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Toyota restructures; product-based instead of function-based

Toyota Motor Corporation (TMC) is restructuring to streamline work processes on a company-wide basis. The changes will take effect starting this April.

The fundamental goal is to create a company built around product-based organizations, rather than function-based organizations. Doing so will enable the dissolution of barriers within the company and eliminate unnecessary coordination work, thus helping to ensure that all team members’ efforts will be leveraged toward the purpose of making ever-better cars and developing a talented workforce.

TMC has already implemented major structural changes in its efforts to make ever-better cars; enhancing the strength and autonomy of regional operations; and emphasizing the importance of genchi genbutsu (現地現物) (on-site learning and problem-solving) in training personnel. Specifically, in 2011 TMC reorganized its structure with the aim of promoting autonomous region-based management, and in 2013 the company split a significant portion of its automotive operations into four business units.

Despite these structural changes, however, TMC said that it still relies greatly on individual efforts made by its own team members and stakeholders due to its present structure and work processes, and in many cases, cross-functional coordination has been found to consume a disproportionate amount of time and effort.

TMC is confident that significant value can be added through this new management structure, in which nine product- and region-based business units will compete with and learn from one another, while operating alongside TMC’s Head Office (responsible for corporate functions).


Overall objectives for the change are:

  1. To link work processes ranging from R&D to manufacturing, thereby enabling the development of ever-better cars and strengthening TMC’s workforce.

  2. To enable individual business units to make decisions more quickly and independently.

  3. To strengthen the functions responsible for formulating mid-to-long term objectives and corporate strategies.

Seven product-based in-house companies will be responsible for short- to mid-term product strategy and development:

  • Innovative R&D and Engineering Company
  • Toyota Compact Car Company
  • Mid-size Vehicle Company
  • CV Company
  • Lexus International Co.
  • Power Train Company
  • Connected Company

R&D, production engineering, and manufacturing operations, which are organized by function at present, will be divided into “advanced” and “mass production” categories, and then allocated to each company. Toyota Group affiliates responsible for vehicle development and production will also contribute to these in-house companies where necessary.

To help streamline operations from planning through to manufacturing, full responsibility and authority will be given to the president of each in-house company.

TMC’s existing region-based business units, Toyota Nº 1 and Nº 2, will serve to check and balance the operations of the new product-based in-house companies.

To streamline the development of products that can quickly meet local needs, discretion over the use of a certain amount of R&D resources will be allocated on a region-specific basis.

Executive changes will take effect on 1 April, while the organizational changes and personnel changes will be effective from 18 April.

TMC’s Head Office will establish the Frontier Research Center, the role of which will be to develop new technologies and business models from a long-term, society-based perspective, actively seeking input from external research organizations and Toyota Group members.

The Head Office will also establish the Corporate Strategy Division. Mid- to long-term strategic planning functions will be grouped under the Corporate Strategy Division, with the aim of determining future strategic directions and optimizing operational resources.

Changes will be made to support the operations of each business unit in such areas as profit and cost management capabilities and administrative systems. Additionally, certain functions will partly be transferred to in-house companies.



This sounds like a disaster in the making. At least in the US, this structure would be a recipe for infighting and resource wars.

Come to think of it, is this not how GM has operated for eons?

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