Toyota's many quality management problems can be traced to their lack of consistency and clarity in their senior management teams. Instead of creating a highly unified strategy to solve the significant quality problems, the company created more problems for itself through political infighting and a lack of focus on what mattered most to customers. The net result was a very significant drop in quality and overall performance of the business.
Toyota Strategic Management
Case (TOYOTA)
Strategic Management: Strategy Implementation
Strategic Implementation
Do you think that the implementation of Toyota's current strategies identified in its 2011 Annual Report and on its web page will help to overcome the public relations difficulties resulting from the recall issues reported by the media in 2010?
The current strategies as identified by Toyota in its annual reports and on its website will not be enough in the short-term to reverse the loss of trust in the company and its brand. There are many factors that contributed to the exceptionally high amount of recalls in 2010 that continued into February, 2011 with one of the most significant being the exceptional level of political infighting and lack of focus on customers' needs instead of pursuing aggressive growth (Shirouzu, 2010). This has continued to be exacerbated by Toyota management concentrating more on cost reduction over customer satisfaction (Marksberry, 2011) and the reliance on contract quality management and production staff for critical functions in the company (Shirouzu, 2010). These factors taken together also highlight how one faction of managers at Toyota are putting quality and the customer experience secondary, while another is arguing for a lower revenue forecast that gives the auto maker greater flexibility and freedom to create high quality vehicles which they have been so known for. As this internal debate continues within Toyota, customers are leaving for competitive brands including Acura, Hyundai, Honda and others (Cole, 2011). The bottom line is that the brand has failed to stay aligned with quality as one of its core, foundational values (Dahlgaard-Park, 2011). It has instead moved away from those customer-centric values and concentrated more on the mass production of highly popular automobiles. The much respected Toyota way of producing high-quality vehicles has given way to a more mass-produced vehicle that has lost the innate value of form, fit and function that had become the brand's unique value proposition, combined with its exceptional reliability and stability (Marksberry, 2011). These were the external symptoms of the much more systemic problem happening within Toyota that potentially contributed to the massive number of recalls in 2009, 2010 and 2011. The divergence in management philosophy led to even wider differences in how to solve the nascent quality management problems that appeared as early as 2005 and began to gain momentum in 2009 until they were very evident during 2010 (Shirouzu, 2010). While Toyota appears to have made peace within itself according to the latest annual report and full set of investor relations documents, its financial statement and other financial metrics continue to show that the trust lost drives down sales, profits and customer loyalty (Toyota Investor Relations, 2013). A look at their annual statements from years ago also supports this contention (Toyota, 2012). The vision and philosophy of the company strayed from its customer-centric focus and in the last few years of annual reports the differences between the stated vision and philosophy and what actual performance have become even more significant (Toyota, 2012a). These past efforts have failed to win over the trust of longtime customers again as evidenced by the slowed sales of their most popular product lines (Toyota, 2012).
The latest investor relations site and annual report Toyota has recently updated as of the beginning of this year are taking an entirely new series of strategies to win back customer trust. These include underscoring their vision of safe driving and safety technologies, combined with their focus on environmental technology and personal mobility, all underscored by a commitment from both Toyota's Chairman Fujio Cho and President Akio Toyoda to continually pursue a "customer-first," "genchi genbutsu (onsite, hands-on experience)" mindset and approach to solving their fundamental problems organizationally and from a quality management standpoint (Toyota Investor Relations, 2013). Both also committed to provide "good quality and affordable price" from this point forward (Toyota Investor Relations, 2013) The current annual report expands on these key messages and shows how much Toyota is investing to make good on these promises.
Despite all of these efforts however, Toyota still has not regained the trust and loyalty of many customers they lost during the massive number of recalls during 2010 and into the first months of 2011. Toyota set records in terms of their recalls announced in 2010 throughout many areas of the auto industry (Cole, 2011). The overall media campaign during 2010 failed to revive auto sales and in fact looked even more questionable amidst so many quality management problems the company had over time (Piotrowski, Gray, 2010). The current annual reports looks to set a new, more positive tone for the future of the company, implying that new initiatives will help to redefine the company's performance (Toyota Investor Relations, 2013). Yet for the majority of long-time Toyota customers, these commitments to create an entirely new culture have yet to be realized. As a result, the accumulated value of their strategies has done little to overcome the negative perception of customers. They will literally need to revamp their entire product line and provide actual quality data to back up their claims of being an entirely new company.
Identify two or more strategies that Toyota is presently taking to win back its loyal customer base and argue whether you believe these strategies are working or not based on Toyota's organizational structure, culture, and controls. Are they succeeding at this endeavor? Pay special attention to Toyota's values and culture in your discussion.
The first is the Toyota Global Vision that is a taxonomy of twelve different factors Toyota senior management first introduced this year as part of their re-positioning of the global brand. The Global Vision mixes together the core components of Corporate Social Responsibility (CSR) external to the company and shows how important infusing jobs with autonomy, mastery and purpose including long-term motivation are internally (Toyota Investor Relations, 2013). Toyota has chosen to represent the taxonomy as a tree, which can be seen at this location on their website.
The Toyota Global Vision is specifically designed to win back the trust and belief on the part of customers that the brand is viable and will continue to progress towards its broader vision and mission as a company. The Global Vision initiative is consistent with the structure and culture of the company. It however is not as well aligned with the control-based approach the company has become famous for from an engineering perspective (Cole, 2011). As a result this first initiative, as well-intentioned and well-executed as it is, will most likely not counter the negative press and reputation the company has gained over time. What customers are looking for is a more focused effort to turn around the problems inherent in supply chain, sourcing, production and most importantly, form, fit and function of the vehicles being produced. The Global Vision initiative, as inclusive as it is, fails to properly align what matters most to customers and provide proof of significant change happening in the company.
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