Business Capstone Project: Toyota's Product Harm Crisis and Recovery

This business capstone project provides a comprehensive analysis of Toyota's product-harm crisis, focusing on the definition of the crisis, the problems faced by Toyota's leadership, and the organizational changes implemented. The project examines both successful and unsuccessful strategies, including the impact of digitalization and social media. It highlights the importance of a robust database for monitoring customer complaints and the significance of social media in crisis management. The project concludes with recommendations for Toyota to manage future product harm crises, recover brand loyalty in the global market, and maintain a focus on product quality. The analysis references relevant academic literature to support its findings and recommendations.

RUNNING HEAD: Business capstone project 0
Management

Business capstone project 1
Contents
Definition of product-harm crisis within the context of Toyota.............................................................2
Identification of the problems which should be solved by the Toyota leaders.......................................2
Analysis of the organizational changes which were successful and unsuccessful..................................2
Recommendations for Toyota to manage product harm crisis and recover brand loyalty in the global
market....................................................................................................................................................4
References.............................................................................................................................................5

Business capstone project 2
Definition of product-harm crisis within the context of Toyota
The product harm crisis states to the situation when products are identified to be defective,
dangerous and hazardous to the customers. It can have terrific human and financial costs. The
product harm crisis can put an impact on the whole product type or subdivision of the
product. It commonly leads to the product recall voluntary or government regulators can
force the recall (Miron-Spektor, et al. 2018). In the case of Toyota, the product harm crisis
was caused by the accident which was initiated by the emotionally charged accidents
comprising 52 deaths apparently accredited to the sudden acceleration problem. The recalls
are not new for the automotive industry. Almost 10 million vehicles are recalled every year in
the US for several reasons. The product crisis has effects in the short term but it can lead to
the sales loss along with the product recall costs. In the long term, the product harm crisis can
damage the reputation of the company (De Almeida, et al. 2018).
Identification of the problems which should be solved by the Toyota leaders
The leadership team of Toyota deal with the massive recall effort. The recalls are the
indication of the importance of company safety strategies. The leaders have to renovate the
reputation of the company along with customer loyalty. The customers around the globe react
differently to the product harm crisis (Ballé, Chaize & Jones, 2019). It has been observed that
the customers are likely to get over the crisis and it puts impact if the company declares a
voluntarily recall and openly accountable for the product. The recall of Toyota was enforced
by the government which had a negative impact on the reputation of the company. The public
did not consider the statement given by Toyota and it has defended the trust of the public.
The leaders at Toyota are required to deal with the massive recall effort. The leaders
anticipate eliminating the product-harm crisis. The leaders are always interested in knowing
what to expect in the scenario of product harm crisis mainly in the consumer and stock armlet
reactions (Öztürk, Varoğlu & Varoglu, 2017).
Analysis of the organizational changes which were successful and unsuccessful
The digitalization of the automobile is a menace which is linked directly with the recall. The
advancement in technology like computers has made automobile manufacturer to adopt
computer systems in order to control and improve the functioning and performance of the
vehicles. During the earlier recalls, Toyota had assured to develop a database which would

Business capstone project 3
show defects and report them so that customer complaint can be monitored in an effective
way concerning vehicles (Cleeren, Dekimpe & van Heerde, 2017). According to the current
recall assessment, Toyota did not create a database and gave much attention to the
information gathered by the database in the appropriate manner. Such a situation can be a
new opportunity to Toyota which means to perceive and retort to the customer complaints in
the defined time. This problem is required to be addressed by the company to maintain its
market share and to evade the situation which occurred to Sony (Prystupa-Rządca, 2017).
The influence of social media was conveyed to limelight by the crisis. Crisis management
was ominously affected by the media. Toyota has previously realized the significance of the
social networks previously and added fans on Facebook during the crisis. Though,
representing the performance of the company on social media does not reflect everything.
The company needs to bring in notice the competitors. A report represents that Hyundai
which is an automobile company from Korea has boosted its fan following on the social
media networks at a high rate. Toyota needs to ascertain the reason for the increase in the
number of fans. It is critical for any company to monitor the trends of the competitors as it is
helpful in gaining competitive advantage contrary to the competitors. On the other side, a
product-harm crisis leads to the brand crisis which also leads to the losses in sales volume
along with the market share (Reddy, 2016). It is one of the foremost crises which are required
to be solved by the Toyota leaders. The stock prices of the company started falling
considerably just after the recall. Although, the effects of the stock price were not that
devastating because they started to increase instantly after the Toyota president appeared in
the US public hearing in 2010.
It is stimulating to implement the organizational change and to decide whether it’s successful
or unsuccessful. The unsuccessful organizational change of Toyota was the usage of a defect
reporting database to monitor customer complaints. The Toyota president represented the
statement that the growth rate of the company was increasing at a higher rate and the
company focused on increasing the sales of the cars than paying attention to the quality and
customer complaints. The use of social media by Toyota led to success. The company has
even added fans on Facebook even during the crisis. The use of the media can be substantial
to the company in crisis management (Whelan & Dawar, 2016).

Business capstone project 4
Recommendations for Toyota to manage product harm crisis and recover brand loyalty
in the global market
The recommendation to be given to Toyota is the use of social network sites. The company
can use social media for disseminating the company’s message to the public. The proper use
of social media can help in keeping an eye on the public. It is observed that people rely more
on social networks like Facebook, Twitter, and Instagram during the crisis. The company
easily attain get real-time information from the customers by tapping on social media
networks. Toyota could also make use of the internet for developing software and database
which can monitor and report defects along with the customer complain. The database can
even help Toyota to react to customer complaints more effectively.
It is also recommended to the company to focus on the quality of the vehicles than the
number of vehicles produced. Toyota must manufacture higher quality automobiles and avoid
a future recall in order to gain the trust of the customers. The digitalization of the automobiles
is the way to monitor and maintain quality in the vehicles produced.

Business capstone project 5
References
Ballé, M., Chaize, J., & Jones, D. (2019). Lean as a learning system: What do organizations
need to do to get the transformational benefits from Toyota’s method?. Development
and Learning in Organizations: An International Journal.
Cleeren, K., Dekimpe, M. G., & van Heerde, H. J. (2017). Marketing research on product-
harm crises: a review, managerial implications, and an agenda for future
research. Journal of the Academy of Marketing Science, 45(5), 593-615.
De Almeida, G. V., De Souza, F. B., Baptista, H. R., Gupta, M. C., & De Campos, R. (2018).
Fundamental principles of the Toyota Way and the Theory of Constraints:
comparative analysis and synthesis. International Journal of Services and Operations
Management, 30(1), 51-71.
Miron-Spektor, E., Ingram, A., Keller, J., Smith, W. K., & Lewis, M. W. (2018).
Microfoundations of organizational paradox: The problem is how we think about the
problem. Academy of Management Journal, 61(1), 26-45.
Öztürk, A., Varoğlu, M. A., & Varoglu, D. (2017). A Critical Review of Implicit Leadership
Theory on the Validity of Organizational Actor-National Culture
Fitness. International Journal of Organizational Leadership, 6, 456-469.
Prystupa-Rządca, K. (2017). the role of organizational Culture in Knowledge Management in
Small Companies. Journal of Entrepreneurship, Management and Innovation, 13(3),
151-174.
Reddy, C. K. (2016). The Role of Crisis Management for the Sustainability in the Global
Scenario–A Case Study. Ushus-Journal of Business Management, 13(1), 65-76.
Whelan, J., & Dawar, N. (2016). Attributions of blame following a product-harm crisis
depend on consumers’ attachment styles. Marketing Letters, 27(2), 285-294.