We can work on Leadership challenges in Toyota that led to the 2009 recall crisis

Table of Contents

This study seeks to analyse how leadership failed in controlling quality that led to the recall crisis that led to holding of production and sales. Toyota is company one of the global manufacturer of vehicles was chosen for the study.

The main purpose of the study is to understand the role of leadership in an organization and how its failure can lead to organizational problems like failure of business strategies thus leading to business challenges. This is through studying the organizational structure, leadership and business strategies to determine how they relate to business effectiveness.

The objective of this assignment is to analyse the role of leadership in meeting organizational processes and how its failure can affect overall business effectiveness.

This study used the case study approach to evaluate leadership challenges that led to quality issues and recall crisis in Toyota Company.

Toyota Motor Corporation is a Japanese automotive manufacture with a corporate structure of over 300,000 employees. It was the first automotive dealer to produce over ten million vehicles per year due to its intensive growth and generic business strategies. The dramatic crisis witnessed in Toyota at the end of 2009 were caused by rapid expansion of the business activities without putting proper leadership strategies in place.

In 2009 Toyota was hit by a dramatic crisis due to its burgeoning quality in its products. This decline in quality led to recall of over 4.3 million vehicles in the market. This led to suspension of vehicle sales and ceasing production of the affected models as leaders sought to find solutions to the problems affecting the company (Camuffo & Wilhelm, 2016, P. 7). One element that escalated the issue was the slow response in public relations to justify the problems that the company was going through. Consumers believed that the company had something that was being hidden or was working on reverse engineering to cover its track. Failure by Akio Toyota the CEO of the company to make a crisis statement was criticized as a measure of poor leadership qualities from the CEO and the entire Toyota company leadership (Camuffo & Wilhelm, 2016, p. 6). Therefore, the challenge faced in the company was a leadership problem caused by lack of clear strategies to meet the changing needs. This report analyses leadership failures in Toyota that led to the crisis and during the crisis by highlighting major areas that indicate low leadership styles in the organization. The report will also recommend possible strategies that can be put in place to mitigate such situations in future.

Leadership is the ability to guide individuals and teams to achieve organizational goals. Such individuals possess higher abilities that allow them to control others to achieve the desired results. Through providing direction, implementing plans and motivating others, the leader achieves followership behaviour that leads to organizational success. Different leadership and management styles have been proposed to offer principles that form the strategy (Ebert & Ricky 2010, p. 135). Leadership theorists have proposed different leadership styles that may be used to achieve results. It has been argued that there is no best style that perfectly meets the needs of an organization but rather may encompasses a mixture of several elements gathered from a variety of styles to achieve a mix that serves the needs of the company. The structure of the organization determines the style that may be used (Nan jundeswaraswamy & Swamy 2014, p. 59). This distributes powers and authority while establishing lines of reporting that define the hierarchy which needs to be observed when carrying out processes. The company uses a divisional hierarchical structure to manage different geographical and regional operations.

The divisional organization structure with varied business operations around the globe. The structure is used to support goals and set strategic direction for achieving the needs of the organization. The company uses a traditional Japanese structure to maximize efficiency and capacity. According to De Menezes, et al. (2010, p. 8) this system is strongly centralized and hierarchical to meet the needs of the company. The company is managed on a global hierarchy where management is highly hierarchical with decisions coming from above to the bottom. Here top management makes all the decisions while lower level employees report to those above them. Periodical reporting is used to keep management aware of all the processes taking place in the company. Geographical divisions are used to break down the company’s structure into regional blocks for easy managing. This allows each region to govern itself and report to the rest of the organization. Product based divisions are used to break down the company into different functional areas (Dyer & Nobeoka, 2000, p. 351). These are Lexus, Toyota number one in America, Europe and Japan, Toyota number two for operations in all other regions, and unit centre for design of engines. Each of these divisions plays a different role that leads to the success of the whole organization.

Toyota uses intensive growth and generic strategies to achieve its entrepreneurial needs. The generic strategy focusses on a combination of cost leadership and broad differentiation styles to develop competitiveness (Liker, 2004, p. 15). Cost leadership entails minimizing operational costs and reducing selling prices to attract customers. Broad differentiation on the other hand requires development of different unique products to satisfy different customer segments. A combination of these two leadership styles forms an organizational culture that stresses continual improvement and the role of leadership in modelling employee behaviour. The Toyota way operates on a lean managements system which seeks to minimize waste of resources without sacrificing productivity.

