Free Essay

Toyota Case Analysis

In: Business and Management

Submitted By 01vulture
Words 1341
Pages 6

Toyota Motors Corporation, one of the largest automakers in the world. In January 2010, Toyota was forced to recall millions of cars after problems with braking, floor mats and acceleration pedals in its vehicles. The recalls even led Toyota to halt sales and production of eight of its most popular models. Due to growing number of recalls, sales plummeted thereby affecting the company's position in the global automotive industry. Analysts began to question Toyota's legendary quality and felt that the recalls represented a major failure on part of the company. After the recalls, Toyota went into crisis management mode and announced a fix for the accelerator problem. Various crisis management initiatives undertaken by the company to regain the trust of customers and restore its image as a quality automaker. As part of its crisis management process, Toyota placed ads in print and television media, involved executives and used social media platforms to address its customers. However, some analysts felt that the crisis communication team of Toyota was weak which led to a delay in identifying and addressing the situation. Crisis management experts were of the view that the image of Toyota would depend on how quickly it can fix the problems and how well it communicates with its customers.


1. Understand the importance of crisis management and various issues and challenges related to it.

2. Analyze whether Toyota's response to the crisis was adequate.

3. Explore the PR and crisis management strategies that Toyota should adopt to contain the impact of the crisis and retain its brand reputation.


The case is about the poor crisis management of Japan based Toyota motor corporation. It took Toyota around 77 years to build an enviable reputation for producing high quality products - automobiles and rugged commercial/leisure vehicles; and about 7 months to cause the world to question its validity. The consequences of poor crisis management could severely damage the reputation of a company; hence every company must be prepared for crisis. This case explains the importance of crisis management and the crisis management strategies Toyota should adopt in future.


Crisis management is the process by which an organization deals with a major event that threatens to harm the organization, its stakeholders, or the general public. Three elements are common to most definitions of crisis: (a) a threat to the organization,(b) the element of surprise, and(c) a short decision time. Venette argues that "crisis is a process of transformation where the old system can no longer be maintained." Therefore the fourth defining quality is the need for change. If change is not needed, the event could more accurately be described as a failure or incident. In contrast to risk management, which involves assessing potential threats and finding the best ways to avoid those threats, crisis management involves dealing with threats after they have occurred. It is a discipline within the broader context of management consisting of skills and techniques required to identify, assess, understand, and cope with a serious situation, especially from the moment it first occurs to the point that recovery procedures start.


* Efficient Crisis management practices, * Prepare the company to face contingent or emergency situations effectively and efficiently * Ensures responsibility of the organisation to its stakeholders * Helps the management and the employees to face any kind of crisis without any panic or controversies.

* It improves the public relations of the company with the environment.

ISSUES AND CHALLENGES: The issues and challenges faced in crisis management includes the following: * Inefficient crisis management team in the company which is a disadvantageous factor. * Proper forecast of the potential problems that would occur is difficult. * Crisis management plan should be formulated prior by the company. * The PR must be efficient enough to tackle the media which otherwise will result in bad reputation. * Improper crisis management tarnishes the brand image of the company. * Defining the actual problem in a short notice is difficult.

* Identifying and planning for worse case scenarios.


The Toyota’s response to the crisis are listed as follows: * It recalled 8-10 million of its Toyota and Lexus vehicles sold worldwide. * Toyoda promised to beef up quality control and said he would head a special committee to review quality checks, go over consumer complaints and listen to outside experts to develop a fix. * Set up customer relations handling complaints and delivering service for faulty brakes. The response given by Toyota however didn’t satisfy its customers. It was a shock to Toyota’s customers who were so assured about the quality and reliability of Toyota vehicles.

Some of the reactions from public: "Toyota needs to be more assertive in terms of providing consumers comfort that the immediate problem is being addressed and that it can deal with these crises," said Sherman Abe, a business professor at Hitotsubashi University in Tokyo. The PR should be dealing with the media convincingly which is very important in critical situations´.


