Recall crisis of Toyota

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(a)    How is it possible that a company with a strong quality focus have so many quality issues in such a short amount of time? (1000 words)


Primarily, we may have to admit the success of Toyota before the recall crisis of its well development in the global market especially when Toyota replaced General Motors’ 77 years dominant position as the largest automaker in the world in 2008. The over-rapid growth, impropriate management in supply chain and pressure from strong Yen as well as insufficient crisis management, result in these quality issues in such a short amount of time.


) Over-rapid growth


As the case mentioned, in the year 2008, Toyota had taken the dominant place of General Motors as the largest automaker in the global market, which was a remarkable monument in the developing history of Toyota. But after this period, the quality issues of Toyota were highlighted. From the above statement, we may get the conclusion that the over-rapid growth speed of Toyota may be one of the major causes of the recall crisis. According to Connor (2010), the desire of Toyota to replace General Motors as the No.1 automaker in the world has pushed this organization to have a relative ignorance on its products’ quality.


For instance, the “mass production” initiated by Ford was abandoned by Toyota. To enhance the productivity and lower the cost, Toyota has introduced the so called “lean production system” that is famous for the characteristics of short production period, low levels in inventory as well as high variety of product types (Murray 2010). To assist this system, Toyota has built up many overseas plants and factories to enhance its productivity and lowers the production cost. Such excessive overseas expansions resulted in the overwhelming production rise. In the year 2009, Toyota possessed the capacity to produce 10 million cars compared the 5.2 million in 2000 (Toyota 2010). Although the quantity rose up fast, the quality dropped down and the quality problems of Toyota occurred frequently from then on, which gives all the automaker the lesson that although the profitability of business is so important, the quality control and safety maintenance of the products should also be take serious. The aggressive growth may lead to the unmanageable risks as Toyota experienced, which should be learned for all the automakers in the global market. (Connor 2010)


) Impropriate management in supply chain and the pressure from strong Yen


As the above mentioned to facilitate the global expansion, Toyota has adopted the outsource measures in components production so as to lower the cost. For example, Toyota just produced nearly 25% of the major components while the rest were often outsourced to some contracted suppliers compared with the 68% of General Motors and 50% of Ford (Ohnsman, Green & Inoue 2010). According to the data from Ohnsman, Green and Inoue (2010), there are about 200 to 300 Tier one suppliers and near thousands of Tier 2 to 3 parts suppliers of Toyota.


As we all know that the monitoring of the supply chain for all of the manufacturing industries which have the cooperation relationship with the third party suppliers. In this aspect, Toyota may not have a good job, which becomes of the causes for the quality issues. For instance, even in 1990, the reports from Toyota disclosed the facts that the defect ratio of the parts manufactured by its suppliers from the North America and Europe was one hundred times than itself made in Japan, which reflected the difficulty in quality monitoring of Toyota in its suppliers. (Butod 2009)


At the same time, the strong Yen also forced these Japanese companies to cut their manufacture costs, lowers the sell prices and so on so as to maintain their performance in products export which also became one of the reasons for Toyota to develop the partnership with many foreign suppliers. Moreover, due to the large number of the suppliers, it is really an awkward task for Toyota to well manage and monitor these supply chains that finally resulted in the quality problems of this company. (Butod 2009)


) Insufficient crisis management


As the case mentioned, the leadership of Toyota and some strategies of this company may be also the reason for the quality problem of this company especially the poor crisis management. Based on the information from the case and other related information, Toyota’s crisis management was satisfactory and sufficient when dealing with the recall issues. On the one hand, it didn’t catch the proper opportunities to prevent the further effects of the quality problems. One the other hand, it also performed poor when the quality problems exposed to the publicity that Toyota Company acted relatively passive and gave an unfortunate impression to the public. (Liker & Ogden 2011)


