Toyota Motor Corporation - Losing 'The Toyota Way'?

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Case Details:

Case Code : BSTR385
Case Length : 20 Pages
Period : 2005-2010
Pub Date : 2011
Teaching Note :Available
Organization : Toyota Motor Company
Industry : Automotive
Countries : Japan; Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"As grave as the current troubles are, they are symptomatic of a larger problem at Toyota: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture."¹

- BusinessWeek, in March 2010.

"We maybe slacked in some of our core principles [like] attention to the basics of manufacturing. It was as if we were engaged in car manufacturing in a virtual world and became insensitive to vehicle failings and defects in the market. Now we understand the gap between virtual world and real world, and we're working hard to fill those gaps. We want to pursue the basic performances in our cars-run, turn, stop-and secure the confidence of our customers."²

- Akio Toyoda, President of Toyota, in July 2010.

Crisis at Toyota

On August 26, 2010, Toyota Motor Sales USA, the US-arm of Japan-based automobile major, Toyota Motor Corporation (Toyota), announced that it would recall around 1.13 million Corolla and Corolla Matrix vehicles manufactured between 2005 and 2008. The reason cited for the recall was faulty electronic control modules (ECMs), which could stall the engines. Toyota planned to replace the ECMs free of cost. Commenting on the recall, James Bell, Market Analyst at Kelley Blue Book³ , said, "As if to rub gasoline in Toyota's already painful wounds, this round of recalls is in response to consumer complaints of unexpected and therefore dangerous engine stalling, rather than the equally unexpected acceleration problems earlier this year.⁴"

Crisis at Toyota cont.. - Next Page>>

1] Alan Ohnsman, Jeff Green, Kae Inoue, David Welch, Margaret Cronion Fisk, Doron Levin, Ian Rowley, Makiko Kitamura, Yuki Hagiwara, "The Humbling of Toyota," BusinessWeek, March 22, 2010
2] Alex Taylor III, "How Toyota Lost its Way," Fortune, July 26, 2010.
3] Kelley Blue Book is the largest vehicle valuation company in the US.
4] David Bailey, "Toyota to Recall 1.3 Million Cars in the US and Canada," www.reuters.com, August 26, 2010.

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