Production and Sales Quotas
Posted: Fri Jan 23, 2004 5:27 pm
Today I read an article about Toyota surpassing Ford in vehicle sales to become
the number two in total annual sales, behind GM. (However, Ford still leads
Toyota in car sales, if Toyotas heavy truck division is excluded from the
numbers.)
Fujio Cho, president of Toyota, is generally considered to be an excellent
manager and was ranked as one of the leading managers in the world by Business
Week. What struck me were the last few paragraphs of the article.
Heres the article:
http://story.news.yahoo.com/news?tmpl=s ... 3281261243
"Fujio Cho, president, said last autumn that having passed Ford he would not be
aiming to overtake General Motors, the worlds largest motor manufacturer with
sales of 8.6m last year.
I am not personally interested in the ranking of the sales," he said. I was
surprised to hear that [Toyota was ahead of Ford]. Establishing the target
figure of the sales is not a good way to manage. What I mean by this is that,
for example, if we just stick to our sales target the Toyota employee might
resort to discounting the vehicles and I dont want to do that. "
Chos no-quota approach is unusual and strikes me as a production-distribution,
or beer game, strategy. But it could also be just a pricing strategy. Or both.
What do people think about Fujio Chos reluctance to use sales quotas?
Are there system dynamics models out there that compare sales quota strategies
to alternatives?
By the way, prior to becoming president of Toyota, I believe Fujio Cho was
director of strategy.
Best regards, Michael
______________________________________
Forio Business Simulations
Michael Bean
mbean@forio.com
the number two in total annual sales, behind GM. (However, Ford still leads
Toyota in car sales, if Toyotas heavy truck division is excluded from the
numbers.)
Fujio Cho, president of Toyota, is generally considered to be an excellent
manager and was ranked as one of the leading managers in the world by Business
Week. What struck me were the last few paragraphs of the article.
Heres the article:
http://story.news.yahoo.com/news?tmpl=s ... 3281261243
"Fujio Cho, president, said last autumn that having passed Ford he would not be
aiming to overtake General Motors, the worlds largest motor manufacturer with
sales of 8.6m last year.
I am not personally interested in the ranking of the sales," he said. I was
surprised to hear that [Toyota was ahead of Ford]. Establishing the target
figure of the sales is not a good way to manage. What I mean by this is that,
for example, if we just stick to our sales target the Toyota employee might
resort to discounting the vehicles and I dont want to do that. "
Chos no-quota approach is unusual and strikes me as a production-distribution,
or beer game, strategy. But it could also be just a pricing strategy. Or both.
What do people think about Fujio Chos reluctance to use sales quotas?
Are there system dynamics models out there that compare sales quota strategies
to alternatives?
By the way, prior to becoming president of Toyota, I believe Fujio Cho was
director of strategy.
Best regards, Michael
______________________________________
Forio Business Simulations
Michael Bean
mbean@forio.com