Business Analysis Course Project

Among companies that manufacture and sell products, one of the most important competitive advantages they can enjoy is a superior process design and project management system. Two of the best examples of this are Toyota and Apple. Toyota’s auto manufacturing business is a highly sophisticated and well-designed process that begins with an initial sketch and ends with a production automobile in a dealership showroom. Apple’s process is also impressive, and emphasizes innovation that is wedded with technological prowess and rigorously tested to meet high quality standards. This paper will analyze both companies’ process structures in depth in order to better understand their project management systems.

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Every company is selling something. But in today’s growing service and information economy, what’s being sold doesn’t even have to be an actual physical product – it could simply be expertise or knowledge of some kind, or perhaps a product that exists only in the digital realm. However, the vast majority of companies doing business still produces and sells some kind of physical product and the project management and production processes that allow firms to produce and distribute their products represent both challenges and opportunities for those firms. For companies who can master the art of project management and process improvement, these areas can come to represent a competitive advantage. However, firms who fall behind the curve in this area will discover it as a major weakness.

Two companies which produce and sell physical products and enjoy a competitive advantage through the production and process systems are Apple and Toyota. Each company produces a physical product, in the case of Apple mostly smartphones and laptops, and in the case of Toyota mostly automobiles, but each has a unique project management system in place that allows them to best organize and maintain their process to promote maximal organizational efficiency and cut out waste.

This paper will compare and contrast the Apple and Toyota project management systems by taking an in depth look at each. In doing so, we will understand and describe the business analysis process that each company uses in order to achieve its own best outcomes. The goal of the paper is to thoroughly explore and map out these project managements systems and processes in order to facilitate understanding of their real-world structural mechanics as opposed to simply trusting in theoretical organizational models. By undertaking this sort of systemic and procedural analysis, we can get a better idea of how the organization makes strategic decisions, allocates resources and ultimately delivers its products to market. We will seek to understand how a well-developed and executed project management system (along with a well-developed process infrastructure) can give companies like Apple and Toyota a leg up on their competitors, and how systems like this emerge. Ultimately, we will demonstrate that the effectiveness of these systems represents an undeniable competitive advantage for firms that have mastered them, and that firms who wish to compete must undertake their own strategic analysis of production methods, and integrate project management and process improvement as major focuses of their ongoing production and distribution strategy.

The elicitation techniques required to produce this comprehensive analysis will be focused mostly in the areas of investigating the particular processes and protocols implemented by each firm, in gaining an understanding behind the strategic theory associated with each step of the process, in properly ordering the process to achieve maximum efficiency in both production and cost metrics, and in expanding the detailed understanding we gain of the process out to encompass a full understanding of the company’s overall project management system. The investigation into a company’s process and project management system must be conducted in a thorough and directed method if the resulting detail is to have any benefit. It is crucial to the final understanding that we be deliberate in our deconstruction of processes and procedures, because even small misunderstanding can render the resulting conclusions invalid. Any error in understanding the process will result in an erroneous project management map, with steps either missing or out of order, or with steps listed that don’t actually occur in the process at all and don’t belong on the mapping model. The elicitation techniques we utilize will therefore be focused primarily on accurately recording the details associated with each step of the process, and establishing their chronological order within the over-arching project management system.

The requirements of our analysis into the project management systems of Apple and Toyota are numerous. First, we must establish the general parameters within which the firm is operating, and which inform all of its strategic decision making outputs and ultimately define its business. This means understanding exactly what the company is manufacturing, how they are manufacturing it, and who they are manufacturing it for. We require this broad-based understanding in order to determine how each step of the company’s process and project management system contributes to its ultimate end objectives.

Secondly, we will require a look into the technical aspects of each company’s operations, to better understanding their unique production process. Without this detailed technical understanding, we won’t be able to establish the relative necessity of one step over another, and thus would be unable to determine if the process is operating as efficiently as possible.

Finally, we must understand the company’s project management philosophy and the way it approaches its decision making process. This will give us insight in to how the company structures its project management system in order to accomplish the goals they set forward in a manner that is in alignment with their operating philosophy.

At Toyota, the process of selling a car must first begin with designing it; and designing a car must take into account whom the car is being designed for (Pegels, 1984). In this way, we can from the beginning see the full circle of the Toyota production process: a car is designed to appeal to a certain consumer base and then produced and distributed toward that end.

