This However under the rapid growth put a strain

This report will analyse and evaluate the management and
operational decision making process for Toyota. Originally ‘Toyota’s reputation brought many benefits including
market share, customer loyalty and financial strength’ (Quelch et al, 2011).
However under the rapid growth put a strain on manufacturing, design, and engineering
which in turn led to quality issues and recalls. This report will analyse and
explore the decision making process throughout and will do so through the use
of theories, concepts and perspectives throughout as well as looking at the
decisions through an ethical standpoint.

On the 29th September, 2009 Toyota had to recall
3.9 million vehicles due to uncontrollable acceleration and sticking accelerator
pedals, and ‘later in the week it expanded the
recall to Europe and recalled 1.1 million more in the United States because of
floor mats that can catch the accelerator’ (Winston-Salem journal, 2010). This
showing that Toyota were going in a bad direction and decisions needed to be
made. This led to the CEO, Akio Toyoda was forced to apologies shortly after
the best seller, the Prius hybrid for braking problems. Worldwide in 2009 and
2010 recalls totaled about 8 million vehicles. Overall ‘Toyota’s responses were
seen as inadequate and began to strain the trust of the public, car buyers,
regulators and government officials’, (Tennert, 2014) This led to a loss in
sales in addition to a drop in the share price.

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One decision making framework
that is most appropriate for problem solving process is the Cynefin framework.  The first is Disorder where more information I
needed, next is the complex situational contexts, this is an unordered situation
and ‘It might be impossible to identify one “correct” solution, or
spot cause-and-effect relationships, in complex situations’. According to
Snowden and Boone (2007), often in the stage of “Probe – sense – Respond” it is
often best to be patient. The next situational context is the chaotic contexts,
during this there is still no relationship between cause and effects exists.
Some managerial decisions may be to establish order and stability. In addition
some decisions may be made to use risk analysis and develop crisis plans if
needed. The next situational context is ordered and is the complicated contexts
this is where there is a clear relationship between cause and effect but it is
not visible to all. This may be after the first recall and the situation needs
to be assessed. In this contexts the best response would be the best response
using good practice and what has been known to work, in this context Toyota
should have apologized however in this scenario they were not using good practice
and as a result were late to apologies which led to a decrease in sales due to
customer distrust. However throughout this context leaders may rely too heavily
on experts and as a result dismiss or overlook creative solutions which may be
what went wrong for Toyota. The final situational context is the obvious
context which is where the cause and effect relationships are apparent to
everyone, this for Toyota was after the second recall and the CEO Akio Toyoda
apologized, the problems now are dealt with at the help desk and call centers.
In occasions like these in this context leaders may assume previous solution
will work again this may be what led to A
third recall involved a company bestseller, the Prius Hybrid, for braking
problems. This may be because leaders may need new ideas and innovation to improve
on the business. As shown when problem solving Toyota failed to abide by the
Cynefin framework which may have led to their failure. Throughout Toyotas
mismanagement between 2009 and 2010 it seems that the situation was misread
this is because the decision makers at Toyota believed this situation to be
simple, where there’s a clear cause and effect and the issue simply needed to
be managed and monitored which may have been what lead to the last apology.
This emergent situation was in fact chaotic, which is where the business needs
to act to address the immediate problems, this is because the situation turned
into a safety issue and customers were getting injured. In this stage change is
typically dominant.

One outcome from a poor Cynefin
framework may lead to poor decision making styles, one way at looking at how
leaders decide how to decide is through The Vroom Yetton Model. This model is designed
to help to decide the best decision making approach and leadership style is
best for the particular business.  However before using this model it’s important
to consider three factors, Decision quality, Team commitment and Time constraints.
Decision quality is about making the right decision while using large resources
like people, time and information. The decision quality was extremely important
for Toyota as it was critical the right decision was made to handle the Recalls.
The quality of the decision became more important, this is because Ryoichi
Saito, a car industry analyst stated ‘The latest Prius troubles have really damaged Toyota’s brand. Uncertainty
over the Prius trouble will only prompt more consumers to dump Toyota’, (McCurry,
2010). This showing that the decision quality was vital for Toyota. Next is the team commitment, this is when a decision
will have a major impact on your team, the decision that Toyota managers had to
make did have a major impact as it may lead to loss of jobs throughout the
business. In addition the damaging reputation of Toyota may also lead to cut
backs and loss of jobs. It seems throughout the recall crisis Toyotas communication
between customers and other stakeholder management was lacking the right
priorities. Finally there is the time constraints factor, Toyota missed the opportunity
to handle the recall crisis in 2007 so the opportunity to reduce damage mas not
taken advantage of this lead to limited time to handle. This lead to Toyota
implementing a process to deal with the crisis but was introduced late which
lead to lack of trust between Toyota and customers.

