DECISION SHEET

FOR

TOYOTA: The Accelerator Crisis

BY

SURBHI SAURAV
2227561
3MBA_L3

Submitted To

Prof. SREERENGAN V R

CHRIST (DEEMED TO BE UNIVERSITY), BANGALORE

MARCH 2023
Summary:
Toyota, the world's leading automotive company and a global benchmark for quality and
continuous improvement, stumbled seriously. They faced a recall crisis unlike any they had
seen before. Mr. Akio Toyoda, Toyota's president and grandson of the founder was called to
testify before the U.S. House of Representatives Committee on Oversight and Government
Reform about the company's response to the recall. Through the lens of the accelerator crisis,
the case documents trade-offs Toyota made while pursuing a marketing strategy based on
quality and customer experience while simultaneously pursuing an operational generic cost
leadership strategy. Historic information tracks the evolution of the company's early focus on
lean manufacturing, quality, and the customer to the current focus on aggressive cost control
and rapid globalization; it also traces the factors that shaped the context in which the product
failures occurred; and documents the failure of Toyota to respond appropriately and with
sufficient speed. The case discusses Toyota's evolution from a small entrepreneurial family
firm to global industry giant status; their role in driving industry-wide lean manufacturing,
continuous improvement, and quality, known as the Toyota Way; their responses to a series
of apparent product failures; and the resultant erosion of Toyota's reputation. The case
concludes with Akio Toyoda exhausted from his testimony, considering which strategic,
structural, or cultural challenges led to the current recall crisis.

Case Facts:
 Between 2009 and 2010, Toyota vehicles experienced unintended acceleration,
leading to numerous accidents, injuries, and fatalities.
 The root cause of the problem was traced to a combination of factors, including faulty
gas pedals, improperly designed floor mats, and electronic throttle control
malfunctions.
 Toyota initially struggled to acknowledge the issue and respond effectively, leading to
a loss of trust among consumers and criticism from regulators.
 The crisis resulted in a massive recall of affected vehicles, billions of dollars in
settlements and fines, and significant damage to Toyota's reputation.
 Toyota implemented a number of measures to address the crisis, including
improvements to its quality control processes, a greater emphasis on transparency and
accountability, and changes to its management structure.
 The crisis highlighted the importance of effective crisis management, quality control,
and transparency in the automotive industry and led to increased regulatory scrutiny
and industry-wide changes in safety standards.

Protagonist: Akio Toyoda, CEO of Toyota Motor Corporation.

Problem Statement: To analyze and examine Toyota vehicles experiencing unintended
acceleration, which led to numerous accidents and fatalities and widespread negative
publicity for the company.

Challenges:

1. Had the company lost sight of its long-term philosophy, a key principle behind the
Toyota Way?
2. Had Toyota sacrificed quality and its historic customer focus at the expense of
extreme cost reductions?
3. Were nonfamily managers indeed to blame for "hijacking" Toyota?
4. Was Toyota simply subject to the latest media witch hunt in the wake of the global
economic crisis?
5. What role did Toyota’s supply chain and keiretsu structure play in the recalls?

Criteria:
1. Strengthen crisis management processes
2. Lean principles
3. Rebuild trust and credibility
4. Just-in-time inventory management
5. Enhance quality control processes
6. Foster a culture of continuous improvement
7. Increase collaboration with suppliers

Evaluation of Criteria:

 Just-in-time inventory management: The accelerator crisis highlighted how just-in-

time inventory management could be impacted during an emergency. In this case, the
need for a massive recall disrupted the supply chain and caused shortages of
replacement parts, further exacerbating the crisis.

 Lean principles: The Toyota Production System is known for its lean principles,
emphasizing continuous improvement and waste reduction. However, the accelerator
crisis revealed that these principles were ineffective in Toyota's quality control
processes. As a result, the company faced significant financial and reputational losses.

 Enhance quality control processes: To prevent future quality issues and negative
media coverage, Toyota can enhance its quality control processes to ensure that its
vehicles are designed and manufactured to the highest standards. This can include
 investing in new technologies and techniques and providing suppliers and partners
with meet the same high standards.

 Strengthen crisis management processes: Toyota can strengthen its crisis

management processes to ensure it is better prepared to respond to future crises. This
includes developing contingency plans for potential issues, improving communication
and collaboration with regulators and other stakeholders, and ensuring senior
executives are more closely involved in crisis management efforts.

 Rebuild trust and credibility: To address negative public perception and rebuild
trust and credibility, Toyota can take steps to demonstrate its commitment to quality
and safety. This can include launching new marketing campaigns emphasizing safety
and reliability, investing in new safety technologies, and engaging with customers and
stakeholders to address their concerns and feedback.

 Foster a culture of continuous improvement: Toyota can foster a culture of

continuous improvement by encouraging employees at all levels of the organization to
identify opportunities for improvement and develop innovative solutions. This can
include implementing a formalized ongoing improvement process, such as the Toyota
Production System, and providing training and resources to support employees in this
effort.

 Increase collaboration with suppliers: Toyota can improve collaboration with its
suppliers by involving them more closely in its quality control processes. This can
include regular communication and collaboration on quality control processes and
testing and validating parts and components before they are released for production.
By involving suppliers more closely in quality control processes, Toyota can identify
and address potential issues earlier in the show, reducing the likelihood of defects and
recalls.

Recommendations:
First, improve quality control processes: Toyota should implement more rigorous quality
control processes to ensure that all vehicles are thoroughly tested for safety and performance
before being released to the market. This can include using advanced technologies such as AI
and machine learning to identify potential issues in production processes and address them in
real time. Additionally, Toyota should implement a system for monitoring and reporting
possible defects or safety issues to address them promptly. Second, foster a culture of
transparency and accountability: Toyota should foster a culture of transparency and
accountability within the organization, emphasizing the importance of open communication
and honesty. This can include regular contact with customers, suppliers, and regulatory
bodies to inform them of potential issues or concerns. Additionally, Toyota should establish
an independent oversight board or committee to oversee quality control processes and
investigate potential problems, ensuring the company is held accountable for any failures in
its processes.