Business Operations on ToyotaF.docx

Business Operations on ToyotaF.docx

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BusinessOperationsonToyotaF

Operationmanagement:

casestudyofToyotarecallcrisis

Toyota,whichfoundedintheyearof1937byKiichiroToyoda,isoneofthemostfamouscarmanufacturersintheworld.Sincetheyearof2008,ToyotahadexceededGeneralMotorstobethelargestauto-manufacturersintheworld,bothinthesalesandproduction.However,Toyota‘sleadingstatusintheautomobilehadchangedattheendof2009,duetoafatalcrushwhichresultingfromthestuckofgaspedalthathappenedinU.S.A..Asaresult,Toyotahadtorecallnearly9millionvehiclesaroundtheworldwithin6months（Toyota,2010）.Indeed,thequalityofToyotaproductscantracebackto2006,whensomeoilpipingsystemproblemswaspublicized.Intheyearof2008,becauseofproblemofmanualtransmission,Toyotahadtorecall80000cars.Later,someerrantcaranddeadcasethatreportedbythemediahasmadethesituationevenworse.

AllofthesehavealreadychangedtheexternalenvironmentofToyota.Inthemodernsociety,externalenvironmentarecrucialtothesuccessofanorganization.Thecomponentofanorganization’sexternalenvironmentisverycomprehensive.Externalenvironmentincludesfivecomponents,namelycustomers,government,economic,competitionandpublicopinion（Cole,etal.2004）.Eventhoughitishardforanorganizationtocontroltheexternalenvironment,itimportanceontheorganizationisobviously.Thecustomersistheend-useroftheproducts,theirlikeordislikemaylargelyinfluencethemarketshareoftheorganization.Publicopinion,whichhasadirectrelationshipwithanorganization’simage,isalsoimportanttoanorganization.Thepositivenewsoftheorganizationcanhaveapositiveimpactontheorganizationwhichmayencouragecustomertobuythecompany’sproducts.However,negativeorganizationorproductwillleaveanegativeimpressionforthecustomerswhichwillinfluencethesalesattheend.Intermsoftheotherthreecomponentsofexternalenvironment,itwilllargelyinfluenceanorganization’smarketingstrategies,expansionofthebusinessandsoon（Mason,2007）.

ThechangingoftheexternalenvironmenthasalreadycausedsomeconsiderablenegativeimpactsonthereputationofToyotaproducts.TherecentsurveyhasalreadyclearlyshowedthenegativeeffectonthecustomerintheNorthAmerica.AccordingtothesurveythatcarriedbyBloombergpollinMarch2010,40percentAmericanssaidtheydonotwanttobuyToyotaproductsanymore.Moreover,thesurveyalsoshowedthat36percenthavesomenegativeimpressiononToyotaproduct,whichwaslargelysurpassingcustomers’negativeimpressiononanyotherautomobilemanufacturersinthesurvey（GreenJ.GreilingA.2010）.Moreover,Toyota’smarketsharewasdecliningquickly.Intheyearof2009,themarketshareofToyotaautomobileintheNorthAmericanwas15.9percent,however,intheyearof2010,themarketsharehadalreadydecreaseto12.8percent（GreenJ.GreilingA.2010）.ThedecreasingofreputationandmarketsharewilldefinitelyinfluencethecompetitiveofToyota.JustasBloombergpollshowed,thecompetitiveofToyotahasbeenexceededbyFordafterthepublicizedofthedifferentqualityproblems.

ThedecreaseofsalesandreputationofToyotaCompanyisnotresultfromasinglereason.Itisthecausedbymanyfactorsfromproductstomanagementandtoservice.First,itisresultfromthequalityoftheproduct.Justaswhathasbeenmentionedbefore,thequalityproblemsofToyotaproductshasemergedintheyearof2006,theexposureoftheoilpipingsystemproblems.ButToyotadidnotsomeeffectivemeasuretochangethesituationwhichmadethesituationevenworse.ThesecondreasonleadtothedecreaseofsalesandreputationistheToyota’sresponsetothequalityproblem.Aftertheexposureofthequalityproblem,insteadtoresolvetheproblemquickly,Toyotawastryingtohidetheproblems.Accordingtoareport,Toyotacompelledcustomerstosignabackdoorcontracttopreventcustomerstospeaktheirsufferingtothepublic（CBCNEW,2010）.ThethirdfactorthatmadethesituationworseisToyota’smanagementsystem.WiththepurposetosupplantGeneralMotorstobeNo.1intheautomobilemarket,Toyotaisgrowingatanincrediblespeedinthelastfewyears.However,theincreaseofbusinessisnotbackedupwiththeinnovationofmanagement,whichhasledtolosecontroloverthequality.AllofthefactorsworkingtogethertocontributingtothebadsituationthatToyotahavetoface.

Simply,wecanjustuseofgraphtoshowthereasonledtothiscrisisandhowthecrisisinfluencetheorganization.

