Background and History of Toyota
Toyota is one of the world's top ten automotive industry corporations, Japan's largest car company, founded in 1933, now has developed into a huge industrial group, which gives priority to car production, and involves other sectors such as financial, machinery and electronics. In the early time, Toyota was mainly manufacturing textile machinery. In 1933, Toyota xi ichiro, the founder of Toyota, set up the car department in textile machinery production division, which started the history of Toyota motor company to manufacture cars.
Fig.1 Toyota xi ichiro Fig.2 Toyota car
Figure 3 is the logo of Toyota. Toyota's three ovals logo was used from the beginning of 1990. The large oval on the logo represents the earth, in the middle, two vertical ovals are combined into a T word, on behalf of the company.
Fig. 3 the logo for Toyota
It symbolizes the confidence and ambition of Toyota company for the future, keeping a foothold on the future. In addition, it is also a symbol of Toyota to keep a foothold on the customer, meaning the guarantee to customers. Further more, it is a symbol that the user's heart and automobile manufacturer's heart are linked together, with mutual trust. At the same time, the logo heralds Toyota's superb technology and innovation potential, too.
In 1937, Toyota motor industry company was founded with the capital of 12 million yen. In 1938, the factory began production. In 1950, Toyota sales company was founded. After the second world war, Japan was transformed into the post-war economic recovery. At this moment, for the future of Japan's automobile industry, it was a very dangerous period. For example, In 1949, the Japanese car's production was 25622 trucks and 1008 cars. The total output was 26630 units.
Fig. 4 Toyota workshop
At that time, the Japanese industry labor productivity was only about one ninth to one eighth of American industry labor productivity. This was average labor productivity of the industrial industry. Compared with the automobile manufacturing in America, which was relatively more developed, the gap in car manufacturing labor productivity between Japan and America was larger.
How can Toyota get out of this crisis?
(1) The JIT production mode
Confronted with such a grim reality, Taiichi ohno, who was the director of the second machinery factory of mother factory, thought the reason for the gap isn't that Americans paid 10 times more energy, there must be serious waste and unreasonable phenomenon in the production of Japanese factory. As long as it can eliminate the waste and unreasonable phenomenon, labor productivity are supposed to be 10 times as much than now. The concept finally became the most revolutionary, well known for its extraordinary production management, the Toyota mode of JIT (JUST IN TIME) production. That is to say, the basic idea of the Toyota production mode is to thoroughly eliminate waste, and the two pillars of supporting this thought is "Just-In-Time" and "Automation".
Since then, with the goal that to catch up with the United States in three years, Toyota challenged to the old system, strived for prosperity, fought tenaciously, and overcome a major difficulty, making labor productivity rising perpendicularly. By 1982, compared with General company in the United States, the proportion of labor productivity was completely reversed. This year, GM produced 6 vehicles per capita, while Toyota reach the level of 55 vehicles per capita production. In the view of profit created per capita, this year, the profit of General company was $1400 per capita, while the profit of Toyota was $14000 per capita, which is exactly 10 times as much as GM's.
(2) Zero inventory management
Toyota is the first that suggested zero inventory management in the global industry. For now, it is also the enterprise that is doing the best in zero inventory management. Toyota's zero inventory management can make it that as for more than half of the main raw materials and semi-finished products, they are ready to be prepared at the scene in ten minutes early when they are needed in production line, instead of being transported into the warehouse. In other times, the "stocks" are expected to be on the road. Zero inventory is not equal to the inventory is zero, but by strengthening the management on strengthen your logistics, make the inventory in the field of time and space as far as possible close to zero.
Under the action of such a production mode and the management pattern, Toyota motor company entered into a high-speed development stage. In 1957, Toyota sales company in the United States was founded. Until 1972 there have been 10 million cars produced in accumulation. In 1984, Toyota-GM joint venture company started production. In 1988, Toyota's U.S. company announced opening, In 1992, Toyota British company started business. In 1994, Toyota Turkey automobile industry trading company was opened.
