Toyota - The Rise of a Global Corporation Essay

Toyota - The Rise of a Global Corporation - Essay Example In this paper provides the answers to five questions of the case study Toyota: The Rise of a Global Corporation. 1. Toyota after the 1950’s when its production began to increase that it could not afford to follow the American model of manufacturing most parts in-house. The firm did not like the American model because it created numerous inefficiencies. Toyota decided that to follow a model of outsourcing work and keeping close relationships with its suppliers. Among the inefficiencies that Toyota identified from the American model that the company could avoid by outsourcing are: 1) high capital expenditures need to increase the manufacturing capacity to create components and parts, 2) reduce the risk by maintaining low manufacturing capacity in case of a slump in auto sales, 3) Ability to take advantage of lower labor costs of small firms (Hill, 2007). The company created the tight relationship with its suppliers. The company when a step further by investing between 20% to 40% stake in the operations of many of its suppliers. This allowed to company to work in alliance with the suppliers and implement its Kaban system with the suppliers to share information and minimize inventory stocks. The company practically eliminated the need for a buffer inventory count. Outsourcing in the 21st century has become a vital strategy in order to take full advantage of the globalization movement (Kotler, 2002) Some of the drawbacks of the system were the need to invest money in other companies. Another drawback of the system is that buying auto parts ends up raising the cost of the vehicle since the parts themselves is a cheaper alternative. 2. In 1981 the United States government put a strain on the capacity of Japanese auto manufacturers to import autos by establishing a voluntary import quota. The quota places a limit on the amount of auto import that could enter the US market. The agreement the Japanese government entered into limited the number of Japanese auto imports to 1,680,000 units per year (Copper, 2009)Â