealers and

their customers for the purchase or lease of Toyota vehicles. Toyota’s financial services also

provide retail leasing through the purchase of lease contracts made by Toyota dealers.

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In fiscal 2007, the company recorded a total sale of 8,524,659 units, as compared to the total

sale of 7,974,563 vehicles in 2006. Out of the total sales, the company sold 2,273,152

vehicles in Japan; 2,942,661 vehicles in North America; 1,223,628 vehicles in Europe;

789,637 in Asia; and the remaining 1,295,581 vehicles in other countries

Toyota’s philosophy:

Toyota's management philosophy has evolved from the company's origins and has been

reflected in the terms Lean Manufacturing and Just In Time Production, which it was

instrumental in developing. The Toyota Way has four components:

1. Long-term thinking as a basis for management decisions.

2. A process for problem-solving.

3. Adding value to the organization by developing its people.

4. Recognizing that continuously solving root problems drives organizational learning.

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TOYOTA MISSION AND VISION

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GUIDING PRINCIPLES
1. Honor the language and spirit of the law of every nation and undertake open and fair
corporate activities to be a good corporate citizen of the world.
2. Respect the culture and customs of every nation and contribute to economic and social
development through corporate activities in the communities.
3. Dedicate ourselves to providing clean and safe products and to enhancing the quality
of life everywhere through all our activities.
4. Create and develop advanced technologies and provide outstanding products and
services that fulfill the needs of customers worldwide.
5. Foster a corporate culture that enhances individual creativity and teamwork value,
while honoring mutual trust and respect between labor and management.
6. Pursue growth in harmony with the global community through innovative
management.
Work with business partners in research and creation to achieve stable, long term growth and

mutual benefits, while keeping ourselves open to new partnerships. Creating a Harmonious

and Lively Work Environment

- Acting with integrity and in line with sound social norms -

TOYOTA will use its best efforts to comply with all labor and employment laws and

regulations of the countries where it is active, as well as the spirit thereof. TOYOTA

encourages and supports the personal growth of all people working for TOYOTA. Based on

“Mutual Trust and Mutual Responsibility”, TOYOTA endeavors to improve its business

performance in order to make it possible to provide equal employment opportunities and to

maintain fair and stable working conditions. TOYOTA strives to create a safe and

harmonious work environment for its employees.

TOYOTA respects and honors the rights of all people working for it and will not discriminate

against them or permit the infringement of their rights.

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Therefore, all of us must recognize our essential roles in contributing to the success of

TOYOTA and should make a commitment to comply with internal rules, as well as conduct

our duties/work with integrity and in a socially acceptable manner.

As valuable contributors to TOYOTA, we should each also endeavor to fully utilize our

capabilities and to put forth our best efforts in allmatters in order to strengthen and build

TOYOTA’s business performance globally.

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ORGANAZATION STRUCTURE OF TOYOTA

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VARIOUS DIVISION IN TOYOTA

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CODE OF CONDUCT IN TOYOTA

1. Compliance with Laws and Regulations

- With sound social norms in mind -
TOYOTA will comply with applicable laws , internal company policies and rules, abide by
sound social norms, and take appropriate action against any illegal or criminal acts or acts in
violation of the company’s policies and rules. TOYOTA will not make any exceptions to this
commitment, regardless of whether an unlawful act is motivated “in the interests of the
company” or “in the interests of the customer”, or carried out under the instructions of one’s
superior.
We should implement the “Toyota Code of Conduct” and make a commitment to comply
withapplicable laws, as well as internal company policies and rules, and to abide by sound
social norms in all aspects of our work.

2. Use and Management of Assets and Confidential Matters

- Ensuring asset maintenance and confidentiality management -
• TOYOTA possesses a wide variety of tangible 1 and intangible 2 assets that are
indispensable and invaluable to its successful business operations. In order for
TOYOTA to use such assets effectively and at any time during the course of its
business activities,

• TOYOTA manages such assets with a firm hand in order to prevent such assets from
being lost, stolen or used illegally or wrongfully.

• TOYOTA endeavours to manage and protect confidential information (e.g., its trade
secrets) and to use such information in an appropriate manner. At the same time,
TOYOTA does not tolerate the illegal use of another party’s assets or intellectual
property or the unauthorized use of another party’s confidential information.

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We must manage and protect TOYOTA’s assets, intellectual property, company secrets (such
as trade secrets etc.) and personal information, as well as respect the assets, intellectual
property and confidential information of others.
1 Examples of tangible assets: Land, buildings, facilities, equipment; products,
merchandise, materials; office equipment; networks; office supplies; cash and
deposits, securities and bonds; corporate credit card, etc.

2 Examples of intangible assets: Intellectual property rights such as patent rights, trademarks,
copyrights, design rights, know-how etc.; Confidential corporate
matters such as product and technology information, procurement and sales information,
personnel and accounting information,
software (e.g. program, data).

3. Insider Trading
- Act as an investor with sound common sense -
TOYOTA possesses a large amount of valuable internal (confidential) information and does

not allow people working for it to engage in insider trading, such as using confidential

information to buy and/or sell stocks.