At present the plight of the Toyota
In 2007, with annual output of nearly 9.5 million cars, Japan Toyota motor corp., surpassed General motors, becoming the biggest carmaker all over the world. On the other hand, from the end of 2009 to now, because of quality problems, Toyota has recalled accumulatively total about 6 million vehicles in the global, which is rare to be seen in the whole automotive industries. In 2010, there has been an event of Toyota "Recall". Due to the pedal and brake problems of Toyota cars, since January 2010, Toyota totally recalled nearly 8 million vehicles in four months around the world. In May 2015, the two auto giant Toyota and Nissan, because of the hidden trouble of airbag, will launch the recall. It relates to millions of vehicles, which were caught in this problem. In addition to the payment of a recall and losses of stopping production, Toyota also faces a unprecedented crisis of trust.
Fig. 5 Toyota recalls Fig. 6 Related cars
Many industry analysts think, during several years, in the process of rapid expansion of Toyota, the concept of "customer first" became loose, and it ignored quality management, combined with the lack of response to the crisis measures, eventually leading to a grim and costly consequence in the end.
There is a table about each auto manufacturer’s market share in 2010. According to the table, it is easy for us to see that though the Toyota still occupied the most market shares among other companies, its shares decreased by 5.4% while shares of others all increased.
Tab.1 Each auto manufacturer's market share in 2010
| Auto manufacturer | 2010.1.1-1.20 | 2010.1.21-2.15 | Market shares changes |
| Honda | 11.2% | 13.0% | +1.8% |
| Ford | 10.6% | 11.7% | +1.1% |
| Nissan | 8.5% | 9.1% | +0.6% |
| Volkswagen | 2.2% | 2.6% | +0.4% |
| Chevrolet | 10.3% | 10.0% | +0.3% |
| Mazda | 2.2% | 2.5% | +0.3% |
| Toyota | 17.5% | 12.1% | -5.4% |
Analysis on the crisis
From the perspective of the causes of the crisis, Toyota at least reflects two problems: (1) Less quality consciousness. It has been talked about specifically in the public hearing that Mr. Toyoda said Toyota was confused in several principles of safety, quality and yield. (2) Less service consciousness. During the period of "Toyota's recall" event, there has been several chances that Toyota could solve the problem in infancy of the crisis. But unfortunately, because of procrastination, it became the crisis event that caused common attention of social. Presumably, as for the problem of Toyota vehicles, since the problem occurred up to now, Toyota may not regard it as a special project to conquer, even not take it into formal discussion in internal. At hence, Toyota was so slow to respond to consumer complaints, and the more serious consequence is to make the problem vehicles production continue, thus leading to the situation of today.
From the perspective of the solving process of the crisis, Toyota has exposed series of more serious problems, the focus of the incident is about two aspects, one is the reason for Toyota vehicles acceleration. Another is the Toyota's attitude toward the event.
As for the solution of this incident, Toyota still gives no satisfying answer to the public. What they did is just setting up quality advisory groups, strengthening the quality details and recalling the vehicle, which cannot fundamentally resolve the crisis.
Therefore, the event is not only caused by that Toyota neglected the attention to safety. In terms of a well-known car brands, recalling vehicles is not a single event, but it reflects the culture of the enterprise has appeared serious problem, the foundation of the healthy development of an enterprise has been shaken, which could be the beginning of the depth of the Toyota crisis.
Solutions
1. Solution A: Focus on customers
(1) Communicate with customers and compensate
Based on the principle of respect for the law, respect for customers, if the customer complaints the car has quality problem, the company should respond to the reasonable demands put forward by customers actively and carefully. In addition, Toyota should try their best to deal with the problem in fast, without all sorts of excuses to postpone, because the more or the longer they delay, the less initiative they have.
Sincerely to show the truth to consumers. To weaken contradictions and transformation crisis, Toyota should be honest, openly explain details and sincerely accept criticism. Shirking and being vague will only make customer feel it suspicious, increasing difficulty on crisis management.
