8 C09-10-0011
withJapaneseculture.However,asthecompanyexpandedabroad,theyencounteredchallengesreplicating
corporate vision and the corporate culture.
Stakeholder Image. Toyota had invested significantly in building its valuable brand and number one qual-
significant improvement in its car safety and quality, while Toyota was perceived to have made a dramatic
drop. Toyota’s image with their most important stakeholder, the customer, was significantly misaligned from
their corporate vision and culture.
6. Has Toyota effectively managed public relations in the U.S.? Who should be accountable for this activity?
How could Toyota’s crisis management be improved?
publicusuallylookstotheCEOforreassurancethattheproblemsdrivingthecrisisarebeingaddressed
quickly and with adequate resources.
inherited an organization poised for this type of crisis. The nonfamily members had expanded too quickly,
andsidestepped thecompany protocolsto guaranteetop qualityand customerexperience.TableTN-2
ernment of a safety defect within five business days. As a result, the company paid a US$16.4 million fine.
Inaddition,thecompanydidnotappeartofollowthecrisismanagementprocessoutlinedbyNorman
market capitalization had fallen 21 percent in the 9 months since the initial recall.
7. What should Akio Toyoda do now to restore Toyota’s reputation and position Toyota for sustainable
competitive advantage?
activities—steppingbackwardtogobacktothefuture.Oncethevisionisclearlyarticulated,Mr.Toyodacan
C09-10-0011 9
dealing with any problems that might occur in the future. Then, they should do their best to make certain
that problems do not happen.
his name.
8. What lessons can other companies take from Toyota’s crisis?
Other companies can take several lessons from the Toyota accelerator crisis case. In general, coordination and
Quality is not free. It requires a corporate culture that supports quality with behavioral controls, such as the
Toyota Way, or the extensive use of expatriates. An alternative is external controls, such as robust quality
The two crises discussed in this case, sludging and surging, illustrate approaches to crisis management that
Finally, the case highlights potential consequences of misalignment between a differentiation marketing
strategy built on quality and customer experience and an operational strategy built on cost leadership. The
natural tension between these extreme objectives demands very careful guidance from executives committed
achievements can be quickly undermined.
10 C09-10-0011
Update
Itwasapanicthatsparkedtheworldwiderecallofeightmillioncars.ButthecrisisoverfaultyacceleratorpedalsatToyota
may not have been nearly as bad as feared, an official report has claimed.
being linked to problems with its cars.
Thecompany,whichisthelargestcarmakerintheworld,recalled8.5millionToyotaandLexusvehiclesearlierthisyear
over various problems, such as sticky accelerators, faulty braking systems, and dangerous floor mats.
ThemajorityofthecarsaffectedwereintheU.S.,butdriversinBritainalsoreported90mphcrashesduetotheirvehicles
revving uncontrollably.
quence.
One recorder showed that both the brake and accelerator pedals had been pressed. In addition, through examining the
“The limited research completed so far has not led to identification of safety defects other than sticking gas pedals or pedal
entrapment,” the report said.
Reports suggested the company knew about problems years beforehand but did not think they warranted a recall.
Toyota said in a statement: “Toyota is committed to listening more attentively to our customers and continuing to investi-
gate unintended acceleration concerns.”
html.RetrievedJuly16,2010.
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Exhibit TN-1. Accelerator Recall Drivers
Exhibit TN-2. Levels of Change
Source:S.BrownandK.Eisenhardt(1998).CompetingontheEdge.HarvardBusinessSchoolPress.
12 C09-10-0011
Exhibit TN-3. Michael Porter’s Generic Strategies
Exhibit TN-4. McKinsey 7-S Framework
Source:Adaptedfrom:RichardD’Aveni(1994)Hypercompetition.NY:FreePress.
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Exhibit TN-5. U.S. versus Japanese Culture
Dimension United States Japan
Environment Control Harmony
Time Single-focus, fixed, present Single-focus, fluid, present
Action Doing Being
Space Private Public
Power Equality Hierarchy
Individualism Individualistic, universalistic Collectivistic, pluralistic
Competitiveness Competitive Collaborative
Structure Flexibility Order
Thinking Inductive, linear Inductive, linear, systemic
Source:CulturalNavigator.com.
Exhibit TN-7. Toyota’s Brand Alignment
Exhibit TN-6. The Transnational (Integrated Network) Structure
Source:BartlettandGhoshal,1988.