BBPP1103 PRINCIPLES OF MANAGEMENT

FACULTY OF EDUCATION AND LANGUAGES

JAN 2016 SEMESTER

BBPP1103

PRINCIPLES OF MANAGEMENT

NAME

: NORZITA BINTI NORDIN

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TUTORS NAME

LEARNING CENTRE

: JOHOR BAHRU

BBPP1103 PRINCIPLES OF MANAGEMENT

Table of Content
1.0

History of Toyota

..

2.0

Definition of Management ..

2.1

Managements Definition and Functions

2.2

Managers Definition and Role

10

3.0

Evolution of the Management Theory..

13

4.0

Toyotas Management Style

..

16

5.0

The Toyota Way

..

17

6.0

Conclusion

20

21

Reference

BBPP1103 PRINCIPLES OF MANAGEMENT

1.0

History of Toyota
Toyota is one of the leading names in automobile industry. The Japanese

manufacturer has the fastest product development process in the world.

Toyota Motor Corporation was founded by Kiichiro Toyoda and his father, Sakichi
Toyoda and started when Sakichi invented the most advanced modern loom, known as Gtype Automatic Loom.

Non-stop shuttle change type Toyoda automatic loom (Type G)

His success in the loom business had inspired Sakichi to move forward and entering
the automobile business. With the help from his son, Kiichiro Toyoda, the Automobile
Department was successfully set up in September 1933. In April 1935, they completed the
first prototype of an engine named the type A and subsequently the automobile named A1. In
April 1936, the company started massive production of A1 and a newly introduced truck
named G1. These lead to the establishment of Toyota Motor Corporation Ltd. (TMC), on 28
August 1937.

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A1 prototype passenger car

G1 truck
After the Second World War, Japan experienced extreme economic difficulty. Toyota
was on the brink of bankruptcy by the end of 1949, but the company eventually obtained a
loan from a consortium of banks which stipulated an independent sales operation and
elimination of "excess manpower".
In April of 1949, Toyota was unable to meet payroll, and their employees went on
strike which lasted for two months. In order to overcome these, Creative Idea Suggestion
begins and the strike was resolved by an agreement that included layoffs and pay reductions
and other concessions to improve worker conditions.

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In June 1950, the company produced only 300 trucks and was on the verge of going
out of business. This crisis resulted in the resignation of Kiichiro and all his executive staff.
Toyotas total workforce was reduced from 8000 to 6000. Toyota was succeeded by Taizo
Ishida, who was the chief executive of the Toyoda Automatic Loom Company.
Toyota got back on its feet slowly as it shifted its focus away from passenger vehicles,
and towards producing trucks for military applications. The first few months of the Korean
War resulted in an order of over 5,000 vehicles from the US military, and the company was
revived. Taizo Ishida was credited for his focus on investment in equipment. One example
was the construction of the Motomachi Plant in 1959, which gave Toyota a decisive lead over
Nissan during the 1960s.
Return to before the World War II, in 1938, Kiichiro asked Eiji Toyoda, his cousin to
oversee construction of a newer factory in the town of Koromo, which was later
named Toyota City and currently considered as the "mother factory" for Toyota Motor
production facilities worldwide.
Eiiji visited Ford River Rouge Complex at Dearborn, Michigan during the early
1950s. He was awed by the scale of the facility but dismissive of what he saw as its
inefficiencies. Toyota Motor had been in the business of manufacturing cars for 13 years at
this stage, and had produced just over 2,500 automobiles. The Ford plant in contrast
manufactured 8,000 vehicles a day. Due to this experience, Eiiji Toyoda decided to adopt US
automobile mass production methods but with a qualitative twist.
Eiiji Toyoda collaborated with Taiichi Ohno, a veteran loom machinist, to develop
core concepts of what later became known as the 'Toyota Way'. They also fine-tuned the
concept of Kaizen, a process of incremental but constant improvements designed to cut
production and labour costs while boosting overall quality.

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Toyota had managed to do the post-war exports to Okinawa and Egypt and at the end
of 1950s. In 1957, First export of Japanese passenger car (Crown) to the United States was
made and Toyota Motor Sales, U.S.A., Inc. is established.

First export of Japanese passenger car (Crown) to the U.S.

Toyota Motor Sales, U.S.A., Inc.

In 1961, bouncing back from the failure of Crown, Eiiji had introduced small, cheap,
reliable and mass-production cars, which lead to the release of Toyota Publica (Currently
known as Corolla). When Publica dealerships start operations, Total Quality Control (TQC)
is adopted throughout company and a year later, Toyotas 1,000,000th vehicle was produced
domestically.

