1.Explain the case devotes to the crisis Toyota Company overcame in 2009-2010. Basically, what happened?
4.What was the solution to existing problems and the stages of implementation of changes?
1. Toyota is a very successful automobile manufacturer originated in 1937 in Japan. Toyota’s Corolla was introduced in US markets in 1968 which was a huge hit. By the 1970s, Toyota has become the 2nd automobile company in terms of market share after Volkswagen (Tregear, 2015). Apart from increasing its dealers, it also setup a production plant at Indiana to increase the local production and meet the demand however under this rapid growth and Japanese culture in US, things did not went well that resulted in a crisis in 2009-2010. It had to recall 6 million cars due to quality issues in exhaust systems, seatbelts and also had to pay a huge amount as a penalty which resulted in a heavy loss for the company. It posted negative operating income for the first time in 2009.In subsequent years, company changed its strategy, did some restructuring and make numerous initiatives and changes which results in successful turnaround of the company and gradually it is able to restore its reputation and growth and the improved revenue is just the byproduct of improving reputation (Harraf, Wanasika, Tate & Talbott, 2015). Its operating income become significantly high in 2013 and 2014. It is really interesting that Toyota survived after a massive loss by changing and implementing new goals.
When the company is growing at a rapid rate and its innovative produces also find greater acceptance, sometime it loses the focuses on quality, testing and reliability and becomes over confidence. The growth is so fast that puts pressure on the internal management
. Apart from it, it is a Japanese company operating in US and Japanese culture may or may not work in US (Meehan, & Jaworski, 2009). There was also no quality management
by a professional committee and also organization structure do not support quick decision making and responses during crisis situations. There were also issues with corporate culture (Tregear, 2015). Though it is difficult to imagine the quality issues in company like Toyota that have pioneered the , lean and many other initiatives, but the reason is that the organization structure was not supportive as required for a local culture. Power is also centralized and people on the ground do not have much accountability and at the same time, there were huge pressure to manufacture and meet the rising demand. In this process, quality aspects were neglected and the concerns quick large time to resolve as different departments like sales, marketing, production, engineering are located at different locations leading to communication delay (Tukker, 2017). With time, Toyota has learned from its mistakes and it is expected that the company would not repeat its mistakes in future.
3. Company has to recall more than 6 million cars after the various quality problems have been unfolded that resulted in a heavy loss for the company. The problem unfolded when the Lexus met with an accident causing death of 4 people. One of the person in the call complains to highway police that car is accelerating automatically and there are no brakes. Analysis from Toyota confirms that there are issues with floor mat and company had to recall all the vehicles. Apart from it, there were numerous complains about seatbelts, exhaust systems that resulted in recalling large number of cars. Company had to spend a large amount of money in various legal cases, penalties and also the reputation was highly damaged and sales have shrunk (Andrews, et al., 2011). It posted the negative operating income in 2009. During this stage, Management has clearly understood that company is in dire need of changes if it wanted to make a comeback in the US market. It has introspected its current set of problems and identified strengths and weaknesses. Finally, it defined its future goals to mitigate the weaknesses of organization structure like slow decision making, culture and inefficient quality management program although it has not mentioned that how these goals will be achieved. Toyota is a large company and it is always difficult to implement any change in a big organization.
4. The solution to existing problems was to have a quality committee, crisis management team, consolidation of people from different departments to encourage quick decision making, change in organization structure and culture. However these changes were not easy to implement. The various stages of implementation of changes can be explained by Adaptive cycle that consists of 4 steps. In step 1, organization is doing well and there is no need of any change. In step 2, Company often faces crisis due to internal issues, disruptive competitors or any other market force. In step 3, company introspects itself to know about its strengths and weaknesses and also to identify the opportunities. Then it makes a plan what it can do to mitigate the crisis and overcome the situation (Kuipers & Ben, 2014). Toyota had identified the reason for its problems and is certain what it can do but it is still not sure about the “wants” that if it solve the problems. Last step is Entrepreneurship in which organization is determined about it wants but not sure about its cans like how it will achieve what it wants. Toyota was very clear about the solutions but still not ready for arranging for implementation of these plans.
Works Cited :
Andrews, Anthony P. "The Toyota crisis: an economic, operational and strategic analysis of the massive recall." Management Research Review 34.10 (2011): 1064-1077.
Harraf, A., Wanasika, I., Tate, K., & Talbott, K. Organizational Agility. Journal Of Applied Business Research, (2015): 675
Kuipers, Ben S. "The Management Of Change In Public Organizations: A Literature Review." Public Administration 92.1 (2014): 1-20.
Meehan, Seàn, And Bernie Jaworski. "Don't Waste The Crisis Opportunity Knocks!." Perspectives For Managers 173 (2009): 1.
Tregear, R. Business Process Standardization. In Handbook On Business Process Management 2 (2015): 421-44. Springer, Berlin, Heidelberg.
Tukker, Arnold. "Conclusions: Change Management For Sustainable Consumption And Production." System Innovation For Sustainability 1: Perspectives On Radical Changes To Sustainable Consumption And Production (2017): 406.