Toyota Motors Corporation Crisis in 2009 - Case Study Example

TOYOTA RECALL Case information: Toyota recall Name of the company: Toyota global Crisis: recall scandal caused by an accident Date: 28th August 2009 1. Introduction This paper will consist of the analysis crisis that occurred to Toyota company in 2009. The company had experienced a defect in the manufacture of automobiles that had some of them having a wrong positioning of the acceleration pedal with the front driver’s side floor mat. The first recall was done in November 2nd, 2009 with the help of various traffic enforcement agencies. The incursion caused vehicles to experience unintended acceleration; this was due to the defect in the mechanical sticking of the acceleration pedal. The enforcement was done using organizations like the United States national highway traffic safety administration. This paper will be able to cover the recall and the accidents related to the recall. The strategies used to regain reputation, legitimacy and restoration based on the information provided by documents released by the company, press conferences held and the speeches from the management (Muralidharan, et al., 2015). The crisis that lead to the recall was due to the accidents that were reported due to the mechanical errors on the automobiles. Crisis is then defined as an unstable situation of difficulty and is characterized by the following: There is the presence of both danger and opportunity in a crisis depending with how they are handled by the company. The danger exists where the crisis that occurred overwhelms the organization like Toyota Motor Corp. Opportunity can also be tapped when a crisis occurs due to the fact that the organization will gain self-realization and growth The threat to high priority goals and values: when a crisis occurs there will be a direct threat to the plans of the company due to the publicity outcome of a crisis. Anxiety always accompanies a crisis: this is experienced when the company makes a recall on certain issues and its customers will have unrest is not knowing what next for them. Restricted time of response: when a crisis occurs, and a recall is made the company will have a short time to respond to it since it is mostly emotionally charged. According to Choi, & Chung (2012) An occurrence of a crisis in an organization like Toyota Motors resulted to the turning point. It resulted to better tests done to the automobiles before being dispatched to the sellers to distribute them to customers. Crises can be grouped in three ways depending on the function of the impact on the victim and deniability: accidents, product safety, and sandals. An accident is an event that occurs without the control of the person at the event but might be with the control of the other parties as in this case when accidents occurred in 2009 and the cause traced back to the design fault by Toyota. Toyota responded to this crisis that was raised by the United States national highway traffic safety administration. The research done by the administration proved that there were some causes of accidents related to the manufacturer. They recommended the closure of operations in the company so as to pave the way for the investigation of the intensity of the error on pedal and mat positioning (Fan, et al., 2013). To elaborate how the company responded to the crisis, the following theories will be discussed in this paper: stakeholder and legitimacy theory (Lanis, & Richardson, 2012). Benoit’s image restoration theory. For legitimacy to be restored in an organization product, there should be a strong bond between the organization and the communities they do business with. There should be a social construction based on cultural ways of viewing the world. The image restoration theory deals with the tainted image of a company and how to restore as applied by Toyota motors during an occurrence of a recall. 2.0 The case 2.1 context Toyota Motors Corporation is a Japanese company that has been predominantly a leader in automobile manufacture and design. The president of the corporation, Akio Toyoda, is a Japanese investor and entrepreneur. The headquarters of the company is located in Japan. The recall on the spotted defects in the automobile design has constantly forced the company to reconsider its inventions. The company has been able to respond to almost all reported errors due to the design that are not appropriate. The company was presented a report in 2009 by the investigation team of traffic administration. Most customers had complained that the acceleration pedal in the cars was not detaching from the mat causing accidents due to the unwanted acceleration (Muralidharan, et al., 2015). The company normally investigate the matter and also change the design of the other automobiles in the production line. The result that led to the 2009 recall was an event that occurred On August 28, 2009, where two-car collision killed four people riding in a Lexus dealer-provided loaner ES 350 in San Diego, California. The national highway traffic safety administration failed to grant the company the reopening of the previous acceleration petitions. After this Toyota recalled 3.8 million vehicles to be checked for the error in unwanted acceleration. 