Toyota Prius: A Case in New Product Development

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Case Details:

Case Code : MKTG118
Case Length : 27 Pages
Period : 1997 - 2005
Pub Date : 2006
Teaching Note :Not Available
Organization : Toyota Motor Corporation
Industry : Automobile
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

By 2002, it was being sold in North America, Japan, Europe, Hong Kong, Australia and Singapore. Analysts opined that the demand for hybrid cars would rise because of the unstable oil prices and the growing need for environment friendly products.

Commenting on the future of green technologies and on Prius in particular, Chris Giller of Grist.org4 said, “In the marketplace, green technologies and industries are among the fastest growing and most innovative developments.

The Toyota Prius has defied every prediction to become the must-have car. The organic food business doubles every time you blink. Green architecture is taking off.

Renewable energy, emissions trading, environmentally-conscious investing: many of the most exciting advances in environmental thinking are happening in the private sector.”5

Background Note


Toyota's history goes back to 1897, when Sakichi Toyoda (Sakichi) diversified into the textile machinery business from his traditional family business of carpentry. He invented a power loom in 1902 and founded the parent organization of Toyota, the Toyoda Group, in the same year. In 1926, Sakichi invented an automatic loom that stopped operating when a thread broke.

This prevented the manufacture of imperfect cloth. (Calling attention to problems and rectifying them at the earliest later became an important part of the Toyota Production System (TPS)). The same year, Sakichi formed the Toyoda Automatic Loom Works (TALW) to manufacture automatic looms.

Sakichi's son Kiichiro, an engineer from Tokyo University, was more interested in automobiles and engines than the family's textile business. In 1929, he traveled to the US and Europe to study the manufacturing processes in car factories there. After returning to Japan, he spent his time studying car engines and experimenting with better ways to manufacture them.

In the early 1930s, Kiichiro convinced his father to launch an automobile business and in 1933, Sakichi established an automobile department within TALW. The first passenger car prototype was developed in 1935. In 1936, Sakichi sold the patent rights of his automatic loom to a company in England to raise money to set up a new automobile business...

Excerpts >>

4] (Grist Magazine) was an online magazine providing environmental news. Grist was a non-profit organization established in 1999 and headquartered in Seattle, Washington.

5] Chip Giller, “The Environment's New Bling,”, April 21, 2005.

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