Chapter 1

Introduction

1.1 Toyota Motor Corporation Overview

Toyota Motor Corporation (Toyota), incorporated on August 27, 1937, conducts business in the
automotive industry. Toyota sells its vehicles in approximately 190 countries and regions.
Toyota's markets for its automobiles are Japan, North America, Europe and Asia.
The Company's Automotive segment includes the design, manufacture, assembly and sale of
passenger vehicles, minivans and commercial vehicles, such as trucks and related parts and
accessories. The Company's subsidiaries include Daihatsu Motor Co., Ltd. (Daihatsu), which
produces and sells mini-vehicles and compact cars, and Hino Motors, Ltd. (Hino), which
produces and sells commercial vehicles, such as trucks and buses. Toyota also manufactures
automotive parts, components and accessories for its own use and for sale to others. Toyota's
vehicles (produced by Toyota, Daihatsu and Hino) are classified into three categories: hybrid
vehicles, conventional engine vehicles and fuel cell vehicles. Toyota's product line-up includes
subcompact and compact cars, mini-vehicles, mid-size, luxury, sports and specialty cars,
recreational and sport-utility vehicles, pickup trucks, minivans, trucks and buses.
Toyota produces automobiles, and related parts and components through approximately 50
overseas manufacturing companies in over 30 countries and regions besides Japan. Toyota's
manufacturing facilities include plants in Japan, the United States, Canada, the United Kingdom,
France, Turkey, Thailand, China, Taiwan, India, Indonesia, South Africa, Australia, Argentina and
Brazil. Daihatsu brand vehicles are produced at approximately four factories in Japan and over
four manufacturing companies in approximately three other countries, including Indonesia and
Malaysia. Hino brand vehicles are produced at approximately two factories in Japan and over 10
manufacturing companies in approximately 10 countries, including Indonesia and Thailand.
1.2 Mazda Motor Corporation Overview
Mazda Motor Corporation is a Japan-based company engaged in the manufacture and distribution
of automobiles and automobile parts. The Company is also engaged in the distribution of used
automobiles and special purpose vehicles, the transportation of automobiles and parts, the
manufacture and distribution of machine tools, as well as automobile delivery inspection and
bodywork business, among others. The Company operates through four business segments,
including Japan, North America, Europe and the Others.

1.3 Honda Motor Co., Ltd.

Honda Motor Co., Ltd. (Honda), incorporated on September 24, 1948, develops, manufactures
and markets motorcycles, automobiles and power products across the world. The Company's

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segments include Motorcycle Business, Automobile business, Financial services business, and
Power product and other businesses. Honda conducts its operations in Japan and around the
world, including North America, Europe and Asia. Honda markets its products through a sales
network of independent local dealers. Its motorcycles are distributed through outlets, including
PRO'S shops and Honda Dream authorized dealerships. Its automobiles and power products are
distributed in Japan through retail dealers. Its manufacturing facilities are located in Japan, the
United States, Canada, Mexico, the United Kingdom, Turkey, Italy, France, China, India,
Indonesia, Malaysia, Thailand, Vietnam, Argentina and Brazil.
The Company produces a range of motorcycles, with engine displacement ranging from the
50 cubic centimeters class to the 1,800 cubic centimeters class. Honda's motorcycles use internal
combustion engines developed by Honda that are air-or water-cooled, four-cycle, and are in
single, two, four or six-cylinder configurations. Honda's motorcycle line consists of sports
(including trial and moto-cross racing), business and commuter models. Honda also produces a
range of off-road vehicles, including all-terrain vehicles (ATVs) and side-by-side (SxS).
The Company's automobiles use gasoline engines of three, four or six cylinder, diesel
engines, gasoline-electric hybrid systems and gasoline-electric plug-in hybrid systems. Honda
also offers alternative fuel-powered vehicles, such as ethanol, battery electric and fuel cell
vehicles. Honda's principal automobile products include passenger cars, light trucks and mini
vehicles. Its passenger car models include Accord, Accord Hybrid, Amaze, Brio, Brio Amaze,
Brio Satya, City, Civic, Civic Tourer, Civic Type R, Crider, CR-Z, Fit/Jazz, Fit/Jazz Hybrid,
Freed, Freed Hybrid, Freed Spike, Freed Spike Hybrid, Grace, Grace Hybrid, Greiz, Honda
Mobilio, Insight, Jade, Jade Hybrid, Legend Hybrid, Mobilio, Shuttle, Shuttle Hybrid, Spirior,
Acura ILX, Acura RLX and Acura TLX. Its light trucks models include BR-V, Crosstour, CR-V,
Elysion, Odyssey, Odyssey Hybrid, Pilot, Step WGN, Vezel/HR-V, Vezel Hybrid, XR-V, Acura
MDX and Acura RDX. Its mini vehicles models include Acty, N-BOX, N-BOX +, N-BOX Slash,
N-ONE, N-WGN, S660 and Vamos.
Honda offers a range of financial services to its customers and dealers through finance
subsidiaries in countries, including Japan, the United States, Canada, the United Kingdom,
Germany, Brazil and Thailand. The services of these subsidiaries include retail lending, leasing to
customers and other financial services, such as wholesale financing to dealers.
Honda manufactures a range of power products, including general-purpose engines,
generators, water pumps, lawn mowers, riding mowers, grass cutters, brush cutters, tillers, snow
blowers, outboard marine engines, power carriers, sprayers and pressure washers. Honda offers
cogeneration units.

