Operations Improvement Plan for Toyota Motor Corporation
Today, Toyota Motor Corporation has become one of the largest and most successful organizations in the automobile industry. For many years, Toyota has focused on building its reputation by producing high quality and reliable cars, as well as employing its quality products to the society with the aim of developing sustainability as one of the most important factors for business success (Toyota, 2017). With the use of its philosophy and values, Toyota aims at becoming the world leading company in the business of making cars; but with the recent crises that have been happening in the enterprise, it has become difficult to achieve its objective. The crises have as well affected the company’s reputation, which has influenced the perspective of customers in the market for the products that the company is supplying for them. For instance, in 2009, the accelerator problem was a major concern for Toyota because the issue made the customers gain negative views toward company’s products in terms of quality, reliability, and safety. According to Finch (2010), in 2007 and 2008, Toyota received frequent complaints from the customers due to the acceleration issue, which was a massive setback for the company, mostly in its operation in the U.S. and Europe.
During the accelerator problem, Toyota encountered both internal and external challenges, which were becoming a threat to the success of the business. Therefore, this paper focuses on exploring the accelerator problem as it happened in Toyota Company and the way communication was a failure with an attempt to respond to the crisis that was affecting the company’s reputation. The discussion will outline the use of poor communication strategy by the Toyota leaders, as the method that the CEO used to communicate the matter is believed to be another factor that destroyed the company’s reputation in 2009. For a detailed discussion, this essay is laid into different section including the problem statement chapter, an overview of the crisis, description of the acceleration problem, and the solution to the matter. The discussion is finalized by giving the recommendations, and a conclusion statement to elaborate the summary of the discussion on the issues that are raised in this essay.
Problem Statement
For modern businesses, how the leaders communicatively respond to the crisis can influence the perception of the stakeholders and customers, which will ultimately affect the future intention of these organizations. To communicate about the accelerator crisis, Toyota CEO considered holding a conference, where he addressed the customers about the problem and the intention of the company to handle the issue (Anderson, 2012). Although the CEO of Toyota used the method of communication to encourage its customers to have confidence in the enterprise, many people felt that this was not an effective method of communication, as the crisis was a global problem. Anderson (2012) argues that for crisis communication to be appropriate and efficient the company responding to a crisis should consider the message it is using for communication and the audience receiving the information. Typically, the message that the Toyota CEO was delivering to the customers was appropriate because, in the given situation, the CEO was responding directly to a crisis, but the method would have been more useful in the cases where written communication was used. Besides, the strategy that the CEO used to reach out to the customers in different part of the world was not effective because thereafter, the problem escalated, which required the company to take actions that will minimize its loss, and maintain its competitive advantage. With this understanding, it is clear to say that Toyota has been involved in a number of missteps relating to the communication strategy it uses to communicate crisis with its esteemed customers and it is the right for the company to consider employing effective communication strategies whenever it wants to respond to a crisis.
Overview of the Toyota Accelerating Recall
Heller and Darling (2012) express that the recall of Toyota vehicles started in 2007, whereby the company recalled 55,000 floor mats with the reason for the action being said to be the risk of the mat sliding forward and ensnaring the gas pedal. With more investigation being carried out with regard to the car floor mat in 2007, the issue became a major concern for the Toyota’s customers, with more complaints about the mat erupting in 2009. In this case, many people said that the mats would cause unnecessary acceleration to the Lexus car, which would result in unintended accidents in the roads (Heller & Darling, 2012). Likewise, in 2009, Toyota recalled 3.8 million U.S. cars with the prime reason for the action being the floor mats that would make the accelerator to be stuck and inconvenience when one is driving. Another reason that forced the company to take some of its products in the market or from their customers is the aspect of the accelerator getting of control even after the floor mats were removed. Similarly, Greto, Schotter, and Teagarden (2010) note that in 2010, Toyota suspended the manufacturing of eight car models, due to the problem of the accelerator pedal, which was viewed as another way of halting the sale of some of its products that would cause accelerator issues.
