...Introduction Toyota has demonstrated along its history to be a high tech car manufacturer company, leader in manufacturing reliable and high quality cars. The rest of the car manufacturers adopted Toyota’s production philosophy, the well-known TPS. The continuous rivalry with the rest of the car manufacturers and the aggressive growth strategy combined with a cost reduction plan caused Toyota to overlook quality issues which caused a very serious problem known as “The Accelerator Crisis” This crisis affected the company’s image and reputation and of course had an impact on its financials since they had to recall the defective cars. In this document it is intended to analyze and explore the reasons behind this Toyota’ accelerator crisis and how it was managed. Case Analysis Toyota had 14 principles in four sections that encompass a philosophy of continuous improvement. These sections, or groupings, refer to: long-term vision, process improvement, root-cause analysis & self-criticism, and developing the people. Toyota was so successful in implementing them that these best practices became a philosophy that others wanted to emulate. It is surprising that Toyota had to face a crisis over its lack of quality. In determining the main cause for this crisis, we can identify several items such as change of the management staff, from family to a professional team, oriented towards growth and increasing sales volumes. The original Toyota values got mixed-up, prioritizing volume...
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...Abstract Toyota Motor Corporation, headquartered in Tokyo, Japan, is a multinational manufacturer of motor vehicles. Its brands include Lexus, Prius, Avalon and the Camry, the “best-selling car in America for nine years running and 13 of the past 14 years” (Pressroom.Toyota.com, 2011, October 17). Started in 1937, Toyota has numerous manufacturing facilities around the world, with regional offices in North America, Latin America, Europe, and Southeast Asia. Over the years, Toyota built a reputation of high-quality vehicles and excellent workmanship, and in 2008, it overtook GM as the #1 carmaker in the world by sales volume (Treehugger.com, 2009, January 21). However, in 2010, this reputation was put on the line when safety issues led to a massive recall of vehicles. To make matters worse, Toyota’s crisis communications failed to shore up confidence in the general public on the way the situation was being handled. This crisis management assessment will investigate some of the issues with Toyota’s “Open Letter to Toyota Customers”. How could a company that built itself on the pillars of safety, quality and reliability go from hero to villain in the blink of an eye? Rather than rebuilding trust and confidence with the public during a crisis, the “open letter” simply enraged much of the public and has become a case study in poor crisis communications. Next, we will review a second crisis communication letter, prepared by yours truly, that could be delivered by Toyota to the...
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...CASE ANALYSIS CRISIS MANAGEMENT AT TOYOTA CASELET Toyota Motors Corporation, one of the largest automakers in the world. In January 2010, Toyota was forced to recall millions of cars after problems with braking, floor mats and acceleration pedals in its vehicles. The recalls even led Toyota to halt sales and production of eight of its most popular models. Due to growing number of recalls, sales plummeted thereby affecting the company's position in the global automotive industry. Analysts began to question Toyota's legendary quality and felt that the recalls represented a major failure on part of the company. After the recalls, Toyota went into crisis management mode and announced a fix for the accelerator problem. Various crisis management initiatives undertaken by the company to regain the trust of customers and restore its image as a quality automaker. As part of its crisis management process, Toyota placed ads in print and television media, involved executives and used social media platforms to address its customers. However, some analysts felt that the crisis communication team of Toyota was weak which led to a delay in identifying and addressing the situation. Crisis management experts were of the view that the image of Toyota would depend on how quickly it can fix the problems and how well it communicates with its customers. ISSUES: 1. Understand the importance of crisis management and various issues and challenges related to it. 2. Analyze whether Toyota's...
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...and Business Development Toyota Crisis: Management Ignorance? – A Swedish Case of Consumers Perceptions Master’s Dissertation in Management of Innovation and Business Development, 15 ECTS Final seminar 2010-05-27 Authors: Yuanyuan Feng Supervisor: Mike Danilovic Hamlstad University Feng(2010) TOYOTA CRISIS: MANAGEMENT IGNORANCE? – A SWEDISH CASE OF CONSUMERS PERCEPTIONS Yuanyuan Feng School of Business and Engineering, Halmstad University, Sweden Abstract Since the late 2009, the famous vehicle manufacture Toyota has suffered a severe crisis due to unintended quality problems in its cars which had triggered Toyota’s largest officially recalls of its cars around the world. This crisis threatens the company’s previous reputation of good quality cars, as well as the brand image built up over time. This study aims to elaborate on the Toyota crisis in order to understand why Toyota faces this crisis and how they deal with the crisis; and investigate consumers’ perceptions of Toyota brand as the outcome of the crisis, with a focus on Swedish market. A qualitative research along with a number of face-to-face interviews with Toyota Swedish dealer and Swedish vehicle consumers is conducted. The findings reveal that the impact of the Toyota crisis in Sweden is not as serious as that in America; there remain satisfied and loyal Toyota’s customers who are not swayed by the negative publicities; While Toyota should manage the crisis even in a better way in order...