We must understand that insider trading is clearly not permitted. Not only is it illegal in many
countries, but it also destroys the mutual trust that TOYOTA has built with its investors,
affiliatedcompanies and business partners. Therefore, we shall not engage in or permit any
insider trading.

4. Activities Promoting Safety

- Enhancing vehicle safety -
For an automotive manufacturing company such as TOYOTA, the pursuit of safer vehicles is
always one of its main challenges and mission.
TOYOTA endeavors as a group, in cooperation with our suppliers and dealers, to engage in
research and development, design, production, quality control and after-sales services in
order to deliver its customers Toyota and/or Lexus vehicles that display sophisticated safety
levels under various conditions and that provide a comfortable experience for drivers.
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TOYOTA will also be actively involved with “People Education” (i.e., Driver Education) and
with improving the “Traffic Environment.”
We should endeavor to think from the standpoint of our customers and pursue ways to make
vehicles safer and offer our customers safety and trust.
25. Environmental Preservation Activities
- Building environmentally and people friendly vehicles -
TOYOTA has a deep understanding of the necessity of environmental conservation on a
global scale.
Therefore, TOYOTA has decided to “dedicate ourselves to providing clean and safe products
and to enhancing the quality of life everywhere through all our activities” (Guiding Principles
3). Furthermore, TOYOTA has developed a proactive policy and plans to assure continual
improvements in environmental performance in the “Toyota Earth Charter” and “Toyota
Environmental Action Plan”.

TOYOTA regards environmental issues as one of the company’s major challenges and takes
environmental impact into consideration at all life-cycle stages of its vehicles, including
development, production, usage and disposal. TOYOTA promotes compliance with
international environmental standards, implementation of enhanced environmental
assessments, and realizing the principle of “building people and environmentally friendly
vehicles” in cooperation with its suppliers, dealers, etc.
We must endeavor to attain the highest level of environmental stewardship in each country
and area.

27. Procurement Activities

- Reasonable and sincere transactions -

Based on following three basic policies, TOYOTA engages in fair and open procurement
activities:

(a) Fair competition based on an open-door policy

Regardless of nationality or size of transaction, TOYOTA offers fair opportunities to all
candidates. TOYOTA evaluates candidates based on their overall strengths, including quality,
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technology, price, volume and reliability of delivery, as well as the stability of their business
management and technological development capabilities.

(b) Mutual growth based on mutual trust

In order to build relationships that result in mutual growth, TOYOTA and its suppliers strive
for mutual collaboration and close communications as equal partners.

(c) Promoting localization in view of good corporate citizenship

In order to contribute to its local communities, TOYOTA globally promotes local production
of Toyota and/or Lexus vehicles and endeavors to actively promote local procurement of
parts and materials.
We engage in procurement activities with fairness and integrity, in consideration of the above
three basic policies and compliance with the law.
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6. Research and Development Activities

- Developing vehicles from the standpoint of our customers -
In order to provide innovative, safe and outstanding high-quality products and services that
meet the needs of customers through “research and innovation”, TOYOTA has established
research and development centers around the world. These centers are well-staffed with
leading innovators and actively cooperate with other TOYOTA group companies, as well as
universities and research institutes, in order to strongly promote research and development of
advanced technologies in various fields.

TOYOTA does not tolerate research and development that violates any applicable laws or
breaches of its agreements with its research and development partners. TOYOTA also does
not tolerate the illegal or unauthorized use of another party’s intellectual property.
Our goal is to develop vehicles from the customers’ perspective and to promote research and
development.

We respect the views of our research and development partners and seek to cultivate and
maintain mutual trust. In addition, we use our best efforts to build a relationship of mutual
trust by satisfying our obligations to our partners.
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We shall be mindful of respecting the intellectual property rights of others when conducting
research and development and when realizing production.
8. Production and Distribution Activities
- Building vehicles that win customer trust and faith -

TOYOTA endeavors to produce high-quality Toyota and Lexus vehicles and parts and
deliver them in an efficient manner in order to meet customers’ expectations. In order to
realize such production and supply goals, TOYOTA endeavors to build the “world’s
optimum production network” and a “global distribution network”.

In addition, in order to enhance the global competitiveness of Toyota and Lexus

vehicles, TOYOTA developed the Toyota Production System, which continues to evolve
according to the characteristics of particular regions of the world and aims to achieve worker
and environmentally friendly plants. We endeavor to maintain the safety and quality of
products and to comply with laws related to production and distribution.

29. Sales Activities

- Winning the trust of customers and dealers -
Based on the following three ideas, TOYOTA strives to build a sales and service structure
that meets various customer needs in a timely manner. In order to achieve such structure,
TOYOTA endeavors to build relationships with dealers based on mutual trust, and to bring
mutual growth and support for fair competition and transactions.

(a) Philosophy of “Customer First”

Based on a “Customer First” philosophy, TOYOTA strives to create a sale and service
structure that promptly responds to the various needs of customers worldwide. To achieve
this, TOYOTA develops products that meet customer expectations and implements a
marketing strategy and sales style that matches the product profiles and various customer
needs.
(b) Mutual growth based on mutual trust
TOYOTA develops and provides attractive product lineups, various styles of dealer
showrooms and sales styles, and a meticulous customer and revenue management system.
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TOYOTA does this to contribute to the improvement of sales efficiency and profitability of
its dedicated dealers, to build mutual trust and to bring mutual growth.

