Toyota: Management

Questions:

1. Analyse the reasons for the problems faced by Toyota in 2009.

2. Identify Toyota’s capabilities and core competencies. How is Toyota placed internally to effectively implement the initiative proposed by Akio Toyoda?

3. What should Akio Toyoda do to return Toyota to profitability?

 
 

Answers:

1. The reasons for the problems faced by Toyota in 2009 are briefly mentioned below (Connor, 2010).

Global economic crisis which initiated in 2007-2008 and reached its peak in 2009 resulting in plummeting demand in US which is one of the biggest markets for Toyota. Additionally there was slowdown in demand elsewhere including Japan and a rising yen further compounded the problems.

The aggressive growth path pursued by the company since the last two decades so as to become the market leader resulted in the quality standards becoming increasingly lax due to which the number of recalls showed a sudden surge.

The recall crisis of the company was further compounded by the fact that there were differing explanations on the origin of the problems resulting in recall due to which the consumers were not satisfied and hence consumers started looking for other products which offered superior quality and safety at similar prices and thus reducing demand at a period when the global economy was in a crisis.

2. Toyota’s primary core competency has always been the superior quality people tend to associate with their offerings. Additionally the supply chain of Toyota along with labour management policies is considered to be highly capable with emphasis on lean manufacturing. At the time of this crisis, Toyota was ill placed internally to implement the initiative proposed by Akio Toyoda. Akio demanded a fresh look at cars with a focus on manufacturing better cars which pass through more rigorous safety tests and additionally can inspire the drivers. Clearly this required a focus on innovation (particularly in designing) and a change in the mindset of the employees or else the company would have perished. However the existing culture bolstered by the decade long success that Toyota had witnessed was that of complacency and being laid back with a relentless focus on efficiency in the current set of activities (Hall, 2009). However the change in business environment required that the company undergoes an overhaul of the internal management culture so that employees and other stakeholders such as suppliers are better adept at adapting to the new business environment.

3. It is imperative that in order to return to profit, Akio Toyoda must focus on the core competencies of the company and must facilitate an environment where innovative practices can lead to superior quality cars. For this it is imperative that changes in the organization structure and the executive positions need to be made so that essentially the people at the top are those who can drive innovation and change (Taylor, 2012). Additionally prudence needs to be observed in the selection of suppliers so that quality raw materials and parts are provided to the company. Clearly the designing team needs to be much more innovative in their designs based on the demands of the customers in different geographies. Further the testing procedures need to be made more robust so as to ensure that the incidents of recall are minimised and the value proposition of Toyota brand is maintained.

References

Connor, M. 2010. Toyota Recall: Five Critical Lessons, Business Ethics, Available [Online] from: https://business-ethics.com/2010/01/31/2123-toyota-recall-five-critical-lessons/ (Accessed on April 17, 2015)

Hall, K. 2009. Toyoda on Toyota: “Grasping for Salvation, Bloomberg, Available [Online] from: https://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2009/10/toyoda_on_toyot.html (Accessed on April 17, 2015)

Taylor, A. 2012. Akio Toyoda: Toyota’s comeback kid, Fortune Magazine, Available [Online] from: https://fortune.com/2012/02/09/akio-toyoda-toyotas-comeback-kid/ (Accessed on April 17, 2015)

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