The Vroom Yetton model, is a
framework that consists of seven questions which will answer the best decision
making process, from the questions the model will decide the best decision making
process for Toyota and their team. Doing this process for Toyota shows that
they seemed to have an Autocratic style this is because Toyota didn’t communicate
properly with the stakeholders, In fact Akio Toyoda and his Father the Chairman
stayed fairly silent during the recalls which may had been a poor leadership decision
making this may have been very damaging for the company. What may be better for
Toyota is if they had gone for a Collaborative decision making style this is
more of a team decision, this may have been a better decision as because if
they spoke to the engineers and manufacturing team they may have realized that
this was a safety and not a quality issue, they may have been able to sort the
problem earlier. Within the consultative and collaborative style is appropriate
when information needed from people who have more insight, like for example the
engineers. However this model is not always appropriate, this is because this
model does not take into considerations like emotion or dynamics of the team,
and task complexity. This may be the case for Toyota as they didn’t want to
lose customer support as well as the issues with customer safety.

The type of power in the
business may affect how Toyota mishandled and mismanaged the Recalls, in
addition to the drop in quality of the cars and the safety risks. It seems the
power Akio Toyoda used seemed to be informational power, which is the ability
to control the information that others needed. They used this because they
controlled what the customers and other stakeholders knew, implying it was
simply a quality issue rather than a safety issue. This type of power led to
the government demanding more information about the safety issue which isn’t
good for Toyotas reputation which led to a decrease of customers and a drop in
market share.  The type of Power Toyotas
managers should have used for this decision making style is coercive power,
this is where the business punishes noncompliance. This may have been good for
Toyota to publicly punish engineers and manufacturers, who made these mistakes.
This may have shown the customers that Toyota were trying to make a change
instead of just recalling cars. It was seen that Akio Toyoda’s ‘apparent
unwillingness to take the heat sets a poor example’, (Taylor, 2010). This is
due to his late apology and total silence during the first two recalls.

 

Another way in which Toyota’s
Decision making strategy’s led to mismanagement was when Toyota became ‘the top
selling automaker in the global market place might have led to some unfavorable
changes in its supply chain management practices’, (P Anthony et al, 2011),
this showing that when Toyota had a good brand they tarnished that by using
cheaper suppliers and rushing designs which inevitably lead to a lack in
quality leading to design flaws which were dangerous for the customers and
tarnished the businesses

Core values of the ‘Toyota Way’ which May have been what
led to the recalls. This poor supply chain led to ‘Toyotas famous “just in time”
inventory strategy’ (Imaoka, 2012), this strategy may lead to using foreign suppliers
with looser ties and may be why the quality of the cars suffered.  In addition throughout all this Toyota based their operations in marketing and
communication strategies, Instead of spending more time on quality and supply’s
they instead tried to expand the reputation and increase sales and market
shares, however by not spending time on quality it led to the recalls and lack
of customer support as they were only thinking about profit instead of the
quality and safety of the car

 

When looking into Decision making its important to remember
Wilfred Bion’s, three fundamental states of mind, this includes Dependency,
fight or flight and hope. It seems for Akio Toyoda and other key executives in
Toyota they seemed to stay unusually quiet throughout the first and second
recall. In addition when looking at this from a psychological standpoint the
Managers may decide to instead use Action anxiety, which is where individuals
feel anxiety as they prepare to take action. ‘Psychology
research has shown that anxiety influences
decision making—for example, job anxiety can cause people to fixate on
potential threats, thus missing big opportunities’ (Mike Mannor et al, 2016),
this may be why managers were not able to deal with the recall crisis back in
2007. This may lead to negative fantasies, when confronting the issue with the perceived
correct action will surface. This may have been the case for Managers at Toyota
when making the important decisions in recalling and deciding their priorities.

From an Ethical standpoint a
decision making framework that may be used for businesses like Toyota is the
Consequentialist theory. This theory has two views, act and make choices in
your own self-interest and the other is to act and make choices that are the
best ‘good’ outcome for most. It seemed throughout that Toyota acted and made
choices based on their own self-interest. This is shown through ‘Toyota hid
internal test data in its ‘secret book’ and refused to hand over evidence of
safety defects involving its cars…. Toyota deliberately withheld key
information of crash victims’, (The Times, 2010), this showing that their
decision was to try and hide information that would affect their reputation
negatively. This could have led to more serious injuries for the customers and
would negatively affect the businesses reputation. After the apology and the
third recall, where there best seller ‘Prius is among Toyota’s
top-selling vehicles, its quality troubles could certainly hurt hybrid sales
and Toyota’s overall earnings’, (Booth and McCurry, 2010). However ethically Toyota recalled them
in order to be safe and they did implemented a plan to handle the crisis which
was effective but late as well as offering quality communication manager to
answer any concerns showing that they also acted and made decision that had the
best outcome for most, as they ensured the safety of many customers by
recalling over eight million cars.

In addition another Ethical decision that Toyota made was
that According to Bowen’s reading of the 2009-2012
media stories, ‘from 2004 to 2009 Toyota uncovered a wide range of problems
that created safety issues, but rather than addressing them proactively the
company instead would often deny there were problems or try to shift blame’ (Eurekalert,
2015). This showing that they were more interested in the maintaining there
reputation and brand image then the safety of the consumers, this showing that
the Decision makers of Toyota at the time decided to be unethical which damaged
the business. Toyota even tried to shift the blame to suppliers and incompetent
drivers, showing they were trying to save their brand image by blaming other
stakeholders.

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