Toyota business expanded its recall in Europe and U.S., which made the recall of its vehicles a crisis that needed an immediate response to protect the reputation of the company. On the other hand, the U.S. Department of Transportation criticized Toyota, with the association secretary claiming the company was not acting ethical and the cars were unsafe, which made the issue to be seen as a global concern (Greto, Schotter, & Teagarden, 2010). Consequently, as the issue of accelerator problem for Toyota Company increased year by year, the firm’s CEO needed to communicate with the customers in the market and give them an assurance of quality improvement. However, the CEO utilized a poor communication strategy, which would only make the issue affect the image of the company and its competitiveness in the international markets.
The Key Challenge and Problem for Toyota
Toyota Company uses its communication channel to display its product, achievement, and what it believes will make the customers within the market buy its products. Fielding (2006) alludes that effective communication is an integral part of the modern organizations that help staffs from different departments to work together and coordinate activities pertaining the performance of the business. In essence, communication is a component that enhances the survival of the firm as well as enabling people in the company to create a meaningful message that will attract more customers and create sustainability. In 2009 to 2010, Toyota Corporation did a recall of some its product as a way of responding to the product related crisis. What made the company look vulnerable to its customers and stakeholders is the technique it used to communicate the issue, with the communication strategy that Toyota CEO used appears to be problematic to the progress of the company. Bebeteidoh and Takim (2016) proclaim that to respond to the accelerator crisis the communication method employed had some limitation it caused a disturbance on the buyers, especially in Japan and United States. Greto, Schotter, and Teagarden (2010) protrude that for Toyota to disseminate information about the accelerator crisis, Akio Toyoda, the company’s CEO held a news conference. The CEO apologized to the customers for the recall and assured the clients that the firm would immediately expand its performance so that it can create satisfaction and meet the needs of the eligible buyers across the globe. This shows that the communication method that Toyota used to handle the accelerator crisis would have been the best if the company has well-structured communication line, which does not have limitations or a communication model with no delays.
As communication is part of organizational success, particularly in crisis communication, the use ineffective strategy to pass the information regarding the recalling of products by Toyota has negative impacts on the company’s status. According to the image restoration theory, one of the most prolific effects of poor communication crisis is that it makes the company brand deteriorate, which has implications on the company’s performance in the market (Coombs & Holladay, 2011). At the same time, it is apparent that poor crisis communication is likely to have effects on the internal structure of the business, as it can create mistrust and irrevocable damage between the organizational leaders and internal stakeholders (Zhong & Low, 2014). Dumay (2004) connect this argument with the business process redesign theory (BPR) by suggesting that if an organization does not have a standardized communication concept, it is likely to set businesses process in a way that the internal stakeholders are affected in a negative manner.
Processed Data Concerning Toyota Accelerator Crisis
In the look of different studies that have been done on the issue Toyota accelerator crisis, it is evident that the matter had statistical implications, with many reports showing that the incident leads to the decrease of the company figures both in the market and internally. For example, Evans (2017) writes that in between 2007 and 2009, the problem of the Lexus ES 300S having uncontrolled acceleration increased, with 74 car owners expressing themselves as victims of acceleration problem. As the reports from the media about Toyota vehicles and the issue of the accelerator attracted the public attention in 2009, in 2010, the organization recalled 2.3 million Toyota cars in the America. The company CEO claimed that the decision was passed due to the problem associated with the gas pedal (Evans, 2017). Moreover, Feng (2010) reports that in 2010, the company recalled 1.8 million vehicles meant to be sold in the European market. More research from Bebeteidoh and Takim (2016) reveal that between 2011 and 2013, Toyota had recalled 14.1 million vehicles that it intends to sell in the U.S., Japan, and Europe. In this period, the recall of the vehicles that were on the market and some already sold to the customers cost Toyota $54 million a day, which made the sales volume to decreased drastically (Evans, 2017).
