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1 Global Crisis Management-Toyota Case Study Tiffany Rudolph Doctor of Business Administration, Walden University DDBA 8006: Contemporary Challenges in Business Dr. Carol-Anne Faint November 19, 2023

2 Global Crisis Management-Toyota Case Study Companies exist to provide the best product or service. Many industries ranging from food, children’s products, cars, and even pharmaceuticals have specific quality and safety standards that they must meet before being sold to the public, or even quality and safety standards required for production. Even with the most rigorous and strict quality and safety standards, there are often still flaws that occur in products that ultimately result in recalls, and those recalls can have significant monetary and human costs. This paper is going to explore the Toyota’s recall issues, by defining product-harm with respect to Toyota, as well as the issues that Toyota leadership must resolve, types of successful and unsuccessful organizational changes, and potential remedies for Toyota’s issues. Toyota Toyota is one of many vehicle manufacturers that sell vehicles in the United States. Despite joining the US market in the 1950s, it took 50 years for Toyota to become one of the leading vehicle manufacturers (Rajasekera, 2013). One year after hitting its biggest financial milestone of gaining $15.1billion in profits, the worldwide financial crisis of 2008 occurred (Rajasekera, 2013). Despite the financial crisis of 2008, Toyota was still able to grow its market share, and surpass General Motors and become the world’s largest vehicle manufacturer (Rajasekera, 2013). Although in 2008, Toyota seemed to be winning, they still reported a loss of $1.5billion, and were facing a continuous stream of recalls, one of which resulted in 52 deaths because of unexpected acceleration issues (Rajasekera, 2013). Recalls and Product-Harm The product-harm crisis is a more extreme version of a recall. While recalls typically occur for one of two reasons, “a defect related to safety and a defect not related to safety”

3 (Rajasekera, 2013, p. 4). Product-harm crises are widely reported cases of unsafe or faulty items (Lei et. al., 2012). In the case of Toyota, the product-harm crises that this company faced was related to the “sudden acceleration problem” (Rajasekera, 2013, p. 5). The issues with acceleration occurred around the time that Toyota became the world’s leading vehicle manufacturer, and because of this newly acquired title and the perceived nonchalant attitude towards the occurrences, the media began to focus on recall issues (Rajasekera, 2013). The reputational harm that companies face may do more harm than the financial damages the companies incur from replacing products and paying out consumer damages (Lei et. al., 2012). For Toyota, the increasing use of social networking sites (SNS), further allowed the news of their mechanical issues to spread further, wider, and faster than before the widespread use of SNS. Problems that Toyota Leaders Must Solve Toyota built a brand on quality control and the major recalls occurring in 2008 and 2010 had major consequences for the organization. To limit the amount of brand damage they could have faced because of the recalls, it was key for the Toyota executives to take swift action to ensure successful management of the crisis they were facing (Rajasekera, 2013). There is a saying that “there is no such thing as bad publicity”, however when it comes to product recalls, that saying is not exactly applicable. Toyota built its brand on quality, so the recalls they incurred were more detrimental to the company than recalls that other brands had. In 1961, Toyota adopted the phrase of “total quality control”, and the more than seven million recalls occurring in 2010 was contradictory to the brand that they spent over 40 years building (Rajasekera, 2013). To combat this, executives must improve their quality control protocols by implementing new or improving existing policies, procedures, and guardrails to prevent similar issues from occurring again.

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