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 Chapter 2
Theory
2.1 Income Per Employee
The financial ratio income per employee is a measure of management efficiency. Income per
employee takes the company's operating income from the income statement and divides it by the
number of employees needed to produce that revenue.
Operating Income
Income per Employee =
Number of Employees
Income per employee measures management's ability to use their employee resources
effectively to create profits for the company. Alternate measures include revenues per employee
and net income per employee. However, operating income is considered a superior measure
since it looks at labor costs and it's not affected by non-operating or one-time adjustments to net
income.
When making a comparison between two companies, the business with the higher value for
income per employee is the more efficient organization. When drawing conclusions about the
relative performance of a company, benchmark comparisons should be made with competitors in
the same industry.
2.2 Revenue Per Employee
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 Revenue per employee measures the average revenue generated by each employee of a company.
Revenue per employee is calculated by dividing a firm's revenue by its total number of workers:
Revenue
Revenue per Employee =
Number of Employees
Revenue per employee is a measure of how efficiently a particular company is utilizing its
employees. In general, relatively high revenue per employee is a positive sign that suggests the
company is finding ways to squeeze more sales (revenue) out of each of its workers.
2.3 Receivable Turnover
receivable turnover is the number of times per year that a business collects its average accounts
receivable. The ratio is intended to evaluate the ability of a company to efficiently issue credit to
its customers and collect funds from them in a timely manner.
Cost of Goods Sold
Receivable Turnover =
Average Account Receivable

2.4 Inventory Turnover

Inventory turnover is a measure of the number of times inventory is sold or used in a time period
such as a year. It is calculated to see if a business has an excessive inventory in comparison to its
sales level. The equation for inventory turnover equals the cost of goods sold divided by the
average inventory. Inventory turnover is also known as inventory turns, merchandise turnover,
stockturn, stock turns, turns, and stock turnover.
Cost of Goods Sold
Inventory Turnover =
Average Inventory
2.5 Asset Turnover
Asset turnover ratio is the ratio between the value of a company’s sales or revenues and the value
of its assets. It is an indicator of the efficiency with which a company is deploying its assets to
produce the revenue. Thus, asset turnover ratio can be a determinant of a company’s
performance.
Sales
Asset Turnover =
Average Total Asset

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 Chapter 3

Analysis

3.1 Data

Income per Revenue per Receivable Inventory Asset

Employee* Employee* Turnover Turnover Turnover
Automotive 94,870, 192** 852,309,343* 11.69 8.22 0.68
Industry *
(Taken From Reuters.com) *in Japanese Yen (¥) **Total in Whole Industry

Company Income per Revenue per Receivable Inventory Asset

Name Employee* Employee* Turnover Turnover Turnover
Toyota Motor 4,306,944 76,981,936 14.96 10.51 0.60
Corporation
Mazda Motor 2,325,698 66,331,220 16.29 6.63 1.31
Corporation
Honda Motor 3,374,164 67,199,424 20.15 8.27 0.79
Co. Ltd.
(Taken From Reuters.com) *in Japanese Yen (¥)

