Toyota's Challenges: A Case Study on Recalls, Social Media & Crisis

This case study examines the challenges faced by Toyota Motor Corporation, a leading global organization, focusing on the impact of digitalization, social media, and product recall crises on brand loyalty. The study evaluates the product-harm crisis stemming from a defect in Toyota's accelerator pedals, leading to widespread recalls and a damaged reputation. It identifies the critical problem of regaining customer trust and analyzes Toyota's response, including the launch of social media initiatives. While Toyota's social media engagement saw some success, the company struggled to restore customer confidence fully. The case study recommends improved public communication strategies, enhanced pre-launch testing, and a robust framework for managing adverse impacts on social media. Ultimately, it concludes that Toyota's experience provides valuable lessons in crisis management and adaptation in a rapidly evolving digital landscape, highlighting the importance of proactive measures and effective communication in maintaining brand reputation and customer loyalty. Desklib provides students with access to this case study and many other solved assignments and past papers.

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Case Study on challenges faced by Toyota
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1CASE STUDY ON CHALLENGES FACED BY TOYOTA
Introduction
Toyota Motor Corporation is one the leading organisation in the global market. Despite
its huge success, the company has faced many issues. The recent challenges the company faces
have risen severe question about brand loyalty. The following case study discusses the
difficulties caused by the recent development of digitalisation, advertisement and brand
recognition through social media and recall problems.
Discussion
Evaluating product-harm crisis and how it has affected Toyota
Product harm crisis can be classified as a crisis that occurs when a product is found
defective or harmful for the consumers and is causes a publicised event. The critical effect of the
crisis targets a subset of that particular category or the entire product category. It has an impact
on the sales of the product and also the cost of the product associated with the product recalls. In
the long run, it takes a toll on the reputation of the company. The company must regain the trust
of the consumers during this crisis (Ma et al. 2014).
In the automobile industry, product harm crisis is nothing new. There have been many
incidents where companies had seen problems related to their products. Toyota’s has a reputation
for manufacturing quality automobiles. However, in 2010, the company had to recall 2.3 million
of its product worldwide. The product issue they face was a defect in their accelerator pedal,
which automatically speeds up the car without the pilot being able to take control of the vehicle.
In essence, it got the attention of media, spreading the news of the loss the company faced via
Facebook, Twitter, which was a massive blow to the reputation of the company (Rajasekera,
2013). The figure-1 below shows a chart that was reported by The National Highway Traffic
Safety Administration showing the record number of vehicles that has been recalled in the US by
2014.

2CASE STUDY ON CHALLENGES FACED BY TOYOTA
Fig 1 – Vehicle recalls in the U.S.A. by 2014 due to NHTSA
Source- (http://fortune.com, 2014).
Identifying the problems needed to be solved by Toyota leaders
The biggest problem which the leaders of Toyota should be concerned with is regaining
the trust of the customers. The sticking accelerator pedal in eight models of Toyota has led in the
closing of many manufacturing factories temporarily. Deaths have occurred due to these issues.
In the US, piles of lawyers are waiting eagerly to life lawsuits to sue Toyota for the loss of the
families that are the victims of the malfunctioning models of car that have been recalled (Jim, &
Shinde, 2015).
The company should look through the rapid spread of the negative impact that has led the
company to suffer in loss of sales and also losing the trust of customers. Facebook and the
internet is in full capacity, and the brand image has been destroyed Toyota has build over China,
Europe, and also in Japan which happens to be their home market

3CASE STUDY ON CHALLENGES FACED BY TOYOTA
Successful and Unsuccessful changes
One of the successful move made by the authorities of Toyota after the recall program
was launching an SNS. Toyota immediately put together a team to deal with the spread of news
through social media. They had an ‘online newsroom’ and a team to strategise social media
impact after the effect of the recall crisis. The team had Facebook, Twitter, YouTube, and
Pressroom Toyota under their surveillance. In the effort of the company, it added an opinion
section in their social media pages, where one could express their feelings towards the company.
This led to the rise of customers on their Facebook page despite the continuous coverage of
sentimental news by the US media. The company has reported that there has been an increase of
10% in the numbers of followers at their Facebook page monthly (Collins, Muthusamy & Carr,
2015).
Despite the effort utilising public campaigns, Toyota is failing in regaining the trust of
their customers. The recall of approximately 8 million cars has led the customers to shift their
brand loyalty. This has been an unsuccessful move for the leading automobile company. The
addressing made by the president of the company Mr Toyoda in front of US Congress made it
clear how not being a good communicator, Mr Toyoda reflected a manner which portrayed a
negative response in social media.
Recommendation for Toyota to look forward
It can be recommended that the company should have a trained public speaker who will
speak on behalf of the company. Toyota should have some other methods for the announcement
of the recall. The company should take new approaches in dealing with the spread of adverse
impact on social media. The company can develop a robust framework which can deal with the
tastings before the launch of the vehicles in the market.
Conclusion
Thus, from the following case study, it can be concluded that Toyota has faced a lot in
the long run and have seen its rise and fall. From leading the market to finding it hard to coexist,
the company is at stake. The case study has a schematic outline of the problems faced by the
company in recent years. The company has learnt a great deal from the crisis.

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5CASE STUDY ON CHALLENGES FACED BY TOYOTA
References
Collins, K. F., Muthusamy, S. K., & Carr, A. (2015). Toyota production system for
healthcare organizations: prospects and implementation challenges. Total Quality
Management & Business Excellence, 26(7-8), 905-918.
Jim, S., & Shinde, J. S. (2015). Crisis management at Toyota. Advances in
Management, 8(2), 16.
Ma, B., Zhang, L., Wang, G., & Fei, L. (2014). The impact of a product-harm crisis on
customer perceived value. International Journal of Market Research, 56(3),
341-366. doi: 10.2501/ijmr-2014-023
Rajasekera, J. (2013). Challenges to Toyota caused by recall problems, social networks
and digitisation. Asian Academy of Management Journal, 18(1), 1-17.
Retrieved from http://web.usm.my/aamj/