Operations Management: Toyota Recall Crisis Analysis and Report

This report provides an analysis of the Toyota recall crisis, focusing on the events of 2010 and their impact on the company's operations and reputation. The report begins by outlining the initial context of Toyota's global presence and its reputation for manufacturing excellence. It then details the recall crisis, including the various defects related to acceleration, braking, and software issues, which led to a significant impact on the brand. The report examines the impact on public opinion and customer perception, highlighting the decline in product reliability ratings and the role of media coverage. Furthermore, the report analyzes the strategic changes undertaken by Toyota to address the crisis, including improvements in crisis management, communication strategies, and quality management initiatives. The analysis emphasizes the late implementation of these strategies and the importance of addressing issues promptly. The report concludes by referencing the key literature used for the analysis, which includes sources from HBR, Wharton, ResearchGate, and The Guardian.

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OPERATIONS MANAGEMENT
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4/16/2020
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OPERATIONS MANAGEMENT 1
Contents
Toyota 2010 crisis......................................................................................................................2
Impact on public opinion and customers...................................................................................2
Company strategic change.........................................................................................................3
References..................................................................................................................................5

OPERATIONS MANAGEMENT 2
Toyota 2010 crisis
Toyota manufacturer has been working in 27 nations across the globe. However in 2009 the
company has sold in 170 nations with 7.5 million vehicles what that included Toyota,
Daihastu, Hino and Lexus brand. Since 30 years the company has considered to be the
symbol of leadership in manufacturing excellence across the globe. However automobile
manufacturers are not immune considering the crisis within the industry. This reflects
production disruptions, product recalls, labour disputes, supply chain efficiency and various
other competitive pressures. One such crisis for Toyota included maintaining product quality
and Superiority of the product which has reflected customer loyalty for the brand.
Since 2007 the company was experiencing car model recall that reflected major crisis at point
of time when top-selling models of the company comes with various potential defects in
quality related to acceleration problem, brake system defects, software glitches, steering
malfunctioning. 2010 recall crisis majorly impacted Toyota business and around 8 million
cars for record it to get major defects in manufacturing. Considering the problem of 2007 it
was considered as major warning signs for the brand which was not taken as serious crisis
until January 2010 where the recall has caught the attention of public and media along with
the regulatory agencies of United States (researchgate).
Impact on public opinion and customers
The recall crisis has majorly impacted the public opinion and customer perception towards
quality and reliability of the brand. There is no doubt that the quality image of the company
has been compromised as per the consumers perception as they suffered from the recalls. The
impact on consumer reflected through the survey data along with the media that has amplified
the case. Negative quality perceptions have reflected the rebound of the trouble repeatedly.

OPERATIONS MANAGEMENT 3
The literature reflect that the major cause of this issue is combination of increased product
complexity along with the objective of rapid growth in automobile industry which has
impacted the supplier management system of the company and eventual performance of the
product manufactured. The company was looking for growth and expansion as the key
strategy of the company which eventually found to be impact the quality and reliability which
has been compromised by the company and has affected the customer loyalty towards the
brand. The depth and enormity of the crisis reflected result from American survey from
around 500 individual. Considering the for product reliability the survey reflected to decrease
to 72% which was nearly 95% which reflected a major impact on Toyota brand reputation
considering the brand quality consumer perception (hbr.org).
Company strategic change
However the company has taken some strategic changes in order to overcome the crisis, some
of which includes Strategy related to timing and preparation. This reflected that the company
was not able to identify and fuck up on the issue at the earliest stages which reflected as
major crisis in 2010. For this Toyota introduced some of the quickly address customer needs
through smart business process. Just reflect implementation of the new process by Toyota
while handling crisis problem in more efficient way, however it was found to be introduced
very late. There were three major aspects that needed to be addressed by the company in
crisis management that is Toyota‘s behaviour, evaluation and response immediately. Since
Toyota missed to address 2007 warning signs for quality management, which could have
make it more efficient by dealing be issues at the early stages. But to keeps on focusing
towards its customers rather than understanding the stakeholder needs which reflect lack of
right priorities for the company. Understanding the problems that has been caused this crisis,

OPERATIONS MANAGEMENT 4
the immediate action is taken by Toyota after this major 2010 recall crisis, it could be said
that the company took late steps in quality management (knowledge.wharton.upenn.edu).
Considering communication as one of the aspects where the company was late as
communication majorly influence public relations. For this the company handle the
increasingly complex crisis with the communication or public relation perspective which
included maintaining organisational image, managing and providing efficient information,
keeping media images in control, strategic handling of relationships with external as well as
internal stakeholders. It has been identified that the activities make the actual difference but
communication may also help the company to overcome the crisis while reducing the panic
among the consumers of brand.
From the crisis management it has been identified that delay in identifying or confronting the
crisis is one of the major issues for a company or supply chain management. Therefore it is
identified that the corporate leaders of Toyota meet to consider safety issues and lead a
systematic response towards the crisis management. Considering the quality management
company has thereafter been considering various strategies in order to get the quality and
reliability of the product in track. From the analysis it can be said that Toyota has consider
various strategies and step in value chain management ;like total quality management has
taken to make the things right after the crisis (theguardian).

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References
Hbr.org. The-crisis-management-lesson-from-toyota-and-gm-its-our-problem-the-moment-
we-hear-about-it? 2014. <https://hbr.org/2014/03/the-crisis-management-lesson-from-
toyota-and-gm-its-our-problem-the-moment-we-hear-about-it?Cm_sp=Article-_-
Links-_-Text%20Size>.
Knowledge.wharton.upenn.edu. Quality-on-the-line-the-fallout-from-toyotas-recal. 2010.
<https://knowledge.wharton.upenn.edu/article/quality-on-the-line-the-fallout-from-
toyotas-recall/>.
Researchgate. What_Really_Happened_to_Toyota. 2011.
<https://www.researchgate.net/publication/265103744_What_Really_Happened_to_T
oyota>.
Theguardian. Pr-view-toyota-reputation-management. 2011.
<https://www.theguardian.com/business/2010/feb/09/pr-view-toyota-reputation-
management>.