Communication and Operational Strategies in Handling the Crisis - Case Study Example

2010 Toyota Safety Recall Crisis Analysis Name Institution 2010 Toyota Safety Recall Crisis Analysis Part One Introduction Toyota Company is one of the key automakers in relation to volume of its products, sales, and quality across the globe. The organization faced critical challenges, which led to a crisis in 2010 resulting into recall of most of its products as well as rapid decrease in the revenues and profit levels. The main objective of this research is to evaluate the occurrence of the 2010 recall crisis, which affected Toyota Company limiting its achievement of competitive goals and objectives. In addition, the research will evaluate key communication and operational strategies as well as their effectiveness and efficiency in handling the crisis. The research will also relate communication and operational strategies in this crisis in relation to Benoit’s response strategy. Finally, the research work will examine adequate recommendations with the aim of enhancing the image, reputation, and profit levels of the organization in the market and industry of operation. Overview of the Company Toyota Company focuses in diversification and differentiation of its products and services with the aim of achieving competitive advantage in the market and industry of operation. This is through engaging in the development and manufacturing of automobiles and automobile-related products in the form of engines, car air-conditioning compressors, vehicles, stamping dies, and car electronics components. The vision of the company is to become the largest and most profitable automaker across the globe in relation to its quality reputation. In 2010, the company had to face an extensive recall practice that could have jeopardized its image and reputation in addressing the needs and preferences of the consumers in diverse markets and industries of operation. Due to this problem, the company has to recall more than 4.3 million vehicles because of the gas pedal and unintentional acceleration concern (Kageyama, 2010). The main objective of the organization was to achieve competitive advantage in the market and industry of operation. According to the organization, the perfect way to achieve this was to supersede General Motors (GM) as the leading automotive manufacturer across the globe. The organization sought to expand its business operations to the extent that it failed to focus on the important risk factors in the development of automobiles. The company had to face a lingering crisis because of these issues. Lingering crisis is characterized by intense media scrutiny, occurrence of multiple events over an extended period, external and internal charges of organizational deception, and insufficient organizational responses to concerns of the affected parties or stakeholders. Internal & External factors in relation to organizational responses All the problems affecting the image and reputation of Toyota Company in the automotive industry began in 2009. One of the off-duty California Highway Patrol Officer, Mark Saylor, was traveling on Highway 125 in Santee, California with three other family members. The four people were in a 2009 Lexus ES350, which suddenly accelerated out of control to the extent of hitting another car along the highway. The outcome of this encounter was the tumbling down of the vehicle and the fateful incidence resulting in the death of the four passengers. Another event that contributed to the development of the crisis is the preliminary reports by Toyota Company and local authorities in 2009. According to the preliminary reports, the Lexus, which had been on loan from Baker Lexus of San Diego, might have had the wrong mats installed. This affected the operations of the gas pedal in the course of driving. In the same year, Toyota decides to announce the process of recalling the floor mats in relation to Toyota and Lexus Vehicles. In addition, the company advised relevant owners of the affected vehicles to remove their floor mats as well as place them in the trunk. The company also directed the dealers to use zip ties with the aim of securing the floor mats in the vehicles. The main objective of this approach was to limit any interference of the mat with the gas pedal. Toyota Company was very slow in its public relations with reference to recall crisis leading to the development of suspicious feeling among the American consumers that the company might have been hiding something from the public or covering its tracks. The CEO of the corporate did not communicate with the consumers through his public statements on the issues until the second month of 2010. The American media fraternity accused Toyota of lack of transparency as well as action in the course of the crisis. Nevertheless, the organized focused on exploitation of Japanese style of public relations thus unprepared to handle the cultural differences, which turned the crisis into a media firestorm (Piotrowski & Gray, 2010). Another factor that hindered the organizational response by the Toyota Company in relation to the recall crisis was the diverse public relations and opinions between Japan and the United States. According to research studies, the public relations practitioners from Japan and the United States could argue offer the most effective communication strategy vital for handling the issue without success due to differences in their opinions and traditions. The variation of public relations in the United States and Japan led to slow response from the organization in handling the issue (Piotrowski & Guyette, 2010). For instance, in the Asian continent, any public relations issue affecting an organization would be addressed through secret and silent mechanisms. On the other hand, the issue is different in the United States. This is because stakeholders in the form of politicians, consumers, and other affected parties focus on answers prior to any action by the organization. Since Toyota did not address these expectations, the media was quick to blame the organization’s management for the occurrence of the issue. The crisis also grew under the influence of globalization and technological advancements. Part 2 Analysis of the Crisis Response & Chronology Date/Year Activity 02/11/2009 Toyota Company recalls 3.8 million Toyota and Lexus vehicles in the United States for the floor mat issues with the reference to the drivers’ side mats 26/11/2009 Toyota Company amends the floor mat recall inclusive of brake override with the number of vehicles rising to 4.2 million in the case of the United States. 