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Publica
This success of Toyota changed the market for automobile industry and other
automobile manufacturer such as Honda and Datsun to produce the equally small and cheap
cars. In order to face the stiff competition, TMC had moved forward to produce a not only
cheap and reliable car, but also offers more comfort and can be driven for a long period of
time, which is known as Corolla, which was released on 5th November 1966. Today,
Toyota Corolla has conquered the world and currently become the most produced and sold
car model worldwide.

First model of Toyota Corolla

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2,0

Definition of Management
It is very difficult to give a precise definition of the term 'management'. Different

scholars from different disciplines view and interpret management from their own angles.
The economists consider management as a resource like land, labour, capital and
organisation. The bureaucrats look upon it as a system of authority to achieve business goals.
The sociologists consider managers as a part of the class elite in the society
According to George R. Terry (1877 -1955), ''Management Is a distinct process
consisting of planning, organising, actuating and controlling; utilising in each both science
and art, and followed in order to accomplish pre-determined objectives."
According to F.W. Taylor (March 20, 1856 March 21, 1915), "Management is the
art of knowing what you want to do and then seeing that they do it in the best and the
cheapest may."
According to Peterson and Plowman, "Management may be defined as the process
by means of which the purpose and objectives of a particular human group are determined,
clarified and effectuated"
One popular definition is by Mary Parker Follett (3 September 1868 18 December
1933). Management, she says, is the "art of getting things done through people."
In summary, after considering various opinions on the definition of Management, it
would be best to differentiate between management and Managers. According to OUMs
Module, the definition of management and Managers are as explained below :

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2.1

Managements Definition and Functions

2.1.1

Managements Definition

Management by definition is the process of overseeing and coordinating resources

efficiently and effectively in line with the goals of an organization. In other word,
management is the process to control, plan and make decisions about an organization. The
process, to control, plan and decision making should be made using the best techniques, at a
lower cost, but producing the best result towards achieving the organizational goals.
Management is the process of reaching organizational goals by working with and
through people and other organizational resources.
Management has the following 3 characteristics:
i.

It is a process or series of continuing and related activities.

ii.

It involves and concentrates on reaching organizational goals.

iii.

It reaches these goals by working with and through people and other
organizational resources.

2.1.2 Management Functions

The 4 basic management functions that make up the management process are
described in the following sections:
a) Planning
b) Organizing
c) Leading
d) Controlling.

Four Functions of Management

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PLANNING:
Planning involves choosing tasks that must be performed to attain organizational
goals, outlining how the tasks must be performed, and indicating when they should be
performed. Planning is concerned with the success of the organization in the short
term as well as in the long term.
ORGANIZING:
Organizing can be thought of as assigning the tasks developed in the planning stages,
to various individuals or groups within the organization. Organizing is to create a
mechanism to put plans into action, towards the success of departments, which, in
turn, contributes to the success of divisions, which ultimately contributes to the
success of the organization.
LEADING:
Leading can be defined as guiding the activities of organization members in the
direction that helps the organization move towards the fulfilment of the goals.
The purpose of leading is to increase productivity. Human-oriented work situations
usually generate higher levels of production over the long term than do task oriented
work situations because people find the latter type distasteful.
CONTROLLING:
Controlling is the following roles played by the manager:
1. Gather information that measures performance
2. Compare present performance to pre-established performance norms.
3. Determine the next action plan and modifications for meeting the desired
performance parameters.
4. Controlling is an on-going process.

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2.2

10

Managers Definition and Role

2.2.1

Managers Definition
A manager is an individual who is directly responsible for ensuring that tasks
are performed by people or employees in an organization. A Manager is a
person who is in charge to plan, monitor, direct and make decision for a group
of people. Managers have the authority to take corrective actions, when
necessary and are always accountable for all decisions made.

2.2.2

Managers Role
The ten roles are:
a) Figurehead.
b) Leader.
c) Liaison.
d) Monitor.
e) Disseminator.
f) Spokesperson.
g) Entrepreneur.
h) Disturbance Handler.
i) Resource Allocator.
j) Negotiator.

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11

The 10 roles are then divided up into three categories, as follows:

Category

Roles

Figurehead
Interpersonal

Leader
Liaison

Monitor
Informational

Disseminator
Spokesperson

Entrepreneur
Disturbance Handler
Decisional
Resource Allocator
Negotiator

Interpersonal Category
The managerial roles in this category involve providing information and
ideas.
1. Figurehead a person with authority and expected to be a source of
inspiration to carry out social, ceremonial and legal responsibilities.
2. Leader a person to manage the performance and responsibilities of
everyone in the group by motivating and encouraging the subordinates.
3. Liaison a person to communicate with internal and external contacts and
to network effectively on behalf of the organization.

