Toyota Motor Company is one of the leading companies in the automobile industry, and it dominated global the market at one time after it attained a 12.8% market share. As most other firms would do, Toyota wanted to maintain a competitive age through mass production of cars in both Japan and the US. This pressure led to the company favoring volume over the rest of its priorities as a company; safety and quality. The company significantly compromised the issue of safety, which resulted in the production of faulty vehicles that would accelerate on their own uncontrollably, the 2010 accelerator crisis. This paper explores a process that requires improvement in the wake of such a malfunction and it identifies management leadership as what needed to be improved if the company was to avoid negative public reputation and improve the safety concern for its clients.
Problem Statement
The Toyota accelerator crisis of 2010 was greatly mishandled, which meant that the issues related to it were not dealt within the required timeframe, resulting in additional complications and public relations damage as well as many other negative outcomes such as deaths of clients. The grandson of the founder of the company, Akio Toyoda, confessed to the House of Representatives of the US that the issue resulted from a failure by the firm in terms of management leadership, which led to a deviation from the company’s philosophy coined in the ‘Toyota Way’ (Heller and Darling, 2012). The company resorted to pursue growth, which surpassed the rate at which it was capable of developing its clients and organization even while they ought to have been mindful of that. Resultantly, the desire for growth and profitability resulted in a compromise of the safety requirements that caused deaths of some of its clients after their vehicles became uncontrollable due to unregulated self-acceleration.
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Background to the Issue
The ‘Toyota Way’ was a blueprint that the firm had adopted to guide how it would operate and it cultivated an organizational environment in which the employees strived for responsibility, dedication, loyalty, and creativity (Johar, Birk, and Einwiller, 2010). The workers worked as a team in which they had equal opportunities to contribute to ideas that would improve the quality of automobiles that the company manufactured. In the earlier times, the firm greatly valued the need to take responsibility for issues related to their car manufacturing process as well as being able to deal with problems that would compromise the safety of clients (Johar, Birk, and Einwiller, 2010). However, as time wore on, the firm found itself deviating from its philosophy because it wanted to cut on the costs of production and continue being as profitable as possible.
The management of the company opted to reduce bonuses and dismiss workers who worked on temporal contracts so that they would raise the overall profit. Because company was producing cars at a rapid rate on the superficial consideration, it was assumed that it was on the right path to profitability, which was far from what the reality would be. However, in 2010, the company confessed that its crave for profitability had compromised the safety of its customers. Toyoda’s confession to the House blamed a lack of concentration on the issues of safety by the company because rapid production had been preferred instead of the other two factors of the firm’s philosophy. The accidents that resulted from uncontrollable accelerations involving the firm’s automobiles harmed the reputation of the company, which resulted in a series of lawsuits (Johar, Birk, and Einwiller, 2010). It was specifically identified that the management failed to address client concerns in time partly because they were immersed in a profitability undertaking.
Impact
Failing to improving management leadership at the company would mean that more clients would die in road accidents and the company would continue to lose its reputation. In the world where corporate branding is one of the main sources of competitive advantage, a spoilt reputation would mean that Toyota would lose a significant proportion of its market share (Finch, 2009). However, if the management leadership was improved such that clients have their concerns addressed in time, the company would gain reputation as one that cares for the needs of its clients, which is also in line with the issues of corporate social responsibility. However, improving management process would mean added costs of operations that the management had considered an extra burden since it would require more workers.
Desired Outcome
Improving management leadership would improve the firm’s response to crises. Such a move will have a positive effect on the company’s reputation in the market, especially if it will reduce the safety risks. Clients would develop more confidence in the management of Toyota since they would feel cared for when their concerns are addressed. A sustained corporate image is considered one of the factors that promotes profitability, raising the levels of satisfaction of stakeholders (Finch, 2009). Even while the move proposed in this analysis would mean an extra cost of operation, the firm is likely to improve its volume of sales because of its brand reputation.
In conclusion, Toyota Motors needed to have improved on its leadership management processes if it was to deal with client concerns for safety while riding their automobiles. Such an improvement, though costlier, would raise the firm’s reputation and improve its profitability in the eventual process.
References
Andrews, A. P., Simon, J., Tian, F., & Zhao, J. (2011). The Toyota crisis: an economic, operational and strategic analysis of the massive recall. Management Research Review , 34 (10), 1064-1077.
Finch, J. (2009). Toyota sudden acceleration: a case study of the national highway traffic safety administration-recalls for change. Loy. Consumer L. Rev. , 22 , 472.
Heller, V. L., & Darling, J. R. (2012). Anatomy of crisis management: lessons from the infamous Toyota Case. European Business Review , 24 (2), 151-168.
Johar, G. V., Birk, M. M., & Einwiller, S. A. (2010). How to save your brand in the face of crisis. MIT Sloan Management Review , 51 (4), 57.