Cost Benefit Analysis of the Data
From the data above, it can be argued that the recall activity had weaknesses that would affect Toyota profitability and even makes the company operate at a loss. Based on the total amount of the vehicles that Toyota recalled from 2009 to 2013, it can be presumed that the recall practice was not beneficial to the company and it has contradictory implications on the total sales of cars that Toyota made in this period. Statistically, the company recalled 18.2 million vehicles within the duration of 5 years, which is clear indication for one to say that the recall practice influenced the cash value of the company, as well as the level of business profitability in this period.
Sustainable Solution for the Communication Problem
For Toyota Company, to communicate about the crisis to its customers, the CEO of the company should take the role of communication, and therefore, employ the most appealing strategy to share the crisis information with the world. As such, Toyota Company should focus on establishing a communication model that follow a restructured communication flow chart to enhance communication improvement and avoid using the inconvenience strategy to communicate about the problem that may occur in future. For Toyota to have well-organized and effective communication techniques, the CEO should consider creating policies that will restore and give direction on the communication process. Thus, for Toyota to solve its problem relating to communication, the firm should consider using written communication, as one of communication strategy that organizations use to inspire their clients and make them feel motivated. Many businesses intend to use written communication in cases where leaders want to respond to customers and internal stakeholders, due to its effectiveness and the aspect of being convenience (Dlabay et al., 2008; Conway, 2004)
Recommendations
Although the CEO of Toyota has tried to implement some changes that will strengthen and reshape its communication model, the enterprise should focus on doing more in order to ensure that communication does not affect its operation in Japan, American, and Europe. Therefore, it is suggested that Toyota needs to come up with a communication strategy that will adjust the distribution of information to the affected stakeholders and a communication strategy that will ensure that the company clients cope with the situation brought by the crisis. This can only happen if the enterprise top managers involve other leaders and subordinate in the management of crucial practices in the company such as making the decision such as the suitable communication channel that the company needs to use when connecting to the global market about unfavorable situations. In a study that was completed by Husain (2013) it is found out that when communication is carried by involving the leaders and other employees in the organization, this makes the communication strategy meaningful and informative to all the staffs at all levels. Thus, this can be a better way for Toyota to ensure that employees support the communication strategy and they are part of the communication process.
The Visual Tools
The tools that are efficient and operational in the case of Toyota Corporation are stratification and active and regular engagement or surveying. The tools are selected because they can help Toyota support an improved communication strategy and assist the organization to pass decision using the proposed communication method effectively. Stratification as a tool that Toyota can use to support its operation, and it is significant because it aid companies to separate information obtained from different sources and use the data to form a particular pattern showing the progress of the company (American Society for Quality, 2017). With communication being a major area of concern for Toyota Company, the tool can be used to identify what is needed for improvement and the section that needs support to make communication efficient for the benefit of the organization. Conversely, active and regular engagement or surveying is also a substantial tool, as it gives companies the opportunity to make improvement according to the opinion of the people and knowledge concerning work situation (American Society for Quality, 2017). Toyota can use this tool to create engagement in the workplace, specifically between the company leaders and employees, which is one of the best ways to adjust the communication practice in the enterprise.
Conclusion
This paper discusses the issue of crisis communication in reflection to the way Toyota Company handled its accelerator crisis using poor communication strategy. From the discussion, it is apparent that Toyota has faced many difficulties and the company may continue to face the same problem if the organization does not consider embracing change where necessary. With the Toyota problem or crisis escalating in 2009, this forced the company to make some of the largest recalls, which has been a primary threat to the reputation of the firm. Based on the literature used in this paper, it can be seen that Toyota has tried to share the crisis information with its customers, but the company used the wrong method for this purpose. Hence, for Toyota Company to maintain its cumulative gain and competitive advantage, it has been proposed the company CEO need to consider using written communication as a method to deliver crisis messages and interacting with other people. The strategy will make customers satisfied and maintain their loyalty regardless of the crisis that may occur in future in terms of quality of the Toyota products.
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