Toyota Crisis: Causes, Solutions, and Implementation Analysis

This report provides an in-depth analysis of the Toyota crisis that occurred between 2009 and 2010. It begins by outlining the events, including the recalls of millions of vehicles due to quality issues related to exhaust systems, seatbelts, and floor mats, which resulted in significant financial losses and damage to the company's reputation. The report then delves into the root causes of these issues, such as rapid growth, cultural differences, and inadequate quality management processes. It highlights the company's shift in strategy, including restructuring and the implementation of new goals through the adaptive cycle, as well as changes in organizational structure and culture. The report concludes by examining the solutions implemented, such as establishing a quality committee and crisis management team, and the stages of change that Toyota underwent to overcome the crisis and restore its market position. The analysis underscores the importance of maintaining quality control and adapting to market challenges.

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COURSE NAME

1. Explain the case devotes to the crisis Toyota Company overcame in 2009-2010.
Basically, what happened?
Toyota is a very successful automobile manufacturer originated in 1937 in Japan.
Toyota’s Corolla was introduced in US markets in 1968 which was a huge hit. By the
1970s, Toyota has become the 2nd automobile company in terms of market share after
Volkswagen (Tregear, 2015). Apart from increasing its dealers, it also setup a production
plant at Indiana to increase the local production and meet the demand however under this
rapid growth and Japanese culture in US, things did not went well that resulted in a crisis
in 2009-2010. It had to recall 6 million cars due to quality issues in exhaust systems,
seatbelts and also had to pay a huge amount as a penalty which resulted in a heavy loss
for the company. It posted negative operating income for the first time in 2009.In
subsequent years, company changed its strategy, did some restructuring and make
numerous initiatives and changes which results in successful turnaround of the company
and gradually it is able to restore its reputation and growth and the improved revenue is
just the byproduct of improving reputation (Harraf, Wanasika, Tate & Talbott, 2015). Its
operating income become significantly high in 2013 and 2014. It is really interesting that
Toyota survived after a massive loss by changing and implementing new goals.
2. Why these mistakes occurred?
When the company is growing at a rapid rate and its innovative produces also find
greater acceptance, sometime it loses the focuses on quality, testing and reliability and
becomes over confidence. The growth is so fast that puts pressure on the internal
management. Apart from it, it is a Japanese company operating in US and Japanese
culture may or may not work in US (Meehan, & Jaworski, 2009). There was also no
quality management by a professional committee and also organization structure do not

support quick decision making and responses during crisis situations. There were also
issues with corporate culture (Tregear, 2015). Though it is difficult to imagine the
quality issues in company like Toyota that have pioneered the Total quality
management, lean and many other initiatives, but the reason is that the organization
structure was not supportive as required for a local culture. Power is also centralized and
people on the ground do not have much accountability and at the same time, there were
huge pressure to manufacture and meet the rising demand. In this process, quality
aspects were neglected and the concerns quick large time to resolve as different
departments like sales, marketing, production, engineering are located at different
locations leading to communication delay (Tukker, 2017). With time, Toyota has learned
from its mistakes and it is expected that the company would not repeat its mistakes in
future.
3. What happened in the company?
Company has to recall more than 6 million cars after the various quality problems
have been unfolded that resulted in a heavy loss for the company. The problem unfolded
when the Lexus met with an accident causing death of 4 people. One of the person in the
call complains to highway police that car is accelerating automatically and there are no
brakes. Analysis from Toyota confirms that there are issues with floor mat and company
had to recall all the vehicles. Apart from it, there were numerous complains about
seatbelts, exhaust systems that resulted in recalling large number of cars. Company had
to spend a large amount of money in various legal cases, penalties and also the
reputation was highly damaged and sales have shrunk (Andrews, et al., 2011). It posted
the negative operating income in 2009. During this stage, Management has clearly
understood that company is in dire need of changes if it wanted to make a comeback in
the US market. It has introspected its current set of problems and identified strengths and

weaknesses. Finally, it defined its future goals to mitigate the weaknesses of
organization structure like slow decision making, culture and inefficient quality
management program although it has not mentioned that how these goals will be
achieved. Toyota is a large company and it is always difficult to implement any change
in a big organization.
4. What was the solution to existing problems and the stages of implementation of
changes?
The solution to existing problems was to have a quality committee, crisis management
team, consolidation of people from different departments to encourage quick decision
making, change in organization structure and culture. However these changes were not easy
to implement. The various stages of implementation of changes can be explained by Adaptive
cycle that consists of 4 steps. In step 1, organization is doing well and there is no need of any
change. In step 2, Company often faces crisis due to internal issues, disruptive competitors or
any other market force. In step 3, company introspects itself to know about its strengths and
weaknesses and also to identify the opportunities. Then it makes a plan what it can do to
mitigate the crisis and overcome the situation (Kuipers & Ben, 2014). Toyota had identified
the reason for its problems and is certain what it can do but it is still not sure about the
“wants” that if it solve the problems. Last step is Entrepreneurship in which organization is
determined about it wants but not sure about its cans like how it will achieve what it wants.
Toyota was very clear about the solutions but still not ready for arranging for implementation
of these plans.

Works Cited :
Andrews, Anthony P. "The Toyota crisis: an economic, operational and strategic analysis of
the massive recall." Management Research Review 34.10 (2011): 1064-1077.
Harraf, A., Wanasika, I., Tate, K., & Talbott, K. Organizational Agility. Journal Of Applied
Business Research, (2015): 675
Kuipers, Ben S. "The Management Of Change In Public Organizations: A Literature
Review." Public Administration 92.1 (2014): 1-20.
Meehan, Seàn, And Bernie Jaworski. "Don't Waste The Crisis Opportunity
Knocks!." Perspectives For Managers 173 (2009): 1.
Tregear, R. Business Process Standardization. In Handbook On Business Process
Management 2 (2015): 421-44. Springer, Berlin, Heidelberg.
Tukker, Arnold. "Conclusions: Change Management For Sustainable Consumption And
Production." System Innovation For Sustainability 1: Perspectives On Radical
Changes To Sustainable Consumption And Production (2017): 406.