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...Critically evaluating a business response Introduction Between 2009 and 2011, the Toyota recall crisis has aroused massive attentions, discussions and criticisms in a wide range of media circles (Piotrowski and Gray 2010). This paper will firstly review the whole crisis situation and then evaluate Toyota’s response from three different perspectives. There are many arguments about the deep root problems of Toyota’s poor reactions. This paper will only focus on two perspectives to offer recommendations. One is the corporation’s communication strategy; the other is the corporation’s crisis strategy. Case study overview Toyota Motor Corporation is one of the baggiest car manufactory in the world. It is the car industry leader on both sales and production. The brand name was treated as the synonymous with good quality and safety (Kingston 2010). However, between 2009 and 2011, Toyota was experiencing sequent recalls due to its safety issues. Recalls were mainly triggered by several car accidents in U.S. The first recall was caused by the problems with floor mats that might trap accelerator pedals in November 2009. But the crisis did not end there. Toyota continually conducted more recalls due to wide range reasons. The problems include sticky gas pedals, software glitches, steering control and fuel leakage. Before February 2011, there were nineteen separate recalls and encompassed over twenty million cars in total within different car models (Cole 2011). Toyota’s initial response...
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...Business Development Toyota Crisis: Management Ignorance? – A Swedish Case of Consumers Perceptions Master’s Dissertation in Management of Innovation and Business Development, 15 ECTS Final seminar 2010-05-27 Authors: Yuanyuan Feng Supervisor: Mike Danilovic Hamlstad University Feng(2010) TOYOTA CRISIS: MANAGEMENT IGNORANCE? – A SWEDISH CASE OF CONSUMERS PERCEPTIONS Yuanyuan Feng School of Business and Engineering, Halmstad University, Sweden Abstract Since the late 2009, the famous vehicle manufacture Toyota has suffered a severe crisis due to unintended quality problems in its cars which had triggered Toyota’s largest officially recalls of its cars around the world. This crisis threatens the company’s previous reputation of good quality cars, as well as the brand image built up over time. This study aims to elaborate on the Toyota crisis in order to understand why Toyota faces this crisis and how they deal with the crisis; and investigate consumers’ perceptions of Toyota brand as the outcome of the crisis, with a focus on Swedish market. A qualitative research along with a number of face-to-face interviews with Toyota Swedish dealer and Swedish vehicle consumers is conducted. The findings reveal that the impact of the Toyota crisis in Sweden is not as serious as that in America; there remain satisfied and loyal Toyota’s customers who are not swayed by the negative publicities; While Toyota should manage the crisis even in a better way...
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...A Lesson in Communicating Bad News: The Toyota Recall Crisis: Missteps, Miscommunications, and Missed Opportunities Mari E. Friedrich MGT 460 June 24, 2015 Abstract The paper will serve to examine the corporate leadership failures of the Toyota 2009-2010 defective acceleration recalls. Focusing specifically, on a case that occurred in the state of California in 2011, resulting in a massive recall by Toyota, and nearly 30 percent of all U.S. vehicle recalls in 2010. This study will center on Toyota’s response on the case facts and its internal and external communications with Toyota North America, the Toyota owners, and the National Highway Traffic and Safety Administration (NHTSA). It will also address key stakeholder issues and risks to the Toyota brand. Finally, desirable outcomes will be outlined for resolving the ethical challenges by Toyota, as well as possible solutions that could have been implemented and recommendations for the future. A Lesson in Communicating Bad News: The Toyota Recall Crisis: Miscommunications, Missteps, and Missed Opportunities Case Introduction There has been an unprecedented period of corporate crises over the past decade. Effective crisis management has been a key element in whether a company can ride the storm and come out the other side. There is a constant presence of crises in the world of business and global business today that the public has seen firsthand. A crisis can happen to any company, large or small in every...
