Global Crisis Management A Case Study

Toyota Motor Corporation is a company that was established in 1937 with the goal of developing quality automobiles. Toyotas growth and success in the global automotive sector is attributable to various factors including a suitable business concept and model. Toyotas global reputation as a manufacturer of affordable quality automobiles is linked to its use of continuous improvement and just in time (JIT) concepts. However, the company recently experienced a product-harm crisis that affected its loyalty in the global market, which is characterized by intense competition. The product-harm crisis was characterized by recall issues that generated concerns regarding the firms openness to its customers and the public. In addition to these concerns, the recall also exposed some digitization in the global automotive industry (Rajasekera, 2013). This paper examines this case and provides recommendations that could help the firms global leaders recapture their brand loyalty.

Product-harm Crisis

Rajasekera (2013) notes Toyota has developed a reputation as a manufacturer of affordable quality automobiles partly because of its focus on continuous improvement and use of the JIT business concept. These concepts have played a critical role in Toyotas business model and its global success in the automotive industry. The company has also remained committed to enhancing the quality of its products following the recent unending stream of product recalls. The firm adopted Total Quality Control as part of its efforts to enhance product quality and increase its competitiveness against well-established brands in the automobile industry. Despite efforts to enhance product quality, the firm recalled 3.9 and 2.9 million vehicles in 2009 and 2010 respectively. These recalls came at a time when the global automotive industry has become more competitive, especially with the emergence of new low-cost automobile manufacturers.

The recent recall issues facing Toyota represented a product-harm crisis that generated concerns regarding product quality and the firms openness with the public (Rajasekera, 2013)....

Despite being an established giant, the company faced concerns regarding the quality of its products and its engagement with the public because of the product recalls. As evident in Toyotas case, a product-harm crisis is one of the major threats to a companys reputation. According to Van Heerde, Helsen & Dekimpe (2007), a product harm crisis is defined as a well-publicized event in which a firms products are found to be defective or dangerous. Such events can damage the long-standing reputation of a company and contribute to losses in revenue and market share.

Based on the case of Toyota, a product-harm crisis is a well-publicized incident in which the firms automobiles were found to be dangerous or defective. In this context, Toyota announced its issues with a product that was found to be defective or dangerous. The company considered defects in its vehicles dangerous as they caused a number of deaths and were the subject of unprecedented media coverage. In relation to the vehicle recall law, Toyotas product-harm crisis was brought by a defect relating to safety since the issue with some of its vehicles caused injury or death (Rajasekera, 2013).

Problems for Toyotas Leaders

The product-harm crisis in Toyotas case generated numerous issues for the companys leaders. Toyotas leaders needed to address various issues brought by the product recall, digitization in the automotive industry, and social networks. One of the issues that these leaders needed to address is defects in some of the vehicles. The defect was a major issue that needed to be addressed urgently since it was allegedly the cause of a number of deaths relating to safety throughout the globe. These events were considered serious and attracted the attention of the media across the globe. Therefore, Toyotas leaders needed to address the issue since it was the core of the crisis (Fan, Geddes & Flory, 2011).

Secondly, Toyotas leaders needed to address the damaged reputation because the defect in some of its vehicles…