Analyzing Toyota's Recall Challenge

RMI 5051 Managing Risk Spring 2019 Homework Assignment Week 2 40 points Due on Thursday, January 31, 2019, before class Submit via Canvas Homework #2 Window Perraju Dinavahi

Answers to the Unintended Acceleration: Toyota’s Recall Crisis Case:

1. Unfolding from an event happened in August 2009, Toyota’s crisis has begun to erupt. A horrific accident in which an off-duty cop, Saylor and his family died on spot, exposed Toyota’s insufficiency in crisis management. The cause of death was due to Unintended Acceleration (UA) in which the officer who was driving the car had no part. Initially, it was thought that the cause of the accident was floormats obstructing the gas pedal so, Toyota recalled 7.5 million vehicles around the world and had to stop the sale of their all-time best-selling car models due to concerns with the floormat design.
   Toyota kept concentrating on floormats and the accidents kept on happening accounting for about 33% of all RTA and the cause for all of them was UA. Toyota offered irrelevant solutions to the consumers and improper explanations to the authorities. NHTSA issued safety warnings quoting that the unintended acceleration in Toyota vehicles was related to not just mats, but many other things like gas pedal maneuverability, engine ignition, and braking system resulting in unintended acceleration.
   During the same time, Toyota released a statement saying “A rare set of conditions which may cause the accelerator pedal to become harder to depress, slower to return to or, in the worst case, stuck in a partially depressed position” which was irrelevant to the problem that must be addressed and continue to work on floormats. This statement added fuel to the fire and regulatory agencies had to release a harsh counter statement against Toyota saying Toyota was misleading the public. Saylor’s incident made not only U.S. regulatory agencies question the safety and quality of Toyota’s vehicles further but also but ignited Congressional panel investigations starting from March 2010. From 2009 to 2010, the Toyota Corporation, the global lead, and an extremely profitable company ended up having a disastrous public relation cost the Toyota millions of dollars in loss and trust. Jan. 2010, Consumer Reports pulled out eight Toyota models from its approval list due to the substantial recalls from Toyota made them concern about each vehicle released by Toyota. The escalating challenges with Toyota vehicles affected them to lose customer loyalty and position in the car market. Rapid growth and poor supply chain management were one of the reasons why the crisis became difficult to handle. Issues with the complexity of the products struggle within the hierarchy and managerial concerns further weakened Toyota’s ability to handle the crisis. The 2010 recall became a very big crisis because of insufficient crisis intervention strategies from the risk management team, so was the weakness in Toyota’s response.

2. Saylor’s accident was horrible, engulfed the entire officer’s family, brought the global attention. This horrific road accident confounded prevailing apprehensions about whether Toyota automobiles endured from an electronic defect that triggered uncontrolled acceleration. This, in turn, putting pressure on various state and federal regulatory agencies as public safety is always a priority and so the agencies warranted Toyota with a lot of investigations.
   Toyota quickly throws a press release denying media reports a crisis exists with its drive-by-wire electronic control method. In order to strengthen their statement, Toyota tagged with their statement a NHTSA report published two days before indicating the organization has declined an appeal by a Toyota owner to open a new inquiry into Toyota's drive-by-wire system. Ignoring the fact from the same report NHTSA saying it had launched a probe into Toyota's all-weather rubber floor mats in March 2007 after several reports of unintended acceleration in 2007 Lexus ES 350s and even with other models. 2009 Christmas, Toyota Avalon, four passengers died. Toyota said its supplier’s fault, accused suppliers for manufacturing gas pedals. The problems kept worsening and worsening.
   Toyota accidents accounted for 33 percent of all accidents and killing 37 people onboard. That made media work focused on Toyota and brought global attention to the company. Toyota made heavy recalls and those again worked against Toyota losing customer loyalty. The way that Toyota has managed the recall concerns has not been helpful to their company.
   It feels like some of the of the recalls were only issued because there were a heavy death toll and pressure from regularities. The statements and press releases from Toyota made things worse further. Toyota needed to honestly acknowledge that there was a crisis inside the company (straight down to manager level and up) and flaws in their automobiles, Toyota should have been acted fair to the people and to the media, which they have not. If Toyota was straightforward, they may have lost some customers, but they could protect trust. I instead they kept misleading the customer through the media that broke the trust and customer loyalty. Reputation for a corporation in the world trade is crucial for its existence.

3. Toyota surpassed the automotive organizational standards over the past two decades. The global market for Toyota has been big and profitable. Rapid growth, making new models and new customers made Toyota stand on top with other strong competitors. But, the crisis in 2010 and the crises before that exposed Toyotas inability to manage the crisis.
   Toyota should put more efforts to develop crisis management strategies. A good risk management team would improve the risk awareness culture there by design anticipatory crisis intervention model beforehand. Every vehicle the Toyota makes needed thorough testing for its safety and quality before it is released to the market. Toyota should carefully implement compliance standards those include laws and regulations and then participate in social subsidies. Toyota should not only engage in safety but also make eco-friendly and energy efficient products for the customer needs. Toyota should be honest with the customers and the agencies. Lean manufacturing and standardization of auto parts of helped Toyota to cut down the production costs but not the quality. Toyota should take their part in manufacturing standardization and feel more accountable for quality control.
   Toyota should aim to deliver support to corporations across the globe by constantly providing with product service that anticipates the consumer needs. Toyota should remain to embark on collaborative attempts to reinforce its management policy and boost company value. Toyota should encourage business and cost structure improvements to get a strong management manifesto so that it can act swiftly to the shifting market situations. Toyota should also spend time resources to develop a good RM team to have robust crisis prevention and intervention methodologies.

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Conclusion

In analyzing the Unintended Acceleration: Toyota’s Recall Crisis Case, it becomes evident that Toyota faced significant challenges in crisis management during the unfolding of this event. The crisis, stemming from tragic accidents and subsequent recalls, exposed shortcomings in Toyota's response strategies, leading to a loss of trust and significant financial repercussions. The case underscores the critical importance of effective crisis management in maintaining corporate reputation and customer loyalty. Moving forward, Toyota must prioritize the development of robust crisis management strategies, including thorough testing, compliance with regulations, and transparent communication with customers and regulatory agencies. By implementing these measures, Toyota can strive to regain trust, enhance product safety, and strengthen its position in the global automotive market.