Case Study for Global Crisis Managementâ€Toyota

Question: Describe about the Case Study for Global Crisis Management Toyota. Answer: Definition of Product-Harm Crisis Product- harm crisis refers to when the products of a company are said to be faulty, dangerous and unsafe to the consumers (Samaraweera Qing, 2014). A product crisis can affect the whole product type or a subcategory of the product and mostly leads to a product recall voluntarily or the government regulators can force the recall. In the case of Toyota, its product harm-crisis was triggered by accident that was caused by a Toyota Lexus when its accelerator got stuck, and the vehicle crushed killing four people. Product crisis has short term effects which could be lost sales and product recall costs. In the long-term, the crisis would damage the reputation of the company. Problems Toyota Leaders Must Solve The leaders of Toyota have to restore its companys reputation and consumer loyalty. Consumers across the world react differently to product harm crisis. Research shows that consumers tend to get over a crisis and its effects if the company announces a voluntary recall and is publicly responsible for its product (Sakurai, 2011). Toyota recall was forced by the government, and this had a negative impact on the Toyota reputation. The public did not believe the explanation given by the company, and this has upheld public trust (Lei, Dawar, Grhan-Canli, 2012).Negative effects on the company. The major challenge facing Toyota is to Organizational Successful and Unsuccessful Changes Digitization of the automobile is a threat that is associated directly with the recall. With advanced computers, automobile manufacturers have adopted computerized systems to regulate and enhance the functioning and performance of the vehicles. During previous Toyota recalls, the company had promised to develop a database that would show defects and report them so that it could monitor customer complaints that are vehicle-related in a fast way (Rajasekera, 2013). The current recall reviewed that the company did not create the database, or it did not give much attention to the information collected by the database in a well-timed manner. This situation may be a new opportunity to a company that has the means to observe and respond to customer complaints in time. This is a problem the leaders at Toyota need to address to maintain its market share and to avoid the situation that happened to Sony. The power of social media was brought to light by the crisis. Media has a significant effect on the crisis management. Toyota had realized the importance of the social networks earlier, and it has added fans on Facebook during the crisis. However, observing a company's performance on a social network does not show everything. Toyota needs to watch its competitors. The analysis shows that Hyundai, an automobile company from Korea, has increased its fans on social networks at a high rate. There must be a cause of this increase, and Toyota needs to discover what it is. Monitoring the trends of competitors is vital for any company as it helps the company to have a competitive advantage against its competitors (Rajasekera, 2013) Product-harm crisis leads to a brand crisis that would lead to losses in sales volume and market share (Cleeren, van Heerde, Dekimpe, 2013). This is one of the major crisis that Toyota leaders have to solve. After the recall, the stock prices of Toyota started dropping drastically. However, the effects on the stock price were not so overwhelming because they started to rise immediately after the Toyota president Akio attended the US public hearing in February 2010 (Rajasekera, 2010). Organizational change can be challenging to implement, and this may determine if is successful or unsuccessful. Toyota's organizational change that was unsuccessful was the use of a defect-reporting database to monitor customer complaints. In one of the statement presented to the U.S. Congress, the Toyota president, Akio Toyoda said the growth rate of Toyota was increasing at a high rate, and they focused on increasing the sales of cars rather than giving attention to quality and customer complaints. However, use of social networks by the company was a success. The company has added its fans on Facebook even during the crisis. Media can be of significant help to a company in crisis management. Recommendations The first recommendation would give use of social network sites. A company can use social media to disseminate company message to the public, and if properly used, it can help keep an eye on the public. People rely more on social networks such as Facebook and Twitter during the crisis. By tapping on the social networks, one can get real-time information from customers and competitors. Toyota could also use the internet to develop software and database that monitor and report defects and the customer complain. With the use of this database, Toyota will be able to act on its customer complaints more efficiently. Secondly, Toyota needs to emphasize on its quality of vehicles rather than the volume of sales they make. To win its customer and public trust back, they must produce automobiles of higher quality and avoid any future recall. Digitization of automobiles can be a way to monitor and maintain quality in the vehicles it produces. References Cleeren, K., Van Heerde, H. J., Dekimpe, M. G. (2013). Rising from the ashes: How brands And categories can overcome product-harm crises. Journal of Marketing,77(2), 58-77. German, F., Grewal, R., Ross Jr, W. T., Srivastava, R. K. (2014). Product recalls and the The moderating role of brand commitment.Marketing Letters, 25(2), 179-191. Lei, J., Dawar, N., Grhan-Canli, Z. (2012). Base-rate information in consumer attributions of Product-harm crises.Journal of Marketing Research,49(3), 336-348. Rajasekera, J. (2010). Crisis management in social media and digital age: Recall problem and Challenges to Toyota.International University of Japan Graduate School of International Management Working Paper No. IM-2010-02. Rajasekera, J. (2013). Challenges to Toyota caused by recall problems, social networks and Digitization.Asian Academy of Management Journal, 18(1), 1-17. Sakurai, M. (2011). The impact of Toyota Recalls on Corporate Reputation. International Management19(1), 73-89. Samaraweera, G. C., Li, C., Qing, P. (2014). Mitigating Product-Harm Crises and Making Markets Sustainable: How does National Culture Matter? Sustainability,6(5), 2642-2657.