21/01/2010 Toyota Company decides to recall 2.3 million Toyota vehicles for the problems relating to accelerator pedals 27/01/2010 Toyota Company executes another amendment to the recall policy to include 1.1 million vehicles from the United States market 29/01/2010 Approximately 1.8 million vehicles from Europe and China added to the recall process for problems with the accelerator pedal 05/02/2010 First official press communication from the president of the organization on the issues affecting the company 08/02/2010 Approximately 436,000 hybrid vehicles recalled across the globe for brake-related issues 12/02/2010 Toyota recalls more vehicles in the United States for potential problems with reference to defective front shafts 16/03/2010 Provision of an apology to the customers in relation to diverse problems In the context of such problems, an organization has the obligation of responding in accordance with the needs and preferences of the stakeholders. The organization must consider impact of the crisis on its image, reputation, and identity in relation to developing and implementing an extensive mechanism in minimization of the issues. In addition, the organization must consider the audience, type of crisis, and phase of the life cycle the crisis with the aim of determining a proper response strategy. In responding to this crisis, Toyota adopted and implemented diverse communication approach in the course of the three months of 2010 (January, February, and March). Phase 1 (January to February) In the first phase of this response strategy, Toyota focused on the united front and past performance. During this phase, Toyota decided to recalls as well as informing the affected customers on the issues affecting their global company. This is through utilization of the press releases with a united front. In order to achieve this objective, the company used similar or exact quotes in the course of the three-month crisis response. The management sought to inform the employees of the company (functional publics) similar aspects and stances of the topics of discussions in relation to the recall crisis with the aim of ensuring that they fought together as Toyota Company (Chandler, 2010). According to the affected stakeholders, the constant use of repetition in relation to key points of discussion might have suggested that the company was trying to hide something from the public. The main objective of the organization in this context was to achieve consistency in responding to the crisis thus the concept of utilizing a united front to tackle the 2010 recall crisis. Throughout the response process, one statement by Jim Lentz as the President and Chief Operating Officer of Toyota Company stands out. According to the statement, “nothing is more important to us than the safety and reliability of the vehicles our customers drive’ (Rechtin, 2011). The statement appears in subsequent press releases in the course of February and March of 2010. In this response, the Toyota sought to convince the public on commitment to fixing the vehicles on the road, ensuring safety of the products, and making new vehicles that are better and reliable in accordance with the needs of the consumers. In this course, it was clear that the company focused restoring customers or functional publics’ trust in relation to the reliability of the vehicles (Heller & Darling, 2011). Toyota also decided to stop the production of the affected vehicles claiming that it was the right decision to aid the restoration of the image and reputation of the organization in the context of automotive industry (Toyota crisis taking its toll on brand loyalty, 2010). This relates to the implementation of the Coomb’s approach in relation to restoration of the image and reputation of the organization in the market and industry of operation. Toyota also applied the essence of minimization strategy with the aim of minimizing the seriousness of the sticking accelerator pedal crisis. According to the organization, the issues of unintended acceleration have been a part of the auto industry for many years with an estimated timeframe of the invention of the brake and accelerator pedals. This approach enabled the organization to shift the blame from its operations thus integration of the concept of Benoit’s technique in restoration of its image and reputation in the diverse markets and industries of operation. To some stakeholders, the approach might seem to offer an impression of nothing an automaker can do in case of unintended acceleration because it can happen to everyone within the industry. During the initial stages of Toyota’s response, the company focused on its past performance through reminding consumers and government bodies of all the good Toyota had achieved. The organization also focused on how long it had been in the market and industry doing the great things as well as the high level of trust consumers had on the project (Schmidt, 2010). It is possible to relate this response in phase one to the case of Coombs’ Crisis response strategy. This strategy is also essential in understanding the communication response by the Toyota Company. First component of this strategy focuses on denial (Coombs, 2006). This relates to the ability of an organization to prove that no crisis exists or that the organization has no responsibility for the crisis. According to the arguments by the Toyota Company, brakes and gas pedal issues had been within the industry for some time now thus not the ultimate responsibility for the development of the crisis it was facing in relation to its products. The approach was to deviate from the view of the public and the media from the organization as the main source of the crisis. In addition, the strategy focuses on integration of the concept of diminish (Coombs, 2006). This component reflects the aspect