Case Study: Toyota's Operational Performance with Balanced Scorecard

This assignment provides a comprehensive analysis of Toyota's operational performance through the lens of the Balanced Scorecard (BSC). It identifies and explains the four perspectives of the BSC—financial, customer, internal processes, and learning and development—and recommends two Key Performance Indicators (KPIs) for each perspective to align Toyota's operational performance with its long-term philosophy. The financial perspective focuses on profitability of investment and net sales, the customer perspective emphasizes consumer loyalty and satisfaction, the internal perspective highlights labor productivity growth and administrative expenses, and the learning and development perspective considers non-production and marketing expenses per consumer. Additionally, the assignment identifies and explains seven dimensions of quality—durability, performance, features, conformance, serviceability, aesthetics, and perceived quality—and their importance to Toyota Company, referencing David Garvin's framework for quality analysis. This detailed case study offers insights into how Toyota leverages strategic management tools and quality dimensions to achieve operational excellence and long-term success. Desklib provides access to this assignment and a wealth of other study resources for students.

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Individual Assignment DBN509 Operations Management
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Individual Assignment DBN509 Operations Management
Question 1. Balanced Score Card and its Four Perspectives and recommend two KPIs for
each Perspective to align Toyota’s operational performance with its long-term philosophy.
According to Cooper, Ezzamel and Qu (2017) in the Journal “Contemporary Accounting
Research”, is that Balanced Score Card was developed by Robert Kaplan and David Norton in
1986 as tool to be used by managers in business daily operation and management. Chung (2018)
describes Balanced Score Card as a predominantly and influential tool of management that has
remains enduringly and prevalent within all organizations around the globe. Thus, at a basic level
BSC assists companies to clarify their plans and communicate their firm’s key strategic priorities
and goals. In addition, BSC can be fundamentally being divided into a strategic framework
sections known has perspectives, the perspectives are essential for the success of the business has
suggested by (Arimoto & Kurata, 2017). According to Gonzalez-Aleu et al. (2018) in the journal
“The TQM Journal” is that main Balanced Score Card or BSC perspectives include the
following; financial perspective, the customer’s perspective, interior process perspectives and,
learning and development perspective deduced by Toyota in it management system.
1. Financial perspective: The financial perspective of the Balanced Score Card is being
described as the primary perspective in all profit based organization like Toyota (Arimoto
& Kurata, 2017). According to Bergeron (2017) is that financial perspectives deals with
all forms of Toyota Company financial objectives that has led to it successfulness in the
automobile industry. In addition the key performance indicators normally make it
necessary for the Toyota to perform a comparative analysis of various department. The
Toyota has been obtaining outcome from the analyses of the company financials aspects

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that are contrasted with the result acquired on the first analysis of the firm financial
aspects.
The two recommended KPIs (Key Performance Indicators) for the financial perspective
in the context to Toyota Company include the total profitability of investment KPI and
profitability for the net sales KPI (Hunk, 2018; Shan, Ahmad & Nor, 2016).
 KPI 1; Total profitability of investment: At Toyota Company Total profitability of
investment indicates how the Toyota profit has been able to generate profit over the
years. It also clarify from which group and type of Toyota key consumer is bring more
profit to the firm (Gibbons & Kaplan, 2015). While, the more the profit generate by
Toyota form either the groups and key firm consumers the higher the profitability, and
the higher the investment of Toyota. On the other hand, the low the profit generation by
Toyota the lower the investment and profitability. Toyota has understand the long-term
philosophy that has made it to be of greatest value. The profitability investment KPI has
enable the Toyota to know how much to incur to delivering its initial car, and all
requirements the company needs in striving to maximize and increase profitability
(Gibbons & Kaplan, 2015). Thus, Toyota Company is thriving towards generating more
profits which is one of its key long-term philosophical objectives through the help of total
investment profitability KPI.

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Profitability KPI Figure 1: (Arimoto & Kurata, 2017).
 KPI 2; Profitability for net sales: indicates the effectively of how Toyota Motor Co.,
Ltd is creating revenues on each dollar that it is obtaining from its car sales. The
profitability for net sales KPI measured the profit that Toyota Motor Co., Ltd made in
both long term and in short financial decisions that reflecting the core mission of Toyota
Company (Gibbons & Kaplan, 2015). The higher the profit obtained from the investment
of from profit earned from Toyota net sales the greater the firms profitability in the net
sales. The Toyota Company profitability for net sales has given the firm an advantage of
responding to the pricing war of its vehicles in contrast to the other competitors in the
same marketplace (Hunk, 2018).

