By: Jorge Choque
Jul 21, 2021
Case: Toyota Motor Company
• After World War II, the Japanese said: “We will focus on the customer, in order to forget the past.
• In 1973, the oil crisis occurred in the USA, it was radical, because big cars consumed a lot of gasoline; against the domestic economy.
• They started to use smaller and cheaper cars (but Japanese cars were very bad).
The car revolution took place between the 1970s and 1980s. Americans gave their opinion on Japanese cars and said:
- They have a small car.
- It doesn’t consume a lot of gasoline, but the model is ugly.
- It is unreliable.
The 03 big challenges: The Japanese had to overcome.
- Have a powerful engine.
- Have a big car, but it’s not a spendthrift.
- How do you convince Americans that this car is what they need?
The Japanese look for a LEAN BORN MOTOR
• With the engine burner in order, they managed to start the VTEC (engine burner, with more force, but without spending a lot of gasoline).
• The Japanese said: “The one who buys is not the rich man, but the one who wants a new car.
• For example, if the CHEVI car was selling for $ 5,000, the Japanese launched a car for $ 3,000.
• Customers started buying on a “MOUTH TO MOUTH” basis.
• If the cost was 5,000 USD and they sold it for 3,000 USD, all in order to retain their customers; but their task was to order the costs within the company.
What did the Japanese do?
- They used KEIRETSU as manufacturing conglomerates.
- They used the banks, but the net income was negative; it was a sacrifice to support their manufacturing businesses.
- The state gave facilities to manufacturing companies and placed the whole INQUIRY in YETRO; And when the company wanted new research, they had to pay a small percentage.
- Before, the Japanese were hated, and now they are loved for their cars and electrical equipment.
- This confirms that the ultimate goal is not profit, but long term financial performance.
- Now the best-selling car: worldwide is TOYOTA with a share of 18% to 20%
How can I compete with the other company?
- We have more value, but with the same costs.
- You get the same value, but with less cost. Both cases are reached in quadrants 3 and 6.
- You cannot stay at point 3, where the VALUE is HIGHER; but at a lower cost; You can do it in a certain time, but not for a long time, because otherwise you will not be able to maintain yourself; just to retain your customers, to repeat the purchase.
- You have to go from point 3 to point 6, for example.
- You should know that at point 3, you have a short-term sacrifice, without income; but think long term for income.
- This is a short-term solution, to be able to bear the reduced profits.