Preview

Toyota's Crisis

Powerful Essays
Open Document
Open Document
3407 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Toyota's Crisis
“Campus”

DENMARK
CORP 3364
Crisis and Business Continuity Management
An Analytical Evaluation
On
Toyota’s Crisis of Unintended Acceleration
Submitted By:
Ram Prasad Kadariya
P11016207
Nov. 28, 2011

Tutor:
Sven-Eric Bruhn Bertelsen
Toyota Crisis of Unintended Acceleration
Definition
Any company smaller or larger can have a crisis sooner or later and that can have serious negative impact on it. Pearson and Clair ( 1998 ) as cited in Crandal, Pamel and Spillen ( 2010 ) define crisis as an event with low probability but high impact on organization. Similarly, Coombs ( 2007 ) defines crisis as an unpredictable event that can have serious impacts on organization with negative outcomes ( cited in Crandal, Pamel and Spillen, 2010, p. 4 )
Toyota became world’s No. one automobile company going ahead of General Motor in 2008. But sooner Toyota got into the serious crisis caused by the safety issue of sudden unintended acceleration and its lack of proper management leading to the massive recall of more than 14 million vehicles globally (Jacks Investment Research, 2011), government investigation, heavy fines of 48.8 million US dollar for not reacting appropriately to the report of problem and the legal actions from the victims (New York Times, 2011). Here it seems that wide spread criticism of Toyota from public, medias and government agencies (MacKenzie & Evans, 2010 ) was unpredictable for Toyota. Similarly, massive recall of 11 millions vehicles, government investigation, fines and legal action from the customers were serious negative outcomes. Damage on Toyota’s reputation (The Economist, 2011) and loss of market share (Kitamura, Ohnsman and Ito, 2011) are other negative outcomes of the incident. This event had been very difficult to handle for Toyota These all things indicate that this is a case of serious organizational crisis in the terminology of Crisis Management.

Contributory Factors
Denial of the problem:-
Toyota denied the


References: Alten, A. ( 2010 ). Congress Puts Toyota (and Toyoda) in the Hot Seat. TIME U.S. ( Feb. 24 ). Retrieved November 26, 2011 from http://www.time.com/time/nation/article/0,8599,1967654,00.html#ixzz1exu1V55b Baldoni, John (2011) Balley, D. and Krolicki, K. (2010). Toyota U.S. sales reel from crisis; GM, Ford surge. Reuters (Feb. 2). Retrieved November 27, 2011, from http://www.reuters.com/article/2010/02/03/us-autos-sales-idUSTRE6114BW20100203 BBC, 2010 ) Berger, J. T. ( 2010). Toyota – Crisis Management at its Worst. The Wiglaf Journal ( June ). Retrieved November 24, 2011, from http://www.wiglafjournal.com/communication/2010/06/toyota-%E2%80%94-crisis-management-at-its-worst/ Carty, S Dyar, D. ( 2010 ). Massive Legal Battle Shaping Up Against Toyota. Voice of America ( March 26 ). Retrieved November 25, 2011 from http://www.voanews.com/english/news/usa/Massive-Legal-Battle-Shaping-Up-Against-Toyota-89291097.html Elliot, D., Swaetz, E Isidore C. (2010). Toyota’s recall costs: $2 billion. CNN Money ( Feb. 4). Retrieved November 25, 2011 from http://money.cnn.com/2010/02/04/news/companies/toyota_earnings.cnnw/ Jacks Investment Research, ( 2011 ) MacKenzie, A. & Evans, S. ( 2010 ). The Toyota Recall Crisis. Motor Trend ( Jan.). Retrieved November 19, 2011, from http://www.motortrend.com/features/auto_news/2010/112_1001_toyota_recall_crisis/viewall.html Nelson, C New York Times ( 2011 ). Toyota Motor Corporation. New York Times (Nov. 8). Retrieved November 24, 2011 from http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html?scp=2&sq=toyota%20recall&st=cse Ohnsman, A The Economist, ( 2011 ). Toyota 's boss seeks inspiration from rice balls. The Economist ( Jan. 12 ). Retrieved November 23, 2011, from http://www.economist.com/blogs/newsbook/2011/01/carmakers_4 The New York Times ( 2011 ) Toyota ( n. d.) . Recall Information. Toyota. Retrieved November 26, 2011, from http://www.toyota.com/recall/videos/rapid-response-smart-team.html Vartabedian, R Woodyard, C. ( 2010 ). Toyota PR blitz plays catch-up after storm of problems. USA TODAY ( Oct. 2010 ). Retrieved November 26, 2011 from http://www.usatoday.com/money/autos/2010-02-10-toyotaad10_ST_N.htm W
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Best Essays