In April 2010, Toyota Motor Corporation (Toyota) agreed to pay a whopping US$16.4million fine imposed on it by the National Highway Traffic Safety Administration (NHTSA)in the US

The fine related to sticky accelerator pedal defects in its vehicles, which resulted inthe company recalling approximately 2.3 million vehicles in the US in late January 2010. According to industry observers, the fine was the largest civil penalty ever levied on an automaker by the NHTSA. Regulators said that Toyota had been penalized as it had failed to notify the NHTSA for at least four months after learning about the problems in its vehicles. As per US federal law, automakers were required to disclose defects within five business days. However, Toyota refuted the allegations that it had violated safety regulations and maintained that it had agreed to pay the fine in order to avoid a dispute.

The PR and Crisis management strategies includes the following * Vulnerability audits should be conducted periodically. * Establishment of the crisis response team, a notification system and definition of when such a team would be mobilized. * Development of a step-by-step action plan and checklists. * Guidance regarding where to locate and how to outfit a crisis communicationscenter. * Simulated crisis training. * Media and speaker i.e PR training. * Stakeholder research and analysis. * Legislative and regulatory response planning; and

Expert’s advice for Toyota:
Toyota should increase its planned spending on Super Bowl ads and offer commercials that promote the brand "as being safe, secure and reliable.''Mr. Doyle proposes that the Toyota president issue a statement or give a news conference stating, "We are now prepared to manage this. We know where the problem is.'' CRISIS MANAGEMENT INITIATIVES:

As part of its crisis management strategy, on January 31, 2010, Toyota * Launched a major PR campaign to promote the safety and reliability of its vehicles. * It used print and television media for public apologies, explanations, and press releases. * Toyota sent apology letters to its customers informing them about the recall. * Help line for handling customer complaints and repairing the defaults.


Industry experts considered the spate of recalls as a major crisis for the company as it not only led to financial loss but also became a significant threat to the reputation of the company. The suspension of the sales of eight of its popular models cost the company sales of 20,000cars and light trucks, accounting for over US$500 million in lost revenue in the last week of January 2010.


Toyota being one of the world’s largest automaker should ensure efficient crisis management and Public relations in order to protect their reputation and retain their customers in the market. Effective steps should be taken in order to reinstall their quality and reliability of their products. The defects in their product design have to be corrected and safety of the customer should be ensured. It should formulate and plan for crisis and respond to the public immediately without delay and ensure trust among the customers.…...

Similar Documents

Free Essay

Toyota Case

...TOYOTA: DRIVING THE MAINSTREAM MARKET TO PURCHASE HYBIRD ELECTRIC VEHICLES Table contents 1- Situation analysis ………………………………………………………3 a. The market ………………………………………………….……3 b. Micro-environment ………………………………………….……4 c. Macro-environment …...................................................................4 2- Answers to the questions …………………………….………………….4 1- Situation analysis Synopsis: Toyota the international automobile manufacturer is aiming to become the largest worldwide automaker, seeking to reach 15% of global sales. In this case, this company is trying to be leader of the hybrid-electric automotive. The challenge, here, is to change consumer perceptions and attitudes to reach the universal mainstream acceptance. Market: In the US, the auto industry is really vast. In 2001, consumers used more than 120 billion gallons of gas, costing $186 billion. Cars are very important for Americans, because they project the make and the model of their car as a reflection of their status and self-image. Recession happened between 2001 and 2003, which affected the new car sales; and a struggle was created for the major manufacturers to hold their leadership and positions with the new needs of the consumers and the strong environmental legislation and regulations in US. HEV combines existing technology with innovative new environmentally conscious technology. In 2003, Toyota had taken the lead in this HEV evolution; it had taken a strong approach to adapt...

Words: 1459 - Pages: 6

Premium Essay

Toyota: Analysis

...pursue its strategy, including its capital and human resources. In this modern and competitive era growing business, means taking timely, quick and accurate decisions about the way we want to grow our business. As an organisation grows, it becomes more and more complex for management to control. In this case, strategic planning is the key component for all type of organisations, which help them to keep on track. All organisations depend on strategic plan to keep the long-term focus synced up with day-to-day decision-making. From Board level to front line staff, everyone is aligned with the organisation's strategy and vision. Because it is a road map to lead organisation from where it is now to where it would like to be in future. It is very important for management that they make sure, that all those who involved in any activity are clear about what that organisation is looking to achieve and how they are planning to do it. The main source of information is included from official websites and reports published by companies. Moreover, references from different books, published journals articles, research reports and internet have been used to support the arguments. Critical Analysis of Strategic Planning of Primark Company profile Primark is an Irish clothing retailer. It opened its first store in Dublin in 1969 under the name of Penneys. The company head office is based In Dublin, and operates 193 stores in Ireland, UK and other European countries. Primark is a subsidiary......

