BSBRSK501 Manage Risk: Case Study Analysis of Toyota's Total Recall

This report analyzes the risk management failures that led to Toyota's massive recall between 2007 and 2010. The analysis identifies legal framework violations, safety and operational risks, and financial repercussions stemming from unintended acceleration issues. It examines stakeholder responsibilities, conducts a SWOT analysis, and proposes critical success factors. The report also details communication strategies, research requirements, and risk assessment methodologies. Furthermore, it outlines a risk treatment plan, prioritization strategies, and opportunities for rebranding to restore customer confidence. The minimization of risk is addressed through external reviews, top management involvement, and standard development process improvements. The risk action plan encompasses risk assessment and probability analysis, emphasizing the importance of documentation and continuous stakeholder communication. Ultimately, the report underscores the need for proactive risk management to prevent similar crises and maintain organizational stability. Desklib provides access to this and many other solved assignments for students.

Manage Risk
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Contents
Introduction................................................................................................................................4
Question 1- Legal framework impacting the risk......................................................................5
Question 2-Present standards.....................................................................................................5
Question 3- Areas address by the risk factor under consideration.............................................5
Question 4- Type of risk identified............................................................................................5
Question 5- Responsibility of the risk........................................................................................6
Question 6- Internal and external stakeholders..........................................................................6
Question 7- SWOT analysis.......................................................................................................6
Question 8- Critical success factor.............................................................................................7
Question 9-Communication with the stakeholders....................................................................7
Question 10- Research requirement...........................................................................................7
Question 11-Assessment of risk.................................................................................................8
Question 12- Likelihood of problem repetition.........................................................................8
Question 13- Possible consequences..........................................................................................8
Question 14- Treatment of the risk............................................................................................8
Question 15- Risk priority..........................................................................................................9
Question 16- Opportunities in the given case............................................................................9
Question 17- Minimization of risk.............................................................................................9
Question 18- Risk action plan..................................................................................................10
Question 19- Documentation requirements.............................................................................10
Question 20- Importance of documentation.............................................................................11
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Question 21- Implementation of the plan.................................................................................11
Question 22- Frequency of communication with stakeholders................................................11
Question 23- Conclusion..........................................................................................................11
References................................................................................................................................13
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Introduction
The main objective of this report is to identify the risk associated with the provided case
study. A provided case study is focused on the business operations of Toyota during the
financial years 2007 to 2010. They about various problems identified by the management of
Toyota during this period as management had to recall the significant number of cars getting
reports of safety shoes in their models (Hubbard, 2020). This report will help in identifying
the basic details about the risk under consideration and strategies that could have been used
by management to ensure that this risk factor does not affect the operations in the future.
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Question 1- Legal framework impacting the risk
The government of every country has established certain rules and regulations that are
required to be complied by every car manufacturer to ensure the safety of customers. This
type of regulation is very essential to be followed by every car manufacturer as a violation of
these factors can result in a financial penalty and operational ambiguity among the business
organizations. This is the primary legislative Framework that will be affected by the risk
factor under consideration as a provided case study indicates that the management of the
organization has not been able to comply with these regulations.
Question 2-Present standards
Different countries have their standards for car manufacturers operating in a particular
country. Multinational organizations such as General Motors and Toyota have to comply with
such rules and regulations after considering the market in which they are selling the products.
For example in the case of the United States of America, Federal Motor Vehicle Safety
Standards (FMVSS) have been established by national highway traffic safety administration
(NHTSA) (Östling et.al, 2019). The standards are required to be complied with by every car
manufacturing selling product in the USA. The primary responsibility of developing the
standard lies with NHTSA. These rules and regulations are passed by congress after making a
detailed review of the provided compliances.
Question 3- Areas address by the risk factor under consideration
The Health and safety of customers is the primary area that has been addressed by the risk
factor under consideration. Unintended acceleration problems were identified by various
customers that resulted in the death of at least 50 people from 2000 to 2009. This problem
was due to unsystematic matting in the cars. In addition to those areas of financial and
operational laws were also identified by the organization as overall revenue generation
capabilities of the organization decrease due to such problems.
Question 4- Type of risk identified
Safety risk- This risk factor is associated with the safety of customers that arises due to the
lack of safety precautions taken by the organization in the manufacturing process. This
resulted in a recall of around 10 million cards in a particular financial year.