There are several leadership models that have been proposed by scholars in the field of management. One such style is the classic model which suggests that a good manager directs and controls all aspects of the organization through a hierarchy of management and a well-defined structure. The diverseness of leadership traits allows the leader to use several leadership. Leadership styles need to motivate, inspire and engage employees in the company (Teich & Faddoul, 2013, p. 7). This style entails taking risks that seek to grow the organization in the right direction. For example Toyota uses intensive growth and generic strategies to achieve its entrepreneurial needs. The generic strategy focusses on a combination of cost leadership and broad differentiation styles to develop competitiveness (Liker, 2004, p. 15). Cost leadership entails minimizing operational costs and reducing selling prices to attract customers. Broad differentiation on the other hand requires development of different unique products to satisfy different customer segments. A combination of these two leadership styles forms an organizational culture that stresses continual improvement and the role of leadership in modelling employee behaviour. The Toyota way operates on a lean managements system which seeks to minimize waste of resources without sacrificing productivity.

Toyota is established on a leadership style that has been described as the “Toyota way” since the style is inspirational and recognizes the needs of employees and the organization thus trying to balance between the two. Akio Toyoda blends different leadership styles to lead and manage the company. Through transformation leadership, the company seeks to motivate employees through synchronizing leadership style with the employees to develop teams that work together. This style is based on personal characteristics of the leader and the relationship developed with followers. This allows crafting common vision and putting in place coherent goals that make employees develop dependable behaviour with desired outcomes (Avolio, et al., 2004, p. 959). Employees within such leadership motivated through sharing organizational goals with management. The leader motivates employees to perform better by meeting their needs through incentives that make them part of the organization (Luthans & Kreitner, 2005, p. 12). Charisma, individualized consideration and intellectual stimulation is used to bring and manage changes within the organization. This is a shift from the revolutionary that was used by earlier leadership.

The company has an established organizational culture based on Japanese corporate culture that entails living and working philosophies like total quality management, just in time and Kaizen. Management Japanese way is based on “hourensou” or frequent reporting and touching base which ensures that there is collaboration and flow of information within the system (Rother, 2008, p. 17). The leadership model used in the company is based on teamwork, collaboration and consensus. Therefore success of the company is dependent on all employees (Liker & Convis, 2011, p. 15).

When Toyota Company was established, it started embarking on an intensive growth strategies to improve the company. This entailed increasing market size by penetrating and exploring new markets (Camuffo & Wilhelm, 2016, p. 7). This led to the need to develop more products and at the same time manufacture more vehicles to meet the needs of the market. Internationalization speed increased business process which led to opening of eighteen new plants around the globe making it the biggest producer.

The lean management system has been described as the best style that has been emulated by other companies. To Toyota, lean management is an organization configuration that is causally linked to performance. This is through built in quality that exists in all business processes (Monden, 2010, 11). The Toyota way best describes this a process where line managers establish quality measures that identify errors in the system and seeks ways to correct them. The style focusses on efficient methods of carrying out tasks that seek to reduce overall costs. Lean management is part of the Toyota philosophy that the company has used to survive global competition.

In 2009 Toyota was hit by a dramatic crisis due to its burgeoning quality in its products. This led to suspension of vehicle sales and ceasing production of the affected models as leaders sought to find solutions to the problems affecting the company (Camuffo & Wilhelm, 2016, P. 7). One element that escalated the issue was the slow response in public relations to justify the problems that the company was going through. The company took long to realize a problem in its production system of the corporate culture in place. The corporate style gives managers more autonomy at work making it difficult for subordinates to report issues that the organization may be facing due to its management system.

The Toyota way system is highly tacit requiring continuous on the job training that started slowly failing due to high turnover experienced during the time. Plants were geographically separated from each other making it difficult for top management to monitor quality issues in production. As these challenges continued, some global factories were reluctant in managing quality issues like giving workers the power to stop factory lines when they detect errors in the system. Further, expansion led to an increased number of employees that made it difficult to manage and satisfy the needs of such employees. Internally developed middle-level managers were not fully consistent with the Toyota’s philosophy and corporate culture.

