Toyota Motors Case Study

1. What cultural factors led to the problems Toyota faced with its accelerator pedal?

New Management: When new management was implemented, Toyota suffered when this resulted in lack of alignment of Toyota’s current values. The new management system of nonfamily members focused primarily on the financial benefits of Toyota’s new products and completely ignored the “The Toyota Way” that brought the company success to begin with. Their primary goal was to increase market share and build higher profit margins by reducing costs, ignoring the priority of the customer value proposition and quality that Toyota’s brand promised.

2. What errors did the company made in its handling of the situation? Why?

There are multiple errors that Toyota made when informing the public about the recall situation, waiting a few weeks even though they were clearly aware of the issue. Toyota failed to provide the proper communication to the industry about the whole situation. The company lacked the proper external communication to deliver the thoughts and plans that were occurring inside the organization. This lead to the public assuming that Toyota was hiding information regarding the incident on purpose to avoid allegations when Toyota could easily have minimized this risk by being upfront and communicating much quicker. This also affected the stakeholders of Toyota as investors continued to feel betrayed by Toyota management.

Organizational structure: As Toyota began to globalize and manufacture more vehicles internationally, there was no priority enforced for a separate headquarters. All the decisions were made by executives in Japan who lacked the proper knowledge to understand Western communications. With bigger operations and more wide spread manufacturing, Genchi Genbutsu was more difficult to attain as it took more time to find the source of every problem