The Denial of Quality Issues by Toyota - Essay Example

Student’s Name Professor’s Name Writing Assignment: Toyota Crisis (Recall of Automobiles) Toyota Crisis (recalls of automobiles) In August 2009, United States policeman was involved in a fatal accident when driving a Toyota Lexus that killed him and his family. The car was believed to have suddenly accelerated on its own with no control. This event received news coverage that question whether Toyota cars had electronic defects that led to uncontrolled acceleration. These accidents continued. During Christmas, a Toyota Avalon suddenly accelerated killing all the passengers on board. This was followed by other similar accidents associated with acceleration problems. To solve this problem, Toyota carried out massive recalls amounting to over 8.5 million vehicles worldwide. This threatened to destroy the company’s image and reputation. Taking appropriate actions in dealing with crisis is very crucial in crisis management. Organizations are required to establish the issue in question, who is involved, and how to solve the issue (Greyser, 2009). However, Toyota Company ineffectively managed its crisis in the following ways: first, the company lacked sense of urgency in dealing with the crisis as it responded six months after the crisis erupted; second, the company denied the existing quality issues of its vehicles at the early stage; and third, Toyota presented unclear and contradictory messages to its stakeholders, resulting to distrusts. Toyota did not respond immediately to the crisis associated with quality issues as expected. The first fatal accident due to acceleration problems took place in August 28, 2009. According to Biasio and Veale (2009), it is very essential for organizations to respond quickly to crisis as this influences the outcome of the entity. The company did not respond immediately as the first recall took place after three months. This was followed by the second recall that took place after additional two months. This trend occurred because the company ignored this issue, and acceleration problems related accidents occurred. Months after the crisis occurred, Toyota announced sequent recalls when it realised the situation was very serious. Toyota started active response to the situation in order to revive its reputation. The lack of urgency in attending to the crisis perceived by the public ultimately ruined Toyota’s company brand. According to Coombs (2007), crisis responsibility is all about dealing with crisis situations effectively and with accountability. Toyota Company was criticised for its long-delayed and less-than-reassuring response to the crisis. Customers take into consideration different aspects of crisis information like the organisation’s responsiveness, according to their expectations (Dawer and Lei, 2009). This suggests that, effective crisis management with immediate response is very important when customers are experiencing problems with respect to affected products. Also, the Toyota Company denied the existing quality issues of its vehicles at the early stages. Quality issues involved in the company’s vehicles were brought to light with extensive investigations by NHTSA in North America. Toyota at first attributed the accident that involved Toyota Lexus to have been caused by an incompatible floor mat that interfered with accelerator pedal. The company issued a public safety advisory to inform owners of particular Lexus models of problems associated with the ill-fitting floor mats (Stewart, 2010). It then announced the first recall to remedy this issue. However, the explanation of the ill-fitting mats problems was questioned by NHTSA who highlighted that the problem was caused by the accelerator and floor-pan design. The denial of the quality issues by Toyota put the company’s reputation and image at a high risk. Criticism towards the company was all over the media in the United States (Welch, 2010). Instead of just reassuring the public on the basis of quality, the company acted in such a way that led to fear among owners of Toyota vehicles for their safety and new buyers to seek for other models and makes. The denial of quality issues by Toyota also caused a series of lawsuits and recalls that caused the company to incur losses. In addition, after the Toyota crisis occurred, the company offered unclear and contradictory messages to the stakeholders. When the crisis occurred, Toyota attributed the cause of the problem to be the ill-fitting mat and viewed the problem as minor and kept it secret. The company was unable to convince the stakeholders who perceived the problem in different perspective and required straightforward information to offset suspicions. According to Coombs (2007), the first priority in the case of crisis situation should be focussed on protecting the stakeholders from harm by being open and sincere to them in order to enable them cope with psychological uncertainty caused by the crisis. Needless to say, Toyota’s denial of the issue resulted to distrust and made things even worse. There was no excuse as to why Toyota acted the way it did in terms of offering contradictory information to the stakeholders and deniel of the quality of their cars. Denial strategy is not accepted even when the crisis is unexpected (Fortunato, 2008). Moreover, at first, operating officer of Toyota, Jim Lentz denied the claims that the company had moved slowly in controlling the crisis situation. To sum it up, Toyota suffered a crisis as a result of unattended quality issues in its vehicles. This trigged recalls of more than $8.5 million all over the world. The crisis threatened the reputation and image of the company. The managerial decisions taken to deal with the crisis was faulty and led to the company’s misfortunes. The company brand image was destroyed when they failed to respond to the crisis in time, contradicting information to the stakeholders and their lost in quality focus. However, months later, Toyota began recovering from the crisis; the company’s brand image, profitability, and market share started recovering again. More and more information emerged that suggested that a number of accusations against Toyota presented has little basis of fact. For instance, experts say that the quality of Toyota vehicles remained better than established industry average levels. Even after the crisis that faced the company, Toyota was favoured by 59% of americans and its brand rose to 70% and is still the brand of choice. This has led to an increase in sales and profits. The company got back to its full production and recovery in the late 2011 (Liker and Ogden, 2011). It has hit the record profit of $18.1 billion this year. If the company had reacted differently to the crisis maybe it would have taken less recovery time than it did. References Coombs, W. T. (2007). “Protecting Organization Reputations During a Crisis: The Development and Application of Situational Crisis Communication Theory“, Corporate Reputation Review, 10(3), 163-176. Dawar, N. and Lei, J. (2009). “Brand crises: The roles of brand familiarity and crisis relevance in determining the impact on brand evaluations”, Journal of Business Research, Vol.62, 509-516. De Blasio, A. and Veale, R. (2009). “Why say sorry? Influencing consumer perceptions post organizational crises”, Australasian Marketing Journal, 17(2), 75-83. Fortunato, J.A. (2008). “Restoring a reputation: The Duke University lacrosse scandal”, Public Relations Review, Vol.34, pp.116-123. Greyser, S. A. (2009). “Corporate brand reputation and brand crisis management”, Management Decision, 47(4), 590-602. Liker, J. & Ogden, T. (2011). Toyota under fire lessons for turning crisis into opportunity. New York: McGraw-Hill. Stewart, J.B. (2010). “Common Sense: Toyota Recall Should Warn Investor Away”, Wall Street Journal (Eastern edition), New York, N.Y.: Feb.3, 2010, pg.D.2 Welch, D. (2010). “Oh, What A (Hideous) Filling”, Business Week, New York: Feb 15 2010, Iss. 4166, pp.21. Read More