Toyota's Risk Management Implementation and Improvement Strategies

This report provides a comprehensive analysis of risk management and operational improvement strategies within a business context, specifically focusing on Toyota. It details the implementation of risk management strategies to minimize potential threats to business profitability and brand image, emphasizing the importance of proactive planning and internal environment analysis. Furthermore, the report outlines various operational improvement strategies, including asset optimization, total quality management, process improvement, inventory management, and value engineering, with a particular focus on total quality management (TQM) and its associated tools and techniques for enhancing production quality and reducing costs. The application of TQM principles, inspired by William Edward Deming, aims to improve Toyota's operational activities by minimizing errors in manufacturing processes through inspection and Six Sigma methodologies. This report, contributed by a student and available on Desklib, serves as a valuable resource for understanding the practical application of these strategies in a real-world business scenario.

INTRODUCTION TO
BUSINESS
OPERATIONS AND
SERVICES

Table of Contents
INTRODUCTION......................................................................................................................3
TASK.........................................................................................................................................3
Implementation of risk management strategy which can minimize risk................................3
Improvement strategy.............................................................................................................5
CONCLUSION..........................................................................................................................9
REFERENCES.........................................................................................................................11

INTRODUCTION
Business operations are the activities that help businesses to engage on a daily basis
through which they can increase the value of the business and maximize business
profitability. The business activities can be helpful in optimizing and generating a sufficient
number of resources through which business expenses can be managed and profits can be
maximized. Business operations focus on different activities which are performed within an
organization (Choi, Chan and Yue, 2016). In other words, business operations focus on sales
and marketing process management, supply chain management, procurement of human
resources for the company and community branding customer service and relations and many
other factors which can hamper business profitability and working culture. This report will
discuss the concepts of business operations and services. The report will outline the risk
management strategies which can be implemented by businesses through which risk can be
minimized. The project will also state improvement strategies, tools, and techniques which
can be implemented by businesses in the whole organization.
TASK
Implementation of risk management strategy which can minimize risk
Risk management is a tool order strategy of insurance that can help and support
businesses in sustainable success. Risk management is critical for business and an effective
risk management strategy will be helpful in protecting the brand image, credibility,
reputation, and status of the organization in the industry. In the context of Toyota, the
implementation of risk management strategies will help in developing strategies through
which business success can be maximised. Through determining the risk factors earlier will
help Toyota in planning effective strategies which will be helpful in resolving potential risks
which can hamper business profitability.
The components of risk management strategy focus on smooth and effective business
activities. These strategies analyse and control the potential threats which can adversely
impact the overall organizational activities of Toyota where these activities can be related to
their market share, capital, structure, revenues, and their profitability (George and et.al,
2018). As per the given study, the disaster is responsible for creating a devastating impact on
Toyota and the whole economy of Japan. This major disastrous combination of an

earthquake, a tsunami, and a nuclear emergency created and combined disastrous impact on
several economies where a greater number of people were found dead missing, and injured.
However, the production components of Toyota almost around 20% are manufactured in
Japan and this combined trilogy of disasters has restricted the efficiency and ability of the
organization to meet customer demands in a timely manner. Therefore, this has increased the
importance of risk management strategies which must be implemented by Toyota in order to
minimize or face the impacts of such disasters when it occurs again.
In the context of risk management, it is significant for a business to ensure that the
internal business environment of Toyota must be analysed which will be helpful in
determining the best possible risk management strategies for the business (Grayson and
Hodges, 2017). The brand Toyota manufactures automobiles at reasonable prices where the
Brand ensures such practices where they can meet all quality standards and offer the
provision of the value for money which acts as a core competence of the organization. The
provision of the value for money is considered as an important aspect in order to maintain
effective customer management and security market shares in a constant manner. Quality is
one of the factors which creates a base for an organization and acts as their strength which
can further lead to innovative production practices. By focusing on quality and innovation
helps Toyota in fostering cost leadership strategies through which they can maximize the
profitability of the brand and offer a sense of direction. The strengths of Toyota are
fundamentally based on the concepts of lean manufacturing which are further known as
Toyota production systems. Based on this manufacturing concept the other innovative
practices such as six Sigma just in time and Kaizen must be implemented or brought into
practice by the automotive company, Toyota.
The principles which are related to lean business practices are established by the
principles of Toyota which are related to their vision mission and objectives of the company.
Therefore, the risk management approaches of the company must be planned strategically
within the organization. Moreover, Toyota must focus on strategies that will help them in
strengthening its brand image and goodwill among customers and in the overall industry. Due
to product recall, this might have created a wrong image of the brand in the minds of
consumers which can hamper brand reputation and result in adverse brand management
(Hacioglu and Sevgilioglu, 2019). Therefore, due to poor control of risk management
strategies, can lead to sudden changes uncertainty, and poor outcomes. The provision of