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Net Sales KPI Figure 2: (Shan, Ahmad& Nor, 2016).
2. Consumer perspective: The consumer perspectives mainly focuses on the Toyota
performance goals linked to consumers and the marketplace has deduced by (Hunk, 2018). If
Toyota wants to attain its financial objectives and long term philosophy then it have to be aware
of what exactly should be delivered to consumers and the specific deliveries required by the
consumers. The Toyota consumer perspective objectives include, customer satisfaction and
services and brand awareness. Toyota have increase its new car brand awareness through social
media platform in order to gain customers satisfaction. The two recommended KPIs in context to
Toyota consumer perspective include consumer’s loyalty KPI and consumer satisfaction KPI
(Shan, Ahmad & Nor, 2016).
 KPI 1; Consumer loyalty: indicates the Toyota client retentions. The Toyota
consumers’ loyalty is the numbers of customers who normally buy Toyota cars more than
once in a specified period. The Toyota consumers’ loyalty KPIs has played the main role
towards the success of the company. Whereas, the greater the consumers trustworthiness
in Toyota vehicles the highest the perception the firm is committed to attain its long-term
philosophy (Arimoto & Kurata, 2017).

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Consumers’ loyalty KPI Figure 3: (Goya et al., 2018)
 KPI 2; Consumer satisfaction: is the Toyota KPI that indicates the number of
consumers’ who firm cars and after sales services satisfied. The higher the numbers of
satisfied consumer’s satisfied by Toyota the higher the profit being generated, whereas,
the lower the consumers’ satisfied the lower the profit Toyota is making, but the is loss
higher when consumers are not satisfied (Goya et al., 2018). Hence, Toyota consumer’s
satisfaction is the key performance indictors that Toyota Company has improve every
year in order to attainment its mission (Arimoto & Kurata, 2017).

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Satisfaction KPI Figure 4: (Cooper, Ezzamel & Qu, 2017).
3. Internal perspective: Internal perspective answers the questions on how Toyota Motor Co.,
Ltd delivers to its consumer’s related objectives and the financial related goals in a specified
period. Under this perspective Toyota has to set its interior operational goals and, what the
business requires to have. Toyota has also ensure the availability of all resources needed in order
to increase its performance (Arimoto & Kurata, 2017). The Toyota internal process perspectives
include capacity deployment and quality optimization (Goya et al., 2018).
The two recommended KPIs on internal perspective in context to Toyota include labour
productivity growth KPI and administrative expenses per employee KPI.
 KPI 1; Labour productivity growth: Toyota Company labour productivity growth
show the output of the Toyota in the economy. The labour productivity of the Toyota
Company has been grouped into three aspects. The aspects are investment and saving at
the Toyota capital, technological advancement and human workforce. Thus, the lower the
Toyota output in the economy the lower the productivity it is in the economy. Whereas,
the higher the productivity the higher the output and growth of the Toyota in the

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economy. The Toyota has achieved its main goals and long term philosophy based on the
labour productivity growth has the firm increased its investment in labour market.
Toyota Growth KPI Figure 5: (Cooper, Ezzamel & Qu, 2017).
 KPI 2; Administrative expenses per employee: the Toyota Company cost of employing
each worker including wages and benefits of employees are addressed under
administrative KPI. The lower the Toyota administrative expenses per worker the higher
the profit and lower the business operation cost, whereas, the Toyota administrative cost
is too high the higher the operational cost and hence low profit generation. Toyota has
been paying its workers based on and according to their job performance statistics (Goya
et al., 2018). Hence, long-term philosophy of Toyota has been attained through the
reduction of administrative expenses (Arimoto & Kurata, 2017).