(c) Importance of fair market competition

TOYOTA respects free trade and market competition, implements ambitious sales strategies
in order to obtain customer satisfaction and support in various areas of the world, and
endeavors to engage in fair competition and transactions.
We conduct our sales activities with the above ideas in mind.
11. Profitability Enhancement Activities
- Building a stronger profit foundation -
In order to respond to the expectations of investors and society, TOYOTA endeavors to
perform various measures to improve business management efficiency, achieve sustainable
increases in profit and strengthen the foundation of its management and profit.
When determining investments or financing for various domestic and overseas projects,

TOYOTA’s decisions are made after conducting thorough pre-studies, including anticipated
profitability. As for fund management, TOYOTA places the highest priority on safety and
certainty. Based on the appropriate financial performance indices, TOYOTA assesses
business management efficiency and profit make-up on both an individual and consolidated
basis. TOYOTA does its best to continuously improve these, and to timely and fair disclosure
of its financial condition and to make appropriate payment of taxes. In order to realize such
disclosure, TOYOTA strives to appropriately oversee the financial condition of its
subsidiaries and affiliates.

10. Overseas Business Activities

- To become a global company trusted worldwide -
TOYOTA engages in business worldwide and many of its activities are conducted outside
Japan, including not only manufacturing activities, but also research and development.
TOYOTA recognizes the ever-changing environment surrounding its business operations,
global diversity, the specificity of each local area in terms of its own rules and customs, etc.,
and the rapid changes in world political and economic climate. TOYOTA respects
international rules and laws, as well as the culture, customs and history of local societies.

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Thus, TOYOTA promotes its business activities from “both a global and local” standpoint so
as to contribute to the development of local economies and society.
We contribute to expansion of TOYOTA’s business overseas by respecting the culture,
customs and history of each country, as well as national, regional and international laws and
rules.

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The Toyota Way Principles:

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Principle 1.
Base your management decisions on a long-term philosophy,
Even at the expense of short-term financial goals.
■ Have a philosophical sense of purpose that supersedes any short-term decision making.
Work, grow, and align the whole organization toward a common purpose that is bigger than
making money. Understand your place in the history of the company and work to bring the
company to the next level. Your philosophical mission is the foundation for all the other
principles.

■ Generate value for the customer, society, and the economy—it is your starting point.
Evaluate every function in the company in terms of its ability to achieve this.

■ Be responsible. Strive to decide your own fate. Act with self-reliance and trust in your own
abilities. Accept responsibility for your conduct and maintain and improve the skills that
enable you to produce added value.

Principle 2.
Create a continuous process flow to bring problems to the surface.

■ Redesign work processes to achieve high value-added, continuous flow. Strive to cut back
to zero the amount of time that any work project is sitting idle or waiting for someone to
work on it.

■ Create flow to move material and information fast as well as to link processes and people
together so that problems surface right away.

■ Make flow evident throughout your organizational culture. It is the key to a true continuous
improvement process and to developing people.

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Principle 3.
Uses “pull” systems to avoid overproduction.

■ Provide your downlink customers in the production process with what they want, when
they want it, and in the amount they want. Material replenishment initiated by consumption is
the basic principle of just-in time.
■ Minimize your work in process and warehousing of inventory by stocking small amounts
of each product and frequently restocking based on what the customer actually takes away.
■ Be responsive to the day-by-day shifts in customer demand rather than relying on computer
schedules and systems to track wasteful inventory.

Principle 4.
Level out the workload. (Work like the tortoise, not the hare.)
■ Eliminating waste is just one-third of the equation for making lean successful. Eliminating
overburden to people and equipment and eliminating unevenness in the production schedule
are just as important—yet generally not understood at companies attempting to implement
lean principles.
■ Work to level out the workload of all manufacturing and service processes as an alternative
to the stop/start approach of working on projects in batches that is typical at most companies.

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Principle 5.
Build a culture of stopping to fix problems, to get quality right
the first time.
■ Quality for the customer drives your value proposition.
■ Use all the modern quality assurance methods available.
■ Build into your equipment the capability of detecting problems and stopping itself. Develop
a visual system to alert team or project leaders that a machine or process needs assistance.
Jidoka (machines with human intelligence) is the foundation for “building in” quality.
■ Build into your organization support systems to quickly solve problems and put in place
countermeasures.
■ Build into your culture the philosophy of stopping or slowing down to get quality right the
first time to enhance productivity in the long run.

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Principle 6.
Standardized tasks and processes are the foundation for continuous
improvement and employee empowerment.
■ Use stable, repeatable methods everywhere to maintain the predictability, regular timing,
and regular output of your processes. It is the foundation for flow and pull.
■ Capture the accumulated learning about a process up to a point in time by standardizing
today’s best practices. Allow creative and individual expression to improve upon the
standard; then incorporate it into the new standard so that when a person moves on you can
hand off the learning to the next person.

Principle 7.
Use visual control so no problems are hidden.

