Toyota Case Study 2009

In October 2009 Toyota announced that it was recalling 3.8 million U.S. vehicles which cost the company more than seven million dollars. This was due to the issue of whether “poorly placed or incorrect floor mats under the driver’s seat could lead to uncontrolled acceleration in a range of [its] models.” The catalyst of the issue was the incident involving a crash in California whereby the accelerator of a Lexus sedan got stuck, resulting in a mans death. As well as additional reports including “sticky gas pedals, pedal entrapment and software glitches” which all affect braking and thus related to the company’s manufacturing systems. The National Highway Traffic Safety Administration became involved and pressured Toyota to “recall additional vehicles and models.” As Cole states, Toyota “was in a class by itself, long known, even revered, for its sterling quality” and “pioneer of numerous quality improvement methodologies.” The suggestion that Toyota was experiencing quality issues, was a serious matter, and one that could dramatically harm its strong reputation for building reliable, low-defect vehicles.

The organizational structure of Toyota gives us some insight into the handling of the crisis and ideas for the most effective way for Toyota to move forward. A conflict such as this has the ability to paralyze productivity but if dealt with constructively and effectively, can present opportunities for learning and improvement. Companies such as Toyota that have a rigid corporate culture and a hierarchy of seniority are at risk of reacting to external threats slowly. It is not uncommon that individuals feel reluctant to pass bad news up the chain within a family company such as Toyota. Toyota’s board of directors is composed of 29 Japanese men, all of whom are Toyota insiders. As a result of its centralized power structure, authority is not generally delegated within the company; all U.S. executives are assigned a Japanese boss to mentor them, and no Toyota