Toyota Motor Company: Losing its Quality Edge?

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Case Details:

Case Code : OPER095
Case Length : 29 Pages
Period : 2006-2010
Organization : Toyota Motor Corporation
Pub Date : 2010
Teaching Note :Not Available
Countries : Japan; Global
Industry : Automotive

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The recalls and sales and production suspension cast a negative light on Toyota's reputation for quality, just as the company emerges from an unprecedented downturn in the auto industry. This could hamper the company's potential sales and profitability recovery, especially in the U.S. market."¹

- Jeong Min Pak, senior director, Fitch Ratings Ltd², in 2010.

"[The lean production system] runs too deep in the Toyota culture and has been too successful and too effective. I would anticipate Toyota is going to get through this with a weakened reputation -- but since the company made great cars for a great price for 50 years, they are on a much better platform for restoring the luster of their reputation because the platform was so strong to begin with."³

- Michael Useem, a management professor at Wharton Business School⁴, in 2010.

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Introduction

On January 21, 2010, Toyota Motor Corporation (Toyota) recalled 2.3 million select Toyota Division vehicles in the US. The recall was done to fix sticking accelerator pedals which caused unintended acceleration, leading to accidents.

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1] Yuri Kageyama, "Toyota Recalls Show Price of too Rapid Growth," www.miamiherald.com, January 28, 2010.
2] Fitch Ratings is a global rating agency which provides credit markets with independent and prospective credit opinions, research, and data. Headquartered in New York and London, the agency has 50 offices worldwide.
3] "Quality on the Line: The Fallout from Toyota's Recall," http://knowledge.wharton.upenn.edu, February 3, 2010.
4] The University of Pennsylvania's Wharton School of Business is one of the top business schools in the US.

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