Toyota, the giant global automaker, paid a heavy price for its emphasis on cost control. The resulting problems with quality and the negative publicity led to severe financial losses and an erosion of its reputation in many markets.

The options for this question are the following:

A. Minimal

B. Superficial

C. Low-budget

D. Excessive

The correct answer is D. Excessive.

Explanation:

In this case, it is useful to consider that cost control is the procedure that allows companies to carry out the regulatory and protection processes against what the client expects to receive. Toyota is a well-known brand, and poor cost management can have an impact on the inflation of its costs and therefore the price of its cars rises considerably. Excessive costs negatively influence the companies' results, and therefore their correct management influences optimal results for the operation.

excessive

Explanation:

Toyota is famous for its just in time (JIT) manufacturing method. It reduces costs by lowering lead times and inventory levels. Japanese car manufacturers (e.g. Toyota and Honda) are very successful and famous world-wide because they have managed to produce very high quality cars at lower prices than their competition. Like most Japanese manufacturers, they follow Deming's total quality philosophy.

The downside with this philosophy is that is relies on a very tight vendor manufacturer relationship. Once Toyota or Honda, or other Japanese factories, start working with one vendor, they will continue to do so for long periods of time, since they trust their vendors maybe a little too much.

In this case, Toyota demands very low prices from its vendors in order to purchase components and parts. That leaves the company vulnerable to any problems related with the vendors' product quality.

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