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...issues of quality and ethics in Toyota Motor Corporation in line with the recall crisis at Toyota and its overall impacts to the brand as revealed by (Greto, Schotter & Teargarden, 2010) in their study titled, “Toyota: The Accelerator Crisis.” In her process identification, Ndagire introduces us to the drivers of the Toyota accelerator crisis and in her response, she contends with the fact that nonfamily members who were obsessed with quantity influenced the crisis in quest. In addition, the author says that the reason behind the recall crisis at Toyota was the nonfunctional management structure. Ndagire goes on o mention that failure by the top management to involve the employees in decision making especially concerning the TPS system demoralized the employees hence they could not support the corporate brand while the stakeholders would only do so upon invitation and satisfaction of the model quality. Also to not from the process identification is that Toyota did not manage public relation in U.S in the verge of the accelerator crisis thus need for crisis management. According to Ndagire, for the CEO to restore Toyota‘s reputation, he should change the management structure by ensuring flow of information among different units as well as minimizing on cost cutting. Further, she concludes that Toyota lost sight of its long-term philosophy by focusing on quality rather than quality and that three different quality dimensions were not addressed at Toyota. After analyzing the...
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...evaluating The Toyota Way process within Toyota during the time of their accelerator crisis. A problem statement will be defined around Toyota’s internal and external customer complaint responses and communication channels, especially between US Toyota employees and the authoritative management of Toyota based in Japan. Problem Statement To become the leading automotive producer, with a strong presence in all of the 50 states and abroad, Toyota developed a strong global marketing plan and employed more than 8,900 people. They “produced 5.2 million cars in 58 production sites in 2000, and by 2009 they had the capacity to produce 10 million cars and had added 17 production sites.” (Greto et al, 2010, p. 3). Any industry leader in the position of Toyota should seize opportunities to grow and expand while ensuring that the company employees, customers, and stakeholders all stand to benefit and are all well informed about the possibilities that lie ahead. Effectively, a clear and informative communication system must be part of the company’s organization structure. However, the organizational structure known as the Toyota Way, a system designed to provide the tools for people to continually improve their work, though efficient and effective, could not prevent the accelerator crisis. Toyota’s rigid corporate culture and a hierarchy of seniority are at risk of reacting to external threats slowly, which is what happened during the accelerator crisis. Though Toyota places an emphasis...
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...9/11/2015 Abstract Prior to October 2009, Toyota was seen as a leader in manufacturing and quality that other companies were trying to emulate (Cole, 2011). The company was facing a recall crisis because the National Highway Traffic Safety Administration had to pressure them to recall additional vehicles after a driver died in what was identified as a stuck accelerator followed by reports of unintended acceleration as a result of sticky gas pedals (Cole, 2011). Communication was the process identified that Toyota needed to improve. Communication between customers, management, employees, and the media was selected as the process for improvement. Project Management Institute (2013) reports that Business research from Forbes, PricewaterhouseCoopers LLC, and Towers Watson proves that companies realize that effective communication is important for success. According to Project Management Institure’s The High Cost of Low Performance: The Essential Role of Communications, “PMI’s 2013 Pulse of the ProfessionTM report revealed that US$135 million is at risk for every US$1 billion spent on a project. Further research on the importance of effective communications uncovers that a startling 56 percent (US$75 million of that US$135 million) is at risk due to ineffective communications” (p. 2). This paper discusses the process of how to improve communication at Toyota. Introduction Toyota experienced the accelerator crisis because of a breakdown in communication. We start...
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...Nhi Nguyen 1 Toyota Communicating Through Crisis INTRODUCTION Since September 2009, the famous vehicle manufacture Toyota has suffered a severe crisis due to unintended quality problems in its cars. In responding to the crisis, Toyota has recalled more than 10 million vehicles worldwide for accelerator pedal, carpet and floor mat flaws that may cause unintended acceleration. This catastrophe has led to millions of dollars in settlements and U.S. fines, as well as hundreds of product liability lawsuits against the automaker, threatening the company’s previous reputation of good quality cars, as well as the brand image built up over time. This research paper aims to elaborate on the Toyota crisis in order to understand why Toyota faces an escalating crisis and how they deal with the crisis, and evoke lessons from Toyota scandal. ABOUT TOYOTA MOTOR CORP. Toyota is one of the world’s largest automakers, based in Toyota, Aichi, Japan. Since its establishment in 1937 in Japan, Toyota has a long history of building safety, reliable and high quality vehicles. Today, the company manufactures vehicles and parts at 53 production sites in 27 countries and regions around the globe, with a variety of sub-brands categories such as Lexus, Yaris, Corolla, Camry, Toyota trucks, and the world’s first gas/electric hybrid Prius, etc. (toyota.com). Its vehicles have been well known for quality, reliability and fuel efficiency. According to the article, “Accelerating into trouble,” from the Economist...