    Environmental Analysis Paper
    • 2768 Words
    • 12 Pages

    Environmental Analysis Paper

    As many may be aware, Toyota is not shy to the media spotlight. Toyota has been the number one automobile distributor since 1935 when the founder, Kiichiro Toyoda revealed their first model the A1 and by the 1950s. Toyota had produced more than 100,000 vehicles. However, not all of Toyota’s fame has been popular. Many will remember the major automobile company by the massive number of recalls totaling nearly one million, occurring in several countries across the globe. Half of the recalls were in Japan alone, but others were in the United States, Zimbabwe, South Korea, China, and Tanzania, to name a few. The recalls were from acceleration problems in different vehicles such as the Prius, Hybrid, Camry, and Sequoia Sports Utility Vehicles. On February 1, 2010, Toyota Canada Incorporation made the announcement that it would be recalling approximately 270,000 Toyota vehicles equipped with a specific accelerator pedal assembly and suspending delivery of the eight models involved in the recall on January 26, 2010. In this paper, Team C will elaborate on Toyota and its marketplace, provide the latest corporate reports, compare the three macroeconomic variables of employment, GDP and how it relates to Toyota’s deficit performance, provide its environmental analysis, and analyze information that identifies any relationships between the United States economic trends and the operational performance of Toyota.…

    • 2768 Words
    • 12 Pages
    Best Essays
    Read More
  • Good Essays

    Practice
    • 744 Words
    • 2 Pages

    Practice

    Toyota used to sit on top of the world. It basked in the reputation of building high-quality cars efficiently. It enjoyed unprecedented growth, even surpassing General Motors as the largest car manufacturer in the world. But all of that came tumbling down with reports that cars were accelerating out of control, careening down highways, and putting everyone’s lives in danger. There was even a recording of a 911 call from an off-duty policeman who lost control of his car and died in the ensuing crash. Toyota responded with a recall of historic proportions—nearly 8 million cars in the United States and 1.8 million in Europe. It even suspended sales of brand new models, including the best-selling Camry and Corolla, until the vehicles could be repaired. But still, there was confusion about what was causing the problems—was it the floor mats, the braking system, the software controlling the engine, or something else? Conspiracy theorists argued that Toyota had no clue what was causing the sudden acceleration and that their recall was basically worthless.…

    • 744 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Toyota Strategy After Recall
    • 1697 Words
    • 7 Pages

    Toyota Strategy After Recall

    As of January 28, 2010 9 million Toyota’s were recalled worldwide due to an issue with the pedal entrapment/floor mat problem.There were allegations about what the problem was some people said it was the floor mats that could easily get stuck on the pedal and cause unwanted acceleration. Others claimed that there was a problem with the accelerator itself. On February 8, 2011 the National Highway Traffic Safety Administration (NHTSA) in participation with NASA performed an investigation on the throttle system of the Toyota vehicles. The study lasted for 10 months and afterwards the scientist from NASA and NHTSA announced they found no defect. Sometimes mistakes like this can be crippling to a company’s reputation. In business it is important to have a plan for everything. All business should have a thorough business plan if they want to be successful, and Toyota has a very thorough business plan. As a CEO I would write out a detailed plan on how our company would overcome this obstacle and follow that plan precisely, this plan would consist of all the steps our company will take during the initial stages of rebuilding our brand. It’s important to maintain a good public image for the company. A bad public perception of a company can be fatal. The plan that I have will include the following steps: 1) Stop the production until the problem is fixed. 2) Apologize and explain what happened. 3) Explain the corrective actions we would take and what we’re doing to do to prevent this in the future. 4) Advertise/Rebuild the brand.…