Fig.7 Ensure after-sales work
Sincerely apologize to consumers. After the crisis, consumers no longer pay attention to the fact, but pay attention to the attitude of the company to events. So after the occurrence of crisis, Toyota must show its cards in the first time and be a good listener to consumers.
Toyota is supposed to speed up the progress of recall and use the least time to recall all cars that have quality problems, meantime, make corresponding range of compensation and provide quality after-sales service.
As a specific measure of quality improvement, Toyota should strengthen technology field survey system, for example dispatching technicians to the local technical to do analysis. In addition, in the decision-making process of the recall, Toyota should listen to more voices of local consumers, invite some who know more about the local market to participate in decision making to make better, faster and more accurate decisions.
(2) Carry out the sales promotion activity
Depreciate sales promotion of designated models and give gifts to the customer of buying a car, purchase desire of customers will be increased. For old customers, will be provided with free washing and inspection car service, thus maintaining customer relationship.
(3) Carry out the new car test drive
Toyota should encourage customers to do test drives with the vehicle which used to be in problem but now is improved. The test drivers should be the owner of original problem vehicle and auto industry experts. Toyota designates places all over the world to carry out the new car test drive, proving problems have been solved perfectly.
2. Solution B: Focus on public relations
(1) Media public relations
1) Adhere to the media
Today there is a highly developed information society and any attempt to block media approach is wrong. In front of an emergency, if the more you hide, the more it will expose. In this time, only by passing the right information to the media and guiding actively, the media is likely to think you have the sincerity to solve the problem, and those rumors just may subside.
2) Construct media channels
Toyota should establish good relations of cooperation with one or two media, which can be output through their positive news once company encountering negative reports, so as to guide the public opinion and quell negative reports. In addition, the good relations with media, also can help enterprise promote their positive news. When meeting with negative reports, it can also get the message in the first time, helping enterprise to take measures.
3) Make good use of media coverage
Using the domestic media and the most authoritative website to report the relevant measures and actions taken by Toyota on processing "Recall" to show that Toyota sincerely solves this matter and be responsible to customers, thus obtaining the public recognition.
(2) Government public relations
Toyota should hold a hearing and communication with government departments actively, taking the initiative to contact with government departments.
Toyota is expected to actively participate in the technique project and the social public welfare undertakings. Through interior journals of enterprise, news reports, conferences, public relations activities and other media, can Toyota deliver positive information of enterprise to government. At the same time, the enterprise high level leaders should take the lead and take the initiative to invite relevant government departments to enterprises to visit or have meeting, understanding the government's guidance to the enterprise policy, which helps enterprise take measures to maintain good relationship with government.
3. Solution C: Focus on the internal of enterprise
(1) Make internal self-check, investigate for responsibility
To find out the root cause, technical personnel, design staff and external experts should conduct a comprehensive inspection and testing from design to production to the practical use, and each link should be examined.
(2) According to the cause of the problem and link, the improvement of technical research, production and safety guidance should be carried on, to solve the problem of internal links in the shortest time.
(3) Whether it is a technical problem, design problem or production problem, the departments and individuals that cause problems shall be investigated for responsibility according to the internal procedure of Toyota, and the further measures will be taken when it is necessary, in order to give consumers a satisfying reply.
(4) Strengthen the quality management system
From design, production to finally put into the consumption field, on the basis of adhering to the principle of company management, Toyota should strengthen the quality supervision and tight the responsibility system, and the responsibility of each department and personal responsibility should be clear. For overseas manufacturers, product quality standards should be in accordance with international quality standards. If there are products that don't meet the standard, the manufacture will be investigated for their responsibility.
Fig.8 Strengthen the quality management
(5) Promote awareness of the employees to face and deal with the crisis
Toyota should choose employee representatives and strengthen the communication between enterprise and staff representatives. Enterprises explains the detail of the incident to employee representatives, making the representatives recognize effects of the event, to resolve the undesirable mood of stuff because of negative news. Allowing employees to participate in the measures-making about how to develop through the crisis will increase the staff's participation and the sense of duty.
