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This research paper outlines the roles of managerial accounting of a manufacturing company. To be precise, a case study of a Japanese company named Toyota Motors Corporation has been taken to analyse the various facets of this concern. The paper includes a brief overview of the company under study, its mission and vision statement and an outline of its line & staff function. It will be followed by ascertaining the value chain components of the company. Then, a research will be conducted regarding the company’s planning process in designing its strategies, positioning of its product and its budgeting/ selling activities. Besides that, it will also be ascertained that how this company use controlling techniques to monitor its manufacturing and selling plans. A balanced scorecard used by company will be analysed to explore four main perspectives of the company namely, financial, customer- orientation, learning & growth and processes of the company. Then, two situations will be provided in which the company’s decision making abilities will be demonstrated. This will be followed by a conclusion and a list of recommendations.
Toyota Motors Corporation is natively from Japan. It is interesting to know that this company is listed as the largest automobile manufacturer in terms of production in a survey conducted in 2012, producing more than 200 million vehicles in that year. Not only that, according to a study held in February 2016, Toyota Motors is considered to be at 13th position in the world among all the companies in terms of revenues. Currently, it gives employment to 346,219 people across the entire world. It is the largest company of Japan listed in stock exchange in terms of revenues as well as market capitalisation (no. of outstanding shares multiplies by market price of a share).
The company’s founder was Kiichiro Toyoda. It is said to be established in 1924. However, the production process started in 1937. It commenced its business with the name of Toyoda after the name of its founder. But he felt that company should be named as Toyota because it took eight stokes of brush (considered to be a lucky number) to write this name in Japanese. Hence, the company was named as Toyota. Currently, the management team of the company includes Mr. Ali S. Habib, the chairman, Mr. Keiichi Murakami, the vice chairman and Mr. Parvez Ghias, the CEO of the company. Main products that are focussed by the company include hybrid electric vehicles, plug- in hybrids, all electric vehicles, hydrogen fuel- cell vehicles, cars, land cruisers, pick- up trucks, buses, luxury type vehicles and sport vehicles.
The vision statement of the company includes its goals to become a successful venture by fulfilling customers’ demands with their wide range of vehicles comprising best technology.
The mission statement of Toyota Motors Corporation says that their utmost priority is to provide safe journey to its customers. It is focusing n technologies that can help in saving energy and conserving environment so that they can contribute in forming a prosperous society
Value chain of a company refers to all the activities and operations that are linked together and work towards adding value to the organization. These activities are classified as primary or secondary. It is a systematic approach which helps in identifying managerial success of the organization in attaining a competitive position.
Since the company has been established, its strategies demonstrate two main aspects: Lean manufacturing approach; and the other one is JIT production, also known as Just- In- Time production. These methods and other subsidiary plans of this company are altogether known as the Toyota Way. All the strategies of the company are focussed on two principles- everyone should be respected and improvements are a continuous process.
The strategic planning of the company always involve setting challenging goals/ targets, team work, etc. the most prominent features of the company’s strategic planning includes the following.
(Morgan & Liker, 2006)
To maintain its competitive position or to position itself differentially in the market, the company works in following areas.
Budgeting process of Toyota Motors Corporation is focussed at TQC, which means Total Quality Control. It is worth noting that the company’s budgeting process is not solely based on controlling the costs. They have three- fold targets: cost control, continuous improvement and target costing. The major information required by the company to frame effective budgets for production and selling is related to the following aspects.
The company had tried many techniques to control its manufacturing and selling process. Few of them are discussed below.
(Holweg, 2007)
Perspectives | Goal | Objective | Measures |
Financial | Increase profits and control costs | Increase sales by 30 and reduce costs by at least 20% by the end of this financial year to increase the bottom line of the company. | Orders for purchasing raw materials should be scaled up. |
Customer | Safety measures in vehicles | Introduce new technologies in the operations by conducting intensive research and development so as to enhance safety measures in vehicles. | Glass sheets used in the vehicles will be improvised and high- tech glasses will be used for safety purposes in luxury and sports vehicles. |
Process | Achieve economies of scale, saving energy, environmental conservation | Increasing sales will imply increase in scale of production, so machinery, equipments and raw materials should be scaled up. | Machineries and equipments should be increased to achieve financial as well as process perspective of the company. |
Learning and growth | Training of employees for their career development | Introducing training programme for workers to deal with sophisticated machineries in a more efficient and safe manner. | On- the- job training will be provided by the shop floor managers in the next month every Monday, Tuesday and Friday. |
One of the recent decisions taken by the company is regarding safety measures of the cars manufactured at the factory. This announcement was made on June29, 2016. It has decided to recall 2.87 million vehicles to incorporate airbags and emission control measures in them. It shows the strategic planning of the company in line with their mission statement. It will help them in gaining competitive edge and a distinguished market position among the competitors. This decision will reap great benefits for the company (Metros, Schiavone, & Blake, 2006).
Another decision- making situation from the premises of Toyota Motors Corporation was announced on January27, 2016. The company decided to buy the car manufacturer Daihatsu. The deal will be settled for $3.1 billion. This strategic acquisition will help in increasing the scale of business and achieving the target of profit maximization & cost minimisation.
To conclude and summarise this report regarding analysis of managerial accounting of Toyota Motors Corporation, following inferences should be focussed.
Holweg, M. (2007). The genealogy of lean production. Journal of operations management , 25 (2), 420-437.
Metros, C., Schiavone, P. J., & Blake, T. J. (2006). Patent No. U.S. Patent No. D517,965. Washington, DC: U.S. Patent and Trademark Office.
Morgan, J. M., & Liker, J. K. (2006). The Toyota product development system. new york: New York: Productivity Press.
Pil, F. K., & Holweg, M. (2006). Evolving from value chain to value grid. MIT Sloan management review , 47 (4), 72-80.
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