    • 1697 Words
    • 7 Pages
    Good Essays
    Read More
  • Good Essays

    Revisiting Crisis Communication Discourse
    • 4621 Words
    • 19 Pages

    Revisiting Crisis Communication Discourse

    [sic] by which an audience can recognize [sic] the company and distinguish it from others…

    • 4621 Words
    • 19 Pages
    Good Essays
    Read More
  • Powerful Essays

    Technology and Organizational Structure
    • 1744 Words
    • 7 Pages

    Technology and Organizational Structure

    Taneja, S., Pryer, M., & Sewell, S. M. (2012). Toyota Recalls: A Strategic Leadership Perspective []. International Journal Of Business & Public Administration, 9(2), 125-140. Retrieved from Ebscohost…

    • 1744 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    A Description of Toyota Motor Corporation
    • 2083 Words
    • 7 Pages

    A Description of Toyota Motor Corporation

    Toyota Motor Corporation,, commonly known simply as Toyota, is a multinational corporation headquartered in Japan. At its peak, Toyota employed approximately 320,000 people worldwide. It is the world 's largest automobile maker by sales. The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father 's company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a department of Toyota Industries, it created its first product, the Type A engine, and, in 1936, its first passenger car, the Toyota AA. Toyota also owns and operates Lexus and Scion brands and has a majority shareholding stake in Daihatsu and Hino Motors, and minority shareholdings in Fuji Heavy Industries, Isuzu Motors, Yamaha Motors, and Mitsubishi Aircraft Corporation. The company includes 522 subsidiaries.…

    • 2083 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Good Essays

    Unethical Behaviors
    • 413 Words
    • 2 Pages

    Unethical Behaviors

    In 2007, Toyota created a catastrophe all over the nation causing 2262 incidents including: 815 crashes and 314 injuries. Toyota had built over 8.5 million defected vehicles (bad accelerators) and sent them out to be sold to customers knowingly these vehicles were dangerous to individuals (Patton, J., & Estep, B.,2010).. Unethical behavior includes the Japanese purposely failing to mention the defect in the accelerator system so they could keep up their sales to become the number one selling automobile company in the United Sates. The company was looking to make money and were not worried about the fact they were going to hurt many individuals in the society (Patton, J., & Estep, B.,2010).…

    • 413 Words
    • 2 Pages
    Good Essays
    Read More
  • Powerful Essays

    The Toyota Lexus Crash: An Overview Of The Toyota Recall Crisis
    • 2006 Words
    • 9 Pages

    The Toyota Lexus Crash: An Overview Of The Toyota Recall Crisis

    This expansion slowed the response time in the organization. However, Toyota organizational structure shows the reason why the company had been through this crisis. Toyota had a rigid corporate culture, the employees were feeling hesitant and reluctant to pass any bad news to the Toyota family. 29 of Japanese board directors are from the Toyota insiders. however, they don't allow any decisions to be made in the US branch, only in Japan and this prevented the US branch from the early recall and caused the crisis all because the organization was following a centralized power structure. Toyota used the just in time production which means making what is needed only when its needed and only the amount needed, when Toyota wants to produce a big amount of automobiles efficiently, there should be a production plan which includes the parts procurement so providing what is needed when its needed and the amount needed can reduce or eliminate the waste and useless requirements which result in improving the productivity. However, this system gave power to front line employees to stop the manufacturing streak when a problem had been noticed. after the speedy growth, Toyota did not want to stop any manufacturing line when an employee claim that there is an issue, the employee should be certain about the issue because if he stops the manufacturing because of a problem that is not existing he will be fired, so if the employee suspect any problem he prefer to keep silent and all this happens from changing in the culture of the company. Toyota has neglected the customer care because of the late recall. the culture impact change in many different ways. to be successful, the company's culture is set by values provided by the founders, they publish their ideas thru the culture which has a discipline policies and a system thinking. in my opinion, Toyota should Adopt the Role culture to improve the…