■ Use simple visual indicators to help people determine immediately whether they are in a
standard condition or deviating from it.
■ Avoid using a computer screen when it moves the worker’s focus away from the
workplace.
■ Design simple visual systems at the place where the work is done, to support flow and pull.

Principle 8.
Use only reliable, thoroughly tested technology that serves your
people and processes.
■ Use technology to support people, not to replace people. Often it is best to work out a

process manually before adding technology to support the process.

■ New technology is often unreliable and difficult to standardize and therefore endangers

“flow.” A proven process that works generally takes precedence over new and untested

technology.

■ Conduct actual tests before adopting new technology in business processes, manufacturing

systems, or products.

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■ Reject or modify technologies that conflict with your culture or that might disrupt stability,

reliability, and predictability.

■ Nevertheless, encourage your people to consider new technologies when looking into new

approaches to work. Quickly implement a thoroughly considered technology if it has been

proven in trials and it can improve flow in your processes.

Principle 9.
Grow leaders who thoroughly understand the work, live the
philosophy, and teach it to others.

■ Grow leaders from within, rather than buying them from outside the organization.

■ Do not view the leader’s job as simply accomplishing tasks and having good people skills.
Leaders must be role models of the company’s philosophy and way of doing business.

■ A good leader must understand the daily work in great detail so he or she can be the best
teacher of your company’s philosophy.

Principle 10.
Develop exceptional people and teams who follow your company’s
philosophy.
■ Create a strong, stable culture in which company values and beliefs are widely shared and
lived out over a period of many years.

■ Train exceptional individuals and teams to work within the corporate philosophy to achieve
exceptional results. Work very hard to reinforce the culture continually.

■ Use cross-functional teams to improve quality and productivity and enhance flow by
solving difficult technical problems. Empowerment occurs when people use the company’s
tools to improve the company.

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■ Make an ongoing effort to teach individuals how to work together as teams toward
common goals. Teamwork is something that has to be learned.

Principle 11.
Respect your extended network of partners and suppliers by
Challenging them and helping them improve.
■ Have respect for your partners and suppliers and treat them as an extension of your
business.

■ Challenge your outside business partners to grow and develop. It shows that you value
them. Set challenging targets and assist your partners in achieving them.

Principle 12.
Go and see for yourself to thoroughly understand the situation

■ Solve problems and improve processes by going to the source and personally observing and
verifying data rather than theorizing on the basis of what other people or the computer screen
tell you.
■ Think and speak based on personally verified data.
■ Even high-level managers and executives should go and see things for themselves, so they
will have more than a superficial understanding of the situation.

Principle 13.
Make decisions slowly by consensus, thoroughly considering
all options; implement decisions rapidly

■ Do not pick a single direction and go down that one path until you have thoroughly
considered alternatives. When you have picked, move quickly and continuously down the
path.

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■ Nemawashi is the process of discussing problems and potential solutions with all of those
affected, to collect their ideas and get agreement on a path forward. This consensus process,
though time-consuming, helps broaden the search for solutions, and once a decision is made,
the stage is set for rapid implementation.

Principle 14.
Become a learning organization through relentless reflection
and continuous improvement.
■ Once you have established a stable process, use continuous improvement tools to determine
the root cause of inefficiencies and apply effective countermeasures.

■ Design processes that require almost no inventory. This will make wasted time and
resources visible for all to see. Once waste is exposed, have employees use a continuous
improvement process to eliminate it.
and very careful succession systems.

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Toyota Worldwide presence:
Toyota has factories in most parts of the world, manufacturing or assembling vehicles for

local markets. Toyota has manufacturing or assembly plants in Japan, Australia,

India , Canada,Indonesia ,Poland ,SouthAfrica ,Turkey ,Colombia ,the UK,the US,UAE,

France, Brazil, Portugal,and Mexico, Malaysia, Thailand, Egypt, China, Vietnam, Venezuela,

the Philippines, and Russia.

In 2002, Toyota initiated the "Innovative International Multi-purpose vehicle" project (IMV)

to optimize global manufacturing and supply systems for pickup trucks and multipurpose

vehicles, and to satisfy market demand in more than 140 countries worldwide. IMV called

for diesel engines to be made in Thailand, gasoline engines in Indonesia and manual

transmission in the Philippines, for supply to the countries charged with vehicle production.

For vehicle assembly, Toyota would use plants in Thailand, Indonesia, Argentina, South

Africa and Pakistan. These four main IMV production and export bases supply Asia, Europe,

Africa, Oceania, Latin America and the Middle East with three IMV vehicles: The Toyota

Hilux(Vigo) , the Fortuner, and the Toyota Innova .

Toyota has invested heavily in vehicles with lower emissions, for example the Prius, based on

technology such as the Hybrid Synergy Drive. In 2002, Toyota successfully road-tested a

new version of the RAV4 which was powered by a Hydrogen fuel cell. Scientific

American called the company its Business Brainwave of the Year in 2003 for

commercializing an affordable hybrid car.

