How Toyota Uses Social Media in Recall Crisis - Case Study Example

The Role of Social Media in Crisis Management:

A Case Study of Toyota Motors

Chapter 1: Introduction

The role and significance of social media has grown immensely over the past decade. The popularity and sheer outreach of the medium has attracted a whole new type of crowd - the corporate organisations, who are now increasingly making their presence felt by using the medium to reach out to their customers directly, thus changing the tone of the communication from formal to informal, in a bid to appeal to their target customers. The social media has now become a formidable force, given its outreach and capacity to spread any information within seconds across the globe, threatening to make or break the reputation and credibility of firms (Bradley & McDonald, 2011). Organisations are hence now increasingly using this medium for Public Relations purposes, to help maintain and /or promote their brand image, leveraging the medium for its own financial benefits (Breakenridge, 2012).

One of the greatest advantages offered by the social media is the power and opportunity for the corporations to manage their brand image through public relations (Schwartz, Seeger and Auer, 2016). Corporations are now increasingly using the social media platforms for crisis communication in a bid to mitigate the damages caused due to corporate or strategic faux pas, and help rebuild their reputation by appealing to the customers directly via such personal and direct communication, as that afforded by the social media platforms (DiStasoa, McCorkindale, Wright, 2011; Wigley & Zhang, 2011).

The purpose of this study is to identify, analyse and explain the crisis management strategy adopted and implemented by Toyota Motors to address and resolve the challenges faced by the company during the 'recall scandal' that hit the company giving it bad press and causing wide-scale damage to its reputation, brand name and credibility among its customers.

• • Research Questions:

The key purpose of this study is to understand and explain the role of social media in crisis management as well as critically evaluate the crisis management strategies applied by Toyota Motors during its product-recall scandal. The following research questions are hence framed to help achieve the stated objectives:

• RQ 1: How does social media contribute in salvaging the reputation of corporate organisations and enable execution of crisis communication strategies?
• RQ 2: How effective and /or relevant are social media platforms in mitigating the damages caused to the brand names?
• RQ 3: What were the key strategies used by Toyota Motors to address and resolve the crises faced by them?
• RQ 4: How did Toyota Motors engage the use of social media to reach out to their customers?
• RQ 5: How effective was the role of social media in addressing and resolving the challenges faced by Toyota?

• • Definition of key terms and concepts used:

The various terms used during the course of this study include social media, and public relations (PR). In order to afford clarity regarding the meanings and scope of the terms used, the following definitions shall be used to refer to the aforementioned concepts.

Social Media:

The term social media is "an umbrella term that is used to refer to a new era of Web-enabled applications that are built around user-generated or user-manipulated content, such as Wikis, blogs, podcasts, and social networking sites" (Liu, Austin, and Jin, 2011: p. 346).

Crisis:

This term is defined as "the perception of an unpredictable event that threatens important expectancies of stakeholders and can seriously impact an organisation's performance and generate negative outcomes" (Coombs, 2012: p. 2).

Public relations:

This term is defined as “a leadership and management function that helps achieve organisational objectives, define philosophy, and facilitate organisational change” (Lattimore, Baskin, Heiman, Toth, and Leuven, 2004: p.5).

Chapter 2: Literature Review

The rise in use of social media platforms by corporate organisations is indicative of its ever-increasing strength and power as a highly influential communication channel. Consumers today, world-wide are able to communicate and express their views about any given product or service by sharing their experience online via their own personal social media platforms such as blogs, tweets, Facebook posts as well as by commenting on public free-for-all forums in the form of reviews. Hence the given the immense power held by the public, organisational management teams have been focusing on using such tools effectively for their own professional benefits (Kroh & Nord, 2010).

The sheer outreach afforded by the social media platforms and ease of use, have made social networking sites an inevitable tool in crisis communication. As the sharing culture grows, organisations are now increasingly on-their-toes since sharing of any negative experiences by the customers could catapult into an overnight scandal, and if not addressed effectively could grow out-of-hand resulting in an unmitigated disaster (Coombs, 2012; Fearn-Banks, 2011). Public relation practitioners are hence increasingly making their presence felt across all major social media platforms, in a bid to engage the customers in the initial stages itself, before the crisis becomes too big to manage without causing irreparable damage to the company's brand name and reputation (Choi, 2012).

The following section comprises of a sound and comprehensive theoretical framework that helps in explaining and addressing the role of social media, public relations and crisis communication in mitigating potential damages /losses likely to be faced by organisations at times of crisis.