At the same time, there is also the idea from many analysts, experts or even the public that the reaction and respond of Toyota to the recall crisis was also impropriate and insufficient. Especially its decision to try to hide and cover up the problems may finally contribute to the quality issues going worse. According to some reports, they show in the year 2009, Toyota Company had realized several of its vehicles were with the problem of unintended acceleration (Butod 2009). But Toyota only recalled on the mats of some selected models. And the recall of the entire lines of the vehicles of Toyota was forced rather than voluntarily. Moreover, some reports also claimed some unearthed information that Toyota may have got the information or knowledge on the defect of its vehicles since the year 2004, but it didn’t take an immediate action. Toyota apologized for its quality issues and showed thanks for the loyal customers when the pressure from the public can’t be removed so easily. Such kind of crisis management was blamed and criticized by the public as too little and too late. Generally speaking, the mismanagement in the recall crisis also became the cause to accelerate the bad influence of the quality issues of Toyota Company, which not only crippled the future development of Toyota but also declined its reputation. (Ingrassia,P. 2010,)


(b) What are some cultural changes that Toyota should make to repair its tarnished image? (1000 words)


In terms of the recall crisis of Toyota, we can find there is a relatively obvious flaw inside the company which is related to the company culture that in most of the Japanese firms including Toyota which often tries to cover up and fudge some facts. Meanwhile this kind of company culture in these Japanese companies including Toyota also makes their people who are chosen to communicate with the media and public lack the exact information. Such kind of flaw in the company culture then became one of the causes of Toyota to act relatively passive when faced with the questioning from media and convey an indifferent and stonewalling image. This kind of culture element in Toyota leads it to mismanage the recall crisis. (Kingston 2010)


For Toyota, there is a bad need to repair its tarnished image via the reforming its corporate culture. And according to Daft (2010, p.287), culture change refers to a major shift in the norms, values, attitudes and mind-set of the entire organization. For Toyota, if it expects to rebuild its reputation, these changes are necessary to take great concern.


ⅰ) Trust building


From people working in these Japanese automakers, we can see that there is a bad need for these Japanese automakers to build the trust between itself and its non-Japanese leaders (Taplin 1995). Toyota, for instance, has been doing business in the USA for nearly half a century, which still prefers to assign Japanese boss to monitor and mentor these American and European executives. Moreover, there was nearly no America executives were appointed or authorized to issue the recall including the top American sales executive- Jim Lentz. Such kind of distrust on these non-Japanese leaders resulted in a great loss of Toyota. On the one hand, several outstanding non-Japanese leaders such as the marketing leader Jim Farley, the leader of Lexus brand-Deborah Wahl Meyer and so on all left Toyota. On the other hand, the over-emphasis on the importance of Japanese leaders rather than other non-Japanese leaders has pushed Toyota to a frustrating communicating atmosphere that most of the information communication inside Toyota was one way that was from top down and the major decisions was almost made in Japan. (Ohnsman, Green & Inoue 2010)


To change this situation and assist Toyota to act more flexibly and effectively, it is necessary for this organization to build a trust between itself and these non-Japanese leaders. One way for Toyota to deal with this situation is suggested to foster the diversity culture which is to establish a heterogeneous workforce including people from different countries, religions, genders, education backgrounds, sex orientations, ages, and races and so on in order to perform to Toyota’s potential in an equitable work environment (Cascio 2010). For Toyota, such kind of diversity culture building may facilitate it to attract and retain more talents from all over the world rather than the Japan itself, which is not only useful in crisis management because more people from different background may offer more creative and wise measures but also helpful in maximizing the productivity, creativity as well as commitment of the workforce when meeting the requirements and needs from diverse consumer groups (Cascio 2010).


And in terms of the image rebuilding after the recall crisis, we may have the suppose that the American leaders for Toyota may be the most proper choice to assist this corporate to regain the trust and brand loyalty in the American market, due to their better understanding of the local markets better than the Japanese ones. By and large, based on the above analysis, we recommend Toyota to foster the diversity culture to give more tolerance and trust to these non-Japanese talents so as to help itself to repair the image.


