PROCESS IDENTIFICATION 1

U1A1: Process Identification

MBA 6022

Strategic Operations Management

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Instructor: Dr. Zhimin Huang

Date: 30August2014
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ABSTRACT

The Process Identification begins with an introduction into the Toyota Motor Corporation and

goes forward with a summation of their performance as an organization and briefly giving

insight into the woes and troubles during the period know as the “Toyota Crisis”. The case study

Toyota: The Accelerator Crisis (2010), by Greto, Schotter will be used as a reference in

providing such information along with personal opinion and critiques. The information provided

from the case study along with other relevant cited works will allow for an overall suggestion for

operational improvement.
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INTRODUCTION

Kiichiro Toyoda who is the son to entrepreneur Sakichi Toyoda founded Toyota Motor

Corporation in 1937 on August 28 as a division of Toyoda Automatic Loom Works (Toyota

Global, 2014). The company has its headquarters in Japan from where it started by selling

customized cars by the name Toyopets with the first car called Toyopet SA followed by Toyopet

SB and Toyopet Stout, Toyopet Crown, and Toyopet Corona respectively. Although the brands

at the time were selling and making profits, there were reports that the management of Toyota

were of the opinion that the American consumers would not buy the Toyopets upon the company

entering the American market. The situation lead to the manufacture of a new model named

Corona in 1965w that was more powerful compared to others and two years down the line,

32,000 Corona model cars had been sold. By 1979, the Toyota hade registered a cumulative

export rate of ten million units, which was a double increase in her exports within four year as

per the company’s global website (Toyota Global, 2014).

In the years 1982 there was a merger of Toyota Motor Company and Toyota Motor Sales

forming Toyota Motor Corporation and during 1990s the new band of Toyota Motor Corporation

changed tact into making luxurious vehicles such as the Camry Solara, T100, Scion and Prius

which is the overall best selling hybrid car in the world (Oreshko, 2011). Nevertheless in 2007

the company started observing severe defects in some of their popular car models prompting

enormous recalls that in turn according to (Oreshko, 2011) resulted in a steady decline in the

sales as well as affects their vehicles today. However, despite the defect challenges according to

became the largest carmaker in the world thus the reason why one can never go far without

seeing Toyota car models on the road, which is in tandem with the common slogan stating, “The

car in front is always a Toyota”

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IMPORTANCE OF THE PROCESS

The stated goal of the “Toyota Way” is to grow, work and align the organization toward a

common purpose that instills brand recognition and enthusiasm for its employees and customers.

It is not the volume, but rather, safety and quality in that order that the Toyota brand seeks to

compound upon. One may suggest that the global expansion efforts of the Toyota Corporation

reached too far in too short a period of time. Clearly, quality has always been a driving force for

Toyota; therefore it represents greatest importance for Toyota. Developmental costs can only be

stretched so far before a company runs the risk of producing a faulty product with mechanical

errors. Therefore, it should be very important for Toyota as a quality and safety issue.

THE SCOPE
Toyota has a market capitalization of nearly two trillion dollars, therefore a systemic

safety or quality issue can impact Toyota’s markets worldwide (Zacks, 2013). Toyota has seen

tremendous growth rate and expansion resulting into her dominance of the automobile industry

thus attaining huge profit margins as the case of 2007 where the global profits stood at over

$19.9 billion (Toyota Global, 2014). The designation of the popular “Toyota Production System”

commonly called TPS brought hope o the co0nsumers since their safety and quality challenges

would be past tense. The TPS used on time deliveries of components as well as halting the whole

production line even during discovery of one defect at the time of production. Even though the

process was smooth, question arose upon discovery of many vehicles in the market having defect

problems as to hoe Toyota approaches the production process and the rapid growth.