2.1. Situational Crisis Communication Theory:

The situational crisis communication theory was developed by J. W. Coombs (Zaremba, 2015) with a view to offer the researchers a sound theoretical framework to help them establish a connection between the critical crisis factors namely type of crisis faced by them as well as the type of response strategies used by organisations to address and resolve the issue. The theory helps the researchers in shedding light on the extent to which the stakeholders hold the organisations responsible for the crisis. This theory is known to be an extension of the attribution theory and the rhetorical theory, since attribution theory entails that individuals tend to find causes for events, particularly negative ones as well as events or situations which are associated with high level of uncertainty (Heath, 2013: p. 829).

Coombs (2010) defined the theory as a “systematic method for evaluating the reputational threat of a crisis and selecting crisis response and post-crisis response strategies designed to maximize the reputational protection of the response” (p. 171). The theory helps in explaining the manner in which the general public make sense of events in a crisis situation, understand and pin the responsibility of the same on those concerned, make comparisons with the past in order to assess the company’s prior-history and /or reputation in order to make sense of the events unfolding in the present. A crisis, in the SCCT (Situational Crisis Communication Theory) theory, is explained in the form of clusters, which are developed based on the type of victims in each crisis situation (Coombs, 2012).

There are various types of victim clusters in a crisis situation. These include, the victim cluster, the accidental cluster, the intentional cluster. Each of these clusters help in identifying the type of crises involved and the corresponding approach /strategy to be adopted by the organisation. Thus, crises in the victim cluster include natural disasters, product tampering, rumours as well as violence at the workplace. Crises in the accidental cluster includes accidents caused by the Toyota vehicle due to sudden brake failure, resulting in not only the death of the family of four travelling in a Toyota vehicle but also that of an innocent passer-by. Intentional crises on the other hand include crisis arising due to deliberate and wilful actions carried out by an individual or the organisation resulting in damage to another person's life. This includes deliberately over-looking the type of material used or using cheap materials as a cost-cutting measure, in spite of the fact that it could result in potential damage to the user in the event an accident. This theory argues that the type of crises thus can help organisations frame a response or initiate damage control measures to help restore the loss caused to their brand image (Zaremba, 2015: p. 36; Martinko, 2004).

Various researches carried out over the years have effectively applied the SCCT theory to help explain the efforts made by organisations to overcome the crisis situations faced by them. In a study carried out by Schwarz (2012) for instance, which involved studying of responses of the general public posted via social networking sites, it was observed that most of the posts carried undertones of blaming and complaints about the ‘Love Parade’ tragedy that occurred in Duisburg, Germany. The Love Parade festival is one of the largest techno-music festival in Europe. The event which was held in July 2010, in Duisburg, Germany resulted in killing 21 people and injuring over 500 participants, was known to have occurred due to stampede after a mass-panic broke out in a tunnel. The people responsible for the tragedy which included the organisers of the event, Lopavent Ltd., and the concerned authorities including the Duisburg Police as well as the Mayor of Duisburg, responded to the crisis by shunning responsibility and blaming one another for the damage caused. All the parties involved engaged in an aggressive form of blame-game and scapegoating tactics to alienate themselves from the occurrences of the event, resulting in a serious loss of reputation particularly for the Duisburg Police and the Mayor. The analysis of the social media revealed that the public were angry and frustrated with the authorities' response to the crisis and provoked angry backlash against them (Schwarz, 2012; Schwarz, Seeger, and Auer, 2016).

Studies indicate that the type of response and communication channels used to communicate the response greatly affect the effectiveness and success of the crisis management strategy used by the organisations (Lee, Seo, Nam, Hwang, & Sung, 2012). For instance, an accommodative strategy is likely to be most effective when communicated via corporate blogs as opposed to through internet news (Lee, Seo, Nam, Hwang, & Sung, 2012: p. 77). Similarly, the type of crisis information being communicated to the public is directly and positively associated with social media platforms and are known to improve the probability of such information being received positively by the public (Liu, Austin and Jin, 2011).

2.2. Image restoration theory

The image restoration theory was developed by William Benoit in 1995 (Benoit, 1995) with a view to help explain the manner in which organisations recover from crisis situations. The strategies or processes applied by organisations to respond to a crisis is referred to as apologia (Benoit & Brinson, 1994). This theory has developed and evolved over the years to include the various strategies used by contemporary organisations in an era of increasing social media presence. The theory now includes a detailed and comprehensively developed framework to help understand and examine not only the organisations' response to a crisis situation but also analyse the various strategies used by them long after the crisis has been resolved, as part of their post-crisis communication used to appeal to their customers (Seeger & Padgett, 2010). This theory is based on the assumption that the brand image and reputation of an organisation have extreme significance and are economically valuable for the companies and that threats to the same can not only result in irreparable damage to the company's reputation but also losses worth millions (Coombs, Frandsen, Holladay, and Johansen, 2010).

