The earthquake and subsequent tsunami in Japan had a significant negative impact

Question

The earthquake and subsequent tsunami in Japan had a significant negative impact on Toyota, reducing their ability to produce parts to be delivered to their manufacturing and assembly plants around the world. Using the laws of supply and demand as a construct, research and discuss the impacts on Toyota and the auto industry in general from such an event. How does a business remain competitive when prices must remain high due to a reduction in supply? Please answer in 250 words or more and make handwriting legible

Explanation / Answer

Toyota's quarterly profit crumbled more than 75% after the March earthquake and tsunami wiped out parts suppliers in northeastern Japan, severely disrupting car production. We believe Toyota has been the hardest hit by the disaster. The company has a relatively low overseas production rate, meaning that a large share of its auto manufacturing is done in Japan. This is a major problem, given the issues in that country. Not only have many of its parts suppliers suffered significant damage to their plants, but Toyota has also had to deal with considerable power shortages, which have limited production capabilities.

Several automakers shut down production facilities in the wake of the disaster while others were rocked by damage at ports, where televised news coverage showed fires engulfing hundreds of cars waiting to be shipped overseas.

Plants were closed by Honda, Mitsubishi, Nissan, Subaru, and Toyota following the disaster, affecting production of several models sold in the United States. Toyota has the largest presence in the region of any automaker, manufacturing the Scion xB and xDhatchbacks and compact Yaris in near the heavily-damaged city of Sendai. Its plants were closed immediately after the disaster, as was a Honda plant producing the compact Fithatchback and Acura RL and TSX sedans. Likr this Toyota faced lit of disasters and facing now too. OVERCOME:. for not only Toyota but for many other companies this kind of disasters are not new to them,so they took many precautions as given below:

1. Labour motivation and using low elasticity. In order to help reduce electricity demand, Toyota (and many other Japanese companies) have:

Severely curtailed or eliminated use of air conditioning. Toyota’s workers will be assembling cars at 84F through the summer
Moved their “weekend” to Thursday and Friday. Toyota will close their Japan plants on Thursday and Friday to reduce demand on those days, then open on Saturday and work until Wednesday.
Turning off as many lights as possible. You won’t find a lit hallway in a Toyota office building or factory in Japan. Most offices are half-lit.
Asking workers to take the stairs. To save on electricity use, workers are asked to take the stairs instead of the elevator whenever possible.

3. Re-engineering the parts chain. Toyota execs and engineers have worked diligently to reduce the number of parts bottlenecks, using a wide array of tools. Some suppliers with fully-operational plants were given temporary contracts to produce parts that a competitor couldn’t build. 3. Problems brought the best in them. Crisis bring out the best in people. When a disaster strikes, the tendency is to assume the worst. Yet often times disasters provide people with extraordinary motivation and subsequent effort. At every point in Toyota’s supply chain, there is a worker giving his or her all to get Japan back on track.

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