Running head: GLOBAL CRISIS MANAGEMENT

GLOBAL CRISIS MANAGEMENT

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Table of content
Introduction to the problem ............................................................................................................ 3

Evaluating the definition of product-harm crisis ............................................................................ 3

Problems to be solved ..................................................................................................................... 4

Analysis of organizational changes ................................................................................................ 4

Recommendation ............................................................................................................................ 5

References ....................................................................................................................................... 7
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Introduction to the problem

Toyota is a manufacturing car company. The company is doing business very well. However the

company has faced many problems regarding their Lexus model (Spear, 2004). Toyota Lexus

was also a popular model, but suddenly the accelerator of the Lexus model got stuck and killed

four people. After that the customers were feeling unsafe, and this impacts their overall business

process as well. Because of this, the company faced product-harm crisis, and they lost their sales.

The problem is very critical for Toyota (Greto, Schotter, & Teagarden, 2012). Because they have

to pay the recall cost because of this. The management team of Toyota has the responsibility to

identify the problem as well as identify the proper solution for the company.

Evaluating the definition of product-harm crisis

Product-harm crisis refers to the situation when the product of the company is said to be

dangerous, faulty and unsafe to the customers. Product crisis can affect the company’s business

process and also it affects the category and subcategory of the product, and this leads to recall of

the product. Government regulatory also forces the recall as well (Gao & Low, 2014). In the

short term product-harm crisis can create negative impact in the sales process of the company

and the long-term product- harm crisis can affect the brand image and the reputation of the

company (Siomkos & Kurzbard, 1994).

In the case of Toyota, also faced product-harm crisis when the accelerator of their product

Toyota Lexus got stuck and because of this four people lost their lives. Product harm crisis

creates a negative impact on the sales process of Toyota. However, it has short-term effects on

their business process (Ma, Zhang, Li, & Wang, 2010). Because of the product-harm crisis,
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Toyota was losing their sales of Lexus model and the company also faced many issues regarding

the product recalls costs and others.

Problems to be solved

The company Toyota is facing challenges in their business due to the product recall. Product

recall is the process where the customers return the products to the company due to some failure

of the products or safety issue. Some cars of Toyota are facing the problem of product-harm

crisis. So, the consumers think that they can get harm with the vehicles of the company.

Therefore, the leaders of Toyota need to solve the problem of product-harm crisis (Rajasekera,

2013). Otherwise, the company will lose their market reputation, and they will fail to get

competitive advantages. However, losing the market value as well as the status is also other

problems of Toyota which need to solve the leaders of this company. The product recall can also

cause of decreasing the market share of Toyota. Thus, this is another problem for the company.

The leaders need to be very careful regarding these factors to get success in the market. In this

case, it can be seen that if the problem of product recall and product-harm crisis continue then

undoubtedly the organization will fail to get profits as well (Kotani, 2015). The leaders must

solve these two problems with solving these problems other challenges of Toyota can be

automatically resolved.

Analysis of organizational changes

The digitization of automobile can be the threat which is related to a product recall. The

company has adopted the advanced computers; the automobile manufacturers or the

computerized systems in terms of regulating as well as enhancing their performance of the

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company. In the previous year, Toyota had recalled, they promised to develop the database

which could show the defects of the cars and also report them. Thus, they could monitor the

complaints of the customers (Sergey Sosnovskikh, 2016). As per the recent recall the

organization had not created their database, they also had not provided so much attention to their

collected information. However, with the help of the situation, they can get some opportunities

as they can respond the complaints of the customers and make some proper solutions. The

leaders of Toyota must maintain their market share. In this case, the social media can help them

to solve the crisis. The social media has a useful role in the crisis management of the company.

The company had used Facebook to address their fans on social media. On the other hand,

Toyota must focus on its competitors (Toyota, 2013). The Trends of the rivals should monitor

the company this can be helpful for them to get proper competitive advantages.

The organizational change can provide some challenge for the company. So, this can be

successful and unsuccessful both. The organizational change of Toyota was mainly unsuccessful

as they have a defect-reporting database to monitor the consumer complaints. The president of

Toyota, Akio Toyoda stated that their growth rate was enhancing at the high rate, so they had the

focus on developing their sales rather than providing the attention to the customer complaints.

On the other hand, the social media usage of Toyota was very successful (Heller & Darling,

2012). During the crisis, the facebook had helped them to manage their crisis by developing their

relationship with their fans.

Recommendation
In terms of advising it can be seen that Toyota can widely use the social networking sites. Toyota

can send its message to the public so they can get easily aware of Toyota’s statements and the
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company can also keep their eyes on public. Toyota also can obtain sufficient information

regarding their rivals and customers. They can also use some internet services for developing its

software or database which help them to monitor or report the defects along with the consumer

complaints. By using the database, they can be able to take some steps on customer complaints

efficiently.

Along with this secondly, Toyota can focus on the quality of their vehicles. In order to attract the

customers and win public trust again, Toyota can produce their automobiles with higher quality.

Also, they need to avoid future recalls. Like this, they can enhance their sales and develop their

market share again.

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References
Gao, S., & Low, S. P. (2014). The Toyota Way model: An alternative framework for lean

construction. Total Quality Management and Business Excellence, 25(5–6), 664–682.

https://doi.org/10.1080/14783363.2013.820022

Greto, M., Schotter, A., & Teagarden, M. (2012). Toyota: The Accelerator Crisis. Compilations:

Case Studies on Strategic Management, 309–335.

Heller, V. L., & Darling, J. R. (2012). Anatomy of crisis management: lessons from the infamous

Toyota Case. European Business Review, 24(2), 151–168.

https://doi.org/10.1108/09555341211204017

Kotani, S. (2015). Scheduling problems in the lot production lines of the Toyota production

system. Journal of Japan Industrial Management Association, 65(4E), 321–327.

Ma, B., Zhang, L., Li, F., & Wang, G. (2010). The effects of product-harm crisis on brand

performance. International Journal of Market Research, 52(4), 443.

https://doi.org/10.2501/S1470785309201399

Rajasekera, J. (2013). Challenges to Toyota caused by recall problems, social networks and

digitisation. Asian Academy of Management Journal, 18(1), 1–17.

https://doi.org/10.2139/aamj.1603027.

Sergey Sosnovskikh. (2016). Toyota Motor Corporation: Organizational Culture. Philosophy

Study, 6(7). https://doi.org/10.17265/2159-5313/2016.07.005

Siomkos, G. J., & Kurzbard, G. (1994). The Hidden Crisis in Product-harm Crisis Management.
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European Journal of Marketing, 28(2), 30–41. https://doi.org/10.1108/03090569410055265

Spear, S. J. (2004). Learning to Lead at Toyota. Harvard Business Review.

https://doi.org/10.1225/2890

Toyota. (2013). Chapter 7 . Organizational Structure and Change Case in Point : Toyota

Struggles With Organizational Structure. Toyota.