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...DE MONTERREY | THUNDERBIRD Production Operation Management TOYOTA: THE ACCELERATOR CRISIS Study Case Report | | 1. What were the drivers of Toyota´s accelerators crisis? Why was Toyota facing a recall crisis? The drivers of Toyota crisis were Strategic, structural and cultural issues. At the strategic level, the cost reduction strategy added with the increasing of the output volume strategy caused a decrease in quality. Furthermore, the structure of Toyota (HQs in Japan and not in the U.S) impacted Toyota’s response to customer’s claims, taking a long time to address Toyota consumer’s concerns, and in fact was one of the most criticized issues during the crisis. In other words, the company took a considerable time before recalling units that meant life losses and significant economic impacts. At the cultural managerial level, there were difficulties driven by how Japanese address the situation vs. how Americans deal with the problems. The company lost its original philosophy due to different cultural orientations between Japanese headquarters and North American subsidiaries. The fact that Toyota was recovering from its last unit’s recall (due to motors leaking oil) plus the beginning of the global financial crisis, ended up yielding a deviation of the original long term plan to look after the U.S subsidiary´s financial performance, triggering a swap in the three main pillars of Toyota (Safety, Quality and Volume). 2. Michael Porter claims that...
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...challenges, discuss the drivers of Toyota’s accelerator crisis. Why was Toyota facing a recall crisis? Toyota was facing the accelerator recall crisis because the company and its management became more focused on growth and less concerned with the TPS principles the company had adhered to for much of its existence. Lean operations with a focus on the bottom line and a very lackadaisical support system in North American oversight as well as deficient TPS training proved to be a cultural disadvantage to a highly centralized Toyota management team (Gretto, Schotter & Teagarden, 2010). How well are Toyota’s management, employees and external stakeholders able to support their corporate brand? There was a clear breakdown between Toyota’s management, employees and external stakeholders. Because Toyota’s management was centralized in Japan and the U.S. operations worked in isolation from an information sharing standpoint, it was impossible for all interested parties to effectively collaborate and quickly solve the accelerator issue. There was a difficulty in training and process collaboration, especially in regards to TPS, which the American subsidiaries lacked any expertise or field knowledge in (Gretto, Schotter & Teagarden, 2010). Has Toyota effectively managed ethics and public relations in the United States? Who should be accountable for this activity? How could Toyota’s crisis management be improved? Toyota was deficient in managing ethics as well as handling...
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...Committee Basic Approach to Internal Controls Business Continuity Management (BCM) at Toyota Risk Organization Risk management system Improve risk management Creation of the Emergency Operation Centre Creation of Global Large-Scale Disaster Countermeasure Committee Improving information telecommunication system in case of an emergency CSR Management Organizational Culture If you were hired as an Advisor: What recommendations or changes would you make? How would you implement these recommendations or changes? What are the company’s mission and current strategies? Toyota has for mission to be the first choice for all customers looking for materials handling solutions and to be widely recognized for their innovative products and services with a total respect for society. Toyota tries to build trust and confidence with their customers by delivering outstanding quality products and services which ass real value to their businesses. Toyota respects the expectations and ambitions of employees, stakeholders and suppliers through a constant search to improve. Toyota aims to achieve long-term and stable growth in harmony with the environment, the global economy, the local communities it serve and its stakeholders. The impact of the high Australia dollar, new government regulations, changing customer preferences and increased product competition have impacted significantly on Toyota and have forced us to review and transform the way we do business. In addition to their...
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...Team B Assesses Public Relations for Toyota SUA Recalls MKT/578 University Of Phoenix Team B Assesses Public Relations for Toyota SUA Recalls In August of 2009, an off duty California Highway Patrol officer and three family members died when their Lexus crashed after the accelerator pedal stuck. The car was traveling at a high rate of speed and could not be stopped according to a panicked call from the driver (MacKenzie and Evans, 2010). This tragedy kicked off a crisis for Toyota as it had to deal with accusations that a faulty accelerator pedal is what caused the crash. The company faced negative publicity from the media, the public and the NHTSA (National Highway Transportation Safety Administration) as a result of this accident and other accidents involving sudden unattended acceleration (SUA) from a stuck accelerator pedal. In response to these incidents and the publicity, Toyota eventually recalled 7.5 million vehicles to fix the stuck accelerator problem and shut down production of its effected vehicles until the problem could be solved. In this paper, Learning Team B has evaluated the role public relations played in this case and how the company could better prepare for a similar crisis. Problem Toyota realized it had a public opinion problem after numerous reports of “runaway” cars were claimed to have been caused by an accelerator pedal that would remain pressed down after the driver released the pedal. This resulted in the California accident...
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