2.3 Data Toyota motor corporation has various channels of addressing such crisis when a recall occurs. The company uses the following communication channels: Annual reports, speech from the chief executive officer and press releases like newsletters http://www.toyota-global.com/investors/ir_library/annual/pdf/2009/. The company set strategies to counter a recall like the one in 2009 whereby corrective actions, apologize, and mortification were used to restore the image of the company. The data that was collected from the website and traffic investigations are done by the national highway traffic safety administration (Fan, et al, 2013). The company formed a research team to look into the issue that caused unintended acceleration in Toyota and Lexus vehicles. The following list of data analyzed for the recall in 2009 from http://www.toyota.com/recall: The Toyota Annual Report 2009-http://www.toyota-global.com/investors/ir_library/annual/pdf/2009/ Toyota Newsletters 2009 Message from the chief executive officer Progress update report 2009 2.3 Methodology The content analysis is focused on the strategy to recover the damaged image of the company due to the recall in 2009. This is done to regain the customers trust and to improve the legitimacy of the company’s products. I have used new reports, mass media, publications to provide sufficient information on the level of reputation damage done by the recall. The Telegraph and BBC News analyzed the situation and provided many responses that were implemented by the impression management team to repair and maintain the legitimacy of the company’s products. The impression management team ensured that they influence the audience and customers of the company on several occasion. The CEO speech during the press statement in that year influenced a lot of people since he apologized for the accidents that were caused by the mechanical errors caused and the promise that guaranteed a change in the future crisis occurrence. The chairperson also promised a strong focus on the field operational test to help reduce mechanical problems in the future. In a crisis, according to Choi, & Chung (2012) the strategies used by the company rely on the level of responsibility, the company could have a high or low level of responsibility in the occurrence of 2009 accident crisis. Toyota viewed itself as having a high level of responsibility for the accident crisis because the press release by the chairperson used words that suggested that he was regretting. The chairman stated, “The unprecedented global economic crisis significantly impacted our bottom line in fiscal 2009, ended March 31, 2009, resulting in an operating loss for only the second time in the Company’s history. I sincerely regret the concern this has caused stakeholders—our shareholders and investors, customers, business partners, and members of the local communities in which we operate. I assure you that the speedy restoration of Toyota’s business vitality—and the laying of strong foundations for future growth—are our top management priorities.” (BBC News 2015) The image restoration strategies used by Toyota motors are discussed in the Benoit’s Image Restoration Theory, which provides three primary macro strategies that were implemented by the company in influencing its audience and customers. Corrective action The company took full responsibility of the mechanical error and committed itself to correction strategy recommended by the research team. The company promised its customers to remain competitive as the far safety of their automobiles were concerned. Cooperation The company promised its customers to cooperate with the relevant authorities to regain the interest of its customers. This was the press release by the chief engineer in charge of the field test and analysis. Mortification The company stated that it was unacceptable and regretted the occurrence and acknowledged the cause of the errors and accepted to be held responsible and accountable for the test control failures. 3.0 Findings The company has been the frontline in addressing the customers on the recall and encouraging them to trust their services and promising them on the reduction of occurrences like that. The company used its 2009 report to address the whole issue of the recall in length and head of staffs took the opportunity to apologize for the occurrence of the recall and the accidents caused to its customers. The company cooperated with the authorities to correct the errors and the recall was addressed with maximum seriousness that implicated positively to the customers and was much appealing to the affected population and audience (Fan, et al, 2013). The legitimacy theory helped in ensuring that the products of the company were taken into consideration by the customers. This helped in the restoration of the image of the company. 4.0 Conclusion, In conclusion, the company would have been in a good position to compensate the customers. However, the company ensured that the affected customers were convinced that the occurrence of such errors was reduced as much as possible. The company has since restored its image and has prospered with new development. The use of image restoration theories helped in the repair and maintenance of the reputation of the company. The legitimacy theory was applied and used to create the notion that the automobiles produced by the company were up to the required standards. This ensured that the company made legitimate automobiles and were trusted by the customers. The company has since made various recalls in the right time and has helped in preventing it from the accidents caused by their automobiles (Fan, et al., 2013). References Garriga, E., & Melé, D. (2013). Corporate social responsibility theories: Mapping the territory. In Citation Classics from the Journal of Business Ethics (pp. 69-96). Springer Netherlands. Lanis, R., & Richardson, G. (2012). Corporate social responsibility and tax aggressiveness: a test of legitimacy theory. Accounting, Auditing & Accountability Journal, 26(1), 75-100. Reimann, F., Ehrgott, M., Kaufmann, L., & Carter, C. R. (2012). Local stakeholders and local legitimacy: MNEs' social strategies in emerging economies. Journal of international management, 18(1), 1-17. Fan, D., Geddes, D., & Flory, F. (2013). The Toyota recall crisis: Media impact on Toyota's corporate brand reputation. Corporate Reputation Review, 16(2), 99-117. Choi, J., & Chung, W. (2012). Analysis of the Interactive Relationship Between Apology and Product Involvement in Crisis Communication: Study on the Toyota Recall Crisis. Journal of Business and Technical Communication, 1050651912458923. Muralidharan, E. K., Bapuji, H., & Laplume, A. O. (2015). Influence of institutional profiles on time to recall. Management Research Review, 38(6). Read More