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Administrative KPI Figure 6: (Bergeron, 2017).
4. Learning and development perspective: The learning and growth perspective is the final
components of Balanced Score Card addressed by Goya et al. (2018) in the journal
“Transactions on Intelligent Transportation Systems”. The main components of the perspective
at Toyota include the human capital, information investment, and administrative capital. Human
investment or capital at Toyota are skills and performance management. Whereas, information
investment or capital include information system and technology set-up and organizational
capital involves workers alignment and teamwork in the company. In addition, Toyota
organization management regularly focuses on the use of indicators that are characterized by
uncompleted procedures dissimilar to final KPIs (Goya et al., 2018). The workers in various

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department at Toyota has been trained in order for them to complete a big numbers of successful
innovation in the company.
The two KPIs recommended for the learning and growth perspectives in the context to Toyota
include non-production expenses per consumer KPI and marketing expenses per consumers KPI.
 KPI 1; Non-production expenses per customer: Toyota Motor Co., Ltd does not
subsidize directly to the manufacturing cost linked to production of its vehicle, but either
it subsidize them indirectly as being indicated by non-production per consumer KPI. The
KPI enabled Toyota to produce more cars since the manufacturing cost has been allowed.
The higher the cost of production the lower the car being produced by Toyota, while the
lower the cost of production the more cars being produced by Toyota. Hence, Toyota
long-term philosophy is achieved, because low cost of production being incur by Toyota
and more the products produced will be of high quality and reliable, the higher the profit.
Non-production KPI Figure 7: (Arimoto & Kurata, 2017).
 KPI 2; Marketing expenses per consumers: indicates the amount of money spend by a
Toyota on every consumer during the marketing period (Hladchenko, 2015). The higher
the money spend in marketing per consumer by Toyota the lesser the profit Toyota Motor

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Company Ltd makes. Thus, Toyota has been strive to reduce money spend on marketing
in order to make more profit. Hunks (2018), clarify that if the cost of marketing or
advertisement per individual is low the profit then the company will be create higher
profit, hence it long-term philosophy of thriving into corporate world will continue.
Toyota Marketing KPI Figure 8; (Gonzalez-Aleu et al., 2018)
Question 2. Identify and Explain seven dimension of quality and explain how the
dimensions are important to Toyota Company.
The managers from US know that it is mandatory for them to improve the quality of their
products and services, because most of the US based customers have informed them. According
to the study conducted in 1981, it was reported that more than 50 percent of the United State
customers believed that the quality of the United State commodities have reduced over the past
five years (Kerai & Saleh, 2017). In addition, most current survey indicates that more than a
quarter of the United State consumers are not confident on the US manufacturing on whether the
industry can deliver reliable commodities (Xiaoping & Xuan, 2017). Various company have
decided to adjust to the by upgrading their quality by adopting plans that have been
indispensable of the quality movement for the creation of quality cost calculations, dependability

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in engineering and controlling of statistical quality. However, the problem made Japanese and
Europe competition to intensify because not many of the firms were seriously trying to make use
of the quality programs work even as they executed the programs. It also being suggested that if
the companies would have intensify the quality control programs implementation, consumers
from United State would not be complaining of the low quality commodities (Xiaoping & Xuan,
2017). In addition David Garvin proposes the essential quality of dimensions or group of quality
which acts has the framework for planning analysis (Hladchenko, 2015).
Therefore, it is significant to understand the quality that are linked to the continuous
improvements in an organization (TOYOTA). The seven dimension of quality mentioned by
David A Garvin in 1986 include durability, performance, features, conformance, serviceability,
aesthetics and the perceived quality (Xiaoping & Xuan, 2017). In the context to Garvin seven
quality of dimension 2014 FJ Cruiser a brand of Toyota can be used to outlined all the seven
quality as follows:
1. Performance: Performance is a key dimension of quality that can be referred as the cars
crucial operational characteristics or traits. In the instance, 2014 FJ Cruiser basic
performance traits include acceleration, cruising, coziness, speed and comfort. The
performance of the 2014 FJ Cruiser Toyota brand most can be contingent on the
efficiency of its fuel consumption, competence of the braking system and its acceleration
time. The performance of FJ Cruiser has been verified and rated by the Toyota. 2014 FJ
Cruiser Toyota brand is a Sports Utility Vehicle or SUV, being powered on a 4.0 liter of
fuel, V6 engine that produces 260 horsepower. The car is an automatic transmission in
standard and its offers both rear and part-time 4 wheel drive. The can is packed with a 6
speed manual exclusive with all-time 4 wheel drive with power of more than 220 kw at