effective supply performance can be essential for ensuring that the solution for the conflict is
accurate and will be helpful in resolving and avoiding such a crisis.
The risk is high which can be stated in the case, defines higher commodity risk in
which Toyota competes with other giants, such as GM and Ford. In order to minimise the
risk, Toyota must focus on the risk model which should be implemented through which they
can assess the impacts, the risk can create on the market price and availability of the staff
amid the contemporary business conditions.
In order to implement a risk management strategy, Toyota must follow different steps
which can be helpful in minimising risk and uncertainty that can arise due to such disasters.
Not to implement a risk management strategy Toyota must consider the services which are
offered by the brand. It is essential for Toyota to determine the risk in a continuous manner as
this will help them in gaining insight of the exposure level against predetermined tolerance
level and understand the level of loss which can be caused due to such risk (Henderson,
Goldring and Simeon-Dubach, 2019). It is essential for Toyota to regain its competitive
position and market share through the automation production company can react to risk by
increasing the production rates. Through focusing on quality problems with the help of lean
manufacturing system, this will be helpful for Toyota to improve the quality standards of
their products which are offered by the brand through which they can sustain for a longer
period of time span within the industry after analysing and resolving the potential risk which
can hamper business profitability.
Improvement strategy
Operation improvement strategy is the term that is used to define the vision, goal, and
objectives that are used by businesses to enhance their operations through which businesses
can gain a competitive advantage. The operational improvement strategy focuses on
sustainability and comparative advantages which can be achieved by determining the
operational ineffectiveness, wastages, condition of assets, and cultures of the company within
the company operations and their stakeholders (Kuo, Chen and Tseng, 2017). Implementing
an operational improvement strategy is essential for businesses through which they can make
the continuous effort for the sustainability and success of the organization. According to the
above scenario, Toyota can implement various improvement strategies which will be helpful
in enhancing operational effectiveness along with increasing the growth and profit margin of

the organization. There are various strategies that can be implemented not to improve current
situations some of the strategies which will be followed by Toyota all listed below:
 Asset optimization- the strategy of a set optimization is the approach to provide the
capability of optimizing all components of business assets for increasing the life span,
minimising the cost of a set life cycle, and ensuring convenience. Implementation of an
asset optimization strategy will support the automotive company to improve the overall
operational activities of the organization.
 Total quality management- total quality management is the managerial approach of
sustainability and the technique for long-term success by focusing on meeting customer
demands and satisfying customers of the brand (Nag, 2019). In the context of Toyota, the
company can implement total quality management techniques as their operational
improvement strategy where the employees of the organization can participate in
improving operation process product service in the culture of the company through which
they can meet customer demand and ensure customer satisfaction.
 Process improvement- process improvement is another report of Ratan Singh operational
services of an organization. This approach of operational improvement is used to
determine the lies and enhance the overall processes of the organization to optimize and
meet new quality standards in customer demand. In the context of Toyota, the process
improvement strategy will be helpful and effective for the brand in order to adapt in such
changing scenarios through which they can maintain their position in the industry and
meet customer demands in a timely manner.
 Inventory management- this approach is used to order, store and use an inventory of an
organization. With the help of an inventory management strategy, Toyota can manage
their raw material components and finished products along with warehouse products. This
improvement strategy will be efficient for Toyota in order to manage their inventory and
meet overall operational improvements standards.
 Value engineering- this approach of operational improvement is systematic and organised
which focuses on providing essential functions in business operations at a lower cost
which is referred to as value engineering. By implementing a value engineering approach
Toyota can promote substitution of materials and methods with a lower cost which can be
helpful in satisfying the customer demand with the help of a reasonable pricing strategy
of the product (Oriade and Robinson, 2017). Moreover, the approach of value engineering
implemented by Toyota supports the brand in improving its operational activities.

The above-mentioned strategies are some of the approaches of operation improvement
which can be implemented by Toyota in order to enhance their overall business operations.
Under the listed strategies, the total quality management strategy will be more efficient for
Toyota in order to improve the operations of the brand. In total quality management, a
continuous process for determining and minimising errors in manufacturing. In the context of
Toyota total quality management is helpful and efficient as it aligns the supply chain
management of the company which leads to customer satisfaction and ensures that all
employees are highly trained and knowledgeable to perform the assigned tasks and
responsibilities. The primary objective of total quality management with the process of
production of Toyota will focus on enhancing the overall quality of final products which will
be delivered to the customers in order to meet their satisfaction level (Reid and Sanders,
2019). According to the Quality guru, William Edward Deming who proposed the concepts
of TQM, the principles of total quality management are internal guidelines and process
standards that are helpful in minimising and eliminating defects from the process of
manufacturing. There are 14 principles in total quality management that can be implemented
by Toyota in order to improve their operational activities which will support the automotive
company in producing errors from their manufacturing processes.
In order to successfully implement a total quality management approach in the
operational system of Toyota, some of the tools and techniques which can be helpful in
improving the production quality, reducing the cost, and will support Toyota in implementing
principles of TQM are addressed below:
 Inspection- Inspection is one of the most effective ways to improve quality. An
organisation may successfully eliminate any defects in their manufacturing process by
doing frequent quality inspections. Toyota may be able to benefit from this. The
organisation will be able to eradicate any weaknesses in its procedures and enhance
overall quality by conducting frequent quality inspections at all levels.
 Six sigma- This is a quality control approach. To eliminate mistakes in organisational
activities, this method uses data-driven analysis. Toyota may use six-sigma to increase
cycle time while also eliminating any defects in the manufacturing process. Toyota will
be able to do activities quickly and with few or no mistakes (Reis, Amorim and Melão,
2017). Six-sigma will greatly increase the quality of the product.
 Just-in-Time- A management strategy that permits a company's raw material orders to be
closely linked with its production schedules is known as "just in time." Toyota will be

