1. Analyse the reasons for the problems faced by Toyota in 2009.
2. Identify Toyota's capabilities and core competencies. How is Toyota placed internally to effectively implement the initiative proposed by Akio Toyoda?
3. What should Akio Toyoda do to return Toyota to profitability?
1: In the late 2009 Toyota faced a severe crisis mainly because of its quality problems in the manufacturing of its cars that effected Toyota’s official recall of its cars around the globe and this also threatened the company’s reputation and image of the good quality cars it manufactured and also its brand image built up by time (Hemus, J. (2010). However the vehicles of Toyota has faced a lot of issues related to accelerated problems that further stopped the growth of it production of cars globally and this also in return led to a heavy financial loss due to reasons like suspending of the production, lost market share and high repairing costs even the high reputation of quality of the cars has been destroyed over time due to all these problems. Toyota has been regarded as a crowning point of the Japanese innovation in the areas of economic reliability, quality of manufacture and fuel efficiency but in the late 2009 Toyota started facing certain serious issues with its vehicles and in six months around 9 million cars were sent back for modification for problems with the acceleration pedals, braking issues, floor mats etc, all of these were related to the problems faced by the public.
It can be seen that the cars manufactured in the present times have become more complicated in its functions and features as there is a lot of changes in the automobile features like the number of wires, computer chips and sensors. As the hi-tech systems have become more complicated and are fitted in the modern cars the quality control testing has become more difficult and is creating a trouble in the uncertainties and interferences of the manufacturing process (Clark, A. & McCurry, J. (2010). Any small defect in the electronic field that is influenced by the environment can lead to the failure of the car. Therefore in the Toyota crisis it can be seen that a simple mechanical default caused by the errors or mistakes of other companies could be avoided in terms of their management and technology. Hence Toyota received a lot of unmatched attention from the mass media which published a lot of negative news related to its crisis issues and also questioned the quality of its cars and the reputation of the company. These negative events also led to a downfall of the future growth, survival as well as the profitability of the organization.
2: As the company had seen many defaults at a particular time due to its crashes and the arguments about the company went deeper and many commentators pointed out to the growth strategy of the company (Toyoda A. (2010). The President of Toyota Mr Akio Toyoda agreed that the speed of the growth had impaired the culture of the company and sent his first apology in early October 2009 expressing his sincere grief regarding the crash of San Diego. He also wrote a journal acknowledging the failings of the company and promised the safety of the customers in the future and also pointed out to all the responses of the internal and external audits of the safety features of their vehicles. Akio also spoke about the fundamental changes that would take place for the company’s operations to make sure that Toyota sets a high standard for vehicle reliability and safety as well as for the customer’s transparency and responsiveness towards the trust restoring factors (Chang R.S. (2010). He also travelled all the way to attend the Congress in Washington and apologized in person and said that he was unaware of all these problems several months after the fatalities of San Diego crash.
3: In order to reform Toyota Akio assembled a group of general managers like the engineering and power train bodies and took a step to instruct them to restore the production and not to waste time reporting the issues. Two teams of engineers were sent to visit each plant supplier and to identify and track the backup parts till the suppliers were again manufactured. To get immediate results there could be a declaration of a new safety system that combines the different accidents avoidance technologies. Also a major restructuring of the panel of Directors and re organization of the various departments that are in charge of the Corporate Planning and also the CSR of the company to speed up the responses of the crisis (Bunkley N. (2011). Akio also shrank the board of directors by half and stated a more significant development and organized informal meetings with the advisors to review the company’s operations. They began working in closely knit group without any written reports or agendas and the decisions should be made on the spot. Another fundamental change made by Akio is that Toyota has moved its top executives in various specialized areas like a sale specialist is assigned to purchasing alone whereas a product engineer is for the area of manufacturing so that each one of them stay within their specialized areas and make use of the experience to the full
Bunkley N. (2011) ‘In Detroit, Toyota vows to earn trust’, New York Times, 10th January.
Chang, R.S. (2010) ‘Toyota creates quality task force’, New York Times, 25th March.
Clark, A. & McCurry, J. (2010) ‘Toyota boss offers ‘sincere regrets’ for faulty accelerators’, The Guardian, 25th February.
Hemus, J. (2010) ‘Accelerating towards crisis: a PR view of Toyota’s recall’, The Guardian, 9th February.
Toyoda A. (2010) ‘Back to basics for Toyota’ Wall Street Journal op-ed, 24th February.
Toyota USA press release Toyota (2009) ‘Toyota's Statement Regarding NHTSA News Release’ 8th November.