Has Cost Controlling and Cost Cutting Contributed to Toyota's Recent Massive Recalls?

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Has cost controlling and cost cutting contributed to Toyota's recent massive recalls? Introduction The auto industry is one in which innovation is key. Competition, primarily with the low cost producers creates an industry with low margins, high fixed costs, and intense rivalries. In many instances, as soon explained, cost cutting is the only natural alternative for many auto companies navigating in a very cyclical industry. The auto industry has seen many turbulent periods prior to 2008. The very nature of the auto industry is that of various cycles of optimism and pessimism on the part of the consumer. Toyota is no different in this regard. Of late, economic uncertainty has created cost pressures on many auto companies. These auto companies, pressed for demand for their cars, are now attempting to cut costs to offset lost revenue. Typically, during economic pessimism and recession, auto sales decline as consumers have less discretionary income. However, due primarily to Toyotas quality and organizational structure, the company has continued to grow. However, the company's relentless tenacity in regards to cost structure is now resulting in massive recalls of many of its more popular vehicles. I believe, this tenacity, which was once a competitive strength of Toyota is now causing it to recall many of its cars. Through its extensive reorganization, the company has seemingly sacrificed quality relative to its peers in the industry (Dawson, 2004). Macroeconomic

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