Abstract
The much-publicized quality issues caused massive damage to Toyota’s legendary image which resulted to various management crisis. How could this crisis happen to a world- class automaker? Analyst believed that the Japanese secretive corporate culture is a stumbling block in managing corporate issues. In a traditional Japanese culture, business is usually run by corporate leaders who are treated like powerful rulers and are not subject to admit mistakes in public. Employees are hesitant to relay any critical information to their superiors for fear of rejection. Toyota has a strong corporate culture as seen in their continuous drive for innovation to produce world-class and safety products. Their cultural respect and mutual trust to every employee is valuable and their motivation for personal and professional growth is strong. Toyota’s cross-cultural perspective is beneficial to the organization; however, their approach in dealing with problems is in contrast to the Western approach. Unlike the Japanese, the Americans are ready to admit mistakes in public. The Western corporate culture practices transparency and effective communication network. Toyota’s failure to meet the government’s safety regulations and to comply with the standards of customer interactions lies on their “don’t look, “don’t tell” approach. Toyota’s management should enforce transparency among employees with a zero tolerance policy. It needs an ethical leader committed to practice the standards of good business ethics.
Keywords: Cross-Cultural Perspective, ethics, corporate issues
Toyota Motors is one of the world’s largest global corporations. It was founded in 1937 by Kiichiro Toyoda with Akio Toyoda as the present CEO. Over the years, Toyota emerged as the number one car manufacturer in the world due to its legendary quality products. By setting its own manufacturing standards and product development, Toyota is consistent in producing quality and reliable vehicles and has been the most profitable company in the car industry.
In January, 2010 Toyota was forced to recall millions of vehicles globally due to braking and acceleration problems encountered in the past years. The massive recall led Toyota to freeze sales and production of its most popular models which resulted to a loss of $54 million a day on sales revenue. Toyota shares also dropped to more than 10% in the market.
According to reports from Motor Trend, Toyota’s crisis started in August 28, 2009 when a horrifying car crash in Southern California killed four when a 2009 Lexus ES350 suddenly accelerated out of control, hit another car and caught fire. The National Traffic Safety Administration (NHTSA) reported that the accelerator pedal had stuck against the floor mats of the Lexus which caused uncontrolled acceleration. Toyota then recalled floor mats on 4.2 million Toyota and Lexus vehicles but the recall did not correct the basic flaw. A number of Toyota drivers complained that even without the floor mats, their vehicles had still accelerated out of control. This time, Toyota recalled another 2.3 million Toyota-brand vehicles because of a problem with the gas pedal and announced its immediate stop of the sale of all models affected shutting down assembly lines for those models at five US plants. There were allegations that in the past two decades, a number of complaints and claims of the same fatal accidents by Toyota vehicles filed with the federal government were dismissed due to lack of evidence. That the company have been fined and reprimanded by judges several times because Toyota failed to render evidence in lawsuits. A number of lawsuits filed against the company were allegedly dismissed out of court for undisclosed sums of money. Other allegations also revealed that Toyota refused to disclose information on their onboard data recorder machine with law enforcement agencies due to its corporate policy to prohibit the use of its software for investigation purposes. Despite of the US laws specifying that the data on the recorder belongs to the vehicle's owner, Toyota shares information only on special cases. Toyota denied all these media allegations and continued to hide defects from customers ignoring complaints for the past eight years.
Although Toyota has made millions of recall, much is at stake for the company. Regaining the trust of customers and restoring its corporate
image is going to be a big challenge. The shame and embarrassment of
producing defective cars is considered a major failure for a company that prioritized on quality and safety. The impact of the crisis revealed a number of imperfections. Toyota violated safety regulations and resorted to bribery to avoid disputes. The management has failed to deal with these existing problems and continued to hide defects from customers and ignoring their complaints. During Akio Toyoda’s press conference, the CEO stressed on the safety of Toyota cars instead of apologizing for the company’s quality problems. The management chose to solve the problems internally to maintain a good public image.
Toyota’s worldwide production doubled over the years. To facilitate this growth, the company had to add more employees and suppliers which require intensive training. It seems that the company failed to provide adequate training to these new employees and suppliers which resulted to flaws in the Toyota production system. The company’s reputation for producing quality cars was rooted from their strong corporate culture in which they created “The Toyota Way”. For decades, the company worked diligently to adhere to these pillars which are: Respect for people and Continuous improvement. Positive results were seen through high demands for Toyota cars, customer satisfaction and loyalty and their huge financial success. Their traditional priority has always been: First- Quality, Second - Safety, Third - Volume. Did Toyota fall away from these values? Did they focus on volume instead of quality? Or was it lack of senior management leadership? Why were these
problems not addressed immediately? As a superior automaker, Toyota’s responsibility is to ensure safety and to listen to the customer’s voice and complaints. It appears that Toyota has not set up an effective communication system to be able to address these problems. Toyota is run by its Japan headquarters and top officials who run the recall process are in Japan and do not include US executives. The safety issues raised by NHTSA were ignored because the US headquarters were not given enough information to provide to the government. Due to communication problems between the US management and their Japanese counterparts, issues in the past have not been addressed properly until these problems have accumulated. If Toyota had been sensitive to consumer complaints and problems were dealt openly at an early stage, it would have saved them from massive losses and public rage. The CEO has finally apologized to the public but the damage has been done both to the consumers and to the reputation of the company. Will Toyota ever be able to recover from this crisis? I truly believe it will. The senior management needs to revise their perspectives and set up effective communication channels between the management and employees to ensure that customers’ voices will be heard. This is the only way Toyota can restore its corporate image and heal the deep wounds inflicted to the American consumers.
References:
Evans, S., Mackenzie, A. (January, 2010). The Toyota Recall Crisis. Motor Trend. Retrieved from http://www.motortrend.com/features/auto_news/2010/112_1001_toyota_recall_crisis/viewall.html
Linebaugh, K., Searcey, D. Shirouzo, N. (February 8, 2010). Secretive Culture Led Toyota Astray. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB/10001424052748704820904575055733096312238.html#