Words: 3932 - Pages: 16

Premium Essay

Toyota Case

...a separation between the two businesses and consequently Toyota Motor Company was born. In order to get a deeper understanding over the industry, Kiichiro studied the production system of Ford, the leading car manufacturing company at that time, and later adopted and improved it. Ten years later, in 1947, Toyota started to produce large-scale passenger cars, competing with Ford and General Motors but suffered from Japan’s economy that was going through a rough patch after the Second World War. In the beginning of the 1950’s Eiji Toyoda became president and developed a different process, the Just-in-time system and in the mid 1950’s the Kanban. The company entered the American market in 1958, but only had its first success there in 1968 with the model Corolla and in the 1990’s expanded to other places throughout the world. Throughout the last few years, Toyota, General Motors (GM) and Volkswagen (VW) have been the three main players competing in the automobile industry. In 2011, GM was the leader with 9.03 million dollars of sales, followed by VW with 8.16 million dollars in sales and finally Toyota with 7.9 million dollars. However, these results can be partly explained by not only the 2009-2010 recalls but also the Japanese tsunami and the Thailand floods that affected the supply of car parts. These results don’t mean that Toyota cannot make a comeback, opposed to that, data from the 1st quarter of 2012 shows that Toyota is the leader in sales, with a total of 2.49 million......

Words: 1137 - Pages: 5

Premium Essay

Toyota Case Analysis

...IDENTIFICATION According to our analysis, Toyota is lacking corporate identity in its host country. Toyota is experiencing difficulty bridging the gap between its Japanese collectivist culture and the individualist culture of the United States in regards to its marketing strategy. ANALYSIS Toyota’s key challenge is the fact that it is lacking an overall image in the minds of its consumers. Their consumers see them as a product rather than a company. For instance, the CEO has concluded, “no one knows who Toyota is, that it is a faceless organization and doesn’t have a human element in the eyes of the consumer.” This shows that its corporate identity is not currently designed to reflect the company’s leading position in terms of technology and image. Toyota’s second obstacle involves developing this corporate identity without diverting from its Japanese collectivist culture. This culture encourages conformity and group cohesion, while it discourages individually standing out; rather they are more uniform and homogeneous in nature. As such, defining your authentic self and broadcasting it tends to put the Japanese at risk of being separate from, rather than part of the group, which is where the challenge lies. The CEO wants its entire company, the “heroes,” to represent the “face” of the company, not just one single person serving as a representative, as the American individualist culture would. However, the consumers Toyota wants to target in its host......

Words: 572 - Pages: 3

Premium Essay

Toyota Case

...discuss the drivers of Toyota’s accelerator crisis. Why was Toyota facing a recall crisis? Toyota was facing the accelerator recall crisis because the company and its management became more focused on growth and less concerned with the TPS principles the company had adhered to for much of its existence. Lean operations with a focus on the bottom line and a very lackadaisical support system in North American oversight as well as deficient TPS training proved to be a cultural disadvantage to a highly centralized Toyota management team (Gretto, Schotter & Teagarden, 2010). How well are Toyota’s management, employees and external stakeholders able to support their corporate brand? There was a clear breakdown between Toyota’s management, employees and external stakeholders. Because Toyota’s management was centralized in Japan and the U.S. operations worked in isolation from an information sharing standpoint, it was impossible for all interested parties to effectively collaborate and quickly solve the accelerator issue. There was a difficulty in training and process collaboration, especially in regards to TPS, which the American subsidiaries lacked any expertise or field knowledge in (Gretto, Schotter & Teagarden, 2010). Has Toyota effectively managed ethics and public relations in the United States? Who should be accountable for this activity? How could Toyota’s crisis management be improved? Toyota was deficient in managing ethics as well as handling public......

