CASE STUDY 1 ORGANIZATION DESIGN AND STRUCTURE

Toyota has long been praised for its efficiency and effectiveness, but there were some glitches in the early 21st century that caused the company to reexamine its organizational structure. 'Customer first, quality first' is the policy that drives Toyota. How is it that the company's able to make both the customer and quality a priority? Toyota would say the answer is in its organizational structure. A company's organizational structure describes how an organization accomplishes its goals, decides the tasks that need to be performed, and who makes the decisions. Toyota's production system and its organizational structure had long been lauded as the most efficient and effective, which created a culture of excellence. They use what they call a just-in- time (JIT) production system, which means raw materials are delivered to the production facility just as they are needed. This level of production is possible because of Toyota's organizational structure, and that structure has undergone some significant changes since 2013. Let's look more closely at the organizational structure of the company before 2013, and then take a look at what has changed and why. For most of its existence, Toyota's organizational structure was based on a traditional Japanese business hierarchy in which the most senior executives make all of the decisions for the entire organization. It is typified by little delegation of authority, and all information flows one way: from the top down. For example, executives in U.S. plants are closely monitored by a Japanese counterpart who makes sure the American executive is following structured protocols. This is called centralized decision making. While centralized decision making supports the business goals and strategies identified by the board of trustees, it also means that as a whole, the organization reacts slowly to external threats or internal weaknesses. Source: https://study.com/academy/lesson/business-case-study-toyotas-organizational- structure.html Required:

1. What type of organization structure best describe the traditional Japanese business hierarchy? Give reasons for your answer. (5 marks) 2. Illustrate what the new organization structure of Toyota could look like based on the case. ( 6 marks) 3. Identify the benefits and challenges that Toyota might encounter with a centralized structure. (4 marks) 4. Discuss the changes that Toyota has undergone to change its organization structure. (5 marks)