of attribution theory when the manager accepts the occurrence of the crisis and tries to minimize or reduce the reputational damage through appropriate actions. From this perspective, Toyota Company sought to address reputational issues through recalling the affected brands in the automotive industry. Moreover, the organization saw the need to focus on safety and quality of the products to address the needs and interests of the consumers. Toyota Company also integrated the concept of reducing offensiveness of the crisis in accordance with Benoit’s strategy in relation to the recalls in 2010 by Toyota Company. This is through bolstering with the ability to stress on the past performance of the organization in the achievement of the goals and objectives of its consumers as well as shareholders. In addition, Toyota focuses on adopting and implementing corrective action with the aim of planning to solve as well as prevent the occurrence of such problems in the future. This is through stopping further production of the affected vehicle models thus an opportunity to protect existing and potential consumers in the modern society. Moreover, the organization sought to implement the concept of mortification as a response strategy (Benoit, 1977). This is through provision of an apology to the affected stakeholders in the course recalling the affected products or automobiles. Phase 2 (February to March) The second phase of the response strategy focused on masked apology, superior technology, and statement of confidence. Toyota sought to shift the focus to explaining the confidence it had in the company as well as attempts to persuade the public to have similar confidence on the corporation thus implementing the concept of Benoit’s image restoration strategies. This is through implementation of both Benoit and Coomb’s techniques in trying to rebuild its image and reputation. The phase did not merge until the beginning of February, two weeks after the corporation had began its management of the crisis in the public domain. During this phase, the organized used the concept of the masked apology from the fact that it continued to show the confidence in restoration of the image as well as apologizing the unintended accelerator and gas pedal issues. Similarly, it is possible to integrate Benoit’s Image Restoration strategies in the illustration of this response. In the course of restoring its image and reputation, Toyota Company focused on the use of the Benoit’s image restoration strategies. In the first course, the organization implemented the aspect of denial through shifting the blame. This is through indicating that the problem of unintended accelerator has been an issue in the automotive industry since the development of such products. This contributed to the concept of another strategy in the form of evasion of responsibilities. In this aspect, Toyota had the opportunity to convince the public that the accident was a mishap thus the need to recall the products with the aim of enhancing safety of the stakeholders and reliability of its products in addressing the needs of the customers (Benoit, 1997). It is also essential to integrate the third component of Coombs’ strategy in illustrating the second phase of Toyota’s response to the crisis of 2010 recall issue. The third component of the strategy focuses on the aspect of deal (Coombs, 2006). This relates to the adoption and implementation of neo-institutional theory where organizations are expected to behave in certain ways with the aim of rebuilding their legitimacy through the concept of discourse. Toyota used this concept to handle its crisis in 2010. In the first instance, Toyota focused on the past performance and quality products it produced to address the demands of the consumers thus the aspect of ingratiation. Secondly, Toyota showed concern for the victims through various press briefings and commitment to the safety and quality of the products rather than just profits and revenues at the end of the fiscal year. Furthermore, Toyota expressed essence of regret and apology through press briefings between January and March in attempts to handle the effects of the crisis on the image and reputation of the organization. Part 3 Recommendation In the course of addressing some of the defects of the public relations by Toyota Company, I would adopt and implement the following critical recommendations (Dardis & Haigh, 2009): i. Prior to any crisis, it is essential for an organization to execute an effective cross-cultural program to facilitate effective interaction between executives and representatives of Toyota in the context of the United States and Japan with reference to common business practices as well as expectations of diverse cultures ii. Each of the public relations teams in diverse nations should have integrated specialized response for each of the nation’s communicational expectations with the aim of achieving effective and efficient response to the crisis iii. Toyota should also consider acting appropriately and extensively on the issues within the shortest time possible. This would aid development of the image and reputation of the organization in the market and industry of operation. iv. Finally, should focus on exploitation of the Benoit’s image restoration strategies with the aim of regaining the trust of the customers utilizing the products of the organization in different markets across the globe. References Benoit, W. L. (1997). Image repair discourse and crisis communication. Public Relations Review, 23, 177-186. Chandler, C. (2010). Toyota in turmoil. The Mississippi Business Journal (Pre-Aug 20, 2012), 32(7), 30. Coombs, W. T. (2006). The protective powers of crisis response strategies: Managing reputational assets during a crisis. Journal of Promotion Management, 12, 240-260. Dardis, F., & Haigh, M. M. (2009). Prescribing versus describing: Testing image restoration strategies in a crisis. Corporate Communications, 14(1), 101-118. Heller, V. L., & Darling, J. R. (2011). Toyota in crisis: Denial and mismanagement. The Journal of Business Strategy, 32(5), 4-13. Kageyama, Y. (2010, Feb 09). Toyota recalls 437,000 priuses, hybrids globally. 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