The amount of business analysis that goes in to the process is staggering. Toyota must get the design right from the very beginning, because it must invest so heavily in its production capabilities in order to produce each vehicle it manufactures. The fixed costs associated with producing each model of car are significant, and design modifications require re-tooling heavy equipment and retraining workers (Sakai & Amasaka, 2007). For this reason, only minor design modifications are possible once the production process is underway for a particular model of vehicle design.

The importance of the initial design phase of the production process is thus apparent, and Toyota invests in this part of its production commensurately. Models are designed years in advance, focus grouped and tested for appeal, prototypes are built, thousands of computer simulations are run, and finally a decision on a finalized design is made and the company can begin to move forward into the next phase of the process to move its vehicle one step closer to the consumer.

Following the design phase, the next phase of the process is the manufacturing of the vehicle. This is an area where Toyota believes it maintains a significant competitive advantage over its rivals, and entire books have been written about Toyota’s unique manufacturing philosophy and practices. This manufacturing phase emphasizes quality and reliability rather than pure production speed, and Toyota empowers its manufacturing line workers to this end to promote these goals (Kakuro, 2004). For example, any employee along the production line can press a button to stop the entire assembly line if he or she thinks there is a problem with the car they’re working on.

After the car is manufactured, the next phase of Toyota’s process is the distribution phase. This is where Toyota must transport the cars they manufactured at any one of their production factories to dealerships where they can be sold to customers. The logistical challenge of transporting this many cars is considerable, and Toyota must manage a transportation network that covers thousands of trucks, hundreds of trains and dozens of super-cargo ships (Amasaka, 2002). Moreover, Toyota must do all this while keeping track of each individual car out of the millions it manufactures and sells each year, without losing a single one of them.

Finally, Toyota must engage in the final phase of its process, the sales phase. This entails not only managing its enormous network of dealerships, but in maintaining all of its advertising and marketing efforts and in promoting the specific new model designs as well as the Toyota brand name. This is the crucial stage of the process where the money is made, and where Toyota goes back all the way to its first step and connects the end consumer with the particular design of automobile that appeals most to them.

In contrast to Toyota, which as an automobile company would qualify as a “heavy” manufacturer, Apple is known for making electronics, notably their signature iPhone and iPad, as well as laptops. The difference in the products the companies make has an impact on the process that each company uses to bring their products to market. Whereas Toyota must design a model to have a life of at least 3-5 years, Apple’s product cycle is much shorter, and they typically update their product lineup on an annual basis.

There are similarities, however. Both firms are global behemoths and must manage the logistical challenges that accompany operating a global enterprise and distributing products across the entire world. Let’s take a closer look at Apple’s production process to see how it compares to Toyota’s.

Apple, like Toyota, spends a great deal of time focused on design. One of the company’s biggest competitive advantages is their brand reputation for having products that are functional, easy to use and attractive. To live up to its customers’ expectations, Apple must ensure that it designs its products to be as user-friendly as possible. This entails a lot of design work with the software utilized on their devices, as well as the physical design of the products themselves, which must adhere to a strict aesthetic that is uniquely Apple (Duhigg, 2012).

Following the design phase, Apple goes in to a phase of product testing and quality control. This is the phase in which they identify all the problems with both their software and hardware and implement fixes before the products hit the market. While it is not too late for the hardware to be redesigned at this point, doing so is not usual unless a major problem is found with the original design (Satariano, 2011). Most of the focus in this phase is on ensuring that the software is as intuitive and stable as possible so that the customer has the best user experience they can (Kraemer, Kinden & Dedrick, 2011).

Once Apple has a design they are pleased with and which has been thoroughly tested, they are ready to move on to the next phase of their production process, and begin to manufacture their products. This is one area where Apple differs greatly from Toyota. Toyota is at heart a manufacturing company that builds cars. Apple is a technology company that is more comfortable with design than manufacturing. For this reason, the vast majority of Apple’s manufacturing is outsourced and contracted to manufacturers in China, such as FoxxCon (Barboza, 2010). One of the biggest challenges Apple faces is ensuring that their manufacturing partners like FoxxCon are producing the products to the exact specifications that Apple demands (Anderson, 2012). If the manufacturer tries to cut corners to increase its own profits, the result could be Apple products that don’t live up to the expectations of Apple’s customers. Apple combats this risk by keeping a close eye on its manufacturers (Tsan et al., 2012).

