Worldwide, the Toyota brand name has been a symbol of quality. Toyotas focus on Kaizen (the Japanese
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In light of Toyota’s commitment to quality, it was shocking when Toyota announced a massive recall of many of its vehicles in early 2010. On January 21, 2010, Toyota stated that it would recall approximately 2.3 million vehicles to correct sticking accelerator pedals, and, on top of that, approximately 4.2 million vehicles would have an ongoing recall for a floor mat pedal entrapment issue. By late February 2010, Toyota had recalled “about 8.5 million vehicles for problems related to gas pedals and brakes,” according to CNN. Jeff Kingston of Temple University Japan estimated that the recall cost Toyota $2 billion. Moreover, the way Toyota managed the crisis was even worse than the financial consequences. The president of the company, Akio Toyoda, the grandson of Toyota’s founder, did not appear publicly for two weeks after the recall announcement. When he did appear, Toyoda took the path of minimizing the problem, citing a software issue, rather than a defect, as the source of the pedal problems. Some uncertainty remains as to whether the problems originated in Toyota plants in America or whether the problem can be traced to designers in Japan. Kingston asserted that Toyota’s failure to be forthcoming on critical safety issues has put “the trust of its customers worldwide” in jeopardy. Where did Toyota go wrong? How did the symbol of quality become tarnished? Some contend that cultural factors contributed to Toyota’s current crisis.
In his Wall Street Journal article, Kingston explained the cultural roots of Toyota’s woes. He indicated that “a culture of deference” in Japanese firms “makes it hard for those lower in the hierarchy to question their superiors or inform them about problems.” In addition, the Japanese tend to focus on the consensus, which can make it difficult “to challenge what has been decided or designed.” In Japan, Kingston noted that “employees’ identities are closely tied to their company’s image and loyalty to the firm overrides concerns about consumers.” One can deduce how Toyota’s problems arose in this cultural environment. If subordinates noticed a problem in vehicular accelerators, they would likely be hesitant to
Report the problem to their superiors (culture of deference)
Criticize their team members who designed the accelerators (focus on consensus)
Request the firm spend extra money to redesign the accelerators for greater consumer safety (loyalty to the firm over concern for consumers)
Moreover, Kingston noted that Japanese corporations have a poor record when responding to consumer safety issues. He described the typical Japanese corporation’s response in the following way:
Minimization of the problem
Reluctance to recall the product
Poor communication with the public about the problem
Too little compassion and concern for customers adversely affected by the product
Why do Japanese firms usually respond this way to consumer safety issues? Kingston gave three reasons.
First, “compensation for product liability claims is mostly derisory or nonexistent” in Japan. In other words, Japanese corporations have little to lose by their minimal response.
may seek to deny their products have safety concerns to “save face,” i.e., to protect their companies’ reputations.
Toyota’s Global Strategy Challenge
In contrast to the cultural explanation of Toyota’s issues, Bill Fischer on Management Issues.com offered a different perspective, suggesting that Toyota’s obsession with growth was the cause of the problems. In his view, companies “can expand by either opening new markets or offering new competencies, but not by doing both at the same time!” Fischer emphasized that companies lack a “head-start” based on using their existing “know-how”
by “moving into new product areas, in new geographic markets with new factory settings.” Transmitting “knowhow” requires personal interaction which is difficult
over long distances. Fischer concluded that “successful globalization is much too difficult a journey without the assurance of having some knowledge that gives your organization a basis for advantage. . . . To do otherwise is to risk following on the wrong Toyota path to success.
With your understanding of what caused Toyota’s crisis, answer the following questions:
1. Define the real problem that Toyota has, listing at least 3 causes of the problem.
2. Identify the strengths and weaknesses that Toyota company holds.
3. To plan for change management plan identify the top five capabilities the company needs to emphasize to be able for the transformation, and justify your choices?
4. Using Kotter eight eight-step model develop a change management plan Towards more customer-oriented culture in order to correct the path?
5. Identify the main reasons behind the employees’ burnout, identify its outcomes and introduce at least five valid solutions to overcome it?
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