3.2 Interpretation
As we can see from data above, if we look into Income per Employee, Toyota have the highest
Income per employee, which mean, Toyota use t heir employee the most efficient to create profits

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 for the company out of the three major automotive company. This mean Toyota is the more
efficient organization. Meanwhile Mazda has the lowest number of the bunch, this could mean
they are not efficient in utilizing their employee resources.
If we look again into the data of Revenue per Employee, Toyota also have the highest
revenue per employee compared to the other two. This mean that Toyota utilize its employee
more effectively compared to Mazda and Honda. This suggest that Toyota is finding more ways
to squeeze sales out of each worker.
Now we look at Receivable Turnover of each company. Toyota has 14.96, Mazda has 16.29,
and Honda has 20.15. Based on this data, Honda, has the highest Receivable Turnover, this
suggest, Honda Motor Co Ltd has the ability to efficiently issue credits to its customers and
collect funds in a timely manner. This mean, Honda, based on receivable turnover data, has an
excellent combination of conservative credit policy and an aggressive collection department, and
last but not least a high-quality customers who pay their credit on time. But if we look into
Toyota receivable turnover data, they have an issue regarding credit collection and policy. This
could probably mean that they are collecting excessively old account receivable. Even though
based on Income and Revenue per employee they are the most efficient one.
Based on Inventory Turnover, here Toyota has the highest number. This mean that Toyota has
high sells and a balanced inventory compared to the other two companies. This could happen
because Toyota manufacturing system of Just in Time (JIT), keeping their inventory and carrying
cost low. If we look into Mazda data, even though they have an excellent combination of credit
policy and aggressive collection, they have the lowest receivable number, this could implies that
Mazda has a weak sales in this period and also a possible problem with overstocking. Meanwhile
Honda is in the middle of the two, this mean they have an average sales and no problem with
their inventory even though they could improve on this section.
If we look into Asset Turnover Ratio, here Mazda has the highest asset turnover number, this
mean that Mazda has a high efficiency in deploying its asset to produce revenue. This mean that
Mazda has an excellent inventory management and a possibility of low margin in their sales.
Meanwhile, shockingly, Toyota has the lowest number of assets turnover, it even under industry
average which is 0.68, and Toyota only have 0.60. They possibly have a problem with production
problems which mean that Toyota is overproducing. Meanwhile, Honda has above average but
not efficient number of asset turnover, because the efficient number is one or above.
3.3 Answer to the Question
1) Which company appears to have the most productive employees?
- The company who have the most productive employee is Toyota Motor Corporation
because they have the highest number in Income per Employee and Revenue per
Employee.

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2) Which company has the best operations and supply chain processes?
- The company who has best operation and supply chain process is again Toyota Motor
Corporation because their high number inventory turnover number.
3) Which company is most efficient in its use of credit?
- The most efficient in credit use is Honda Motor Co Ltd as seen by their highest receivable
turnover number.

4) Which company makes the best use of its facility and equipment assets?

- the company who makes the best use of its facility and equipment assets is Mazda Motor
Corporation as shown by their high number of asset turnover.

Chapter 4

Conclusion

4.1 What Insights Can You Draw from Your Analysis?

We can see that each company is excel at something like, Toyota who excel at employee
utilization and also operation and supply chain process, Honda who excel at credit efficiency, and
Mazda who excel at use of its facility and equipment.
These company should benchmark against each other and their competitors to see what they
are lacking off. For example Toyota can evaluate their credit policy against some of the best in
the industry like Honda, and Honda try to benchmark their employee utilization against their
competitor including Toyota, so they would know where they could improve in the future and
also to identify the best practices for the process in the company.
4.2 What could your companies learn from benchmarking each other?
If the writer have a company, the writer would do benchmark to evaluate the company
performance against the industry standards. Beside that, the company can provide new ideas and
innovation and also motivate the writer, as the owner of the company, to introduce changes into
the writer business
Benchmarking is also to evaluate many aspect of a company, like for example production,
marketing and customer service processes in relation to the best management practices in the
industry. Benchmarking allows firms to develop plans on how to adopt best practices, with the
goal of increasing some aspect of performance.
Benchmarking opens firms up to thinking about new methods, ideas and tools to improve
their effectiveness. It helps break down resistance to change by demonstrating methods of
solving problems other than the one currently employed and demonstrating that these methods
work because they are being used by other firms successfully.

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