Information and Communication in Decision-Making - Essay Example

? Crisis Management: Case Study and Crisis Management Case Study Introduction In today’s business world, the value of information cannot be overstated. Information is the commodity shaping company’s fortunes even if the company is not in the information communication industry. Right now, it is hard for a company to cut out a market niche for itself, and when it does it guards that reputation by all means. Reputation has now become a ticket to success because it is what earns revenue. A good reputation is built when the company conducts itself in a way it is expected to. Reputation is build and maintained through communication (Coombs, 1995). The accounting theory creates assumptions, methodologies and frameworks that businesses should use when applying the financial principles (Benoit, 2000). This aids in providing information that is objective, reliable, timely, clear, consistent and comparable. It is necessary to provide this information so that the stake holders, namely trade creditors, financial creditors, employees, shareholders, trade unions, the present and the current investors, can make decisions based on that information. The information released is not only used for outsiders, but it may also be used internally in order to correct the things and decisions that are wrong. In this sense, this accounting theory informs the discussion of this paper by emphasising on the importance of information and communication in decision making. A crisis is that unfortunate situation that has created a threat to an organisation and its clients, and the organisations' management has to respond to the ongoing threat (Hooghiemstra, 2000). Action has to be taken otherwise the problem was not a threat to be categorised as a crisis. The structural functional systems theory provides some insight into crisis management. It emphasises information flow in an organisation through patterns called networks. It implies that companies with rich communication channels that are clear are able to handle crises better than those who do not. The diffusion innovation theory informs the theoretical framework of this study by providing and describing that innovation is disseminated and communicated only through certain channels over a period of time making consistency of essence (Benoit, 1995). The Case Context This study will examine a case where there was a crisis and how well, or otherwise, was it handled. The case chosen is that of Toyota crisis of 2010 involving faulty accelerators and braking systems. On 29th August 2009, a police patrol officer Mark Saylor was cruising down the highway at well over 100 kph when he realised that the breaks were not working and that the accelerator was stuck in. It finally ended up crashing on another car killing four people. This was the onset of this crisis as several other accidents followed in that month up to the end of the year before the Toyota Company decided to recall all the Toyota models that had been affected by that defect (McDonald, 2010). Data It is only after a hyped media reporting that Toyota came out publicly to admit that there was a problem. This was in January 2010, and 34 drivers had already lost their lives. It was clear that Toyota was in a crisis, and it owed it to its customers and the society at large to take action. It therefore, took the high road action of recalling more than 16 million vehicles worldwide with 10 million of those being in the US (Bensinger, 2010). At this time, the crisis was already at an advanced stage but Toyota being a market leader in Automobile manufacturers had its image, identity and reputation at stake. The only available measure was to hold a press release in which they were to admit that there were vehicles that were manufactured at a certain period of time and had unintended accelerators and faulty breaking system (McDonald, 2010). On February 1 2010, Jim Lentz, Toyota’s CEO in America held a press release meeting on behalf of Toyota’s President Akio Toyoda and declared that the company was recalling all the faulty vehicles and will stop any production of vehicles until the issue has been fully addressed (Adams, 2010). The corporate disclosure method chosen was therefore, the press release, and it also engaged in the social media and the mainstream media appealing for calm and co-operation amongst its customers, present and perspective. Methodology Analysing how Toyota handled the crisis leaves a lot to be desired in its strategy of crisis management. First, people are more likely to listen to the overall leader. That is why, for an example, there is a terrorist attack on a nation it is the duty of the president to reassure the people of their security. Toyota failed in its impression management strategy when Toyota president when into hiding leaving his junior to address the world on his behalf. Mr. Akio Toyoda later addressed the issue when he held a press release on 14th February 2010; two weeks after the crisis became public (Rechtin and Greimel, 2011). The impression management was also not aided by the fact that Toyota failed to employ professional crisis consultants to aid them navigate through the crisis. The profits for 2010 slumped, but they increased in 2011 and maintained that trend ever since. Toyota market share value decreased by 17% for more than 6 months clearly showing that the company had not done enough to reach out to its customers (Rouse, 2010). Many crisis-management experts termed Toyota’s method of handling the crisis as cold. Analysing the press releases, there are several themes that stand out. The first, the company placed a lot of emphasis on a united front. There was the use of almost the same quotes in the press releases by President Toyoda, Jim Lentz and Yoshimi Inaba. All of them spoke of the issue emphasised on the customers’ safety and their commitment towards making their products reliable (Bensinger, 2010). The theme of past performance also stood out. Toyota has been a leader in automobile production since 1930s, and its name has come to be associated with quality and reliability. It used this past performance to handle the crisis by appealing for calm suggesting that this is just an oversight. Another theme that clearly came out was masked apology. The company never apologised for the defects in its products. First, it blamed the floor mats in the car, then the drivers who, according to Toyota, had ‘tensed’. In the press release, Mr. Akio Toyoda uses apologetic words but only to refer to the inconvenience that the recall had brought to its customers and not really expressing what went wrong and taking responsibility for the defects. The last theme to stand out was confidence and defensive approach. From the onset, the company expressed confidence in its superior products and played defensive, even attacking, those who expressed strong dissenting opinions. In their statements, the CEOs labeled such sources as misinforming, confused and merely speculating sources. Toyota went ahead to accuse these sources as having being paid by and working for the competition (Rechtin and Greimel, 2011). Findings The major finding was that Toyota’s total revenue and stock share prices slumped in the year 2010 and later rose again because of this crisis. This supports the view that a company’s reputation is its wealth and should be guarded at all cost. The information generated by the company in crisis should be consistent all the time. Toyota was clever in its approach towards mitigating the negative effects the crisis was having on its reputation. The company proved that bolstering, trivialising, attacking one accuser and corrective action may be used all at once, and it is not imperative that a company sticks to one to reduce the perceived offensiveness of a crisis (Rouse, 2010). Through bolstering the company reminded its customers of its past good deeds and reputation, it went forward to trivialise the situation as ‘only’ and ‘simply’ the floor mats and drivers’ fault. After that it recalled the vehicles in order to correct the defects and took a defensive position attacking anyone who attacked it. Conclusion Toyota Company is the leader in automobile manufacturing and has a strong positive reputation to protect. In the 2010 crisis, it did not manage it in the best way possible, but still it was able to avert the crisis in less than 3 months. Nevertheless, the company did lose a lot of revenue during that time because it had to stop production to deal with the more urgent matters concerning the crisis. If the company had responded just when the accusations were made may be the loss in revenue and value of shares would have been evaded (Adams, 2010). Businesses should anticipate crises, plan ahead, enlist the services of crises management consultants if possible, use the social media to rally support from their customer during the crisis and monitor the extent of crisis and lastly; they should take responsibility and react very fast. All these are what Toyota Company failed to do, and this did cost them their market share and popularity for a while (Rechtin and Greimel, 2011). References Abratt, R., 1989. A new approach to the corporate image management process. 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