ⅱ) Culture element change –deference inside company


Other problem, Toyota faced with is its cultural element such as the shame to admit its false frankly (Kingston, J. 2010). There is a penchant in the Japanese corporate culture to mismanage the crisis via fudging and covering up the facts when companies involved in some products defects, for which Toyota is the exact example. From the case and some relative information, the relatively passive reaction of Toyota in recalling its problem vehicles disclosed this flaw in its corporate culture. If Toyota had acted more actively and frankly towards its vehicle defects, thing may not have gone so worse. (Kingston, J. 2010)


Based on this insufficiency in its cultural elements, it is also necessary for Toyota to implement some changes in this aspect to rebuild its tarnished image. To change this penchant to cover up the mistakes, Toyota had better build and foster the elements such as honesty, sense of responsibility and integrity in its corporate culture which can help this automaker to act more responsibly and frankly to its customers and repair its image as a trustworthy company.


ⅲ) Culture element change –deference inside company


The culture element of deference inside the Toyota Company also needs to be changed (Kingston, J. 2010). As we can see from the case and other relative information concerning the recall issues that there was a delay for the Toyota management to take proper reaction towards the exposed reports on vehicle defects, which further blackened the image of Toyota as the irresponsible automaker. Such kind of deference culture inside Toyota Company makes it relatively difficult for people in the lower hierarchy to doubt or question their boss and to offer some proper and helpful suggestions or information on the problems they noticed. (Ohnsman, Green & Inoue 2010)


To repair the tarnished reputation, Toyota is also suggested to change and modify the element of deference in its corporate culture. The open communication culture is the first recommendation. For instance, Toyota is necessary to richen and fasten its communication channels including the downward communication, upward communication as well as the horizontal communication. With the proper communication culture, these concerns and information such as the information on the problem of the unintended acceleration may be informed and noticed earlier by the top management of Toyota, which can facilitate the management of Toyota to take immediate actions towards the recall crisis and reduce some unnecessary loss. (Daft 2010) 


(c) If you were the strategic consultant appointed by the CEO of Toyota, prepare a proposal for strategic vision(s) for 2012 to 2015 outlining strategic measures that would potentially put Toyota back into the race to be No.1 automaker in the world. (3000 words)


1.0  Introduction


As Griffin and Pustay (2010) mentioned that the strategic vision for a corporate is a short, brief and prompting statement on the practices and plans which the organization is intended to implement and achieve in its future. It often works as a proper direction to lead the organization in its development road. Due to this, it is so important for Toyota to properly design considerate strategic visions for its future development and global expansion so as to give the entire organization a right and appropriate directions to avoid the same crisis as the recall issues.


As the strategic consultant of Toyota, there will be a proposal for the strategic visions for the year 2012 to 2015 as well as several strategic measures to assist Toyota to regain its reputation as the No.1 automaker in the global market.


2.0  Strategic visions for 2010 to 2015


The first proposed vision is that Toyota will work toward the leading position as an organization with good mobility and flexibility in the future car market. This kind of vision is planned to prepare Toyota as the automaker which always places itself ahead of the time via the effective and proper practices in products research and development. Meanwhile, Toyota will depend on the modern technology and great creativity capacity to assist and facilitate the auto-making industries to optimize the utility of these related resources to largely fulfill the requirements from different customers all over the world. (Toyoda 2011)


The next proposed vision is that Toyota will try every means to offer the world with more colorful lives with enriched content which will relay on Toyota’s spirit in presenting the society and consumers with fantastic automobiles. With this direction, all the people in Toyota will devote themselves whole to the society so as to largely fulfill the requirements on the transport safety and reliability. At the same time, the profitability resulting from the success of fulfillment that need will be shared with the host nations as well as the communities via the taxation and the stable employment environment for its people. (Toyoda 2011)


Meanwhile, Toyota will also hold the vision that the working environment safety and harmony will become the No.1 consideration of Toyota for its people. In another word, the concerns with the working people in Toyota are always the highest priority in our organization which affirms Toyota is able to offer the clean, safe and high quality products to the whole society. And then, the great concerns on its people will also help our organization to offer products and services to the customers with excitement and happiness. In a word, Toyota will always work under the principle of product safety and act responsibly for its products. (Toyoda 2011)


Moreover the vision of the commitment to the product quality and constant innovation will be obeyed by Toyota as well, which will be always emphasized with the ambition to make better cars for ever. This kind of vision will be maintained by these modern techniques and creativity as well as fantastic innovation capacity from its people with the continuous efforts and progress made by Toyota. (Toyoda 2011)


