Toyota a Struggling Company PRINCIPLES OF MANAGEMENT OL 215 CHRYSTAL KITOWSKI Even before the March 2011 earthquake and tsunami hit Japan, the company had incurred huge financial and reputational costs stemming from the recalls and subsequent publicity. Consumers were surprised in October 2009 by the first of a series of highly publicized recalls of Toyota vehicles in the United States. Citing a potential problem in which poorly placed or incorrect floor mats under the driver's seat could lead to uncontrolled acceleration in a range of models, Toyota announced that it was recalling 3.8 million U.S. vehicles. The recall was triggered by the report of a fiery crash in California, where the accelerator of a Lexus sedan got stuck, resulting in the driver's death, but they didn't end there. Since then, more than 20 million cars have been recalled. (Kelly, 2012) As much as growth and product complexity were at the root of Toyota's recent quality problems, any thorough analysis would also need to acknowledge the role of the company's centralized management structure. Toyota's information and decision making has been highly centralized. (Kaufman, 2010) Top management in Japan has been less sensitive to the expectations of regulators, culture and politics in overseas markets, and consequently, they have been slower to respond to local problems. For example, in October 2004, Toyota recalled pickup trucks and SUVs in Japan for steering defects, but it didn't extend those recalls to the United States until September 2005. As one executive commented, \"Toyota headquarters is the kind of brain of the company.\" (Cole, 2011) We don't have any independent knowledge outside of them. You can't expect to try and control businesses decisions from Japan they need to give more responsibilities and let managers in the US make decisions. (Kelly, 2012) Furthermore, Toyota has reorganized and, in effect, deliberately slowed down the product development process by establishing a new team of about 1,000 quality engineers and by greatly expanding its rapid quality response teams around the globe. (Kelly, 2012) Although driver error appears to have been the primary cause of the acceleration problems, user error can be reduced by good design. In today's environment, that is a corporate imperative. Toyota has reconfigured the shape of the accelerator pedal in response to its floor mat problems. (Liker, 2004) What do the product recalls say about the effectiveness of the company's legendary production system? The reality is that Toyota's problems were not caused by a faulty production system but by poor management decisions. In particular, the company's executives failed to respond aggressively to early signs of quality problems. Toyota's stumbles are a powerful reminder that there is no such thing as corporate DNA, and that superior production systems, important as they are, cannot be taken for granted. (Kelly, 2012) As new senior management teams move into positions of power, they need to recognize that there are no guarantees that the systems and values that have provided the underpinnings for the organization's success can be sustained without renewed commitment. (Cole, 2011) Ensuring continuity requires clear incentives for the promotion of best practices, adhered-to processes, especially strong problemsolving processes, flexibility, effective socialization of new employees and a supportive organizational culture. In any organization, there will be internal and external factors that threaten to weaken the foundation, be they opportunities for growth, temptations to skimp on training or pressures to lower costs. Therefore, corporate leaders need to be vigilant in maintaining practices and values that support high-quality production systems, even as they learn to adapt to emerging challenges. Despite its vulnerabilities, the Toyota production system still represents state of the art in manufacturing and continues to provide an important model to companies in a wide range of industries. (Liker, 2004) It seems that a fundamental lesson in all this is that straying from the fundamentals of what has made a company great can be hazardous to its health. There is a saying that \"love is blind\" in human relationships. Perhaps it can also be said that \"growth is blind\" when it comes to organizations. Toyota is slowly but surely making a slow come back in winning over the consumer field like they once had them. It is going to time to rebuild what has been lost, trust is everything little or small. Toyota's new motto is \"Moving Forward!\"an attempt to communicate to consumers the company's desire to start afresh and look toward a better future. But are consumers buying it? (Cole, 2011) References: Liker, J. K. (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. Madision, Wisconsin, USA: McGraw-Hill. Liker, J. K., & Meier, D. P. (2007). Toyota Talent - Developing Your People The Toyota Way. Chicago, United States of America: McGraw-Hill. doi: 10.1036/0071477454 Cole, R. (2011, July 1). What Really Happened to Toyota? Retrieved from https://hbr.org/product/what-really-happened-to-toyota/SMR395-PDF-ENG Kaufman, W. (2010, February). Can Toyota Recover Its Reputation For Quality? : NPR. Retrieved from http://www.npr.org/templates/story/story.php?storyId=123519027 Kelly, A. (2012, March 5). Forbes Welcome. Retrieved from http://www.forbes.com/sites/annemariekelly/2012/03/05/has-toyotas-image-recovered-from-thebrands-recall-crisis/