According to Benoit (Coombs, 1999) the image restoration strategy comprises of five critical elements which includes denial, evading of responsibility for the event /crisis, reducing offensiveness, taking corrective action, and mortification. The theory is founded on the assumption that the strategy adopted by the organisation directly affects the manner in which the stakeholders perceive them (Coombs, 1999) thus affecting their reputation in the process. Thus organisations that adopt the denial strategy completely shun the responsibility and the consequences of their actions arising out of it. This is one of the most common responses of organisations when faced with a potentially damaging crisis situation, the acceptance and /or acknowledgement of which is likely to cause them millions of dollars worth of losses as well as loss of potential customers and market share (Benoit & Brenson, 1994). This strategy has been oft repeated by organisations historically. For instance, it has been used by organisations such as Exxon during the oil spill scandal in Alaska; Tylenol during the deaths caused due to poisoning; as well as by Enron to shun responsibility by completely denying their role in the tragedy that unfolded (Schwarz, Seeger, and Auer, 2016: p. 423).

Another commonly used strategy by organisations in the event of a crisis is shifting the blame or complete denial of the occurrence of the event. Acknowledgement of the occurrence of an event resulting in a crisis is also yet another strategy adopted by organisations albeit the cases too few and far in between (Benoit & Lindsey, 1987). This strategy was adopted by Toyota, which immediately acknowledged the fault in brakes and the potential risks involved due to the defect in manufacturing. Benoit (1995) states that organisations caught up in an untoward situation can also opt to step up and take full responsibility for the accident caused due to its fault, and pledge to repair the damage caused and promptly restore the offense caused in the process. This strategy was adopted by Toyota Motor Corporation which immediately ordered the recall of over 2 million vehicles worldwide in a bid to help mitigate the damages caused and prevent any further accidents and loss of lives due to the manufacturing defect. This type of approach is perceived to be highly crucial because it offers the public /consumers consolation regarding the honesty and transparency displayed by the organisation; reassures them that the incident is already been taken care of and restores their faith in the company (Hearit, 1995; Benoit, 1995; Benoit & Lindsey, 1987). The last and final strategy used by organisations is not only accepting complete responsibility for the crisis but also issuing a public apology, and seek forgiveness from the public for the damage caused due to their negligence (Ward, 2011). The Toyota Motor Company adopted this strategy, and not only accepted responsibility for its involvement in the accidents caused due to the faulty brakes, but also publicly apologised to the families of the victims as well as to the general public for its role in the accident (The New York Times, 2009).

2.3. Crisis Response Communication Model

The crisis response communication (CRC) model was developed by Hale et al (2005). According to the authors the CRC Model includes four key steps: observation, interpretation, choice and dissemination.

Observation is the first step in the crisis communication strategy adopted by organisations. This stage entails that the company involved in a controversy, collect all relevant information related to the crisis, as a means of assessing the scope and extent of the damage caused and estimate the gravity of the situation based on the data collected. This stage is extremely crucial for organisations since it enables them to collect all vital information related to the crisis, which they might have missed and enable them to make wise and informed decisions to address the situation, promptly and effectively. Delays in issuing a response to the crisis often results in damage to the company’s reputation and dilutes their brand image and credibility in the eyes of the consumers. Hence collecting information through observation is vital for organisations. The Toyota Motor Corporation is known to collect information, long after the recall-crisis faced by them in 2009 – 2010. This indicates the company’s emphasis on being constantly aware of the consumers’ attitudes toward the products, as well as any complaints or grievances faced by them.

Interpretation: This stage entails making sense of the data collected and make calculated judgements regarding the extent of damage caused. This stage if followed by Choice – which entails making a decision to respond to the crisis. This includes issuing an apology, making decisions directly related to the crisis such as product-recall in case of Toyota Motors, to help mitigate the damages. This stage requires prompt action on the part of the management team in order to prevent any further accidents. The Toyota Motors for instance, received news about the fault in their braking system in 2009. The company announced recall of 1.3 million vehicles worldwide on January 2009; and another recall on August 2009 due to faulty window-switches. This was followed by the company's biggest recall yet, in history, of over 4 million vehicles in the US in September 2009. In February 2010, the company finally issued a public apology and acknowledged that it is indeed in crisis, accepting responsibility for the same (The Guardian, 2010).

