Financial Risk Management at Toyota
Financial Risk Management at Toyota
Abstract:
Toyota Motor Corporation (Toyota) is Japan's largest and the world's fourth-largest automobile manufacturer. The company offers well-known car models like Camry, Corona, Corolla and Lexus. Though a late entrant, compared to General Motors and Ford, Toyota has become one of the strongest players in the automobile industry. Toyota has continued to set new benchmarks for providing value to customers more effectively than competitors. Toyota is exposed to market risk due to changes in currency rates, interest rates and certain commodity and equity prices. In order to manage these risks, Toyota uses various derivative financial instruments. These instruments are in general executed only with creditworthy financial institutions. The case outlines the various financial risks Toyota faces and how the company manages them.
Introduction
Toyota Motor Corporation (Toyota), Japan's largest and the world's fourth-largest automobile manufacturer offered well-known car models like Camry, Corona, Corolla, and Lexus.
Though a late entrant, compared to General Motors and Ford, Toyota had become one of the strongest players in the automobile industry.
In an industry, generally considered to be mature in terms of technology, Toyota had continued to set new benchmarks for providing value to customers more effectively than competitors. Toyota had also redefined the rules of the game in various areas – product development, manufacturing, vendor management and human resources management.
A recent Business Week issue had Toyota on the cover with the caption "Can anything stop Toyota?"
Background Note
Sakichi Toyoda, born in 1868, founded Toyota. He showed little interest in the family's carpentry business. Instead, Toyoda concentrated on improving the handloom machinery used in textile factories. These efforts led to the Toyoda Automatic Loom.
In 1926, Sakichi founded Toyoda Automatic Loom Works (TALW) to make looms. He
Abstract:
Toyota Motor Corporation (Toyota) is Japan's largest and the world's fourth-largest automobile manufacturer. The company offers well-known car models like Camry, Corona, Corolla and Lexus. Though a late entrant, compared to General Motors and Ford, Toyota has become one of the strongest players in the automobile industry. Toyota has continued to set new benchmarks for providing value to customers more effectively than competitors. Toyota is exposed to market risk due to changes in currency rates, interest rates and certain commodity and equity prices. In order to manage these risks, Toyota uses various derivative financial instruments. These instruments are in general executed only with creditworthy financial institutions. The case outlines the various financial risks Toyota faces and how the company manages them.
Introduction
Toyota Motor Corporation (Toyota), Japan's largest and the world's fourth-largest automobile manufacturer offered well-known car models like Camry, Corona, Corolla, and Lexus.
Though a late entrant, compared to General Motors and Ford, Toyota had become one of the strongest players in the automobile industry.
In an industry, generally considered to be mature in terms of technology, Toyota had continued to set new benchmarks for providing value to customers more effectively than competitors. Toyota had also redefined the rules of the game in various areas – product development, manufacturing, vendor management and human resources management.
A recent Business Week issue had Toyota on the cover with the caption "Can anything stop Toyota?"
Background Note
Sakichi Toyoda, born in 1868, founded Toyota. He showed little interest in the family's carpentry business. Instead, Toyoda concentrated on improving the handloom machinery used in textile factories. These efforts led to the Toyoda Automatic Loom.
In 1926, Sakichi founded Toyoda Automatic Loom Works (TALW) to make looms. He