And then, Toyota will also advocate the vision to show great respect to the planet which we live in. A series of actions will be practised by Toyota such as the actions to minimize the side effects on the environment via the well management on the life cycle of the vehicles from the newly manufactured cars to these ended life vehicles. Toyota will try its best to develop and refine the production art of its vehicles so as to minimize the waste and band impact on the environment. (Toyoda 2011)


And Toyota will also cherish the vision to attract more talents and passionate people to meet challenging aims. All of the people in Toyota will be restricted strictly under the high aim that makes the Toyota vehicles the great cars in the world market via optimizing and maximizing the individual potential of its people. (Toyoda 2011)


By and large, all of the above visions for Toyota in the year 2012 to 2015 are all aimed to assist this organization to rebuild the image and regain the market share so as to rebuild its No.1 position as the automaker in the world. The following figure 1.0 summarizes the above vision in to brief including maintain the constant sense of responsibility; show great concern on the product quality and safety; concern the Toyota people a lot; attract a world of talents; care for the mother earth and lead the Toyota group in the leading position. (Toyoda 2011)  







Figure 1.0 Visions of Toyota for 2010 to 2015


Sense of responsibility

Concern the Toyota people

Care for the mother earth

Attract a world of talents

Leading position

No.1 position

Concern on product quality and safety



















3.0  Strategic measures


3.1 Regional strategy


To fulfill the above vision, it is important for Toyota to well implement its regional strategy which is aimed to obtain a welcome position in the host nation via several activities of the company. All the people in Toyota are required to stand united to support each member’s activities to address the requirements and situation of the host countries, which will require a framework in the management aspect to give full support to the expected global integrity, unity as well as the regional concentration. (Toyoda 2011)


Meanwhile the global headquarters will be still in the home country- Japan which will offer the entire directions and guidelines to inform what we should do in the year 2012 to 2015. As the importance of headquarter, we will try our best to provide a full support for the operations in different regions with the initiative in emphasis on needs and situations in these regions which will be regarded as the interface between us and the customers. For this sake, these business regions will be well equipped by us to give the customers the best services and products. (Toyoda 2011)


And since our focus is on the fulfillment of our above visions for the year 2012 to 2015, the operations of these business regions for Toyota will be enlarged than before in policy formulating. For instance, these business regions will have more opportunities to offer suggestions such as the marketing promotion ideas in maximizing the original contribution to our company and these ideas in vehicle designing to fulfill the needs of the regional customers. (Toyoda 2011)


3.1.1 Japan


As our home country Japan will continue work as the major manufacturing platform in producing these high value added model including Lexus models as well as hybrid models. It is necessary for our company to make full use of the abundant accumulation in expertise such as the advanced techniques, skills and the capability of Kaizen. And meanwhile, in Japan other models will also be produced continuously, ranging from mini-cars to large minivans with nice equipment.


In a word, in the Japanese region, Toyota will maintain its tradition know as monozukuri to provide the local customers with satisfactory vehicles and services (Toyoda 2011)


3.1.2 North America


The North America region will be built as the global center for product research and development as well as exports for Toyota. Due to this, the operations and business practices of Toyota in this region will try to gain more autonomy and integration from the local. At the same time, we also plan to assist our workforce with more mobility in the future via the close cooperation with the leaders in North America in the information techniques and several other advanced areas. The successful experience in strategic alliance with Tesla Motors is a good example to direct our business practices and activities in this region (Toyoda, A. 2011).


3.1.3 Europe


As the hypercompetition in this region from other automakers, we plan to develop this region to be the global planning center. That is to say, the role of the European region will be designed and built to be not only the antenna to inform other regions and the headquarters the latest news and information but also as the promotion place for Toyota to promote its business via a series of activities such as the engagement in sports and other activities.


3.1.4 China and other emerging market


These emerging markets such as China are injected with our great expectations in the business development. As the automaker, we have high expectations in these regions especially in the Chinese market. And a development center will be established in this region to offer some support to Toyota’s manufacturing and services in this region so as to ensure the product safety, quality and the care for the environment.


