Toyota Motor Corporation Ineffective Managed Its Crisis

It is known that Toyota has various other legal actions, other governmental proceedings and other claims pending against it, including

One of the main errors leading to this situation was the fact that ChassisCo didn’t follow on the Toyota principle of giving the bad news up front. Toyota stated with every supplier that they expected a swift alert in case any risks were to arise, in order to tackle root causes and diminish the problems right away. On the same line, Toyota knew that the manufacturing process for the

Soon after, under pressure from the National Highway Traffic Safety Administration Toyota did recall some vehicles. Nevertheless, only one month later, four more lives were ended as a result of Toyotas quality plunge and failure to respond. Finally, one month after the death of its eighth victim, Toyota halted production to stop and fix the problem. On top of the oil sludge recalls, this quality failure resulted in another 8.8 million recalls, a $2 billion direct financial hit to Toyota plus another $16.8 million in fines, too many innocent lives, a strained relationship with the NHTSA, and further brand deterioration (Greto et al., 2010).

Upon standing trial, it was decided that Toyota mislead stakeholders when it stated that they had addressed the underlying issue (in recalling floor mats) while covering up another significant issue (sticky pedals). Likewise, the timeline presented by Toyota stated that they only discovered the sticky

They have a power culture which has a centralized decision making party. This culture has no flexibility, centrally rigid and is mono national thus, has contributed in failure to respond to the defects. Though the corporate culture is known for its efficiency but this culture in case of the Toyota has lead to wrong decision which enhanced the issues of the company.

Toyota has again found itself having to recall a significant number of its cars due to product fault. This has caused raising of questions over its brand its reputation.

Toyota was overwhelmed by massive product recalls and damage to its reputation after questions over the safety of its cars and allegations that the company did not act quickly enough once problems had been identified. The problem commenced when one duty police officer and his family back in August 2009 after their car, a Toyota Lexus, unexpectedly accelerated, crashed into another vehicle, tumbled over an embankment and burst into flames lead to the death of the man. Initial company reports identified that the car may have been fitted with the wrong floor mats, which could have slipped and entrapped the accelerator pedal. The problems began to increase for Toyota.

Toyota, one of the world 's leading car brands is known for its impeccable production quality and as a pioneer of the automotive industry. Becoming the largest producer of vehicles by surpassing General Motors in 2008, Toyota has become known for its strong business strategy, innovation and manufacturing prowess, priding themselves on quality and long lasting relationships with all they deal with, particularly suppliers. The intellectual capital of the business however was brought into question as their name began to become tarnished with an increasing number of reports of faulty equipment in a large amount of their cars, causing them to recall approximately 9 million cars by the end of the crisis as well as releasing a number of explanations and announcements as to what these issues were attributed to. This report delves into analysing and presenting information based on the case study, Toyota Crisis: Management Ignorance? to reach a logical conclusion for the benefit of the company.

In 2009 Toyota Motors (TM) posted a net loss of $4.6 billion ("Market watch," 2014). From 2009 to 2011 Toyota encountered a number of factors contributing to their economic downturn. It began with recalling millions of vehicles, for quality related problems, followed by natural disasters hitting northeastern Japan. These disasters wiped out Toyota’s production capabilities (Tabuchi & Vlasic, 2014). While these events were occurring, the cloud of the 2008 global financial crisis was still being felt. This crisis weakened demand in the automotive industry. This weakened demand increased the competitive landscape for all automotive manufactures. This drove down automotive prices and effectively contribution margins (i.e. sold less

As the crisis escalated, Toyota was further criticized for its unwillingness to share information from its data recorders about possible problems with electronic throttle controls and sticky accelerator pedals, as well as braking problems with the production system. Cole said that “...by the time Toyota Motor Company president Akio Toyoda apologized in his testimony to the

We will start the external analysis with the PESTEL analysis of the automotive sector followed by the Porter’s five forces analysis and we will end by having a look at the key competitors and competitor pricing.

Toyota has long been regarded as the pinnacle of Japanese innovation, manufacturing quality and an industrial pioneer (Yuanyuan Feng, 2010). In 2009 Toyota faced a lager scale crisis that was rulled to be the result of “malfunctioning floor mats”. This lead to mass recalls on many of their vehicles and the loss of thousands of dollars due to recall costs and legal bills. After more incidents arose it was found that the actual cause of the incidents was malfunctioning gas pedals and the original floor-pan design. In the time of crisis Toyota was blamed for misreading and mishandling the situation resulting in major losses both financially and in their reputation to buyers.

Toyota is a key player in global automotive market. Its structure constitutes if various production plants in different locations and a very strong branding which helps it capture a major market share. Like other enterprises, Toyota has several strengths and weakness which makes it what it is now. Toyota heavily invests in Research and development which helps it come up reputable product line which is spread out throughout the world because of its strengthening global distribution network however its recent product recalling, loose grip in key geographic areas and wrong allocation of resources shows that even a strong brand like Toyota has its weaknesses.

It has been created also a gap between Image and Vision. After the crisis Toyota's relationship with its main stakeholders (suppliers, national and international customers, employees, dealers and investors) was not so strong as before, because it was loosing its reputation. The investors and the suppliers were complaining because recalling million of vehicles, and the customers were disappointed because they were not receiving what they expected.

One potential threat for Volkswagen is that Toyota may respond strategically by also cutting its prices. However, given Toyota’s quality problems over the past year, they will not be able to lower prices, as this possibly would create the perception of lower quality.. First and foremost, Toyota needs to ensure it handles its quality problems to its customers’ satisfaction. The auto maker needs to ensure the public perception is that Toyota is being upfront, honest, and responsible in dealing with recalls and the