What Happened to Toyota

Revisions for the 7th edition by Eric D. Yordy, The W. A. Franke College of Business

This paper was conducted as a Discussion Board Post assigned by Professor J. Reinke of: Liberty University, Graduate School of Business, Lynchburg, Virginia 24515.

Toyota has hit the headlines over the years over the defects in several of their models which has sent it on a public relations and safety campaigns relating to its vehicles. Notably is the Toyota safety campaign in North America for certain models of Toyota as well as Lexus brands concerning the floor mat entrapment of accelerator pedals, later on it extended to other models in November 2009.

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In the following, the learning team will revise the Business Research Project. The team will collect all the individual papers from week 5 and will incorporate the best elements into one team inferential statistics and findings paper and spreadsheet. The team will also note the strengths and weaknesses of their statistical findings. They will collaborate if there are any differences to find the best approach. The team will combine all the papers from

BUS 430 Prof. Sara Ding International Financial Management Spring 2013 Instructions: Answer all questions in Part A, Part B, and Part C. Write your answers for Part A on the next page and write your answers for Part B and Part C in the space provided below the question. You may use one page (double sided) of notes and a financial calculator, but no other materials.

| Keller Graduate School of MgmtInternational Business (GM598) Instructor: Kenneth Ninomiya Submitted By Group ASilvio AmadorAlfonso AguilarDate:

As mentioned in the company policy, quality is of utmost concern for Toyota. This means that in 1989, when there were issues with the company’s luxury cars

Due to Toyota’s financial greed and unethical practice, vehicles were wrongly equipped with faulty brakes, sticking pedals and poor quality door looks, which caused death of many Toyota customers and hundreds of dollars in damages. When a company like Toyota acts in an ethically questionable manner, it causes the company to lose customers and develop a negative reputation. Customer tend to lose faith in the company and have to look for better service

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As mentioned, Toyota claimed to had addressed the root cause of the unintended acceleration by remedying (or so they said) the floor mat issue. At the same time as they were saying they had taken care of the issue, they were hiding another; sticky pedals were to blame for some instances of acceleration. In 2008, Toyota had discovered a sticky pedal problem with its vehicles in Europe, stemming from the use of a faulty pedal produced by A-Pedal Company. This same company was producing for the United States as well. As early as August of 2009, U.S. vehicles began showing signs of this pedal defect. Toyota had a plan in place, ready to address the issue, but in the wake of the San Diego crash incident occurred in August of 2009 (at a time when Toyota fully knew the effects of the sticky pedal and had reproduced it internally), Toyota management decided to cancel the changes and simply blame floor mats for all unintended acceleration, allowing themselves to not have to disclose information on the sticky pedals to the NHTSA. It wasn’t until early in 2010 that Toyota acknowledged the sticky pedals in its vehicles and recalled over two million vehicles.

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The purpose of this report is to examine if the reasoning behind well-known car manufacturer, Toyota’s loss of revenue and leading market position is alone as a result of extensive product recalls following a fatal crash of a Lexus ES 350 on August 28th 2009. The journal article, “Toyota Crisis: Management Issue?” (Yuanyuan Feng 2010) provides an outline of the key factors that triggered the 2009 Toyota crisis, and explores whether the fall in the company’s returns by 19% were caused purely as a result of the recall and safety concerns, or something much deeper.

It has conducted a numerous number of vehicle recalls over the last few years, which affected its brand image and its financial performance. For instance, during 2009 and 2010, more than 9 million Toyota and Lexus vehicles were recalled due to the wrong floor mats installed that were interfering with the gas pedal, and the firm suspended production and sales. In 2011, 111,000 vehicles from Toyota and Lexus were again recalled due to the damage to the element of the substrate shutdown of hybrid system. And later in the year, Toyota announced to recall 181,000 vehicles due to the non ordinary noise and oil leakage, which have resulted from the bolts that were loosely attached. (MacKenzie, 2015) Beside these recalls, there have been lawsuits for vehicle failure. Toyota has a lower return on equity (13.9%) and return on asset (4.9%) than other auto companies such as Honda and Nissan. If you compare Toyota and Honda, you can tell that asset turnover ratio for Nissan is 81%, while Toyota only has 60%. (Basu, 2015) This shows that Honda is using its asset more efficiently to make profits. Lower return on equity and asset shows that Toyota is not generating much returns for its shareholders compared to other companies and inefficient use of shareholders’

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.