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Operational risk- This respective is associated with the probability that management has not
been able to apply effective standards of operation to produce products and services. Lack of
safety precautions indicates that there is a risk associated with operations (Aaltonen, Salmi
and Marstio, 2018).
Financial risk- management of the organization has estimated that overall opportunity cost
and cost of repair associated with the risk factor under consideration amount to around $2
billion.
Question 5- Responsibility of the risk
In the given scenario overall management of the organization will be responsible for the risk
factor under consideration. In general, it can be said that the chief executive officer and an
operational officer will be responsible for the risk factor under consideration. Internal
management of the organization can assign the risk factor to safety officer that is overseeing
the development of safety standards as well as execution of standards in the given scenario
(Kasperson, 2019).
Question 6- Internal and external stakeholders
Internal stakeholders in the given scenario will be the employees that are working in the
safety and quality standard department of the organization. The objective of this internal
stakeholder will be to make sure that they are receiving adequate standards concerning safety
precautions to be taken by the organization (Rampini, Viswanathan and Vuillemey, 2019).
External stakeholders- External stakeholders in the given scenario will be customers as they
are the users of the final product. External stakeholders in the given scenario will expect the
management to ensure that all the safety precautions have been taken and they are getting the
worth that they have paid for the purchase of the car.
Question 7- SWOT analysis
Strengths
The legal framework of the organization as
management will be able to develop and
follow all the applicable standards.
Weaknesses
Inefficient management on part of top
management as employees has already
disclosed the safety issues but management
did not seriously consider this issue (Dow
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and Ellis, 2019).
Opportunity
Management of the organization has
sufficient financial resources to make sure
that they can recall all the defected cars and
make changes so that their reputation can be
restored.
Threats
The level of competition in the market will
be the primary threat as other business
organizations will acquire the market share
in the time where Toyota is recalling their
products.
Question 8- Critical success factor
The critical success factor in the given scenario will be the ability of Management to recall all
the defected cars and make sure that management has made all the required changes.
Increasing the level of customer satisfaction will be the primary critical success factor that
can be measured with the help of conducting market research. Market research should be
conducted after completing the process of recalling cars for improvement.
Question 9-Communication with the stakeholders
Communication with the same folder in the given scenario should be undertaken through
formal channels of communication such as emails and letters. This is because the problem
under consideration is of high magnitude as it involves the safety of customers (Fanaroff and
Goldsmith, 2019). Proper communication should be made by the organization to customers
concerning the serious matter under consideration so that cars can be recorded as quickly as
possible.
Question 10- Research requirement
Market research will be the primary method of research management that will be helpful in
the given scenario. This is because management will be able to consider the overall level of
satisfaction among the customers after the recall process has been completed. In addition to
that, it will also help in identifying the impact of the demand concerning the products and
services provided by Toyota (Hedlund and North, 2018).
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Question 11-Assessment of risk
After considering the provided scenario can be said the disbursement process is one of the
most important and essential from the perspective of a car manufacturer. The safety risk is
required to be analysed by the organization by the appointment of an external safety officer
that will help in providing an unbiased opinion on the safety standards of the company.
Question 12- Likelihood of problem repetition
After considering the provided information it can be said that there is a medium likelihood of
this repetition of the problem. This is because this type of problem can arise in any business
organization if they are not focused on their standard development process and execution
process. This likelihood can be decreased significantly if top management keeps its constant
involvement in this process (Sekerci and Pagach, 2019). Employees of the company were
aware of the safety shoes and they also communicated the issue with top management but no
action was taken by top management.
Question 13- Possible consequences
Countable consequences after a reoccurrence of this problem will be significantly higher and
negative for the organization. This is because the overall sales revenue of the organization
has decreased by 8% in the year 2010 as compared to the year 2009. Toyota was the only
organization where there was a decrease in sales revenue as compared to the previous year
which indicates the demand for their production market. This demand is expected to decrease
by at least 25% if this type of problem arises again in the future.
Question 14- Treatment of the risk
Following are the steps that are required to be taken by the organization for the treatment of
the risk-
Step 1- First of all management is required to ensure that external examination of safety
procedures is conducted every month.
Step 2- Safety standards are required to be re-examined by external safety expert which will
help in providing an unbiased opinion of the general framework (Berry‐Stölzle and Xu,
2018).
