Section 3. Promotion of Internal Reforms

Item 1. Establishment of the Guiding Principles at Toyota

Toyota began formulating management policies and business plans, and carried out business based upon those policies and plans starting in 1963. Such basic policies, long-term goals, and long-term guidelines were developed in step with the times and based on the Toyoda Precepts, which had been established in 1935. These long-term policies could be broken down into yearly goals, yearly policies, company-wide priority measures, and yearly slogans, and were duly scrutinized by top management.

However, the 1990s brought an age of new issues, including a constantly high yen, frequent outbursts of trade friction, a borderless world economy after the end of the Cold War, and environmental problems-companies found themselves in a rapidly changing world. Moreover, Japan had its own set of additional issues: the bubble economy burst and the country found itself heading toward an aging society and shrinking population, leading to a sense of stagnation and uncertainty regarding both the economy and society.

In 1991, Toyota was selling its vehicles in approximately 160 countries and regions around the world, and had production bases in 22 of those. The pace of globalization was picking up, and Toyota's interaction with the international community was becoming ever greater. A major issue at the time was how to work together with people from different cultural backgrounds and with different value systems, and effectively promote the company's business.

Under these circumstances, at Senior Managing Directors Committee in March 1991, Toyota Motor Corporation (TMC) Chairman Eiji Toyoda commented, "In order to move forward as a global corporation, we must clearly express a global corporate philosophy. We must put down in writing the common understanding that we have developed, and rethink our business and organizational structures in terms of that global corporate philosophy." And it was based on these instructions that the Guiding Principles at Toyota were established.

Formulation of the Guiding Principles at Toyota centered on TMC Executive Vice President Tatsuro Toyoda, who had extensive experience overseas and had been president of New United Motor Manufacturing, Inc. in the United States, and senior managing directors assigned played a supporting role. President Shoichiro Toyoda indicated that he did not want something that was "in keeping with the times", but rather a set of principles that would "lead the times". As such, those responsible embarked on establishing a course that would help Toyota become a truly international corporation.

When the Guiding Principles at Toyota were being drafted, emphasis was placed on envisaging what the domestic and international business environment would be like in the second half of the 1990s, and determining in which direction Toyota should head, while remaining realistic and maintaining an approach in sync with Toyota's existence to date. After much deliberation, Executive Vice President Toyoda and the senior managing directors created in both Japanese and English the seven Guiding Principles at Toyota shown in Table 3-2 below, which were then officially revealed to employees by President Toyoda during his New Year's address in January 1992.

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