Words: 1195 - Pages: 5

Free Essay

Toyota Case

...unlevered value of the project and value of interest tax shields, which are then summed up to get the NPV of the project. The appropriate discount rate is the pre-tax WACC, as we calculate the tax shields separately. The advantage is that the method provides explicit valuation of the tax shields. The FCFE method accounts for the cash flows that remain after adjusting for interest payments, debt issuance and debt repayment. Therefore, we first determine after-tax interest expenses and net borrowing, which are then added to the free cash flows to determine the NPV. The equity cost of capital is used to discount cash flows, because these cash flows are associated with dividends paid to equity shareholders. ----------------------- 2 Toyota Motor Case...

Words: 1199 - Pages: 5

Premium Essay

Toyota - Case Analysis

...EMBA 558 – General Management & Strategy Case Analysis of “Toyota in 2009: The Origins and Evolution of the World’s Leading Automobile Manufacturer” Toyota has grown its production from 100,000 in 1947 to 9.3 million in 2008, making it the number one automobile maker in the world. The astounding growth is due largely to Toyota’s manufacturing system, which contrasts sharply with the conventional mass production system of GM and Ford. A striking difference between the mass production system and Toyota’s manufacturing system is the amount of time it took to set up machines for stamping out automotive body parts. For Toyota, the quicker the time, the more economical and efficient the process was, which reduced the need for specialists and eliminated worker down time by increasing their productivity. In addition, the mass production system emphasized producing a limited product line in large quantities to gain economies of scale, while Ohno Taiichi at Toyota felt such long production runs created massive quantities that had to be stored in warehouses, which would not be cost-effective. More importantly, if the machine settings were wrong, such long production runs (e.g. 500,000 door handles) would result in a significant number of defects and be costly. Another key difference between the two systems was that the mass-production system could not accommodate customer tastes for product diversity, while Toyota’s manufacturing system could by making small......

Words: 1126 - Pages: 5

Premium Essay

Toyota Case

...Executive Summary Transportation has played a part in human beings affairs over the years. It gave man a change to travel to different places. Transportation also provided man with the capability to transfer his/her goods, products, materials and belongings from one place to another without experiencing many difficulties. There are many kinds of transportation one of which is automobiles or cars. A company that sells cars and its parts in the US is Toyota Motor Sales USA. Inc. (TMS) The paper takes a look at the company and its background. The paper will also evaluate TMS's system of measuring, evaluating, and rewarding performances of the regional and general managers and whether or not TMS implement the proposal for change.   Case History TMS and its managers have been discussing a change in organization that will give more responsibility to the company’s regional managers. For those who wanted to pursue the change, they believe that the change would force the regional managers to decide on the success or failure of their region. They believe that the change would reduce the bureaucracy at TMS.  For those who disapprove the change, they believe that the change would force regional managers to focus on short term profits and sacrifice long term commitment to clients.  Regional managers have outmost importance to the firm since they are the ones responsible for dealer related activities; they are also responsible for supervising, training and evaluating their personnel;......

Words: 2088 - Pages: 9

Premium Essay

Toyota Analysis

...Analysis of Toyota Motor Corporation By: Thembani Nkomo This paper will explore the external and internal environment of Toyota Motor Corporation, and suggest recommendations to sustain its competitive advantage. Analysis of Toyota Motor Corporation by Thembani Nkomo ANALYISIS OF TOYOTA MOTOR CORPORATION TABLE OF CONTENTS 1 COMPANY OVERVIEW 2 EXTERNAL ENVIRONMENT OF THE AUTOMOTIVE INDUSTRY 2.1 Industry Overview and Analysis 2.2 Industry Life Cycle 2.3 Industry Demand Determinants 2.4 Porter’s Five Forces 2.5 Industry Cost Structure Benchmark 2.6 Industry Competitive Landscape 2.7 Major Competitors 2.8 Key Success Factors in Industry 3 INTERNAL ENVIRONMENT OF TOYOTA 3.1 Core Competencies 3.2 Distinct Competency 3.3 SWOT Analysis 3.4 BCG Matrix: Internal Analysis of Toyota Portfolio 3.5 VRIO Framework Analysis 3.6 Toyota’s Efforts in Emerging Economies 3.7 Case Study: Toyota’s Successful Strategy in Indonesia 3.8 Strategic M&A, Partnerships, Joint Ventures, and Alliances 3.9 Analysis of Financial Performance 4 RECOMMENDATIONS 5 APPENDICES 6 REFERENCES Analysis of Toyota Motor Corporation by Thembani Nkomo 1. TOYOTA CORPORATE OVERVIEW: Founded in 1937, Toyota Motor Corporation is a Japanese company that engages in the design, manufacture, assembly, and sale of passenger cars, minivans, commercial vehicles, and related parts and accessories primarily in Japan, North America, Europe, and Asia. Current brands include Toyota,...