Following manufacturing, Apple must manage the logistics of distribution, and get its products out of China and on to store shelves all over the world. Much like Toyota, this is a major feat, and requires a sophisticated logistics operation that utilizes planes, boats, trains and trucks.

The final stage of the process for Apple is retail sales. Apples operates its own Apple stores where it sells many of its products directly, and also offers them through traditional electronics retailers, as well as through the internet. This phase also includes Apple’s advertising and marketing efforts, which are crucial for keeping the brand name valuable in the eyes of consumers and making their products desirable.

In looking at the details of each company’s production process, we can get a good idea of their respective project management philosophies. In the case of Toyota, their philosophy is one of taking the time to produce a product that is very high quality. To ensure that this happens every time, on each one of the millions of cars they manufacture each year, they have designed certain parameters in to their manufacturing process to produce this effect. In Apple’s case, their main focus is ensuring that their software and hardware continue to live up to the standards that their users have come to expect from the Apple brand. As a result, Apple’s focus is on quality control and testing, as well as marketing. Each company specializes its own process in order to maximize its competitive advantages in the marketplace and minimize its weaknesses.

The recommendations for improving upon the existing processes for each company must account for this careful balance of preserving existing efficiencies and advantages while carefully attempting to create additional value through the introduction of new techniques. In the case of Toyota, their process could be improved by streamlining their design process to take less time. Apple would be best-served by finding a way to reliably maintain the consistency of their manufacturing operation, perhaps through acquisition and direct control. In both cases these represent opportunities for the companies to shore up their weaknesses and improve their existing processes through intelligent project management.

In conclusion, we can see that the processes each company employs are tailored to fit their need, but have room to be improved. The problems of creating a maximally efficient process structure are ongoing, and must be solved over and over as the situation the company is facing in the marketplace changes. The dynamic nature of the global economy dictates that no existing process can remain static and unchanging forever. Companies must realize this fact and be prepared to adjust and even reinvent their existing processed in response to changing market conditions. An intelligent project management system can allow companies the flexibility to change their processes to suit the overall needs of the firm, while still maintaining high quality and efficiency. Toyota and Apple are both highly successful companies that operate on a global scale, and they didn’t achieve such success by being ignorant of the principles of process design. However, in order to continue their success through the 21st century, they must both continually apply their mastery of process improvement to get better and better.

References

C. Carl Pegels, (1984) "The Toyota Production System — Lessons for American Management", International Journal of Operations & Production Management, Vol. 4 Iss: 1, pp.3 – 11.

Hirohisa Sakai, Kakuro Amasaka. (2007) The robot reliability design and improvement method and the advanced Toyota production system. Industrial Robot: An International Journal 34:4, 310-316.

A. Kakuro. (2004) Development of ‘science TQM’, a new principle of quality management: effectiveness of strategic stratified task team at Toyota. International Journal of Production Research 42:17, 3691-3706.

Kakuro Amasaka. (2002) “New JIT”: A new management technology principle at Toyota. International Journal of Production Economics 80:2, 135-144.

Anderson, M. (2012). Made by Apple in name only. Spectrum, IEEE. 49:3.

Barboza, D. (2010). Supply Chain for iPhone Highlights Costs in China. The New York Times, July 5 2010.

C Duhigg, K Bradsher (2012). How the US lost out on iPhone work. The New York Times, January 24 2012.

Wen-Nan Tsan, Chi Chang, Bo-Chi Lin, Wen-Yao Han, Nan-Shiun Chu (2012). The Industrial Specialization and Economic Contribution of the Smartphone Supply Chain: The Case of Apple and HTC. International Journal of Automation and Smart Technology, 2:3.

A Satariano, P Burrows (2011). Apple’s supply chain secret? Hoard lasers. Bloomberg BusinessWeek, November 13 2011.

Kenneth L. Kraemer, Greg Linden, and Jason Dedrick (2011). Capturing Value in Global Networks: Apple’s iPad and iPhone. University of California-Berkeley, University of California-Irvine, Syracuse University.