Team 12 Case Analysis - Toyota Accelerator Crisis
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Team Case Analysis – Toyota Accelerator Crisis
MG-395 Supply Chain and Operations Management
Team 12 – John Heacock, Austin Stansell, and Madison Crowley
The Toyota accelerator crisis of the late 2000s was a complex issue with multiple contributing factors. One significant factor was the company's rapid growth and pursuit of market share, which may have compromised its commitment to quality control. Toyota's aggressive cost-cutting measures also led to the use of cheaper components, potentially increasing the likelihood of mechanical failures. This is a major problem, as Toyota’s reputation relies majorly on how well their vehicles perform. If their vehicles do not work properly, they will not sell any more vehicles, resulting in their company going under. Additionally, a lack of effective communication between Toyota and its suppliers, as well as between the company and regulatory authorities, hindered the timely identification and resolution of safety concerns. Furthermore, the complexity of modern automotive electronics and software made it difficult to pinpoint the exact causes of unintended acceleration incidents, leading to delays in addressing the problem. On September 29, 2009, a recall of about 3.8 million vehicles and claimed that this problem can stem from the floor mat causing the accelerator pedal to get stuck. Then, on January
16, 2010, Toyota revealed that the pedals themselves had a problem where they would just stick by themselves. This showed that the problems with the pedal were not only related to the floor mat, but to multiple problems. The problem being hard to diagnose was not good for Toyota. It showed that they did not know enough about how their vehicles were made. When a company cannot figure out its own problem, it makes them look bad. This greatly concerned consumers with the safety, reliability, and quality of Toyota vehicles. Overall, a combination of organizational, economic, and mechanical factors contributed to the Toyota accelerator crisis. The crisis was developed due to Toyota’s relentless pursuit in dethroning General Motors.
Because of the ramp up in production and volume, they begin to under analyze their products. This was also caused because they were underutilizing plants in inspection, and only focusing solely on production. Toyota slowly began to push aside their own company values to reach to the newly found goals. Toyota is a company that prides themselves on safety and efficiency, but these philosophies were pushed aside due to greed. Taking the throne for the #1 automotive distributer was in their sights, but unfortunately came at a cost. When issues started to arise with quality of their vehicles, Toyota disregarded all complaints as a user error. The vehicles tended to
build up “sludge” which clogs the passageways of the engine. This would cause the engines to die and there was no way of repairing, you only could replace. This caused millions of Toyota buyers to lash out at Toyota, asking for a reimbursement for the expenses. Eventually Toyota caved on their initial stance and began to give reimbursements, but I believe the initial stance rubbed consumers the wrong way. Operational effectiveness is what Toyota built their entire brand on. It doesn’t matter what you are buying from Toyota, they pride themselves on producing the highest quality possible. A company who would label themselves as people who highlight their weaknesses, not hide them. When people go to purchase a vehicle, the selling points for a Toyota vehicle will always be the safety, the quality, and the excellence that you are investing into. When Toyota when through this event of losing that identity, they had nothing else to stand on as a selling
point. Toyota do not compete from a pricing standpoint; they compete in the thoroughness of their process and the addressing of potential issues. When you buy Toyota, you are buying a vehicle that has been evaluated precisely. When you don’t have that to sell to customers, the perception of the Toyota brand shifts. Now they are perceived as any other vehicle provider but just sold at a less reasonable price point. Now Toyota must put in the work to build their brand image back to the respectable state that it was. Ensuring that one sole event does not tarnish their
brand image for the foreseen future. Many lessons can be learned from Toyota’s accelerator crisis. One lesson that can be learned is the effect of a delayed response. Toyota has been known as a reputable vehicle manufacturer for years, the company worked very hard to create this distinction from other companies. When the company faced the accelerator crisis, they did not respond immediately. When customers are left with problems unsolved by the manufacturer this creates doubt about the company's integrity. If other companies face issues such as Toyota did, it is important to address the customers' concern as soon as possible. Companies that quickly resolve issues help boost customer satisfaction and restores trust within the company. When Toyota did finally recall
the first set of vehicles, 3.8 million vehicles to be exact, they explained what the problem “could” be from. When recalling millions of customers' vehicles it is important to have a definite
point as to why you are recalling them. Toyota did not fully understand what was causing the issues in their own vehicles.The following year Toyota had to recall 2.3 million more vehicles because the issue had still not been fixed. Toyota explained to the government what they “think” the issue was, again this is not the terminology a company should be using in these circumstances. When other companies face issues such as this it is imperative to determine the underlying issue. Toyota sacrificed the quality of their vehicles to try to mass produce more vehicles. Ultimately, reducing the quality ended up costing Toyota to lose credibility and millions
of dollars. Companies that are expanding have to put into perspective the importance of consistency within their product in order to keep customers happy and to keep their reputation.
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