Toyota’s Organisational CrisisIntroduction An organisational crisis can be defined as a low-likelihood but high impact occurrence that poses a threat to the continuity of an organisation and which is characterised by an uncertainty of the cause, consequence and method of resolving it, and the by the belief that a decision must be arrived at quickly to contain the situation (Kreitner 2007, p. 509). Similarly, Coombs (2010, cited by Anderson 2012, pp. 22-23) defined a crisis as the perception that an erratic event poses a threat to important hopes of stakeholders and can adversely impact the performance of an organisation and generate a negative impact.
Clearly, in the current unpredictable business environment in which organisations operate, crises are bound to occur and as such, the organisations must be adequately prepared to deal with any indeterminate but high-impact event. That is, organisations must be able o manage the unthinkable in a foresighted, methodical and apt manner. This calls for organisations to have crisis management teams which can enable them to anticipate and prepare for events that could have a damaging impact on the organisation.
How an organisation responds to and attends to a crisis can make the difference between success and failure. It may not be always possible to prevent a crisis, but the manner in which any unexpected event is handled by an organisation can determine the organisation’s commitment to dealing with organisational crises and hence restore confidence in the organisation’s stakeholders. If an organisation handles the crisis facing it lackadaisically, it is likely to lose confidence among its stakeholders, particularly customers, and this could lead to its downfall. In view of this, this paper analyses Toyota’s recent product recall crisis.
The purpose of the paper is to analyse the crisis, its impact or potential impact, and how Toyota went about resolving the concerns. Toyota’s success and how its organisational crisis ensued Toyota is a carmaker that has built a world-class image over the years. According to a review of a number of literature sources by Fan, Geddes and Flory (2011, p. 5734), Toyota established a top-notch company brand reputation premised on its devotion to quality, constant improvement, reliability, orientation towards customers, and excellence in design and manufacturing.
Toyota also earned a reputation for its commitment to its people and the environment (Guffey 2008, p. 34). This reputation brought many benefits including customer loyalty, a significant market share, and financial stability. However, Quech et al. (2010, cited by Fan, Geddes & Flory 2011, p. 5734) and Steinmetz (2010, cited by the same authors) argue that Toyota’s fast growth put strains on the company’s production aspects such as design, manufacturing, and engineering, which led to a series of quality concerns and product recalls commencing in 2003.
Public focus on Toyota’s car quality issues started in 2009. Fan, Geddes and Flory (2011, p. 5734) report that a major quality problem was noted on 10 September 2009 when a soundtrack of a 911 call of a car crash that occurred on 28 August 2009 was released. The car was being driven an off-duty high patrol officer in California, and the crash resulted in the demise of the officer and members of his family. According to a review of the same case by Knoespel (2011, p.
1), the highway patrol offer had called 911 to report that the accelerator pedal of his Toyota Lexus car had stuck, making the car race at over 100 mph. The vehicle finally crashed into another vehicle, killing all four passengers. It was established that the incident occurred due to an unmanageable acceleration, and this resulted in the recall of 3.9 million cars in the United States on 29 September 2009. The problem was attributed to mat floor problems that led to sticking accelerator pedals.