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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Crisis at Toyota cont...

By late August 2010, Toyota had recalled more than 11 million vehicles over a period of ten months. The vehicles were recalled for different problems ranging from pedals getting lodged under the floor mats causing unintended acceleration, to sticking accelerator pedals. Due to these problems, Toyota was forced to suspend sales and the production of several of its vehicle models in the US. This was followed by significant recalls in Europe, and later by the recall of the Prius Hybrid and the Pontiac Vibe. The problems refused to die down, and the recall was extended to the Lexus, Camry, Highlander Sequoia, Venza, and Avalon.

Analysts attributed the quality lapses to Toyota's shifting focus from quality to growth and the drastic cost-cutting measures that the company undertook. They also blamed the company's organizational structure for the problems, saying that it hampered smooth communication between Toyota's headquarters and its offices in other countries. According to Takahiro Fujimoto, Professor of Economics, University of Tokyo, "Toyota faced excessive or overwhelming complexity that even its strong capability could not handle adequately. At the same time, simultaneous pressures came from volume over-extension, possible quality arrogance caused by its long track record of quality excellence, collapse of demand in the U.S. (particularly luxury sales due to the financial crisis), plus other mistakes and some bad luck -- creating something like a chemical reaction.5"


5] "Quality on the Line: The Fallout from Toyota's Recall,", February 03, 2010.


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