Toyota: Back to Basics after Crisis

Toyota: Back to Basics after Crisis
Case Code: BSTR448
Case Length: 21 Pages
Period: 2008 - 2013
Pub Date: 2014
Teaching Note: Available
Price: Rs.500
Organization: Toyota
Industry: Automotive
Countries: USA
Themes: Crisis Management, Organizational Learning
Toyota: Back to Basics after Crisis
Abstract Case Intro 1 Case Intro 2 Excerpts

Toyota Bounces Back

In September 2013, Japanese auto giant, Toyota Motor Corporation (Toyota) ranked tenth in Interbrand's 2013 list of 'best global brands'. The automaker topped the list of automakers with a 17 percent improvement in brand value from US$ 29.33 billion in 2012 to US$ 35.34 billion in 2013. Commenting on Toyota's performance, Interbrand, said, "The brand not only scored well with customers but has led the entire automotive segment nearly every time." Industry observers stated that the automaker had risen to the top again after a series of recalls had dealt a heavy blow to the company's sales and reputation.

Toyota's longstanding reputation as an iconic brand synonymous with safety and quality took a beating in 2009 when daily headlines accused the automaker of abandoning its core principles and putting customers in danger. In August 2009, four passengers in California travelling in a Lexus were killed when the gas pedal got stuck and the car raced down. The accident instantly became a public relations (PR) nightmare for the company. Even before Toyota's management in Japan could fully understand the problem and react to the crisis, another fatal accident occurred – this time in Texas – in December 2009. The crash involved a Toyota Avalon that flipped over into a six-foot deep pond, resulting in the death of four persons. These incidents gained huge media attention in the US. Many columnists wrote that the automaker’s focus on growing rapidly in the US had led to it losing focus on quality. Lawyers for the plaintiffs stated that the accidents had occurred because of faulty electronics and disregard for the safety of consumers.

Following an outcry from several quarters, by August 2010, Toyota recalled approximately 11 million vehicles and suspended sales of eight models in the US linked to unintended runaway acceleration. Experts stated that a recall of this size would have not just a huge financial impact on the automaker but potentially a telling effect on Toyota's image...

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