In recent years, three global vehicle manufacturers have hit or neared the staggering mark of selling over 10 million vehicles per year — Toyota, Volkswagen and General Motors. Unfortunately, this growth trajectory also coincided with significant problems for the global giants. From 2009 onwards, Toyota faced significant vehicle recall problems and a US$1.2 billion settlement associated with reports of acceleration problems in some vehicles. GM recalled millions of vehicles in 2014 linked with reported faulty ignition switches. Volkswagen faced multiple problems after admitting in 2015 that it manipulated diesel emissions tests.

Partially in response to its own issues, Toyota changed its global structure to be region focused, with one unit dealing with developed markets, another with emerging markets, a third handling important components such as transmissions and engines, and the fourth with the luxury Lexis brand. This change has allowed Toyota to respond to global issues more rapidly, although the change naturally required staff to adjust to changing conditions. However, the distinction between emerging and developed markets in terms of vehicles has become less clear. For example, in response to growing pollution problems, many emerging markets such as China and India are introducing more stringent pollution control restrictions that are similar to those in developed markets. As the middle class expands in emerging markets, vehicle tastes and preferences are merging with those of developed markets.

In recognition of this and other trends, Toyota is restructuring again in 2016 and 2017. This change will realign the structure based on vehicle size and type, such as compact cars, sedans and commercial vehicles. In early 2016 the new structure had not yet been announced, but what is clear is that new structures would be based on changing market conditions and ensure that Toyota’s growth does not compromise its strategic emphasis on quality, reliability and safety. Toyota has learned from past mistakes and its structure is likely to continue to evolve based on maintaining its strategic focus in an ever‐changing environment.

QUESTION

What do you think of the idea that companies can grow too large for effective quality control and legislative compliance? How can companies structure themselves to avoid such problems in the future?

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