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Environmental Record:
The Toyota Motor Corporation (TMC) implemented its Fourth Environmental Action Plan in
2005. The plan contains four major themes involving the environment and the corporation's
development, design, production, and sales. The five-year plan is directed at the, "arrival of a
revitalized recycling-based society."Toyota had previously released its Eco-Vehicle
Assessment System (Eco-VAS) which is a systematic life cycle assesment of the effect a
vehicle will have on the environment including production, usage, and disposal. The
assessment includes, "... fuel efficiency, emissions and noise during vehicle use, the disposal
recovery rate, the reduction of substances of environmental concern, and CO2
emission throughout the life cycle of the vehicle from production to disposal." 2008 marks
the ninth year for Toyota's Environmental Activities Grant Program which has been
implemented every year since 2000. Themes of the 2008 program consist of "Global
Warming Countermeasures" and "Biodiversity Conservation."

Since October 2006, Toyota's new Japanese-market vehicle models with automatic
transmissions are equipped with an Eco Drive Indicator. The system takes into consideration
rate of acceleration, engine and transmission efficiency, and speed. When the vehicle is

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operated in a fuel-efficient manner, the Eco Drive Indicator on the instrument panel lights up.
Individual results vary depending on traffic issues, starting and stopping the vehicle, and total
distance travelled, but the Eco Drive Indicator may improve fuel efficiency by as much as
4%.Along with Toyota's eco-friendly objectives on production and use, the company plans to
donate $1 million and five vehicles to the Everglades National Park. The money will be used
to fund environmental programs at the park. This donation is part of a program which
provides $5 million and 23 vehicles for five national parks and the National Parks
Foundation.

The United States EPA has awarded Toyota Motor Engineering & Manufacturing North
America, Inc (TEMA) with a ENERGY STAR Sustained Excellence Award in 2007, 2008
and 2009 In 2007, Toyota's Corporate Average Fuel Economy (CAFE) fleet average of
26.69 mpg-US (8.813 L/100 km; 32.05 mpg-imp) exceeded all other major manufactures selling
cars within the United States. Only Lotus Cars which sold the Elise and Exige powered by
Toyota's 2ZZ-GE engine did better with an average of 30.2 mpg-US (7.79 L/100 km;
36.3 mpg-imp).

Set to become the world’s largest auto manufacturer, Toyota is turning heads. The company
that clawed its way into foreign markets over a 40 year period (its U.S. market share rose
from 2% in 1970, to 3% in 1980, 8% in 1990, 9% in2000 and 13% in 2006) is now a triple
crown winner in profitability, quality, and market value. culture is the single most powerful
lever for tapping the collective intelligence of an organization and aligning individual
behaviours with an overall strategy. Toyota’s consciously cultivated set of behavioural
norms, the ¨Toyota Way¨, is an instructive example of how culture can create the conditions
for extraordinary and sustainable achievement. For almost 15 years J. D. Power and other
research firms have consistently rated Toyota and its luxury line, Lexus, among the top
automotive brands in terms of reliability, initial quality, and long-term durability.”In
evaluating the reasons for Toyota’s success, the company’s president spotlights perseverance
and alignment rather than strategic brilliance. Toyota gets enormous lift from the alignment
of individual actions with the company’s strategic intent.

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The Toyota Way
1) Continuous Improvement

a. Challenge. We form a long-term vision, meeting challenges with courage and creativity to

realize our dreams.

b. Kaizen (“Continuous Improvement”). We improve our business operations continuously,

always driving for innovation and evolution.

c. Genchi Genbutsu (“Go and see for yourself”). We go to the source to find the facts to

make correct decisions, build consensus, and achieve our goals.

2) Respect for People

a. Respect: We respect others, make every effort to understand each other, take

responsibility, and do our best to build mutual trust.

b. Teamwork: We stimulate personal and professional growth, share the opportunities of

development, and maximize individual and team performance.

Toyota Way—brings into alignment the discrete choices made by individuals every day and

the broad intentions of the world’s largest auto manufacturer. Individuals’ actions

maximizing the chances of achieving a strategic goal—in Toyota’s case, Quality;

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The behaviour is consistent with the company’s core values; The behaviour expresses a “way

of being” that is potentially appealing and meaningful to participants, so that even when

faced with challenges they are likely to be courageous and persistent.

Toyota’s core principles

The Toyota Way has two main pillars: continuous improvement and respect for people.
Respect is necessary to work with people. By ‘people’ we mean employees, supply
partners, and customers. “Customer first” is one of the company’s core tenets. We don’t
mean just the end customer; on the assembly line the person at the next workstation is
also your customer. That leads to teamwork. If you adopt that principle, you’ll also keep
analyzing what you do in order to see if you’re doing things perfectly, so you’re not troubling
your customer. That nurtures your ability to identify problems, and if you closely observe
things, it will lead to kaizen: continuous improvement. The root of the Toyota Way
is to be dissatisfied with the status quo; you have to ask constantly, “Why are we doing this?”