    • 2006 Words
    • 9 Pages
    Powerful Essays
    Read More
  • Good Essays

    Toyota Recall Case
    • 255 Words
    • 2 Pages

    Toyota Recall Case

    Toyota was forced to recall millions of its vehicles in the US and Europe and reports of accelerator defects emerged. The Japanese automotive giant was criticised for putting profits ahead of safety, and an ill-coordinated communications response did not help matters. Toyota’s brand values—reliability, safety and quality—came under sustained scrutiny.…

    • 255 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Toyota Recall Term Project
    • 821 Words
    • 4 Pages

    Toyota Recall Term Project

    Refusing to accept the explanation of Toyota and the federal government, hundreds Toyota owners are in rebellion after a series of accidents caused by what they call "runaway cars."…

    • 821 Words
    • 4 Pages
    Good Essays
    Read More
  • Powerful Essays

    Investment Case Study: Honda vs Toyota
    • 3624 Words
    • 15 Pages

    Investment Case Study: Honda vs Toyota

    Riley, Charles. "Toyota Recalls 7.43 Million Cars." CNN Money. N.p., 10 Oct. 2012. Web. 20 Mar. 2013. .…

    • 3624 Words
    • 15 Pages
    Powerful Essays
    Read More
  • Best Essays

    Lesson from Toyota Case
    • 1550 Words
    • 7 Pages

    Lesson from Toyota Case

    This assignnment’s purpose is to identify the crisis management issue in Toyota Corporation’s series of worldwide recalls of malfunctions in Toyota vehicles. Therefore, here presented the brief overview of historical developent of Toyota. Some detail in crisis situation in the firm found itself is presented in this analysis. This previously a recognized world leader which is Toyota had give us an excellent example of failure to manage the crisis.…

    • 1550 Words
    • 7 Pages
    Best Essays
    Read More
  • Powerful Essays

    Toyota Operations Improvement Plan
    • 3388 Words
    • 10 Pages

    Toyota Operations Improvement Plan

    In the 1960's Toyota linked together quality, customer satisfaction, and profit. These became pillars for Toyota's foundation and the company's baseline for growth and expansion. In 2009, the company's recalls started with what was deemed a floor mat issue. “Over the next four months, the company recalled 3.4 million more vehicles in three separate recalls over and above the initial 3.8 million, for a total of more than 7 million” (Cole, 2011). The issues were linked to different things; Sticky gas pedals, more floor mat problems, software glitches, and electrical problems. But one fact remained, the percentage of unintentional accelerations by Toyota brand cars increased yearly. By December 31st 2009, “Toyota accounted for 33 percent of all unintended acceleration complaints filed with NHTSA.” (Bailey & Kim, 2010). By 2012, Toyota lost almost 3 billion dollars in Government and lawsuit fees and suffered a sales decrease from 2009-2011. The company's image and standard of quality was tainted.…

    • 3388 Words
    • 10 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Toyota Quality Management
    • 3300 Words
    • 10 Pages

    Toyota Quality Management

    Kiley, D. (2007). The Toyota Way to No. 1. Bloomberg Businessweek, Retrieved July 19, 2013,…

    • 3300 Words
    • 10 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Toyota Car Crisis
    • 16008 Words
    • 65 Pages

    Toyota Car Crisis

    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 to retain its good reputation. Crisis, Toyota, Corporate Reputation, crisis management, consumer perception…

    • 16008 Words
    • 65 Pages
    Powerful Essays
    Read More