In addition to that, challenges were witnessed in hiring of temporary workers who were not integrated into the system. Management filed to integrate employees into the corporate culture of the company which in turn compromised some production lines that led to problems in vehicles in 2009. Leadership failed to maintain the organizational culture that had held the company since its inception. The people management system that allows focusing on fundamental needs of the company, and driving energies on long-term issues that shape the future of the organization was forsaken for an intensive growth strategy. This made part of the organization to succeed while the critical element failed. To Toyota, quality was the key driver of its success in the market since it ensures standards in all its production systems. The leadership issues greatly affected the company giving other competing companies market advantage.

Conclusion and Recommendation

The failures of the company are attributed to management and organizational challenges which can be easily addressed. Management needs to address leadership issues that led to failure of the whole system. The company has survived on a quality management strategy that was based on lean management and the Toyota philosophy. Further, there is need to balance between intensive growth and internal capabilities to address any issues that may affect production. There is need to go back to basic principle of “genchi genbutsu” which entails going to the place of work. This strategy makes management responsible for activities that take place rather than waiting for reports. Employees need to be empowered to understand the division and philosophy of the company. The organizational structure needs to be restructured since the current works well in quality management but fails to put in place strategies for responding to organizational challenges during crisis (Luthans & Kreitner, 2005, p. 22). Since business operations are controlled by lower level line managers they need to be highly empowered to maintain quality and respond to crisis issues before they can report to higher management. This may also include allowing departments head to report directly to the executive thus reducing bureaucratic process that hinders decision making during crisis as way of managing challenges associated with aggressive growth. Therefore the company needs to address its leadership and management challenges to address the current problem and avoid future challenges.

Avolio, B., Koh, W. & Bhatia, P., 2004. Transformational leadership and organizational commitment: mediating role of psychological empowerment and moderating role of structural distance. Journal of Organizational Behaviour, 25(1), p. 951–968.

Camuffo, A. & Wilhelm, M., 2016. Complementarities and organizational Mis)fit: a retrospective analysis of the Toyota recall crisis. Journal of Organization Design, 5(4), pp. 1-13.

De Menezes, L., Wood, S. & Gelade G, 2010. The integration of human resource and operation management practices and its link with performance: a longitudinal latent class study. Journal of Operation Management, 18(7).

Dyer, J. & Nobeoka, K., 2000. Creating and managing a high-performance knowledge-sharing network: the Toyota case. Strategic Management Journal, 21(3), p. 345–367.

Ebert, G. & Ricky, W., 2010. Business essentials. Upper Saddle River, New Jersey: Prentice Hall.

Liker, J., 2004. The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer. New York: The McGraw-Hill Companies..

Liker, J. & Convis, G., 2011. he Toyota Way to Lean Leadership: Achieving and Sustaining Excellence. New York: McGraw Hill.

Luthans, F. & Kreitner, R., 2005. Organizational Behavior Modification and Beyond. Glenview IL:: Scott Foresman..

Luthans, F. & Kreitner, R., 2005. Organizational Behavior Modification and Beyond. Scott Foresman: Glenview IL.

Monden, Y., 2010. Toyota Production System: An integrated approach to just-in-time. Boca Raton: CRC Press.

Nan jundeswaraswamy, T. S. & Swamy, D. R., 2014. Leadership style. Advances In Management, 7(2), pp. 57-64.

Rother, M., 2008. Toyota Kata: Managing People for Improvement, Adaptiveness, and Superior Results. New York: McGraw Hill.

Teich, S. T. & Faddoul, F. F., 2013. Lean Management—The Journey from Toyota to Healthcare. Rambam Maimonides Medical Journal, 4(2).

This entry was posted on March 12, 2018 at 10:13 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.

Is this question part of your Assignment?

We can help

Our aim is to help you get A+ grades on your Coursework.

We handle assignments in a multiplicity of subject areas including Admission Essays, General Essays, Case Studies, Coursework, Dissertations, Editing, Research Papers, and Research proposals

Header Button Label: Get Started NowGet Started Header Button Label: View writing samplesView writing samples