Toyota Motor Corporation: Processes and Strategies.
Toyota Motor Corporation is a multinational automobile manufacturer that was founded in 1937 by Kiichiro Toyoda as a spinoff from the larger Toyota industries, for purposes of creating vehicles (Hino 130). Ever since this time, Toyota has grown to become the world’s biggest motor vehicle manufacturer in terms of production and sales of autos. Toyota does not major only in manufacturing automobiles, but also provides financial services and builds robots, among other things (Liker and Meier 45). Toyota’s success in business is to a greater extent attributed to its unique management accounting and finance practices. This paper reports on Toyota Inc’s management accounting and finance practices that affect its value in the motor manufacturing industry.
Brief Description of Toyota Motors Corporation
Toyota Motor Corporation has its headquarters in Aichi, Japan with over three hundred thousand employees worldwide. This company majors in manufacturing and selling automobiles ever since its spinoff in 1937 from Toyota Industries (Hino 130). This company is part of the Toyota Group; one of the biggest conglomerates in the globe, and includes company like the Hino motors, Lexus, and Daihatsu. Apart from manufacturing vehicles, this company also makes hybrid cars, electric vehicles, and robots among other auto items. Toyota is known for its unique management accounting concepts that utilize lean accounting philosophy, the just in time strategy, the kaizen and the kaiben approaches to manufacturing. To be in tune with this practice, Toyota has a unique management system known as the Toyota Production System, which is an integrated socio-technical system that is inclusive of its management philosophy and practices (Lu and Kyokai 23).
This integrated socio-technical system has enabled Toyota to produce world-class, quality automobiles at very competitive price levels, since it manages equipments, people, and materials in the most efficient way possible. This company has been ranked as Japan’s largest motor vehicle company and the third biggest in the world producing nearly five million units of automobiles every year (Sarma 66).
Description of Toyota’s Budgeting Process
Toyota’s budgeting systems are pegged upon two of its major guiding principles that is kaizen; which aims at continuous improvement of its systems, and kanban, which is a just in time manufacturing strategy aimed at producing goods within the shortest time possible (Tanaka 58). Toyota’s current budgeting process does not entirely focus on target costing but rather on cost control.
Toyota’s budgeting process consists of four different budget planning categories, which are portfolios, member expenses, projects, and Hoshin (Tjoa 20). The portfolio budget illustrates a plan for the next fiscal year for portfolio items, and the member expense budget takes into account expenses related to trainings, expected travel, and office supplies...