QUALITY IS THE LIFELINE OF TOYOTA

Toyota Industries’ founder Sakichi Toyoda once said that “A product should never be sold
until it has been carefully manufactured and tested thoroughly and satisfactorily”. Adhering
faithfully to his teachings, Toyota Industries believes quality is our lifeline and a key
management issue. Maintaining and enhancing quality is our most important responsibility to
our customers, and forms the basis of our social responsibilities.
TOYOTO INDUSTRIES’ APPROACH TO QUALITY

All Toyota Industries employees are engaged in comprehensive corporate activities aimed at
maintaining and enhancing “quality” in its broadest sense. The basis of our activities is
“product quality”, as embodied in product durability, reliability, safety and eco-friendliness,
but we also adhere to “marketing quality”, in sales and service, and “total quality,” in
corporate image and brand. The following diagram depicts this approach. We believe that it is
an important responsibility of all employees to participate in creating levels of “quality” that
meets the expectations of our customers

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PROVIDING EVEN BETTER PRODUCTS

Develop and provide products from the customer’s viewpoint. This summarizes
Toyota Industries’ comprehensive “market-in” approach. In manufacturing, Toyota Industries
devotes enormous efforts to research and development of new functions and other features,
endeavouring to develop products that are always ahead of the times. It also uses a design
reviews (DR) system to evaluate product planning based on customer needs and to ensure
product reliability and post-sales customer satisfaction. In the area of sales and service,
everything possible is done to ensure that at all times, customers can use our products in
excellent condition and free of material defects. Distributors and dealers work together to
optimize their response to customers while Toyota Industries has established customer
consultation desks that enable it to interface with customers directly. The company also
carries out questionnaires in relation to products and visits customers to conduct fact-finding
surveys of actual usage. As a result of these activities, we are able to provide even better
products that meet our customers’ expectations.
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WORKING TO IMPROVE MARKETING QUALITY
To ensure that customers can use our products with confidence at all times, it is very
important to maintain and improve “marketing quality” by strengthening the capabilities of
distributors and dealers that directly respond to customers. The company actively provides
dealers in Japan and overseas distributors with support in reinforcing management practices,
developing staff and securing the next generation of human resources. In addition to dealers
in Japan, Toyota Industries has also established distributors overseas to strengthen
dealerships in key regions such as North America, Europe, Australia and Asia.

SYSTEM OF QUALITY ASSURANCE AND QUALITY CONTROL

In all processes, predetermined procedures must be carried out according to instructions to

ensure no defective items proceed to the next stage. This is vital for ensuring that the
company only manufactures high quality products.
Adopting a “marketing” approach, Toyota Industries’ business divisions develop new
products based on customer needs. As mentioned above, the integrity of the overall system is
assured through a design review (DR) system to assess quality, whereby general managers of
divisions inspect every step of the production process, from product planning and design to
production preparations, production, initial quality and customer satisfaction levels. This
ensures that no product progresses to the next stage of the production process unless
established target levels have been achieved.

Once new products are launched and important customer information reaches the quality
assurance department of each division, it is fed back to the responsible department (such as
design and manufacturing) and countermeasures are quickly developed. At the same time, the
DR system is reviewed to prevent a recurrence in subsequent models. while everything is
done in the production process to prevent defective products proceeding to the next stage of
the production process or leaving the factory, we also proactively tackle quality
improvements on five levels, including cleanliness and neatness.
All businesses have taken a positive approach to ensure they comply with requirements of
ISO9001 and TS16949 (an ISO technical specification for the automotive industry), which

30
are international standards for quality management systems. In particular, Toyota Industries’
vehicle division has achieved ISO9001 certification and is now engaged in independent
efforts aimed at establishing even higher quality assurance levels. It is also encouraging its
main affiliates in Japan and overseas to achieve certification.

QUALITY ASSURANCE OF SUPPLY CHAIN THROUGHOUT THE WORLD

As a company that supplies products to the global market, the reliability in quality levels is
synonymous with the Toyota Industries brand, and is considered to be a precious element of
our corporate value that must be preserved. We therefore aim to implement quality assurance
activities that cover our entire global supply chain, including affiliates and business partners
in Japan and overseas.

DEALING WITH CRITICAL QUALITY ISSUES

In cases where serious quality issues arises, such as “accidents due to quality that result in
personal injury, or property damage”, the Quality Assurance Department of the responsible
division must, in accordance with our Rules for Dealing with Critical Quality Issues,
minimize trouble to customers by promptly devising countermeasures, while at the same time
report the issue to the Global Quality Control Department at the Corporate Center using the “
Critical Quality Issues Notification Form”.
The details on the form are then reported to the President through the Director responsible for
quality. This mechanism is also incorporated into our internal reporting system used for
collecting information pertaining to compliance, and functions in conjunction with that
system. For critical quality issues that require recalls, the company is considering setting up
Recall Preparation Conferences within divisions to devise countermeasures.
After the Global Quality Control Department reports to the President via the Director
responsible for quality, the President submits an application form to the relevant regulatory
authority if required. The company also informs customers by direct mail, and carries out
repairs and other measures free of charge as soon as possible.
After confirming the actual progress of the recall, the President then submits a recall report
and an implementation report to the relevant regulatory authority. The Audit Office at the
31
Corporate Center also monitors whether these integrated mechanisms for dealing with market
quality issues are functioning properly
QUALITY GUILDLINES

The Global Quality Control Department at Toyota Industries’ Corporate Center periodically
audits the quality assurance departments of divisions, and collects information relating to the
critical quality issues referred to above, and reports the results to the President. Bearing these
results in mind, once a year the President issues the President’s Guidelines (Quality
Guidelines) to the entire company. The President himself confirms the implementation of the
Guidelines through two special shop quality inspections held at all plants each year, and
reflects the results in the President’s Guidelines for the coming fiscal year

