Toyota Corporation Issue Management Plan

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Table of Contents

Introduction
Issues Identification
Issues Analysis
Strategy Options
Action Plan
Evaluation of Results
Reference list

Introduction

Toyota Corporation is a Japanese automobile manufacturer that is involved in robotics, biotechnology and financial services. The corporation has been in the industry since 1937, and has had a stain-free history and experienced an unprecedented growth in its operation, currently with over 500 subsidiaries and a labor force of more than 300,000 globally; however over the recent times, the corporation has been facing nightmares of all sorts.

The company has been encountered by a number of crises ranging from leadership crisis, public relations, diminishing returns, and the global economic meltdown to the most recent crisis, the accelerator pedal defaults. In counter to these unanticipated situations threatening its continuity and in an attempt to recover from these crises, the corporation’s public relations department was necessitated to formulate an issue management plan.

In developing the issue management plan, the corporation has identified the important aspects that need consideration: the crisis management methods to be adopted, the Toyota communication plan, and the corporation’s management team. It consists of ways of response to the crisis in reality and perception and metrics to define what scenarios are to be handled as crisis (Gottschalk 2002).

Issues Identification

The company’s issues identification approach takes into consideration the entire process of ascertaining the financial, political, legal, government and communication problems associated with the crisis at hand. It all started with the financial warning that was issued by the corporation anticipating its first ever loss since its operations commenced close to seventy years ago.

A financial forecast that revealed the first ever operating loss was attributed largely to the slump in sales of the manufactured automobiles and robotics and the fact that that the value of the Yen was continuously becoming inferior to the dollar and other major world currencies.

Toyota problems was compounded by stiff competition from other automobile manufacturers notably Honda and the slump in the global economy occasioned by the events in Wall Street. Manufacturers of automobile around the world were faced with a tough challenge due to a shake in the operating environment that caused a sharp shift in demand because of the deepened financial crisis that spread over consumers in worldwide.

According to The Economist (2010), “the entity had reduced its operating estimate to a loss of 150 Billion Yen in its fiscal year that ended March 2010; the reduced estimate was subsequent to surprising the international economic markets by decreasing its group working earnings predictions by an unparalleled 1 trillion Yen.”

Toyota’s situation was further aggreviated by the recall crisis of its recently manufactured automobiles with supposedly faulty braking systems. This all started on 28^th August, 2009 when a Californian highway patrol officer was travelling on Highway 125 in Santee California with members of his family when the Lexus ES350 they were travelling in unceremoniously accelerated out of control hitting other vehicles and rolling over an embankment bursting flames, killing all the four occupants.

The incident was said to have been caused by a stuck accelerator that made the vehicle speed uncontrollably. This was followed by a series of similar accidents and complaints from customers over the issue, which led to the recall of over 8.1 million with US reporting 5.5 million cases and also led to suspension of sales of about eight of its best selling brands costing the corporation at least $54 million every day on lost sales.

These crises coupled together have rely had a negative impact on the company’s operations in terms of moneys spend in rectifying the faulty pedals, lost sales, reduced profitability, decreased production and also its public relations. Notably the devastating impacts of these crises are evident on the company’s share, which has hit a new low of $71.80 in the New York stock and the corporation has reduced its networth by about $25 million.

Issues Analysis

Due to the proneness of the corporation to variations in the industry, the corporation has adopted a crisis contingency plan to cover uncertainties occurring, unlike in earlier times the corporation operated without a contingency plan that left the corporation at the risk of bad reputation, public scrutiny, even compromising its continuity in case where a crisis erupts.

The recall crisis took the American market by storm because of the negative publicity and anxiety caused to other customers with the latest Toyota models, the public went into a frenzy with many fearing to use our automobiles and discussions on social networks, televisions and print media reaching fever pitch.

The management of the corporation in the US market went into a crisis meeting to evaluate the accuracy of the allegations and possibly do some damage control. The mangled wreck of the vehicle was collected and taken to the Toyota laboratories for investigations. However, preliminary reports on the crash from both the corporation and independent local authorities indeed showed that the Lexus ES 350 was acquired on a loan from Bob Baker Lexus Showroom of San Diego where the personal car of the victim was being held for repair in return. It was also clear that the Lexus may have been fitted with the wrong floor mats thereby interfering with its gas pedal.

From these investigations, management learnt of the inherent risk in the latest automobiles from the American plant supplied into the market. In October 2010, an article in The Economist highlighted the level of hazard caused by the company’s automobiles.

Those affected were mainly individuals who had purchased their latest automobiles from the American plant. It was also reported that nine other separate incidents where local authority investigations on other accidents involving Toyota vehicles were done.

Majority of the accidents were a consequence of wrong bottom mats and a number of others due to the spruce pieces on the Sienna models. Investigations reported also revealed that the other fatality accidents were as a result of unintended acceleration of the vehicles.

