Abstract

This case discusses how Japanese auto giant Toyota Motor Corporation (Toyota) faced a recall crisis at its North American plant in November 2009 and how it turned the crisis into an opportunity to create more value at the company. The automaker went ‘back to the basics’ of its Toyota Way culture, which stood for Customer First, safety, and continuous improvement. Having recalled more than 11 million vehicles till August 2010, the automaker contained the crisis by stopping the sale of cars that had quality issues, thereby ensuring that the brand did not suffer further damage. In March 2010, the automaker established the Special Committee for Global Quality to build and strengthen an advanced quality assurance system and promote all business processes from the customers’ viewpoint. The automaker also set up the North American Quality Task Force that gave more autonomy to managers at the North American plant. This made the regional managers responsible for the sales of that region in addition to giving them the power to take decisions. Toyota felt that refocusing on the Toyota Way had helped it emerge from the crisis and had also given it an opportunity to revamp its existing business processes. The results were evident when the automaker regained its top spot as the world’s largest automaker in 2012 by selling 9.7 million vehicles. The managers at the North American plant felt empowered after Toyota gave them autonomy in decision-making and strengthened their ‘Customer First’ focus. Several magazines which reported that consumers’ perception about Toyota had turned negative after the recall crisis in 2009, wrote in 2012 that the perception about Toyota had become positive as the automaker had taken several proactive approaches that highlighted its concern for passenger safety. Having emerged successfully from the crisis, the automaker had plans to sustain the growth by making the company a leaner organization, focusing on giving more autonomy to regional divisions and foreign executives.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze and understand Toyota’s recall crisis, its reasons, and consequences.
• Discuss the challenges faced by Toyota in containing the crisis.
• Discuss how Toyota used the crisis as a way to go back to the basics of the Toyota Way and create opportunities for change and renewal in the organization.

Keywords

Toyota, Automaker, Recall crisis ,Crisis management, Public Relations, Internal communication, Crisis into an opportunity, Silo culture, Toyota Business Principles, Toyota Way ,North American Quality Task Force , Special Committee for Global Quality ,Global Quality Special Task Force, North American Quality Advisory Panel