The Relevance of a Decision Making Model for Toyota Company - Research Paper Example

Introduction Every product goes through a set of steps and process before it is being made a final product. A product is a result of careful evaluation of each process and decision making at every process level. This paper intends to explain the relevance of a decision making model and product development process with the example of Toyota Prius. Steps and Factors considered Idea Generation: The evolution of the revolutionary car Toyota Prius dates back to 1993 when the then Chairman of the company came up with a concern of the future of automobiles.

The sole idea of the chairman and other team members from the company thereafter was to develop a car that could be sold on a very large scale and that can deliver better fuel economy. Concept Development: Based on the idea of fuel economy and affordability, the project G21 was kick started in the Toyota stable. The team initially focussed on improving the existing technology so as to improve the fuel efficiency. But the head of the team was not satisfied by extending the existing technology.

It was his decision that something new should be introduced for this project. He discussed about the possibility of a hybrid technology. Soon after putting forward the idea of a hybrid car, Wada, the chairman instructed the engineers to develop a concept car for the 1995 Tokyo Motor Show. The inherent disadvantage of a hybrid car was its higher retail cost. This was a problem that the concept faced at the concept stage. But in order to compensate this Wada instructed that the team work on developing the fuel efficiency by significant percentage.

The concept was named Prius. Prototypes & Testing: Prius underwent a testing of various engine prototypes before it settled down for its present technology. “The team went through 80 alternatives before narrowing the list to four, based largely on fuel efficiency.” (Taylor, 2006) Several problems such as heat, noise, cost etc. were the major factors considered by the team while selecting the alternatives. Based on evaluation of various alternatives, Toyota settled down for the alternative that optimized fuel efficiency and cost.

In 1995 Toyota set the time frame for rolling out the product by 1998. Product Design: This was a crucial step in the development stage. Time was the major constraint that the engineers faced during this stage. The design team had only three weeks of time where the industrial average for such a stage is up to three months. Despite the limited time frame, the team was able to develop the design in two weeks. But the major issue that happened in this stage was the engine problems during extreme temperatures.

The team had only limited time towards the launch deadline. Equipping the engine for extreme climates was the major challenge in this stage. But the design team dealt with the issue one at a time and every engine glitches were fixed. The product was able to achieve the planned 100% increase in fuel efficiency. Marketing: Marketing Prius was another biggest challenge that Toyota had. Based on the research reports that were conducted in the U.S. before 1995, the general attitudes towards hybrid cars were slightly indifferent.

Hybrid being a new concept was the major reason for this attitude. Market surveys revealed that fuel economy alone did not convince the customers about the product and premium pricing. Supporting its higher price tag was a major challenge that the marketing team had to consider. This is when the team decided to capitalize on the emission norms prevalent in the country. Things worked out well when the company started to focus on environment safety. Another major challenge for the company was to identify the target customers.

Since this was a new concept Toyota wasn’t sure as to whom would the actual buyers be. In order to identify this, Toyota ran a pre-selling through internet in which the company sold around 12,000 buyers. Refer to Appendix 1 for the outline of process, challenges and solutions. Decision Evaluation There were several decisions involved at various stages in the development of Prius. The company had in fact used a good decision making model so as to ensure that better decisions are taken at each level.

The core theme of all the decisions was to develop a car that could give better fuel efficiency than all other existing cars. Therefore, every decision was evaluated against this motive. This section can be analysed by looking into the various instances where the company had to take a decision from various alternatives. It may be described that Toyota adopted a three step decision strategy for Prius. The three step strategy is enumerated as follows: 1. Defining task 2. Selecting criteria 3.

Rating and ranking Defining Task: The task was very clear in the case of Prius project. The end objective was to build a car that delivers better fuel economy. The major decision that the management had taken in the initial stage is the decision to develop a car that delivers 100% more mileage than the existing models. This decision was rather embarrassing for many of the engineers at Toyota. The decision itself says that the technology should be entirely different from what they use currently.

The impact of this decision is that the company developed the best hybrid engine. Selecting Criteria: Selecting the criteria for evaluating each decision is another crucial task. The Prius project is something that had to go through various project stages. Each stage had their own specific criteria for decision making at the respective levels. But the criteria that were common to all the stages were fuel efficiency, cost optimization, heat and design. Decision making at each levels were performed based on these criteria.

Rating and Ranking: Rating and ranking of the alternatives have to be performed in order to select a better decision. The ranking of alternatives will be based on the criteria that were formulated. In the case of Toyota all the alternative decisions were ranked based on the contribution it had to each criterion. Conclusion Focus on a core objective or vision is the major requirement in a decision making. Every alternatives in a decision making process had to be evaluated against the core objective.

This is very true in the case of Prius. The engineers at Toyota had to go through 80 engine technologies before settling down for a few. All these 80 technologies were evaluated against the factors such as heat, cost, etc. Through this, the team assured that it did not give room for any mistakes. The focus of the team here was to develop the best engine that delivers fuel economy. References “Toyota: The Birth of the Prius.” CNN Money. Web. 22 October 2012. Newton, C., Media, D. 2012.

“7 Steps of Product Development.” Small Business. Web. 22 October 2012. “9 Steps of Better Evaluation and Decision Making.” Progrid. Web. 22 October 2012. “Measuring Green Car Success with Toyota Prius.” Hybrid Cars. Web. 22 October 2012. Appendix 1. Product Development Stage, challenges and solutions Stage Factors/Challenges Solution Idea Generation New product development Need for fuel efficient cars Hybrid Technology Concept Development High cost of hybrid cars Substantiated by Fuel economy Prototypes & Testing Heat, Cost and Noise Selected four alternatives Product Design Engine failures at extreme climate Developed solution that prevented Marketing Indifferent customer attitudes to hybrid cars Focussed on the message of reduced emissions