Dissemination: This is the last stage in the crisis communication model and entails sharing of information, increasing transparency, opening its communication channels to help inform the consumers about the measures being taken to address and resolve the issue, and including the public to partake in a two-way communication with the company (Hale et al., 2005). This model is extremely crucial for companies in crisis, since it offers them their best shot at mitigating the damages caused to their reputation without suffering any further loss (Hale et al., 2005).

Chapter 3: Research Methodology

This chapter includes the type of research method used to achieve the desired research objective as well as to help answer the research questions listed in the previous section of this study. The case study research method is used to evaluate the use of social media by corporate organisation during times of crisis and examine the role, impact and implications of the same on the company, as a result. Both, primary as well as secondary data is used for the purpose of this study to help lend credibility to the research, answer the research questions and substantiate the research objectives in the process.

3.1. Research Method:

A descriptive, explanatory case study methodology is used for the purpose of this study to help explain the chain of events that unfolded during the 2009 – 2010 product recall crisis and critically evaluate the manner in which the company used social media platforms to mitigate the damages caused to its reputation and salvage its loss of credibility among the customers. The case study approach is deemed to be highly valuable and effective in analysing a given situation since it enables the researcher to collect and use several forms of data to investigate the case and draw meaningful relationship between the events, key variables, processes, behaviours as well as outcomes of the case. A case study approach is best suitable for analysing contemporary cases, events or situations which cannot be easily interpreted or explained through a scientific research approach or by using scientific evidence (Jaques, 2008).

The case study approach relying on data collected from social media platforms, online newspapers and other informal mediums of communication have been widely used in several public relations as well as crisis management case studies. Constantinescu (2012) for instance used a case study approach to collect and analyse data related to public reactions in the famous WikiLeaks case. Similarly this approach has been used by various university studies carried out to address issues related to loss of reputation and personal as well as brand image of those concerned, whereby data was collected using newspaper articles and college journals. These studies were also supported by social media and crisis management theories such as the image repair theory and have proved to be highly successful in explaining, analysing and critically evaluating the crises on hand (Moody, 2011).

Thus, the use of case study approach relying on data collected from formal and informal sources including the social media networks, in this case is likely to help inform the audience about the relevance, significance, effectiveness as well as implications of the use of social media in addressing and resolving a crisis situation faced by corporate organisations and help draw generalisations based on the sound theoretical framework discussed in the literature review chapter.

3.2. Sources of data collection:

The data used for the purpose of this study is collected from articles published in newspapers, Blogs, Community forums, as well as social media. The various sources used for the purpose of this study are described in the table below:

Data collection method:

Data collection tools

Type of Channel

Source

Online newspapers

Formal

The New York Times, The Guardian, The Wall Street Journal

Blogs

Informal

The car connection, The truth about cars

Community Forums

Informal

Toyota Nation, Toyota Minis

Social Media

Informal

Twitter, Facebook, Instagram, YouTube, Digg

Company website

Formal

Toyota official company website

Books and Journals

Formal

Cited in the Bibliography

The data collection tools column in the above table refers to the sources from which the required data was collected. This includes online newspapers, blogs, community forums, social media sites, as well as the information published on the official company website. The type of channel refers to the communication styles used i.e., formal or informal. In an age of social media significant proportion of critical company related information is often passed around through informal channels by the netizens and /or bloggers as well as shared by the company’s customers in the form of product reviews, or tweets, Facebook posts or Instagram images. Hence the informal sources of communication are also included as a critical tool for data collection, to access valuable information and insights shared by the general public. Lastly the source column refers to the sources from which the data is collected. This includes a combination of formal as well as informal channels of communication, such as blogs, forums, social networking sites as well as books and scholarly resources such as peer reviewed journals, to lend greater credibility to the research.

Chapter 4: Case Study – Toyota Motors Recall Crisis

The Toyota Motors Corporation is a name synonymous with excellent leadership, affordable cars, and state-of-the-art technology. This Japanese automaker has, over the years, build a reputation for manufacturing and selling world-class automobiles to their customers world-wide. Their success is the result of their strong commitment to manufacturing high-quality vehicles, their emphasis on continuous improvement as well as excellence in their art, while satisfying the needs and preferences of their valued customers (Liker, 2004; Spear, 2004; Stewart and Raman, 2007).