TheRecallCrisisToyotasuffered

Outsourcingstrategy

Accessoriesareproducedfrommanyorganizations

Integrationproblem

TechniqueProblems

Qualityproblems

Accident

SlowrespondtotheCrisis

Poormediamanagement

PoorCrisismanagement

RecalltheProduct

Thedeclineofthereputation

re-designtheottomanontheseat

Inordertoconfrontthechangingofexternalenvironment,somemeasuresmustbetakenbytheorganization.Asthereasonsarequitecomplex,themeasuresshouldbeverycomprehensive.Firstthefirstpark,wehavelearntthattherootcauseoftheToyota’scrisisisthequality,sothefirststepToyotashoulddoistoimprovethequalityoftheproducts.

Installnewbrakeoverridesystem

re-shapetheacceleratorpedal

Improvethequality

Actually,Toyotahasalreadytakensomemeasurestoresolvethetechniqueproblemsandthenimprovethequality.Inordertoresolvetheproblemthatthepetalmaybestuckbyottoman,Toyotahasre-shapedtheacceleratorpedal,whichwillenlargethespacebetweenpetalandcarottoman.Second,somenewottomanontheseathadbeenre-designed.Thirdly,brakeoverridesystemhasbeeninstalledtoincreasethesafety,thisnewsystemhasalreadybethestandardsysteminCARMY,andtheorganizationfurthertoclaimthatmosttheautomobilesthatmanufacturedbyToyotawillinstalledthiskindofsystem.Aftertheinstallationofthissystem,whencustomersusebarkerandaccelerationtogether,theenginewillstopworkingatthesametime.

Thesecondstepistoincreasetheirservicetomakeupthenegativeofthequality.Accordingtothereportwhichhasbeendemonstratebefore,atthebeginningofthecrisis,Toyotawastryingtohidethefactfromthepublic.Thisactionandattitudehasmadethethingsevenworse.Foronething,itmadetheorganizationmissedthebesttimingtoresolvethiscrisiswithleastcost.Ontheotherthing,itmadealotofcustomersthedoubttheethicofToyota.Asaresult,thereputationaswellascustomers’loyaltywasdecreasedatanamazingspeed.Fortunately,theattritionandserviceofToyotaautomobilechangedalotlater,whichenableToyotatowinitscustomersandreputationfinally.

Changeofthemanagementstrategy

Leaderapologizeforthecustomer

Helpthecustomerstoresolvetheproblems

Recoveryofthemarketshareandreputation.

First,Toyota’sattitudetothisqualitychangedalot.Intheyearof2010,thepresidentofToyotaorganizationapologizeforthecustomerwithasincerelyattitude.HefirstadmittedthetechniqueproblemsofToyota,andthenapologizeforthecustomersforwhattheyhavesuffer,thehepromisethatToyotawilltrytheirbesttheresolvetheproblemproperly（Whoriskey,2010）.Thiskindofsincerelyattitudewillhelptheorganizationtorebuiltthecustomers’confidenttoToyota,andalsowillhelpretaintheloyaltyfromcustomers.

Despitethechangingoftheattitude,Toyotaalsotooksomeactiveactionstoresolvetheproblemsthatcustomershavebeensuffered.First,theorganizationsentsomelettersoremailstotheownersoftheautomobileswhicharesufferingtheproblemsofqualitytowarnthemthepotentialsafetyproblemtopreventsometragedieshappenedagaininthefuture.Second,Toyotachangedthedesigntheinternalinternetsystem.IfthecustomersinputtheirVehicleIdentificationNumber）online,theywillknowtheirwhethertheirautomobilesareinvolvedinthequalityproblemsornot（Toyota,2010）.Ifthecustomersfoundtheirvehicledoinvolvedinthequalityproblemsandalsointherecalllist,theycanjustfillaformonline,thensomelocalToyotadealerswillcontactcustomersandmakeanappointmentintermsoftheirconcern.ToyotaalsoopenanewcustomersservicelineinToyotaCustomerExperienceCentretohelpanswercustomersenquiry.Allofthesekindsofactionbringmanyconveniencestothecustomer,whichhelptoretaincustomers’loyalty.

Moreover,Toyotaalsochangedthemanagementstrategy,whichhadproventobeverysuccessfullater.First,Toyotacarriedoutsomenewregulationstoimprovetheservicequalityoftheorganization.Ontheonehand,Toyotawillpunishthestaffsthatconcealthesituationonpurpose.Ontheotherhand,theorganizationsendsemailorlettertowarncustomersaboutthesafetyoftheautomobile.Furthermore,Toyotaalsoestablishedsomeneworganizationtodealwiththisaccident.First,theysetupnewSafetySupervisionCommitteetomeettherequirementsofthelocalcustomers.Thisnewdepartmentcanstrengthenorganization’scontroloverregioncontrolandalsoprovidequickerrespondentlocalcustomers’enquiries.Second,theyhiresomemoreengineerstoconstituteaspecialaccidentgroup.Alsotheytrainedandprovideequipmenttodistributorstoenhancetheirabilitytomodifytheproblemcars.

Allofthemeasuresareprovedveryusefulintheend.Accordingtothesurvey,boththereputationandsalesofToyotawererecoveryquicklyafterthecarriedoutofthersmeasures.Accordingtothesurvey,Toyota’spurchaseintendshasincreased