Question 4: Why did Toyota enter into the NUMMI joint venture with General Motors in 1984? What was the benefit of this venture to Toyota?
Answer:
Toyota today manufactures a diverse line-up of vehicles all over the globe. As an innovative leader, Toyota is well-known for its management philosophy and the world's first mass-market hybrids.
New United Motor Manufacturing, Inc. (NUMMI) was an automobile manufacturing company in Fremont, California, jointly owned by General Motors and Toyota that opened in 1984 and closed in 2010. On October 27, 2010.
Reason for NUMMI Joint Venture:
General Motors saw the joint venture as an opportunity to learn about lean manufacturing from the Japanese company, while Toyota gained its first manufacturing base in North America and a chance to implement its production system in an American labor environment.
Toyota’s marketing and Distribution strategy was not so good in America, they had the quality product but their Marketing strategy didn’t works properly. Whereas General Motors Marketing and Distribution strategy was too good than Toyota in America. For these reason to gain the benefits of general motors’ marketing and distribution strategy in America Toyota went to the new joint venture of New United Motor Manufacturing, Inc. (NUMMI) which was established in 1984.
Benefits of joint venture for Toyota:
The Joint Venture of New United Motor Manufacturing Inc. (NUMMI) has some benefits for Toyota. These benefits are given below: 1. Chance to build quality Cars by using American workers and American suppliers. 2. It also provides experience dealing with American union for Toyota. 3. Toyota takes the import restriction benefits in America by this joint venture. 4. Improve the Toyota’s marketing efficiency. 5. Raising Toyota’s annual production. 6. Using experience labour from America. 7. Toyota takes the full details of American approach to manufacturing.
Above all these are the benefits for Toyota by this new joint venture of New United Motor Manufacturing, Inc. (NUMMI).