Reference no: EM132282847

Read the case below and answer the questions that follow.

Toyota’s Communication Problems

Toyota is a world leader in improving vehicle quality and safety but its record is not perfect. During the late 2000s, Toyota’s rapid global expansion and its desire to beat General Motors to become the world’s largest vehicle maker led Toyota’s managers to neglect product quality. Toyota failed to realise that producing so many new advanced vehicles required a massive training effort so employees could learn the new techniques necessary to maintain product quality and prevent vehicle recalls. As a result, between 2004 and 2008, Toyota recalled 9.3 million vehicles in the United States and Japan. Its president, Katsuaki Watanabe, publicly apologised in 2007 for these increasing errors but claimed that the company had put in place improved quality programs to put it back on the right track

So it came as a tremendous shock to Toyota when in January 2010, reports of uncontrollable acceleration of some of its vehicles, particularly the Prius hybrid were publicised in the global media. At first, Toyota attributed the problem to floor mats that became stuck under accelerator pedals but within a few weeks, it announced that the design of the accelerator pedal was also faulty. Apparently Toyota had known about this problem for several months and had been seeking a solution but it failed to communicate this problem to its customers. After finding a solution, Toyota recalled and repaired more than 6 million cars.

In March 2010, the president of Toyota, Akio Toyoda, a member of the founding family publicly apologised to Toyota’s US customers for its slow response to the braking problem. He blamed Toyota’s complex management hierarchy for the failure to communicate quality and safety issues quickly to customers. Toyoda also announced a new companywide control system to improve quality and reliability that would allow it to communicate and respond more quickly to information about vehicle problems that it received from customers and report them to the National Highway Traffic Safety Administration in the United States.

Under the new management structure, quality/safety officers at Toyota headquarters in Japan will decide with the chief quality officers in each global region how to address quality issues and each region will share information about complaints raised by customers. Nevertheless, Toyota was fined USD16.4 million for its failure to communicate and inform about the problems involving the faulty pedals. More investigations were made because it appeared that Toyota had also been slow to communicate to customers and issued other safety recalls in the past due to problems such as such as defective steering rods which were linked to 16 crashes, 3 deaths and 7 injuries caused by the steering defect.

Despite all these problems, customers believe that Toyota has learned from its communication mistakes and improved its ability to respond to customer concerns. Its vehicle sales improved in 2010 but Toyota still faced hundreds of lawsuits that are likely to cost it billions of dollars in the next few years

(Source: adapted from J.M George and G. R Jones, ‘Understanding amd Managing Organisational Behaviour’, 6th Ed, (2012) pg 427, Pearson International Edition, USA)

(a) Explain why communication is an important aspect in any organisation. Provide examples to support your answer.

(b) With reference to the case, explain why Toyota was accused of being a poor communicator.

(c) Toyoda blamed Toyota’s complex management hierarchy for the failure to communicate quality and safety issues quickly to customers. Examine how organisation structure can affect the internal and external communications of an organisation.

(d) Describe the corrective actions taken by Toyota to improve the quality of its vehicles and its communications.