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Step 3- Internal testing should be conducted by the external examiner.
Step 4- Customer testing should also be conducted with the help of a Focus Group selected
by the management.
Question 15- Risk priority
Prioritization of general procedures concerning operations of the company will be the
primary factor that will help in prioritization of risk.
Priority 1- Safety- Primary priority should be given to the safety of customers in the given
scenario after all the record cars are corrected. This is because this was the primary reason for
recalling cars.
Priority 2- Quality- After the safety quality of the raw material and final product should be
the priority of management. It should be considered by management that the quality of raw
material is not affecting the safety precautions (Lundqvist and Vilhelmsson, 2018).
Priority 3- The last priority should be given by the organization on the volume of the sales.
Question 16- Opportunities in the given case
As it is already identified that the problem in the given scenario is associated with the safety
issues identified by customers due to unorganized floor matting in the cars. This is the reason
that around 10 million units for record by the organization. In this situation, the opportunity
in front of Toyota is to rebrand its product so that it can regain customer loyalty and
confidence in the product (Ogutu, Bennett and Olawoyin, 2018). This is the only strategy that
can help the organization to increase its overall revenue as it has decreased over the period. In
addition to that blue book value of the car has also decreased which is an indication of its low
demand.
Question 17- Minimization of risk
Following are some of the alternative which can be used to minimize the respective
concentration-
External review- External review of safety precautions should be conducted concerning
standards and general operations of the company.
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Involvement of top management- Top management should be involved in every step of safety
management as they will be response responsible in the eyes of customers.
Changing the standard development process- Safety standard development process will also
be essential in the given scenario as current standards have failed.
It can be said that the involvement of top management will be the primary strategy that can
help in minimization of a risk factor as safety issue under consideration was identified by
employees but not considered seriously by top management (Li et.al, 2019).
Question 18- Risk action plan
Risk action plan in the given scenario will involve the following processes-
Risk assessment- All the risks associated with internal and external operations will be
identified.
Probability of the risk- Probability of occurrence of risk will be identified-
The probable impact of the risk- The expected impact of such risk on general operations of
the company will be identified-
Prioritization of risk- Priority will be given to each risk factor based on probability-
Assignment of risk owner- Risk owner will be identified and appointed (Hopkin, 2018).
Development of risk management strategy- Finally a mitigation strategy will be developed
that will help in mitigating the negative impact of the risk factor.
Question 19- Documentation requirements
Before implementation- Before implementation testing reports and complaint reports
provided by the customers will be the documents that will be required to analyse the problem
under consideration.
During implementation- During implementation management will be required to document
the results of testing undertaken on each unit off the record product.
After implementation- After implementation actions were taken by the organization to make
changes in the product and the outcome will be documented (Austen-Smith, Diermeier and
Zemel, 2017).
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Question 20- Importance of documentation
One of the primary reasons behind keeping a documentation action plan is to make sure that
management can consider the actions undertaken by the organization in making the changes
in general procedures. Safety precautions taken during the action plan will be included in the
general operations of the company to avoid such problems in the future. In addition to that
these documents will be helpful for the organization to manage similar problems identified in
the future (Zhang et.al, 2015).
Question 21- Implementation of the plan
Following steps will be taken for implementation of the plan
Development of steering committee- First of all the steering committee will be formed that
will involve members from the top management for overseeing the functions of safety
management.
Communication of the documents- All the documents concerning Action Plan will be
communicated to the concerned department i.e. safety and testing.
Review- Review will be undertaken by the steering committee concerning the safety
precautions and testing undertaken.
Disbursement of the cars- All the cars will be disbursed to their owners after completion of
the process (Yu and Langari, 2015).
Question 22- Frequency of communication with stakeholders
Communication should be undertaken with the general owners of the cars for review. In
addition to that monthly communication should be undertaken with the customers that are
owners of the recalled cars. It will help in making sure that similar problems are not
reoccurring.
Question 23- Conclusion
On an overall analysis of this case study, it can be said that the external and internal risk
assessment of any business organization is very essential. This report has helped in the
identification of general problems that are being faced by Toyota from 2007 to 2009. In
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addition to that, it has also helped the brain development of risk assessment processes and
risk management strategies that will be helpful for the management.
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