Analysis on solutions
1. Solution A: Focus on customers
Advantages: After series of measures, Toyota can sincerely illustrate the truth of the matter to consumers in first time, and apologize to consumer in time. Listening to customers is a good way to understand consumers, according to which Toyota will know the need of consumers and make effective measures. In this way, will consumers get a certain psychological satisfaction and comfort, returning to Toyota's attitude and purchasing again that make them become loyal customers of Toyota.
Disadvantages: Due to recall, compensation and promotion activities, the profits of the Toyota will have a certain degree of loss.
2. Solution B: Focus on public relations
Advantages: If Toyota makes enough efforts to clarify the facts, the government will vigorously support and help Toyota tide him through difficult times. Besides, the media will also track report, helping Toyota clear the image of enterprise and restore reputation.
Disadvantages: This measure can not fundamentally solve the problems existing in the enterprise, but make the enterprise put all the energy and resources on public relations.
3. Solution C: Focus on the internal of enterprise
Advantages: After the incident, the staff will form a strong cohesion. The problems of the production will be clear up, as well as the management and supervision on quality will be obviously improved.
Disadvantages: Although the enterprise can solve the enterprise internal problems, but there is no obvious and visible benefit for consumers. Breaking away from consumers, the trust crisis and market crisis will still exist.
Selection of choice
Obviously, the best solution is the one combined solution A, solution B and solution C, they all solve some problems in different aspects and each of them shouldn’t be ignored. If I have to put priority to one, after comprehensive consideration, I think solution A is the most appropriate and imperative, which can alleviate the pressure of the Toyota and help it get out of the trouble.
At first, we must adhere to the principle that the customer is god, and Toyota also has the concept of "customer first" in its corporate philosophy.
American marketing expert Neil Barnes Jane in his book "Complain is a Gift" wrote: "When customers are dissatisfied with the production, they have two choices, one is that they can say something, the other is to walk away directly. If they walk away, it is meaning there is no chance for enterprises to eliminate the discontent of consumers to them. When our products causes customers' dissatisfaction, as long as we have the opportunity to make our products back to a satisfying condition, customers are more likely to return to buying the production. Therefore, although the product may appear problem, we must be responsible to the customers and put them in the first place. "
The cost of wining a new customer is as much as 7 to 10 times than maintaining an old customer. If the attitude towards to consumers or the way of handling customer complaints is impropriate, leading to customers leaving because of dissatisfaction, the enterprise will suffer a real loss. At the same time, if the customer's problem cannot be solved, they will not only refuse to purchase next time, but also talk to his other relatives ,friends or colleagues about the affect terrible experience, which may ruin the image and reputation of the enterprise. Therefore, when the product appeared problem, it will make enterprises understand the gap between itself and the market, make the enterprise to find the way to improve the quality of service. Besides, it can also provides a chance for enterprise to improve customer relationship and turn a dissatisfied customer into a satisfied customer.
Doing quickly remedy can not only expose that enterprise attaches great importance to the customer, but also reduce dissatisfaction of customers by cutting their costs and time in waiting at the same time. If problem is solved appropriately and timely, it can not only rebuild the relationship between customers and enterprise, which is damaged because of the dissatisfaction on the production. But also make customers feel the sincerity of enterprise to them, increasing their satisfaction and loyalty to the enterprise. Research shows that if we can solve problems for customers on the spot, 95% of customers will come and buy again later. If the problem is delayed so late to solve, 70% of the customers will patronize again. If the enterprise dose respond to customer complaints around the time longer, customer's satisfaction can reduce more than half. Therefore, rapidly and timely handling customers' problem, making perfect remedy is the important guarantee to eliminate dissatisfaction of customers, wining customers.
Conclusion
In a new market environment, we should not simply understand corporate crisis as a conflict of interest or differences of values, emotion and confrontation are likely to be the root of causing enterprise major crisis. For the enterprise, the key point of crisis management perhaps should be listening carefully, tracking public opinion, responding to public sentiment in a timely manner, thus eliminating the seeds of the crisis in the bud and restoring the trust of consumers, society and government. That can not only make the brand image be restored, but also further plump and enhance the brand image!
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