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Marshall School of Business, University of Southern California, Center for Management Communication (2013)

TOYOTA, INC.: A Case Study in Communicating Bad News


Authors:
Faculty Advisor:
Original reference:

Mezey, Alex; Hamilton, Scott; Kuwahara, Kevin; & Sandlin, Courtney


Dr. Robyn Walker
http://classic.marshall.usc.edu/assets/155/25393.pdf
TEACHING NOTE

PURPOSE:
To analyze Toyotas internal and external communication dealing with its unintended acceleration case
PROBLEM:
Toyotas unintentional acceleration case and its communication problems surrounding this issue
ISSUES:
1. Disconnect between North American and Japanese executives (Internal Communication)
The North American Toyota executives were not given decision-making power for recalls, despite the fact that they
were much closer and knowledgeable about the unintended acceleration issue in America than the Japanese executives.
The disconnect between the executives was great enough that outside observer Ray LaHood, the U.S. Secretary of
Transportation, worried that the American executives issues were not heard in Japan. Internally, Jim Press, then the
president of Toyota Motors North America, urged more open communication amongst the North American and
Japanese executives.
2. Werent honest with the public (External Communication)
Toyota continually denied allegations that there were any problems with its cars, which led to public backlash. Then,
only after the public backlash, did it issue recalls.
3. Toyota put quantity before safety (Internal Communication)
Toyota originally prioritized safety first, quality second, and volume third, but in the early 2000s began to put
growth and volume as the highest priority. President Aikio Toyoda vowed to return Toyota to its original state
of prioritizing safety and quality first, but the shift away from these priorities in the first place represents a
failure of the executives to communicate to the employees the importance of safety versus profits
4. Unwillingness of Japanese executives to work with North American regulators (Internal Communication)
Rather than be forthcoming and transparent with US investigators, Toyota ignored the NHTSAs attempts to communicate
with it until LaHood flew to Japan to meet with the executives in person. Toyota also tried many times to slow down
investigations and even once argued that increased media attention to the issue was generating consumer interest and
complaints. The result for Toyota was a public rebuking from the NHTSA and the public perception that the company
had something to hide.
5. Attempted to slow down/halt NHTSA investigations (External Communication)
Toyota used various tactics to hamper the investigations being undertaken by the NHTSA. Toyota attempted to reduce
the number of relevant cases by changing the definition of a sudden unintended acceleration incident. Next, the
company argued that it was not at fault for many cases, stating that it had warned drivers, shifting the blame to the
consumer. Accident data was first sent to Toyota before being sent to the NHTSA, possibly creating an opportunity for
censorship. Recalls were only issued when it was clear that the NHTSA was not going to give up its investigations. Most
importantly, when Ray LaHood, the Transport Secretary, attempted to contact Toyota, it was unresponsive, forcing him
to contact President Toyoda directly.
STAKEHOLDERS:
1. Toyota
Whats at stake:
i.
Profits
ii. Customer loyalty
iii. Global reputation
2. NHTSA. Whats at stake: Credibility
Case Study: Toyota Inc. (2013) TEACHING NOTES

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Marshall School of Business, University of Southern California, Center for Management Communication (2013)

3. Consumers
Whats at stake: Need to know
i.
they are driving safe cars
ii. the company has their best interest in mind
iii. that the NHTSA can protect them
4. Shareholders
Whats at stake: If performance in the company drops, their shares are worth less
DESIRABLE OUTCOMES:
Give more decision-making power to United States executives
A refocus on quality making sure products are done right the first time
Better communication with the public
Recognizing the problem and taking responsibility
More direct communication with government safety regulators
POSSIBLE SOLUTIONS:
United States executives create an international board dedicated to safety with a North American representative
Taking more time in the development cycle to test all solutions that might create safety problems
Provide safety bulletins through dealers for customers on company-wide recalls and safety investigations
Make sure the people in power are of high character through more extensive background checks
Toyota could allow itself to be held accountable by a third party
Have someone high up in executive order that has a direct line with the NHTSA
PLAN FOR IMPLEMENTING AND COMMUNICATING OPTIMAL SOLUTION TO APPROPRIATE
STAKEHOLDERS:
CEO needs to make a speech and develop a plan that is then communicated to all levels of management
Need to implement safety training workshops for employees
Allow Toyota customers better communication (questions, concerns, and complaints) with the company to show
employees that they are concerned with safety
Create a public media campaign to outline the changes that they are going to implement in order to regain trust in
the company
Meet with NHTSA and work together to find the most optimal strategic plan

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