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Toyota Case Study Analysis

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Overview of Toyota

Toyota is a global multinational corporation headquartered in Japan. By revenue, it is the second largest automaker in the world after Volkswagen and the ninth largest corporation overall. Though primarily an auto company, it includes minor segments in financial services and other industries. The corporation sells vehicles in over 190 countries with more than 50 manufacturing plants in over 30 countries – half of which are in Japan.

Labor Productivity Ratio

Toyota’s labor productivity increased from 2012 through 2014 before decreasing in 2015 and 2016. In these years, Toyota hired between 4,000 and 8,000 additional workers and increased production output. However, the gains in production from year-to-year leveled off in 2015 and 2016, explaining the decreases in labor productivity. These decreases were likely due to the law of diminishing returns in labor. We assess these diminishing returns were most likely felt in plants in emerging economies such as Indonesia, which Toyota built in 2012 and relied on with cheap human labor to lower costs.

Average Cost Per Unit Ratio

From 2012 through 2016, we saw substantial decreases in average cost per unit from year-to-year. This was most likely due to the yen weakening five and ten percent each year against other major currencies such as the US dollar. The weakening of the yen led to significant decreases in Toyota’s cost of good sold (COGS) when converting to US dollars, giving Toyota a better average

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