The defects such as sliding carpets underneath the pedal causing jamming during

acceleration and braking, unwanted acceleration as a result of sticky pedals, and the braking
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failure of Prius’ model has resulted into a recall of more than eight million cars for repairs and

costing the company more than $2 billion (Marsh-Croll, 2009). Had the management taken

control of the production pace then the quality control measures at Toyota could have gotten out

of hand.

PARTIES INVOLVED
Toyota introduced the Toyota Production System to eliminate seven types of wastes and

inefficiencies in the company-overproduction, operator motion, waiting, conveyance, self-

processing, inventory, and correction. This innovative strategy has significantly reduced

Toyota’s operating expenses. Indeed, this strategy has been adapted to a plethora of different

industries successfully.

(CUSTOMERS)

The one question that a consumer presented to the management of Toyota was “where

did the company get it wrong”, given the company had always maintained an excellent quality in

their models. In response to the question, the blame was placed upon the leadership who

abandoned the company’s drive for quality systems thus exposing the safety of loyal Toyota

product consumers and as such, poor leadership is the main cause to the crumbling reputation.
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(SUPPLIERS)

Not only are the customers feeling resentment but the suppliers who trade, sell, market,

and promote the “Toyota way” are apart of the brand failure. As this happens it is imaginable the

effect this has on the retail salesman or dealership when promoting the Toyota brand name to

promote revenue.

PRIORITY

Toyota being the world’s largest car maker begins to start experiencing reduction in

consumers as well as the diminishing sales of there car models. Most importantly, it is evident

that Toyota is facing a major crisis because of massive recalls of car models including the

Camry, Corolla, and Prius, which experience various defects for instance, acceleration problems,

steering malfunction, software glitches and defects in the brake system among others (Marsh-

Croll, 2009).

BENEFITS
The defects such as sliding carpets underneath the pedal causing jamming during

acceleration and braking, unwanted acceleration as a result of sticky pedals, and the braking

failure of the Prius model resulted into a recall of more than eight million cars for repairs and

costing the company more than $2 billion (Marsh-Croll, 2009). It is evident that Toyota’s

meteoric expansion, and its reduction in capital expenditures for development had an overall

impact to the contribution of many defected products Toyota produced during their expansion

period.
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COST
The management of Toyota is responsible for the recall crisis due to its failure to address

the acceleration problem and warranted defects. The cause for irresponsible leadership is because

of inadequate communication between the subordinates and the executives, which typically

results in passage of information in respect to product performance. The organizational

management of Toyota failed to put into consideration is the fact that reliability is a core

competence of the company before the public and the failure to incorporate the company’s

corporate culture of safety and quality into expansion plans.

CONCLUSION

In conclusion, Proper forecastingof the potential problems that would occur is difficult:

Toyota had to reply quickly to the first identifications of problems, in that way it would fix this

accelerator pedal in short notice and avoid their brand image to be tarnished due to improper

management, and to loose somehow the trust of its customer, as to avoid the huge financial loss

due to this crisis. A crisis management plan should be formulated prior by the company: a well-

known and big company as Toyota normally should have a plan to deal with such crisis.

Especially, in term of quick response to overcome the problems, and identifying and planning for

worse case scenarios. Moreover its Public Relations must be efficient enough to tackle the media

which otherwise will result in bad reputation.

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REFERENCES

Greto, M., Schotter, A., & Teagarden, M. (2010). Toyota: The accelerator crisis. Thunderbird

School of Global Management.

Marsh-Croll, C, (2009). Where did Toyota go wrong?

Retrieved from http://ezinearticles.com/?Where-Did-Toyota-Go-Wrong?&id=3715475

Oreshko, Dmitry, (2011) Toyota History, Retrieved August 30, 2014 from: http://www.history-

car.com/2011/11/21/toyota-history/

Toyota Global, Retrieved August 30, 2014 from: http://www.toyota-global.com/

Zack’s Investment Research Toyota Motor Company. Retrieved August 30, 2014 from:

http://www.zacks.com/stock/quote/TM?q=TM