INITIATIVES AND FUTURE POLICIES

The slogan adopted for the FY 2005 Quality Guidelines was “Customer First” with the

established aim of achieving “Zero Defects”. The company adopted two approaches based on

these Guidelines – “Build quality into the original stages of design and production
32
engineering”, and “Build quality into processes at individual manufacturing stages”. Under

the “Build quality into the original stages of design and production engineering” approach,

the company used FMEA* for activities at the new product design stage to prevent the

recurrence of problems that had arisen in the past, and problems that could be expected to

occur from past experience. The company is now deploying this production technology

methodology and is looking to adopt FMEA for the production planning stage. Under the

“Build quality into processes at individual manufacturing stages” approach, the company is

working to increase the quality assurance levels of individual processes through measures to

deal with problem origins and prevent the emergence of defective items.

As a result of these endeavors, claims arising in connection with newly launched products

have fallen substantially. Toyota Industries will continue to utilize these measures to

strengthen its quality assurance efforts. In addition to reinforcing the guidelines adopted in

FY 2005 – “Customer First” and “Zero Defects” – the FY 2006 Quality Guidelines call for

the “Creation of a Workplace that Continually Pursues Quality-first”. In doing so we must

focus on fundamental quality principles and aspire to achieve higher quality awareness

throughout the organization and among our personnel.

The new slogan added for the FY 2006 Quality Guidelines – Creation of a Workplace that

Continually Pursues Quality-first – is intended to encourage all employees involved in

manufacturing to insist on rigorous quality standards established from the viewpoint of the

customer. This approach is essential for ensuring quality and

developing human resources at overseas production sites at a time when overseas production

is expanding. Raising quality awareness among workers is also indispensable as facilities

become more sophisticated and the number of temporary workers is increasing, especially in

terms of building in quality at production sites. Toyota Industries is striving to enhance

quality even further by developing systems and strong human

33
resources that can respond to changes in the various environmental conditions facing

manufacturing, such as utilizing QC circles in which all employees participate.

ACHEIVING HIGHER QUALITY THROUGHOUT THE SUPPLY CHAIN

In FY 2005, the headquarters Global Quality Control Department played a central role in

identifying the inspection situation (market claims, etc.) at subsidiaries in Japan and abroad.

It also followed up on the quality guidelines of key individual business partners in Japan.

Additionally, Toyota Industries jointly held a quality meeting with the BT Industries Group

(see Topics below), and was involved in on-the-spot surveys of QC circle activities at two

affiliates in North America and in providing support measures.

It has also conducted two-day internal/external education programs on quality on seven

occasions to date. Quality training has been conducted for 450 employees responsible for

quality education at internal production departments, quality managers at domestic affiliates

and management and quality managers of business partners.

HUMAN RESOURCE DEVELOPMENT

“Because people make our automobiles, nothing gets started until we train and educate our

people.” As seen in these words, which were expressed by Honorary Advisor Eiji Toyoda,

Toyota seeks to develop human resources through the activity of making things. Toyota

believes that the development of human resources requires the handing down of values and

perspectives. In conjunction with the geographic expansion of business and the growth of

business areas, undertaking global actions for the development of human resources has

become a priority issue. Toyota is building both tangible (a new learning facility) and

intangible (course content) structures relating to team member development that

34
ensures a secure and steady flow of qualified human resources to conduct Toyota’s global

business in the 21st century.

Toyota conducts systematic company-wide and divisional training and assignments for

training purposes with an emphasis on on-thejob training (OJT) to ensure that associates can

fully utilize their abilities. Toyota has defined the required qualifications of “professional

staff”1 for office and engineering positions, and “T shaped human resources”2 who are able

to perform day-to-day activities and expand their skills in technical positions. Company-wide

training is conducted based on employee qualifications, as well as specialized training for

individual divisions, language training, and special knowledge and skill training. In October

2002, Toyota created the booklet “Toyota — Developing People” and distributed it to all

associates to create a common understanding that “the source of Toyota’s competitiveness is

human resources development” and to promote the creation of workplaces where personnel

development takes place at all sites and at all levels.

35
1. PROFFESIONAL STAFF
Associates who can create added value on their own and contribute to society, as well as
utilize their strengths and exercise teamwork.

2. T SHAPED HUMAN RESOURCE

Team members with a broad range of skills, such as English language skills and operational
knowledge (the crossbar of the “T”) as well as highly specialized knowledge and experience
in a particular field (the vertical bar of the “T”)

In order to carry out the Guiding Principles at Toyota Motor Corporation, in April 2001

Toyota adopted the Toyota Way 2001, an expression of the values and conduct guidelines

that all employees should embrace. In order to promote the development of Global Toyota

and the transfer of authority to local entities, Toyota’s management philosophies, values and

business methods, that previously had been implicit in Toyota’s tradition, were codified.