Words: 4841 - Pages: 20

Premium Essay

Toyota Case

...Business Policy Case Study: Toyota Submitted to: Dr. L. Geng Submitted by: R. Stewart, M. Ferguson, S. Ogbonna Date: Nov 26/14 History * The original idea behind the founding of Toyota Motor Company was conceived by Toyoda Sakichi. * His father Sakichi was an entrepreneur and investor whose primary was in textile industry. He was fascinated by the automotive industry after a brief visit to the United States in 1910. His invention in the textile industry led to the ability to lower the costs of weaving high-quality cloth. * He sold his patent rights of the Toyoda automotive loom for 1 million yuan an invested it on is son Toyoda Kiichiro whom he urged to look into the production of Automobiles in Japan. * His son Toyoda met a lot of stiff resistance from the board of Toyoda Automatic loom because the felt the market was dominated with semi knock down cars from Ford and General Motors and deemed it a risk as they felt they could not compete. But a deathbed wish make by his father, propelled Toyoda to forge ahead. Finally in 1933 he was given permission to set up an automobile department with Toyoda Automatic loom. Development * The original idea behind the founding of Toyota Motor Company was conceived by Toyoda Sakichi. * His father Sakichi was an entrepreneur and investor whose primary was in textile industry. He was fascinated by the automotive industry after a brief visit to the United States in 1910. His invention in the textile industry......

Words: 1203 - Pages: 5

Premium Essay

Toyota Case

...Case #5 (Optional) Bohuan Yu Toyota Motor Manufacturing Co. 1. As Doug Friesen, what would you do to address the seat problem? Where would you focus your attention and solution efforts? If I was Doug I would look at when the seat problem began. When Toyota introduced the new wagon model along with eight other seat variations compared to the original five. Also, volume increased significantly as demand did. Now the plant was producing for the world market, Europe and Japan/Middle East added a combined total of 28 variations alone 2. What options exist? What would you recommend? Why? Toyota has several options when looking at resolving this problem. To address this problem I would look to see if these many variations are feasible for a company like KFS to handle. Expanding from simple variations to significantly more can be problematic for any company. Also, with the supplier not being in-house problems cannot be fixed on spot, causing delays. Thought KFS is close in proximity for such an expensive component as seats, it may be worth looking into making them at the Toyota plant itself. This is not a quick solution to fixing the seating problem, and Toyota may not find it cost or time effective to look at that option. At the Toyota plant in Kentucky they have been having problems with a plastic hook that the rear seats pop into. This hook has been breaking frequently causing issues. The cost to modify the tool would cost the supplier KFS $50,000. This......

Words: 555 - Pages: 3

Free Essay

Toyota Case installed in a car so any mishandling can cause damage to it very easily which can cause problem while installation to stop this kind of problems they must have a backup of the seats in their warehouse Recommendation: close relation should be maintained between KFS, TMM AND TMC to overcome the barriers. The supplier should be notified of defective seats as soon as they are discovered. Employees on the assembly line and in quality control should immediately inform KFS. 3. Where, if at all , does the current routine for handling defective seats deviate from the principles of Toyota production system? Toyota Production system was based on the principles of Just In Time (JIT) and JIDOKA which stated that production should be stopped when problems are detected. Deviations from JIDOKA As it implied that production should be stopped when problems surfaced but as in the case of defective seat problem production was not stopped and car passed through assembly line with defective seats in it. Car was taken to Code 1 clinic area to detect the problem and then to overflow parking area for seat replacement. b) Deviations from JIT principle As it stated that produce what was needed and when it was needed. So it aimed at reduction of waste and inventory but in routine for handling of defective seats cars were moved to overflow parking area where seat replacement was done so it resulted in increase in inventory as well as waste. Secondly seats with no......

