Strategic Management

Topics: Toyota, Toyota Production System, The Toyota Way Pages: 9 (2504 words) Published: June 29, 2015
Q1: What were the drivers of Toyota’s accelerator crisis? Why was Toyota facing a recall crisis?

The drivers of Toyota’s accelerator crisis are the quality issues with its vehicles. Within six months, millions of cars had been recalled back for modification under the potential problems with the floor mat, acceleration pedals, and braking which were related to sudden or unintended acceleration problems by public. Even though Toyota has already a full-blown crisis on its hands, but the problem has been compounded by a long-delayed and less-than-reassuring response from Toyota.

Toyota abandoned its mantra of quality, and aggressively seek market share. Toyota expended rapidly in order to become the top global manufacturer, but its quality began to decline and also leading to its reputation beginning to slip. Toyota developed a pattern of slow reactions and secrecy in regards to safety concerns and defects in its vehicles. When definitive causes were found, their marketing team should have publicized the investigation to show that the company was listening to consumers and in complete control of the situation. Lentz said Toyota's recall crisis taught the automaker need to be "much more transparent, both inside and outside the company." "You have to be able to listen to your customers, not just hear them, but listen to what they're telling you -- and be quick about it." (Rechtin, 2014)

Q2:Michael Porter claims that “operational effectiveness” is not a strategy. Why was operational effectiveness such a focus at Toyota? What are the downsides of “lean manufacturing”?

Michael Porter believes that a strategy is based on how the company differentiates itself from its competitors while operational effectiveness is on improving on what the organizations have.(Porter, 1996/11) Toyota’s focus on operational effectiveness is to build and improve on the company’s very own resources “Kaizen”, and to save costs as well as time in terms of production against its rivals, which in turns places them at a competitive advantage. This is similar to Prahalad and Hamel’s idea of identifying key competencies, which is an inside out approach, different from what Porter’s definition of strategy.(Prahalad & Hamel, 2006) An example of Toyota’s initiatives towards operational effectiveness is its development of the TPS system by Eiji Toyoda and TaiichiOhno in 1948 and 1975, widely known as lean manufacturing in the US.(Toyota, 1995-2015) The downsides of lean manufacturing are the high maintenance cost and heavy reliance of the integrated machines, and quality control issues. An example in Toyota’s case, would be the recall of millions vehicles due to gas pedal and floor mats issues in between November 2009 and January 2010, and the fines that were imposed due to the problems by the authorities in US. (MacKenzie, 2010)

Q3: Has Toyota successfully enacted the principles espoused in the Toyota way?

No. Toyota was overly ambitious and expands too rapidly. They are able to be accountable to their shareholders who want growth every year thus resultingin differences in expectation and deviate from the Toyota principles. (Webb, Booth, McCurry, & Harris, 7 February 2010)

What did they do well?
Toyota respect all their external shareholders, challenge them also help them improve (Principle 11). Being a learning organization through relentless reflection (Hansei) and continuous improvement (Kaizen) (Principle 14), Toyota ranked first in the top four manufacturers in the global automobile industry. (Ireland, Hoskisson, & Hitt, 2009)

Room for improvement?
Rapid or overwhelming expansion leading a need to devise a strategy to manage Research and Development, Value Chain and Culture behaviors to achieve consistent result. (Greg, 2009) In conclusion, Toyota needs to focus on the fundamental of Toyota way in order not to be overtaken by competitor such as China made automobile brand which is improving its backward...

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