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    Case Study

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    yathsih24885
    Toyota is known for its quality and organizational structure focused on problem-solving, but it faced a major recall crisis in 2009. Toyota's success was built on its "just-in-time" production system and empowering assembly workers, but rapid growth strained resources and slowed responses. When vehicle defects emerged in 2009, Toyota was slow to issue recalls in the US. Its centralized power structure with decision-making authority concentrated in Japan may have contributed to the delayed response. The organizational structure presents both opportunities for learning from the crisis but also risks from reacting slowly to external threats due to its rigid culture and seniority-based hierarchy.

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    Case Study

    Uploaded by

    yathsih24885
    170 views2 pages
    Toyota is known for its quality and organizational structure focused on problem-solving, but it faced a major recall crisis in 2009. Toyota's success was built on its "just-in-time" production system and empowering assembly workers, but rapid growth strained resources and slowed responses. When vehicle defects emerged in 2009, Toyota was slow to issue recalls in the US. Its centralized power structure with decision-making authority concentrated in Japan may have contributed to the delayed response. The organizational structure presents both opportunities for learning from the crisis but also risks from reacting slowly to external threats due to its rigid culture and seniority-based hierarchy.

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    Toyota is known for its quality and organizational structure focused on problem-solving, but it faced a major recall crisis in 2009. Toyota's success was built on its "just-in-time" production system and empowering assembly workers, but rapid growth strained resources and slowed responses. When vehicle defects emerged in 2009, Toyota was slow to issue recalls in the US. Its centralized power structure with decision-making authority concentrated in Japan may have contributed to the delayed response. The organizational structure presents both opportunities for learning from the crisis but also risks from reacting slowly to external threats due to its rigid culture and seniority-based hierarchy.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    170 views2 pages

    Case Study

    Uploaded by

    yathsih24885
    Toyota is known for its quality and organizational structure focused on problem-solving, but it faced a major recall crisis in 2009. Toyota's success was built on its "just-in-time" production system and empowering assembly workers, but rapid growth strained resources and slowed responses. When vehicle defects emerged in 2009, Toyota was slow to issue recalls in the US. Its centralized power structure with decision-making authority concentrated in Japan may have contributed to the delayed response. The organizational structure presents both opportunities for learning from the crisis but also risks from reacting slowly to external threats due to its rigid culture and seniority-based hierarchy.

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    Organizational Structure: The Case of Toyota

    Toyota Motor Corporation (TYO: 7203) has often been referred to as the gold standard of the automotive
    industry. In the first quarter of 2007, Toyota (NYSE: TM) overtook General Motors Corporation in sales for the
    first time as the top automotive manufacturer in the world. Toyota reached success in part because of its
    exceptional reputation for quality and customer care. Despite the global recession and the tough economic
    times that American auto companies such as General Motors and Chrysler faced in 2009, Toyota enjoyed
    profits of $16.7 billion and sales growth of 6% that year. However, late 2009 and early 2010 witnessed Toyotas
    recall of 8 million vehicles due to unintended acceleration. How could this happen to a company known for
    quality and structured to solve problems as soon as they arise? To examine this further, one has to understand
    about the Toyota Production System (TPS).
    TPS is built on the principles of just-in-time production. In other words, raw materials and supplies are
    delivered to the assembly line exactly at the time they are to be used. This system has little room for slack
    resources, emphasizes the importance of efficiency on the part of employees, and minimizes wasted resources.
    TPS gives power to the employees on the front lines. Assembly line workers are empowered to pull a cord and
    stop the manufacturing line when they see a problem.
    However, during the 1990s, Toyota began to experience rapid growth and expansion. With this success, the
    organization became more defensive and protective of information. Expansion strained resources across the
    organization and slowed response time. Toyotas CEO, Akio Toyoda, the grandson of its founder, has conceded,
    Quite frankly, I fear the pace at which we have grown may have been too quick.
    Vehicle recalls are not new to Toyota; after defects were found in the companys Lexus model in 1989, Toyota
    created teams to solve the issues quickly, and in some cases the company went to customers homes to collect
    the cars. The question on many peoples minds is, how could a company whose success was built on its
    reputation for quality have had such failures? What is all the more puzzling is that brake problems in vehicles
    became apparent in 2009, but only after being confronted by United States transportation secretary Ray
    LaHood did Toyota begin issuing recalls in the United States. And during the early months of the crisis,
    Toyotas top leaders were all but missing from public sight.
    The organizational structure of Toyota may give us some insight into the handling of this crisis and ideas for the
    most effective way for Toyota to move forward. A conflict such as this has the ability to paralyze productivity
    but if dealt with constructively and effectively, can present opportunities for learning and improvement.
    Companies such as Toyota that have a rigid corporate culture and a hierarchy of seniority are at risk of reacting
    to external threats slowly. It is not uncommon that individuals feel reluctant to pass bad news up the chain
    within a family company such as Toyota. Toyotas board of directors is composed of 29 Japanese men, all of
    whom are Toyota insiders. As a result of its centralized power structure, authority is not generally delegated
    within the company; all U.S. executives are assigned a Japanese boss to mentor them, and no Toyota executive
    in the United States is authorized to issue a recall. Most information flow is one-way, back to Japan where
    decisions are made.
    Will Toyota turn its recall into an opportunity for increased participation for its international manufacturers?
    Will decentralization and increased transparency occur? Only time will tell.

    DISCUSSION QUESTIONS
    1. Do you think Toyotas organizational structure and norms are explicitly formalized in
    rules, or do the norms seem to be more inherent in the culture of the organization?
    2. What are the pros and cons of Toyotas structure?

    3. What elements of business would you suggest remain the same and what elements
    might need revising?
    4. What are the most important elements of Toyotas organizational structure?

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