The company with a conservative reputation relied on state-of-the-art technologies and highly effective cultural philosophies such as Kaizen, to build its brand image and expand its market share, growing from strength to strength in the process. Such dedication to high product quality and impeccable management and leadership styles, enabled the company to gain a competitive edge enabling it to compete for market share on the global stage, beating formidable international competitors such as General Motors and the German automaker Volkswagen. The unprecedented success and stability of the Japanese automaker can be estimated from the fact that it was the only company that did not rely on government bailouts even during the global economic downturn that hit some of the largest multinational organizations including General Motors, Chrysler and Ford (Bredeson, 2012).

3.1. Toyota’s Crisis Management Plan:

The company used social media extensively to communicate with their customers. After the crisis first came to light, the company was observed to follow the traditional crisis communication strategy, that of denial. The use of social media by Toyota in the face of the crisis was apparent as it turned to the popular social media platform - Twitter for damage control. Toyota immediately responded to the crisis with a barrage of Tweets, averaging dozens of tweets every 30 seconds, with the hashtag 'Toyota' (CNBC, 2010). The company turned to Digg – a social media platform that features viral and trending issues on the Internet, to help them keep track of what is being said about the company.

Furthermore the company also enlisted other popular social media tools, such as YouTube and Facebook to help communicate their message and stance on the issue to their concerned customers.

Toyota also introduced a dedicated micro-website specially created to help inform their customers about the status of the issue, and enable them to track the progress made in real time. The statistics published on the website were updated ever second, ensuring that their customers are constantly in the loop, and aware about the steps being taken by the company to resolve the issue and that the company is dedicated toward resolving the matter to the best of its abilities. Furthermore the company also engaged their customers by uploading videos on YouTube of their spokespersons explaining, and expressly talking about the recall crisis and reassuring the concerned consumers about the company's reputation, as well as their commitment and dedication toward manufacturing vehicles with highest quality for consumer safety (YouTube, 2010).

3.2. Findings, Analysis & Discussion

The thematic analysis was used for coding and analysing the case study. The observation made from the comments shared on blogs, and social media, as well as articles in online news-papers indicate a strong and negative backlash to the crisis by the public. For instance, the blogs such as The Truth About Cars (2010) and the Car Connection (2010) extensively covered the Toyota Recall Crisis complete with consumer testimonies, closely following the fiasco unfold depicted in the form of analytical charts and graphs. Furthermore corporate forums such as the Toyota Nation (2010) garage journal (2010), as well as Toyota minis (2010) also carried extensive coverage on the crisis situation faced by the company informing the audience about the social media presence of corporate as well as the aggrieved consumers actively seeking resolution by posting their respective opinions and sharing their experiences online.

Chapter 5: Conclusion

The fundamental purpose behind this study was to critically evaluate the role of social media in crisis management, examine the manner in which corporate organisations use social media to reach out to their customers and manage their brand image and reputation as well as to assess the effectiveness and implications of the use of social media platforms by businesses, to connect with their customers and in addressing and resolving conflicts and emerge victorious from potentially damaging situations. The research questions were framed based on these fundamental research objectives and an appropriate research model was chosen (case study approach) to effectively achieved the stated objective. The research questions 1 and 2 were answered through the literature reviewed as well as the theoretical framework used for the purpose, and the rest of the research questions (no. 3, 4, and 5) were answered by way of an extensive case study design.

The study revealed that social media does play a crucial role in enabling companies to execute their management strategies in times of crises, by enabling them to clear their position on the matter, expressly state their role in the issue and reach out to the wider customer base by owning up to their actions and clearly stating their intention to resolve the damages caused by them. Furthermore it was also observed that the social media is highly useful for companies since it enables them to not only track public opinion during the crisis but also monitor their responses and reactions, well after it is over, thus enabling them to use this valuable data to keep themselves in check, and up to date on the changing attitudes and perceptions of the public as well as their grievances and complaints. Thus social media acts as a highly useful analytical tool for the organisations. It's wider outreach ensures that all announcements made by the company relating to apologies or announcements can be heard and passed on to the customers rapidly even prior to an official statement published through their websites or other formal channels.

To conclude the study helped in achieving the desired goal by explaining clearly the role of social media in crisis communication and management, and as a key strategic tool in mending the bridges between the company and the customers. Furthermore it is likely to gain greater control and authority, in the near future given its sheer size and growth history over the decades, thus indicating the ever increasing need for corporates to embrace this media and use the same to communicate their messages across to their valuable customers, in the most effective manner possible.