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12

Informational Category
The managerial roles in this category involve processing information.
1. Monitor a person to regularly seek out information related to the
organization and industry, looking for relevant changes in the environment,
besides monitoring the subordinates in terms of productivity as well as the
well-being.
2. Disseminator a person to communicate potentially useful information to
colleagues and subordinates.
3. Spokesperson a person to represent and speak for the organization and
responsible for transmitting information about the organization and its goals
to the people outside it.

Decisional Category
The managerial roles in this category involve using information.
1. Entrepreneur a person to create and control change within the
organization by solving problems, generating new ideas, and implementing
them.
2. Disturbance Handler a person to take charge to take charge during
roadblock and to help mediate disputes within it.
3. Resource Allocator a person to determine where organizational resources
are best applied. This involves allocating funding, as well as assigning staff
and other organizational resources.
4. Negotiator a person to take part in, and direct, important negotiations
within the team, department, or organization.

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3.0

13

Evolution of the Management Theory

The driving force behind the evolution of management theory is the search for better

ways to utilize organizational resources. Evolution of modern management began in the 19th
century after the industrial revolution. The overarching perspectives on management are :
3.1)

Historical Perspective (1880 -1927)

This perspective includes 3 viewpoints - Classical Perspective, Behavioural
Perspective and Quantitative Perspective
3.1.1) Classical Perspective
The classical viewpoint emphasized on finding ways to manage work
more efficiently. It had two branches:
i) Scientific management emphasized the scientific study of work
methods to improve productivity by individual workers.
ii) Administrative management was concerned with managing the
total organization.
The classical viewpoint showed that work activity was amenable to a
rational approach, but it has been criticized as being too mechanistic,
viewing humans as cogs in a machine.

3.1.2) Behavioural Perspective

The second of the historical perspectives, the behavioural viewpoint
emphasized the importance of understanding human behaviour and of
motivating employees toward achievement. It developed over three
phases:

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i)

14

Early behaviourism suggested on the importance of understanding

employees to motivate better performance

ii) The human relations movement suggested that better human

relations could increase worker productivity.
iii) The behavioural science approach relied on scientific research for
developing theories about human behaviour that can be used to
provide practical tools for managers.
3.1.3) Quantitative Perspective
The quantitative viewpoints emphasized on the application of
quantitative techniques by taking management science approach,
which focuses on using mathematics to aid in problem solving and
decision making; and operations management approach, which focuses
on managing the production and delivery of an organization's products
or services more effectively.

3.2)

Contemporary (1930 1962)

The contemporary perspective includes three other viewpoints Systems
Perspective, Contingency Perspective, and Quality-Management Perspective
i) Systems Perspective
The systems perspective regards the organization as a system of
interrelated parts or collection of subsystems that operate together to
achieve a common purpose. A system has four parts: inputs, outputs,
transformational processes, and feedback. A system can be open,
continually interacting with the environment, or closed, having little
such interaction.

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ii) Contingency Perspective

The contingency perspective emphasizes that a manager's approach
should vary according to the individual and the environmental situation.
iii)Quality Management Perspective
The quality-management perspective is concerned with quality (the total
ability of a product or service to meet customer needs)

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4.0

16

Toyotas Management Style

At initial stage of establishment, Toyota applied the Scientific Management Theory in

its management practise, where the founder, Sakichi Toyoda and his son, Kiichiro focused
on product development, from automatic loom into automobile business.
During the economic turmoil after World War II, Toyota was in its worst state when it
had to deal with labour strike and business downfall. During such time, Toyota had applied
the Behaviour Perspective to resolve workers strike, where they had entered into an
agreement which included various concessions to improve worker conditions. Since then,
Toyota recorded no further incidents of workers strike.
The crisis faced by Toyota after the World War II had led to the resignation of
Kiichiro and the successor, Taizo Ishida had applied a more Contemporary approach, when
he applied the Contingency Perspective to swap the production of passengers car into
producing trucks for military applications to supply to the US military for Korean War and
gave Toyota a lead over Nissan.
In 1960s, under management of Eiiji Toyoda, a
core concepts of what later became known as
the 'Toyota Way' was introduced. The Toyota
Way has been called "a system designed to
provide the tools for people to continually
improve their work". It has 14 principles,
organized in four sections:
1. Long-Term Philosophy
2. The Right Process Will Produce the Right Results
3. Add Value to the Organization by Developing Your People
4. Continuously Solving Root Problems Drives Organizational Learning

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5.0

17

The Toyota Way

The principles in the Toyota Way are briefly described below:
Section I - Long-Term Philosophy
Principle 1- Base management decisions on a long-term philosophy, even at the
expense of short-term financial goals.

