TOYOTA case

TOYOTA CRISIS – Vehicle recalls

        Company description

Toyota, a pioneer and leader in environmental technologies, is the world’s largest automaker. The company was created in Japan in 1937 and became the reference in the car industry worldwide thanks to its innovative production system at that period. Indeed, it is based on “Just in time” production, that is to say producing only sufficient quantity from existing orders with the minimum loss. With 63 production sites around the world, Toyota produces more than 10 million vehicles each year. The company operates 4 different brands: Daihatsu, Hino, Lexus and Toyota. Distributed today in more than 160 countries, the main Toyota’s markets are Japan, United States and China, where the company sells over 50% of its vehicles.

        The crisis

Toyota is an iconic company synonymous of safety and quality whereas a big crisis occurs in 2009 with its cars. Between 2009 and 2011 Toyota recalls more than 9 million of cars. This recall was made on 3 different model of cars.

They attribute the accelerating of the car in indicating that it was the driver fault at the beginning and took their responsibilities.

        The first recall on November 2009 was to correct a problem with the carpet of the driver who blocked the foot pedal, which can cause pedal entrapment.

        The second recall, on January 21, 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration, referred to as Sticking Accelerator Pedal by Toyota.

Some US owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional NHTSA and Toyota investigations, along with multiple lawsuits.

The crisis will be poor customer services, poor marketing evaluation, poor public relations and the poor governance of the entire operation procedures that the company has adopted.

        PESTEL analysis

POLITICAL:

Toyota is subject to the effects of political conditions. This dimension of the PESTEL/PESTLE analytical model identifies the impacts of government on business and industry. In the case of Toyota, the significant external political factors in the remote or macro-environmental environment are as follows:

• Political stability in most major markets
• Free trade agreements
• Government support for environmentally friendly products

The political stability of the major markets is an opportunity for Toyota to develop with a minimum of political tension. In addition, free trade agreements involving Japan and other countries where Toyota is present offer opportunities to improve market penetration. Moreover, government support for green products is an opportunity for the company to improve its products to meet or exceed environmental expectations.

ECONOMIC:

Economic trends influence Toyota's organizational development. This dimension of the PESTEL/PESTLE analysis model determines the effects of economic situations or changes on companies. In the case of Toyota, the most important external economic factors in the context of the remote or macro environment are as follows:

• A weaker yen against the US dollar
• Gradual growth of the US economy
• Rapid growth in developing countries

Toyota has an opportunity to improve its exports from Japan based on the weakness of the Japanese yen. In addition, Toyota has the possibility to expand its activities in the United States, which is the second largest market for the company after Japan.  The rapid growth of developing economies offers the company the opportunity to improve its revenues on the basis of these markets.

SOCIAL:

Toyota is affected by social or socio-cultural factors. This dimension of the PESTEL/PESTLE analysis model concerns the impact of socio-cultural trends on companies. In the case of Toyota, the main external social/socio-cultural factors in the remote or macro-environmental environment of the company are as follows:

• Growing interest in hybrid cars
• Growing interest in electric cars
• Widening wealth gap (threat)

Toyota could provide more products that satisfy the growing customer interest in hybrid and electric vehicles. However, the company must consider the growing wealth gap, which is a threat as it corresponds to a declining middle class.

TEHCNOLOGICAL:

Technological factors have an impact on Toyota, not least because it is a technology company. This dimension of the PESTEL/PESTLE analysis model determines the influence of technologies or technology trends. In the case of Toyota, the most notable technological external factors in the remote or macro-environmental environment of the company are as follows:

• Increasing use of e-commerce
• Trend in mobile technologies
• Cybercrime (threat)

Toyota has the possibility to enhance its e-commerce capabilities or to exploit third party e-commerce service providers for the sale of some of its products, such as spare parts. Toyota also has the possibility to enhance its mobile applications in order to increase customer engagement and loyalty. However, the company needs to address the threat of cyber-crime, including corporate cyber espionage.

ECOLOGICAL:

Toyota must integrate environmental concerns into its strategic decisions. This dimension of the PESTEL/PESTLE analysis model allows for the identification of concerns about the natural environment in relation to companies. In the case of Toyota, the main external ecological/environmental factors in the remote or macro-environmental environment are as follows:

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