Based on the dual pillars of “Respect for People” and “Continuous Improvement,” the

following five key principles sum up the Toyota employee conduct guidelines: Challenge,
36
Kaizen (improvement), Genchi Genbutsu (go and see), Respect, and Teamwork. In 2002,

these policies were advanced further with the adoption of the Toyota Way for individual

functions, including overseas sales, domestic sales, human resources, accounting,

procurement, etc

In January 2002, the Toyota Institute was established as an internal human resource
development organization that aims to reinforce the organic integration of global Toyota
companies by way of sharing the Toyota Way as well as to promote self-sufficiency. The
purpose behind the Toyota Institute’s establishment is to promote the human resources
development of global Toyota in order to promote true globalization and to realize the
advancement of Toyota’s core values. TMC President Fujio Cho is the Toyota Institute’s first
president, with 16 full-time associates managing the business. Within the Toyota Institute, the
Global Leadership and the Management Development Schools constitute the specific content
of the training programs. In 2002, the Toyota Institute conducted training programs targeting
global leadership candidates from TMC and overseas companies and for middle management
personnel to enhance understanding of the Toyota Way, enable best practice sharing and
drafting of action plans, as well as contribute to the creation of a global human network.

A Shared Toyota Way

In order to carry out the Guiding Principles at Toyota Motor Corporation, in April 2001
Toyota adopted the Toyota Way 2001, an expression of the values and conduct guidelines
that all employees should embrace. In order to promote the development of Global Toyota
and the transfer of authority to local entities, Toyota’s management philosophies, values and
business methods, that previously had been implicit in Toyota’s tradition, were codified.
Based on the dual pillars of “Respect for People” and “Continuous Improvement,” the
following five key principles sum up the Toyota employee conduct guidelines:
• Challenge,
• Kaizen (improvement),
• Genchi Genbutsu (go and see),
• Respect,
• Teamwork.
37
In 2002, these policies were advanced further with the adoption of the Toyota
Way for individual functions, including overseas sales, domestic sales, human
resources, accounting, procurement, etc.

THE TOYOTA INSTITUTE

In January 2002, the Toyota Institute was established as an internal human resource
development organization that aims to reinforce the organic integration of global Toyota
companies by way of sharing the Toyota Way as well as to promote self-sufficiency. The
purpose behind the Toyota Institute’s establishment is to promote the human resources
development of global Toyota in order to promote true globalization and to realize the
advancement of Toyota’s core values.
TMC President Fujio Cho is the Toyota Institute’s first president, with 16 full-time associates
managing the business. Within the Toyota Institute, the Global Leadership and the
Management
Development Schools constitute the specific content of the training programs.
In 2002, the Toyota Institute conducted training programs targeting global leadership
candidates from TMC and overseas companies and for middle management personnel to
enhance understanding of the Toyota Way, enable best practice sharing and drafting of action
plans, as well as contribute to the creation of a global human network

38
Group-wide Management

Toyota Industries feels that environmental protection efforts should go beyond the parent
company, and should cover the entire Group, including our subsidiaries.
We are promoting group-wide environmental management activities by offering extensive
support to subsidiaries for constructing their environmental management systems and
launched environmental management programs based on the Environmental Action Plans.

39
Requirements for Subsidiaries of Toyota Industries

Classification Requirements

(1) Acquisition of ISO 14001 certification at new production

bases
(2) Setting environmental targets
·
Amount of SOCs contained in products, LCA
Production
·
Amount of CO2 emissions
·
Zero landeill waste
·
Amount of environmental pollutants emitted, etc.

Set a goal for the environmental management system (recommend

Consolidated acquiring ISO 14001 certification)
Sales
Non- #
Consolidated Require the following of logistics related firms:
·
Acquire environmental management system certification
Other ·
Global warming countermeasures (reduced CO2 emissions)

40
Scope of Group-Wide Environmental Management

Our environmental management system (EMS) was previously operated independently at

respective plants. Aiming for greater environmental management, however, in fiscal 2008 we
newly established a Company-wide EMS, with the president at the top. We will continue to
work to strengthen our environmental governance based on an environmental management
structure compatible with Toyota Industries' business management structure. We will also
strive to reduce environmental impacts that accompany our business activities in product
development and manufacturing.

41
TOYOTA POLLUTION CONTROL

Toyota has entered into a partnership with the California Department of Toxic Substances

Control (DTSC) to develop pollution prevention training programs. In doing so, Toyota has

demonstrated its commitment to environmental stewardship. Toyota has integrated

environmental responsibility in its corporate policy, which influences all aspects of its

operation. Toyota is leading the way in lowering emissions and improving fuel economy in

gasoline powered vehicles. Not only did Toyota create the world’s first mass-produced

gas/electric hybrid car, it is also at the forefront of developing tomorrow’s fuel cell vehicles.

Toyota’s commitment to preserving the environment doesn’t stop with its vehicles. For

instance, two of its manufacturing plants have been designated as zero landfill-producing

operations. Toyota’s “green” complex in California has one of the largest commercial solar

panel systems in North America and conserves more than 11 million gallons of drinking

water annually through special pipelines that supply recycled water for cooling and

landscaping. Pollution prevention is most effective if it is approached through

partnerships. Pollution prevention business partnerships represent a significant cultural

change and philosophical shift to the historic way of doing business, both in the private sector

and in government. The results make both good business and environmental sense.

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