“In depth investigations and analysis by the National Highway Traffic Safety Administration (NHTSA) further revealed that the mats used on the floor of these automobiles were specifically meant for the RX 400 SUV Toyota Lexus but these were erroneously used on the ES 350 model.” This manufacturing error resulted in the accelerator gearshift to wedge against the rubber mats causing the vehicles to speed up abruptly.

Strategy Options

The issues management plan shall incorporate specific management strategy options to be taken during crisis, depending on the nature and extent of the crisis, to minimize the impact of a looming crisis and provide a response mechanism that will mitigate any crisis occurring.

The strategic options should address diverse scenarios of crises ranging from environmental crisis, natural calamities, and technological mishaps; confrontational crisis such as industrial action or crisis arising from management goofs and skewed management values.

For effective strategic positioning in anticipation of crisis, the corporation should provide for crisis planning. Since most crises occur within the predictability of a corporation, for the anticipated crisis, it should identify the dangers or risks involved in its market and come up with an issues management plan, which shows the measures to be put in place when crises strike.

Crisis planning is aimed at minimizing the impact of the crisis and provides a response system and also aims at putting the organization at the best possible position to counteract and recover from crises. However, when planning, the crisis team should be inclusive and not limited to specific disasters, although it can lay more emphasis on the anticipated crisis. A more effective way for the organization to take is creating a crisis management function within its operations.

This operates as a division in the organization and its functions includes; predicting any occurrence of a crisis, planning to curb crisis, communicating and advising the management about the vulnerability of the organization. Issues planning will address matters like crisis management methods, communication plan, management team and the evacuation team.

Another option is creation of a crisis team that is well prepared to combat any crisis. The management should identify the main players to take positions in the team, based on their specialty, character and ability to work.

The crisis team responsibilities include: restoring information networks, control and commands in times of a crisis while acquiring information, so as to provide the senior staff with adequate information on the situation. To enable teamwork and to solve the crisis, the crisis team needs to adopt crisis management, for example performing drills or scenarios to create an imaginary crisis, to evaluate how the team would respond in times of a real disaster.

At the post-crisis stage, the management should put in place a crisis recovery plan. This involves steps that are necessary to bring back the organization to its functioning position. This involves: existing backup of important information, logs, staff and other lists; conducting an insurance review to make sure that it can adequately compensate all risks incurred; exploring legal elements of recovery with the legal department; and reviewing all current service agreements and check for post-crisis provisions and recovery support.

In a case where the company has experienced enduring crisis, which hinder the company’s operation, it could consider discontinuing the business segment, brand or subsidiary affected by the crisis for sometime or forever; or engaging a strategic business combination, such as merger, takeover or amalgamations.

Although this may seem unwise in the short-term, in the long-term it makes sense to the company in terms of; the crisis may spread to other segments, savings in future losses, company reputation and improve on the company’s return on investment (Reid 2000).

Action Plan

For the organization to successfully implement the strategic options at hand, it needs to adopt an action plan. More importantly the action plan should incorporate an elaborate and well-structures communication plan. The communication plan involves coordinating, directing and communicating and providing the levels of command and channels of communication among the crisis team, the stakeholders and media when handling a crisis.

Crisis communication can transform the unexpected into the anticipated and save the company’s credibility and reputation. More importantly is the media management strategy. Media centre is set up that will be headed a chief spokesperson or a senior communications and public relations officer.

From this centre, the Chief Executive Officer and the Managing Director will be personally available to give media updates on the state of affairs. The chief spokesman is supposed handle the media while the rest of the staff are advised to keep off not to communicate with the media personally or give any information that could interrupt the process.

However, the adopted action plan should not be static rather flexible and adaptable with pertinent inclusion of issues and specifics that have come up. The action should ensure inclusion of a clear hierarchy of command that mentions by name and authority assigned to a given position in the case of an emergency. The contact of such personnel both physical addresses, postal addresses and cell phone contacts shall be part of the list to ensure information is conveyed expeditiously.

Evaluation of Results

This will entail establishing a mechanism for setting an agenda for evaluation and review. In evaluation of results, feedback is an important pointer. In the midst or after a crisis, the company should institute a corporation feedback mechanism where affected parties will forward their responses and feedback on how they think the situation was handled and ought to have been done or not.

On the corporation’s official website, the management should place a commentary or feedback portal that is interactive and offers necessary information. Also the corporation should design a facility level stakeholders’ scorecards” managed by the corporation’s CSO (The Economist 2009).

Reference list

Gottschalk, E. (2002). Crisis Management. Melbourne: John & Sons.

Reid, L. (2000). Crisis management: planning and media relations for the design and construction. New York, NY: John Wiley and Sons.

The Economist (2009). Losing its shine: Toyota. The Economist, vol. 393, pp. 75-83.

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