Signs of the impending recall crisis began as early as 2006 when the National Highway Traffic Safety Administration (NHTSA) initiated an investigation into driver reports of “surging” in Toyota’s Camry models. This investigation was closed the next year declaring that there were no defects. Known in the industry for their quality and reliability, Toyota would silently recall almost nine million Toyota and Lexus models due to the sudden acceleration problems. Because of the lingering reaction in dealing with these problems, Toyota’s leadership had been highly ridiculed, so now they had a big job in identifying the solution that would make sure of the safety of their vehicles and reinstate consumer confidence, as well as protecting the Toyota brand and salvaging the dropping share prices.
From its humble family business origins, Toyota had modernized management, manufacturing, and production philosophies. Many business scholars applauded its values and business methods and, as a result, the Toyota Way was adopted by many businesses in a wide range of industries. The Toyota Way mandates planning for the long term; highlighting problems instead of hiding them; promoting team work with colleagues and suppliers; and, perhaps most importantly, instilling a self-critical culture that fosters continuous and unrelenting improvement. From the assembly line to the boardroom, Toyota’s principles urge employees to strive for perfection (Greto, Schotter, & Teagarden, 2010, p. 3).
Toyota weathered through a lot of problems over the years from the accelerating recall to the engine oil sludge, but found their way to sustain and grow. Mr. Toyoda had to sort out what combination of structural, cultural, or strategic challenges led to the current recall crisis. Clearly, Mr. Toyoda had much to do to fix the problems of the recent past, and restore confidence in his company and the brand moving forward. More importantly, Mr. Toyoda had given his personal commitment in his testimony to the U.S. House Committee on Oversight and Government Reform: “My name is on every car. You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers.” Mr. Toyoda emphasized that being loyal to their customers was very important and that these customers need communication as well as knowing that their vehicles are safe (Greto, Schotter, & Teagarden, 2010, pgs. 5-7).
During the recall process, Toyota endured the problems with operations, quality, productivity and competitiveness. These issues should be at the top as far as priority. Mr. Toyoda testified saying: “Toyota’s priority has traditionally been the following: First, Safety; Second, Quality; and Third, Volume. These priorities became obscured, and they were subsequently not able to stop, think, and make improvements as much as they were able to before, and the basic stance to listen to customers’ voices to make better products had weakened somewhat (Greto, Schotter, & Teagarden, 2010, p. 1).
Toyota has had transformation issues as well. Of the seven deadly diseases, Toyota experienced (1) the lack of constancy of purpose to plan their services and products to keep their company in business and provide jobs; (2) the emphasis was only on the short-term profits. This is not a reliable indicator of management performance, so Toyota’s management clearly showed they were not reliable. (3) Performance evaluations, merit ratings, or annual reviews were pretty much non-existent because if this had been in place, the employees moral would have been a lot better because this would reward those who did well. (4) Mobility of management annihilates teamwork. The management based in Japan was not a mobile management team and kept things under wrap, so there was no communication. (5) Management by use only of visible figures: Successful management must take account. (6)...
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