Moreover, we also plan to consolidate this region to enrich these vehicle models lines with more products variety to gain more market share in this region.


3.1.5 Other Asian nations and Oceania,


In the regions such as other Asian countries and Oceania, Toyota will continue to cultivate the human resources in order to support the product localization in these places. To best fulfill the requirements and needs from the local customers in these regions, Toyota will focus on product research and development to attract more customers in these markets.


3.1.6 Other nations


Countries in Middle East, Latin America as well as Africa will also be emphasized by Toyota due to the rapid growth in the requirement of vehicles. For these countries, Toyota will offer customers with attractive vehicles which not only own the good Toyota quality but also have the appealing price.


3.2 Employee strategy
To best develop the competitiveness of the people in Toyota, we will propose several human resource strategies to facilitate the future development of Toyota from the year 2012 to 2015 which is aimed to assist Toyota to regain the market share and the world No.1 position as automaker via the help of its people.

In the first place, the strategic recruitment and selection measure is recommended. In these business regions such as China, India as well as the Oceania, the market potential of cars is great which requires Toyota to have a well structured talents pool (Cascio 2010). We’ll recruit and select more local talents to facilitate our business in not only the ordinary level positions but also the management level positions with the guidance of our diversity culture towards the workforce.

In the second place, the human resource development program and practices aimed to prepare Toyota with a world of diversity talents will be emphasized a lot. To achieve this, Toyota will introduce a variety of training and development programs for the workforce via the acknowledgement on the difference of talents with different religion, genders, sexual orientation, education background, age, nationality and so on. And meanwhile, one measure we will adopt to assist the human resource development for Toyota is to establish a competitive career developing path for all the employees in Toyota such as the clear and attractive career path for those talents in technique as well as management. (Huselid, Becker & Beatty 2005)

3.3 Product strategy


In the product strategy, the proper structure will be set up to ensure the local operations can own the leading roles of Toyota in vehicle designing, developing as well as quality improving. And until the year 2015, the hybrid models lines are expected to be expanded. The product strategy may not only facilitate Toyota to achieve the above six strategic visions but also assist Toyota to be ready to any technique development to capture the imagination from the public of car purchasing.


In terms of the Lexus model, Toyota will try to position it to be the premium brand in the world market. To realize this dream, the Lexus brand will be add more appealing elements such as emotional driving, telematics as well as other attractive points and of course the considerate after sell services of Japanese vehicle will be always maintained (Ohnsman, Green & Inoue2010, ) . 


Furthermore, the product strategy which is aimed to help Toyota regain the world No.1 position as the automaker from year 2012 to 2015 will concentrate on minimizing these products’ impact on the environment and the requirements from these emerging markets.


3.4 Supply strategy


To best integrate our strategic measures with the strategic visions, we propose an effective supply strategy.


Primarily, we’ll promote the special supply strategy targeting on different regions. In our home country- Japan, Toyota will try to make the full use of these existing capacity of our production, the rich manufacturing expertise in hybrid vehicles production as well as other advanced techniques. And in other advanced places including North America and Europe, the productivity will be emphasized a lot. That is to say, Toyota will try its best to maximize and enhance the productivity in the existing factories and plants as well as make the most of the existing resources. In these emerging markets such as China, India and so on, Toyota will enlarge and enhance the capacity of vehicle production via the proper analysis on the regional demand, position measures and so on (Toyoda 2011).


3.5 Management structure strategy


To deal with the dilemma of the recall crisis, Toyota has witness the importance of the people who has been encouraging and helping Toyota to face the quality problem bravely. This experience makes Toyota to realize the significance of the better listening to and understanding the feedbacks from consumers, the sensitivity to what is going on which can help Toyota to make correct and immediate management decisions via the information from the customer feedback. While there is a relatively obvious flaw in the management practice of Toyota that the decision making process isn’t effective enough which is also regarded as one of the causes of the recall crisis. And based on these issues, we will have some suggestions on the modification of the management structure aspects. (Toyoda 2011)


