Section 4. New Business Enterprises
Item 1. Development of New Business Enterprises
Start and promotion of new projects in the 1990s
In 1975, Toyota Motor Co., Ltd. set out to develop non-automotive businesses and established its new Housing Division. In 1976, the non-housing-related New Business Evaluation Group was established inside the Corporate Planning Department (now Corporate Planning Division) of Toyota Motor Co., Ltd., primarily to begin investigating new business opportunities.
Then, in March 1985, following the 1982 merger of Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. and shortly before the 50th anniversary (in 1987) of the founding of Toyota Motor Corporation (TMC), TMC established the 90s Project Committee in order to seriously evaluate new business opportunities as part of a growth policy for the 1990s and beyond.
Rather than relying on the Corporate Planning Department as it had been, TMC set out to investigate, explore, and plan for new business enterprises on a company-wide scale for the first time. In 1986, the committee, renamed the "New Business Project Committee", selected the seven areas listed below as promising for TMC, and project teams created for each of the areas proceeded to evaluate commercialization possibilities.
- 1.Factory automation
- 3.Financial services
- 4.Car-based telephones (communications)
- 5.Mobile communication devices (manufacturing and sales)
- 6.Value added communications network business (VAN)
Of these, the ideas of commercializing mobile communication devices (manufacturing and sales) and the VAN business (to provide lines) were aborted in the end as premature, but TMC successfully established new companies in the remaining five areas. Specifically, TMC established a car telephone company (Nippon Ido Tsushin Corporation (IDO)) in 1987, and a financial subsidiary (Toyota Finance Corporation) in 1989, and started in-house production of semiconductor components at Hirose Plant, also in 1989. Furthermore, during the process of promoting new business enterprise projects, TMC in 1987 decided to invest in Hamamatsu Photonics K.K., a world-renowned company in the field of optical technologies, and Sanritz Automation Co., Ltd., a company possessing high-level technologies in the field of factory automation systems.
In February 1989, to enhance its system for promoting new business enterprises, TMC, repositioning functions from one Group of the Corporate Planning Department, established the new Business Development Department (renamed the "Business Development Division" in August of the same year). In April of the same year, in order to dig up the seeds of new business opportunities buried within the company, TMC formally encouraged its managers to submit ideas for new business enterprises. This program, targeted at section managers and above, generated as many as 730 proposals.
Selecting and studying the most promising proposals led TMC to establish as many as 31 new companies within a few years following 1990.1 These led to more than 10 spin-offs and new commercializations at existing subsidiaries. For example, in 1990 Admatechs Co., Ltd. was spun off as the first internally funded venture company specializing in the manufacture and sales of ceramic powder for use primarily in semiconductors. Table 3-1 lists the numerous other new companies that were established.
Table 3-1 Newly established companies
Automotive production engineering businesses
- - BPA
- - MTA (merged with BPA to form current Toyota Production Engineering Corporation)
- - Toyota MACS, Inc. (now Toyota Technical Development Corporation)
- - Toyota System Research
- - Toyota Systems Engineering
- - Toyota Systems International (merged with above two to form current Toyota Communication Systems Co.)
- - Toyota Caelum (subsidiary of Toyota Communication Systems)
- - (The above four are currently part of Toyota Communication Systems or its affiliates)
- - Toyota Digital Cruise