Words: 724 - Pages: 3

Premium Essay

Umuc Toyota Tps Analysis

...the Production System at Toyota David Osborn Ebenezer Ogoke Lamar Pryor Loretta Inoni UMUC AMBA 640 9042- Dr. Wende Huehn-Brown Table of Contents Exercise #1: 3 Exercise #2: 9 Exercise #3 14 Exercise #4 20 References 24 Exercise #1: Executive Summary Since the early 1950’s Toyota has been in the business of manufacturing automobiles as a family operated company. Much of Toyota’s success has come from their ability to adapt to an ever changing market place, in both good times and in bad, while honoring its commitment to product safety and quality. This commitment has allowed them to consistently produce cars that meet or exceed that of their competition, while taking into consideration the impact on our environment. Through the years many types of cars can be associated with the Toyota brand, but it is the introduction of the Lexus line of cars in 1989 that has helped to keep Toyota at the forefront of innovation and design. Early in 2000 Toyota took on the daunting task of deciding where to manufacture the Lexus RX300. Through careful analysis it was decided that the Toyota Motor Manufacturing of Canada (TMMC) would get this task. How this decision was derived came from the efforts of an independent consulting firm called the Hawks. They utilized production analysis and concepts derived and refined out of Toyota’s Production System (TPS) from Andon to Yokoten, as well as, Grid Analysis and Decision tree to assess how best Toyota should expand its......

Words: 5993 - Pages: 24

Premium Essay

Written Case Analysis of Toyota

... (Section: B) WAC #2 Toyota Motor Corporation: Lunching Prius Submitted To: Sir Aly Raza Syed Submitted By: Saad Shahzad (12046005-005) M. Umair Arif (12046005-092) M. Ahmad (12046005-099) Noman Zafar (12046005-043) M. Umar (12046005-020) Date of Submission: 13/04/2016 Introduction: The time of the case is December 7, 2006. Sakichi Toyoda is the founder of Toyoda Automatic loom works and has advised his son Kiichiro Toyoda to begin with the idea of developing small engines, and in 1937 it was named as Toyota Motors Corporation. Automobile industry basically operate in pickup trucks, luxury cars, SUV’s and powertrains. The geographical location of the company is Aichi prefecture Japan. Hiroshi Okuda was played the rule of key player In Toyota motors, who joined the company in 1955 and became president in 1995. Toyota motors are competing globally but they have also competitors in their own country like Nissan and Honda and they have global competitors as well such as The U.S Big three which is consists of General Motors (GM), Ford and Chrysler, Volkswagen and BMW. The company deals in Cars, SUV’s and Minivan etc. The general issue of this case should they push for a more aggressive timing of launch or given the technical problems or delay the program to ensure a smoother launch? Situational Analysis External Macro Environment Analysis DEEP-LIST Demographic *......

Words: 5452 - Pages: 22

Premium Essay

Toyota: Analysis

...Toyota challenged the US car industry to develop quality compact, fuel efficient, economic vehicles at an affordable cost. They utilized the philosophies of American statistician Dr. William Edwards Deming to improve design, product quality, testing and sales. With such a strong history in quality and production efficiency will Toyota be able to recover from the current recall scandals? How should Toyota present itself to the consumer as it attempts to rectify this growing situation? How can they reinvigorate their sales and convince the public they can still provide a quality product? Industry The automobile industry "is considered to be highly capital and labor intensive." Majority of the revenue in this industry comes from selling automobiles but the parts market is highly profitable as well. Profitability of companies in this industry depends on the manufacturing efficiency, the quality of the product, and the marketing with which the product is advertised. Demand for automobiles is driven by employment and interest rates. Porter's Five Forces model is helpful in determining the intensity of competition and the level of profitability in a given industry and the Five Forces of Competition Framework for the automobile industry is shown below in Figure 1. Toyota Motor Corporation (Toyota) is a multinational corporation headquartered in Japan. Toyota is the world's largest automaker and has the US largest sales. Toyota also owns and operates Lexus and Scion brands and has......

Words: 2587 - Pages: 11

Schneeketten 215/60-16 , 225/50-17 225/55-16 Ö-Norm / Stehend montierbar | Ladies Wide EEE Fit Washable Burgundy-Blue Orthopaedic Diabetic Slippers Booties | X-Ray Markers Rl Anatomical Markers With Orange Ribbon