To begin with, in the current, the total number of our director team counts for 27, this may be too large to make the decision making process effective. Due to this, we propose Toyota to simplify the decision making process by reducing the total number of the director positions to a relatively acceptable number such as 10 to 12 which may facilitate the achievement of our global strategic vision to be more effectively and flexibly. And the number of the director position reducing will also facilitate the effectiveness and usefulness of the inside communication in the upper management level and reducing the decision making layer as well. (Toyoda 2011)


In the next place, the lessons and experiences from the recall issues in the North American region taught us the importance of the trust building between Toyota and those non-Japanese employees. To enhance the capability of crisis management of Toyota in the near future, in 2012 to 2015, Toyota will also empower these non-Japanese leaders and managers with more authority and flexibility in decision making especially in these developed regions such as America, Europe and these emerging markets including China and India. Such kind of strategy is so important for Toyota to get proper and immediate reaction towards customer’s feedbacks in different business regions without delay and misunderstanding. (Toyoda 2011)


3.6 Stakeholders strategy

As Trevino and Nelson (2007) pointed out that a stakeholder is any individual or group that has one or more stakes in an organization, who can affect or be affected by business decisions or undertakings of an organization. For Toyota, it is also necessary for it to have a good consideration and evaluation on its activities and practices related with its stakeholders besides the above mentioned employees.  


Besides the employees, other stakeholders including the consumers, shareholders, the local communities as well as the governments all play a significant role in the future development of Toyota for the period of year 2012 to 2015.


On the one hand, Toyota will contribute a lot to the wellbeing of the society via the sustainable development, the maintenance of the products quality, and enhance the variety and function of its vehicles which the great care on the environmental issues. And meanwhile, due to the impact of economy downtown and recall crisis, the sales profit had declined nearly 20%, which had affect the profit of our shareholders to a certain extent (Ohnsman Green & Inoue 2010). To remove and alleviate the frustrated situation, Toyota will concentrated on the sustainable development strategy and calls for every effort from Toyota people to enhance the safety and quality ratio of our vehicles with a satisfactory price in order to stimulate customers’ consumption of our vehicles to protect the profitability of our shareholders for the year 2012 to 2015. (Toyoda 2011)


On the other hand, the transparency of our operation will also be emphasized in the year 2012 to 2015, which can not only make our stakeholders understand the situation and activities of Toyota much better and also work as a monitoring mechanism for all the stakeholders to monitor and evaluate Toyota’s performance. A wider communication channels such as the message board on our website, the Face book, blogs, hotline as well as other kinds of communication means will be open to all of our stakeholders to help Toyota make more wise decision and perform more satisfactory. (Toyoda 2011)


3.7 Supplementary strategy


To best support these strategic measures, Toyota will also enhance the three major functions including maximizing the quality, minimizing the cost as well as promoting the human resource development. A solid foundation for our business will be shaped via balancing the strengths of products’ attractiveness and the price competitiveness.


And according to the annual report of Toyota (Toyota 2009, 2010), we got that in the year 2009, we had suffered an operating loss to ¥460,000,000,000 but a good financial performance in the year 2010 by several improvements. The recall issues did give Toyota a terrible hit and to fast recover our organization from the downturn our finical objective for the year 2012 to 2015 is to position Toyota to constantly achieve a sound sales return annually. That is to say, we will devote ourselves to position our organization to be the organization which has the capability to enjoy a sustainable growth by providing the fantastic cars, contributing the vitality to these host countries as well as the communities.



4.0  Conclusion


In this report we have proposed the strategic visions and some measures for the year 2012 to 2015 for Toyota which are all aimed to assist our organization to regain the No.1 position as the automaker in the world market. 


There are six strategic visions offered including maintaining the constant sense of responsibility; showing great concern on the product quality and safety; concerning the Toyota people a lot; attract a world of talents; caring for the mother earth and leading the Toyota group in the leading position. These kinds of visions are set under the background of the image tarnished after the recall crisis. So our aim to propose such kind vision is to direct Toyota to have a clearer and correct future development path after the recall crisis.


Besides these strategic visions, we also propose some practical strategic measures for Toyota to better integrate its future development with these visions.


We hope this report can assist Toyota have a promising development in the future years and really realize the expectation to get the No.1 position of world automaker.










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