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Case – Toyota
Introduction
Between October 2009 and July 2010, Toyota Motor Corporation recalled
8.5 million cars and trucks. The design and quality problems that caused the
recalls, and expenses related to the recalls, were obviously of great concern to
the company. Repairing defects will cost several billion US dollars and it is
not clear whether the company will suffer serious long-term effects due to the
recalls. Its reputation for quality had become well established over several
preceding decades, particularly in North America (its largest and most profitable
market). Media attention to its problems has now been somewhat lessened
by the BP disaster discussed in Case 2.1.
While recalls are relatively common in the automobile industry, Toyota’s
problems gained widespread attention because of: (1) the number and size of
the recalls; (2) the company’s longstanding reputation for producing high
quality vehicles; (3) the company’s slow and inadequate responses to the
problems; and (4) concerns that Toyota’s commitment to quality may have
been impaired by its rapid expansion and emphasis on profits.
Of the 8.5 million recalls, the majority was related to unintended acceleration
problems (Nation, 2010), or failures to respond to pressure on the brakes.
At least 52 deaths were linked to these problems (Thomas and Krisner, 2010).
The unintended acceleration problem was largely solved by securing loose
floor mats that could snag gas pedals. The problem of accelerators that could
sometimes stick required a design change.
Separately, Toyota recalled some of the hybrid Prius automobiles because
the company found a design problem with the brakes that could cause poor
performance on slippery or uneven roads (Sobel and Simon, 2010). Other
problems were claimed to be due to failures in the electronic control systems.
Following a number of complaints regarding vehicles that sped up, another
one came from a Prius owner who said his accelerator stuck while he was
driving on a Southern California Freeway. Investigators from the US National
Highway Traffic Safety Administration and from Toyota found no problems
with the vehicle (Spagat and Thomas, 2010). In July 2010, it was disclosed that
at least some of the reported cases of unintended acceleration were caused by
driver error rather than defects in the Toyota control systems. In these cases, a
preliminary investigation by a US government agency has indicated that onboard
instruments showed that the drivers had their feet on the accelerators
rather than on the brakes at the time of the crash. Figures or estimates of how
many of the problems were due to driver error will not be available for some
time (after further investigation and analysis).
Some of the many recalls during the period were required because of a
wide range of other problems.
Two other examples of the reasons for and scope of the recalls
In China in December of 2008, before some of the more massive recalls,
Toyota recalled 120,000 Crown, Reiz, and Lexus cars produced there between
2005 and 2006. The Chinese Administration of Quality Supervision, Inspection
and Quarantine said a manufacturing defect could cause the electric
power-steering systems to fail (Toyota, 2008).
On Friday, July 2, 2010, Toyota recalled a total of 270,000 Lexus and Crown
vehicles, their luxury brands. This recall affected their vehicles worldwide,
and was to fix valve springs that could cause the vehicle to stall in traffic. Of
this number 138,000 were in the US; 91,903 in Japan; 15,000 in Europe; 10,000
in the Middle East; 6,000 in China; and 8,000 elsewhere. About 200 complaints
had been received, but no accidents or injuries reported. This covered models
produced between July 2005 and August 2008. On Monday, July 5, 2010,
Toyota began recalling another 90,000 Lexus and Crown branded vehicles,
though this time only in Japan (Kageyama, 2010).
Poor communications and slow responses
Of great concern to many Americans was Toyota’s slow, and in US culture inadequate,
initial responses to reports of problems with the company’s vehicles.
The company was fined a record $16.4 million by the US government for
responding too slowly to the crisis. Even 9 months after the recalls began, an
analyst with Nomura Securities in Tokyo said the company is not doing a
good job in communicating with the public about what it is doing to improve
quality checks, and thus it is difficult for people to believe that the company is
taking the customers’ view as it promised it would do (Kageyama, 2010).
Outside observers, and eventually Toyota officials themselves, blamed
poor communications upward for the slow response to problems. Managers
in Japan responsible for overseeing American operations received many
warnings from Toyota’s top US management about complaints. But they were
slow, or failed entirely, to pass on these warnings to top management in
4. What are the apparent views of Toyota’s top management with respect to
social responsibility?
Toyotas top management had little or no knowledge about the quality assurance and they didn’t
consider the fact of public safety and they still sold the cars that had fault in them and were not
being socially responsible knowing the problem. The other fact was that they were only catering
the problem not considering the fact that the US market is completely different from what
Japanese market was. Further they removed or retired middle management which was not a wise
decision for what they did. Their neglection of the fact that were presented from the US market
had been a overall companies fault. They believed in them selves that they cant make a faulty car
which caused this major crisis. Toyota need to have more social responsibility because they can
put many people life’s in danger.