Sample Management Case Study on Theory of Constraints (TOC)

Profit-making institutions encounter challenges from different fronts. The probability of a threat to disrupt the management practices of a firm are usually high, hence a response plan is required. Nissan Motor Company is a global corporation headquartered in Japan. The organization has experienced natural disasters such as record-magnitude earthquakes and floods. The ability of Nissan Motor Company to overcome the threat of natural disasters was vital in the development of its Business Continuity Plan (BCP). Risk identification plays a key role in improving the effectiveness of a disaster recovery plan, as evidenced in the Nissan Motor Company case study.

Theory of Constraints (TOC)

The TOC is a business process that seeks to identify the weakest element of a Supply Chain Management (SCM) and subsequently work towards its improvement. Nissan Motor Company identified natural emergencies as a constraint in both operational and management activities (Puche et al., 2016). The following five steps describe how risk management would improve using the TOC theory;


The initial step entails identifying the current risk facing an organization. At the moment, Nissan Motor Company is facing a potential threat to experience a natural calamity (Schmidt & Simchi-Levi, 2013). Being a global organization, diversity is expected to play a key role in promoting prompt recovery from a natural disaster.


The subsequent step includes making prompt improvements in the throughput of the constraint. Nissan Motor Company would improve its recovery plan by planning a response process that saves workers and people, then production equipment. That is, it entails “making most of what you have”.


TOC recommends that an organization should seek alternatives when enacting a risk management plan. Nissan Motor Company would reduce and eliminate the risk of heavy losses from a natural disaster in Japan by considering risk management alternatives (Schmidt & Simchi-Levi, 2013). The company could benefit from operating in Foreign Direct Investments (FDIs) since most natural disasters do not affect multiple regions at once.


This step urges an organization to consider further solutions and practices of improving a risk management plan. For instance, the Nissan Motor Company could consider foreign insurance packages that cushion the organization during financial difficulties. Further actions, for instance, would promote efficiency in the SCM process of the company due to increased awareness in the risk management strategy.


The last step recommends an iteration of the preceding steps of TOC. In essence, consistency eliminates the potential risk of a constraint on a long-term basis. Nissan Motor Company should adopt this step to ensure its Succession Planning adheres to the core principles of its risk management plan (Schmidt & Simchi-Levi, 2013).

Total Quality Management (TQM)

Nissan Motor Company focuses on achieving high levels of customer satisfaction. The organization believes in enhancing its competitive edge through quality products. The principles of TQM are aimed at maintaining quality standards of production as a means of achieving customer satisfaction (Aquilani et al., 2017). For instance, through TQM, Nissan Motor Company has maintained its global markets in foreign countries. The organization can advance its competitive strength by adopting modern practices of TQM. Globalization is transforming automotive FDIs in which automakers establish plants in different regions of the globe.

Cultural diversity is a critical element in the SCM process of an automotive company that operates globally. Nissan Motor Company, being a multinational corporation, could capitalize on the benefits of cultural diversity in a working environment. TOQ principles and core objectives could facilitate in developing effective conflict resolution strategies (Aquilani et al., 2017). For instance, Nissan Motor Company could develop managerial policies of social inclusion that reduce instances of discrimination among employees.

Cause and Effect Diagram











The main challenge or problem at Nissan Motor Company is recovering from a natural disaster, as evidenced during unpredicted hurricanes, earthquakes, and floods. Talent management would enable the firm to retain its culture for a long time. Through talent management, a vital element of a firm’s Business Continuity Plan (BCP), the company would ensure a smooth management transition. Employee management and leadership practices would account for environmental conservation and financial transparency in the organization. Collectively, the identified strategies would enable Nissan Motor Company to counter the threat of a natural disaster.

Time Function Map (Flowchart for Nissan Maxima)






























Data for the New Location

The new location for the new manufacturing plant is Mexico City. The net risk factors of Mexico City as a suitable location are sustainable than in Columbia SC. For instance, the political risk of operating in Mexico City is lower than Columbia CS, implying a conducive working environment for employees. The different in transportation cost favors Mexico City concerning the target market.

Nissan Motor Company has promoted the global economy in unique ways. The organization operates as a multinational corporation headquartered in a country prone to natural disasters. TOC identifies natural emergencies as the main problem or risk factor that affects a production element in the firm’s SCM process. Cultural diversity ought to be addressed for the organization to achieve its objectives in TQM practices as evidenced in the launching of the Nissan Maxima model.


Aquilani, B., Silvestri, C., Ruggieri, A., & Gatti, C. (2017). A systematic literature review on        total quality management critical success factors and the identification of new avenues of       research. The TQM Journal29(1), 184-213.

Puche, J., Ponte, B., Costas, J., Pino, R., & De la Fuente, D. (2016). Systemic approach to supply      chain management through the viable system model and the theory of         constraints. Production Planning & Control27(5), 421-430.

Schmidt, W., & Simchi-Levi, D. (2013). Nissan Motor Company Ltd.: Building Operational     Resiliency. MIT Sloan Management Review, 13-149.