Section II The Right Process Will Produce the Right Results

Principle 2 - Create a continuous process flow to bring problems to the surface.
Work processes are redesigned to eliminate waste through the process of continuous
improvement (kaizen)
Principle 3 - Use "pull" systems to avoid overproduction, a method where a process
signals its predecessor that more material is needed. The pull system produces only
the required material after the subsequent operation signals a need for it. This process
is necessary to reduce overproduction.
Principle 4 - Level out the workload to help minimizing waste, not overburdening
people or the equipment and not creating uneven production levels.
Principle 5 - Build a culture of stopping to fix problems, to get quality right the first
time. Any employee in the Toyota Production System has the authority to stop the
process to signal a quality issue.
Principle 6 - Standardized tasks and processes are the foundation for continuous
improvement and employee empowerment. Despite its bureaucratic system, Toyota
allows for continuous improvement from the people affected by that system. It
empowers the employee to aid in the growth and improvement of the company.

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Principle 7 - Use visual control to see every problem. Included in this principle is the
5S Program - steps that are used to make all work spaces efficient and productive,
help people share work stations, reduce time looking for needed tools and improve the
work environment.
Principle 8 - Use only reliable, thoroughly tested technology that serves people and
processes.

Section III Add Value to the Organization by Developing Your People

Principle 9 - Grow leaders who understand the work, live the philosophy, and teach it
to others.
Principle 10 - Develop exceptional people and teams who follow the company's
philosophy. Teams should consist of 4-5 people and numerous management tiers.
Success is based on the team, not the individual.
Principle 11 Respect extended network of partners and suppliers by challenging
them and helping them improve. Toyota treats suppliers like their employees by
challenging them to do better and helping them to achieve it. Toyota provides cross
functional teams to help suppliers discover and fix problems so that they can become
stronger and better.

Section IV: Continuously Solving Root Problems Drives Organizational Learning

Principle 12 - Toyota managers are expected to "go-and-see" operations. Without
experiencing the situation firsthand, managers will not have an understanding of how
it can be improved.

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Principle 13 - Make decisions slowly by consensus, thoroughly considering all

options; implement decisions rapidly.
Principle 14 - Become a learning organization through relentless reflection and
continuous improvement.

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6.0

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Conclusion
Toyota has done an excellent job as it is obvious that there is something special about

Toyota. The Japanese automobile manufacturer currently has the fastest product development
process in the world. New cars and trucks take 12 months or less to design, while competitors
typically require two to three years. Toyota has phenomenal quality levels that rivals can only
dream of matching.
Toyota has turned operational excellence into a strategic weapon not merely through
tools and quality improvement methods but a deeper business philosophy rooted in
understanding of people and what motivates them. Its success is ultimately based on its
ability to develop leaders, build teams, and nurture a supportive culture, to devise strategy, to
build deep supplier relationships, and to maintain a learning organization.

(word count :2,984)

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REFERENCE
1. Hino, Satoshi (2005). Inside the Mind of Toyota: Management Principles for Enduring
Growth. University Park, IL: Productivity Press.

2. Liker, Jeffrey (2004). The 14 Principles Of The Toyota Way: An Executive Summary of
the Culture Behind TPS.

3. Liker, J (2004). The Toyota Way: 14 Management Principles from the World's Greatest
Manufacturer.McGraw-Hill.

4. Retrieved from website http://www.toyota-global.com/company/history_of_toyota/

5. Retrieved fom website http://www.toyota-global.com/company/history_of_toyota/18671939.html

6. Aguinaldo dos Santos, James Alfred Powell, Marjan Sarshar, (2002) "Evolution of
management theory: the case of production management in construction", Management
Decision, Vol. 40 Iss: 8, pp.788 796

7. Roth, William (1998) The Evolution of Management Theory: Past, Present, Future, CRC
Press LLC USA

8. Retrieved from website : http://www.toyotaglobal.com/company/history_of_toyota/75years/text/taking_on_the_automotive_business

/chapter2/section6/item6_d.html

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9. Mintzberg, Henry (1989), Mintzberg on Management : Inside Our Strange World of

Organizatons, The Free Press, NY USA