able to boost productivity while lowering waste. They'll cut down on waste and inventory
expenses as they'll just acquire what's needed for the production process. Toyota will be
able to improve their quality despite the fact that managers will have to properly forecast
inventory demand.
 Kaizen- This is a Japanese expression that means "continuous growth." This technique
encourages continuous quality improvement by including all employees. Toyota will be
able to establish a more efficient and productive working environment by using Kaizen
(Temnyshov and Belyaev, 2020). This will help Toyota create a collaborative working
environment, improve the quality of all processes consistently, and maintain employee
engagement.
 Lean production- Toyota may benefit from lean manufacturing since it can be applied to
all stages of production and distribution, reducing waste while ensuring product quality.
By appropriately responding to market needs, the corporation's costs may be quickly
decreased.
 Deming Cycle- The Deming cycle is a four-stage technique for continuous improvement
that follows a logical structure. Repeating such processes may easily increase a
company's quality. The PDCA cycle is another name for the Deming cycle. Toyota will
prepare for any modifications in the cycle's implementation ahead of time. Then they'll
take little actions to put their plan into action. They will next examine their results and as
a result they will take actions to enhance their process. Toyota's quality might be
improved significantly if these four steps were followed on a regular basis.
 5s- The 5S approach is intended to help workers operate in a physically and
psychologically healthy atmosphere. Sort, put in order, shine, standardise, and maintain
are the words that come to mind. Toyota will gain from 5S by eliminating waste and
increasing productivity (Uhl and Gollenia, 2016). They may reduce mistakes
immediately, enhance manufacturing quality, and boost staff morale.
 Cost of quality- This is a strategy that helps a company determine out how many
resources it can employ for operations without losing quality. Toyota can determine how
much money they will save by improving quality using this strategy. Toyota can increase
the quality of their work since this technique maximises business resources.
To recover market share and improve its current position, Toyota must improve the
overall quality of its production process and products. To improve the quality of their

product, they must apply a range of quality improvement techniques. The use of quality
improvement tools will ensure that those methods are properly executed.
 Fishbone diagram- A fishbone diagram is a visual tool for categorising potential issue
causes and determining the root cause of a problem. This diagram is also known as a
cause-and-effect diagram or an Ishikawa diagram. Toyota might utilise this strategy to
analyse the main source of difficulties by combining brainstorming practise with mind
map templates. By using the technology, Toyota may concentrate on product
development and troubleshooting. Following the brainstorming session, the Toyota
supervisor will work with the group to rank the probable reasons in order of importance
(ur Rehman and et.al., 2016). They may be able to use technology to identify the root of a
problem and solve it, therefore enhancing quality.
 Pareto Analysis- This is a fundamental decision-making tool for examining a wide range
of issues and quantifying the effect of addressing them. Pareto analysis assists in
focussing on problem-solving by giving efficient advantages. Toyota will use this tool to
apply the "80/20 Rule." According to this rule, 20% of the job benefits the company 80 %
of the time. Another clue is that 20% of the causes result in 80% of the problems. Toyota
will use this technology to figure out which missions are the most profitable and which
are the most difficult. Toyota will be able to identify and manage their concerns and
goals, as well as help staff organise their tasks, resulting in increased productivity,
profitability, and overall quality.
 Check Sheet- This is a simple document that is used to collect data both in real time and
when data is created. The check sheet tool allows Toyota to record data quickly and
efficiently. This sheet may be used to record quantitative as well as qualitative
information. When working with quantitative data, this is also known as a tally sheet.
This technology might be used by Toyota to collect data quickly and analyse quality
(Wikner and et.al, 2017). The possibility of errors in the production and distribution
phases is lowered as data is collected and monitored in real time.
CONCLUSION
From the above information, it can be concluded that business operation comprises of
different business activities which are performed in day-to-day operations through which an
organization can enhance their profitability. Business operations can differ from industry to
industry and operations within and manufacturing industry can turn raw material into

physical products which can be sold to customers through which business can achieve
efficiency and this will be helpful in focusing on areas that will support business in excelling
and maintaining their position within the industry. With the help of an effective risk
management strategy, this can support an organization in effective strategic planning, better
cost control through announced workflow, client evaluation, and the engagement process
increases profitability, reduced risk of litigation, increased knowledge of risk systematic
decision making less disruption and continuous improvement within the organization.

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