BADM64_ProjectSubmission2_Toyota(2)

BADM64_ProjectSubmission2_Toyota(2) - Too Big to Fail? The...

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Too Big to Fail? The Toyota Motor Corporation’s Recall Problem Marilyn Cummings, Sarah Dalia, Victoria Diez, and Chidi Ibez 10/12/2010
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Executive Summary Since its U.S. operations began in 1957, the Japanese-owned Toyota Motor Corporation has emerged as the leader in quality and customer satisfaction. Their production system known as TPS revolves around “built-in quality” and has been modeled in businesses outside of the automobile industry. Today, in a twist of irony, the world’s leader in automotive manufacturing and sales faces the largest recall in its history. An elective safety recall involving a motor vehicle occurs when a vehicle proves unsafe or unreliable. The manufacturer files a public report with the National Highway and Traffic Safety Administration describing the defect or noncompliance with NHTSA standards 1 . The company must notify owners of recalled vehicles of the risk posed by the defect with , a description of the free remedy, and directions for what owners can do in the interim. To date, Toyota has distributed 2.3 million notification letters to the owners of 64 Toyota-Lexus models that are expected to suffer from unintended acceleration or accelerator entrapment problems. Not only has this cost the This has cost the industry leader not only $5.5 billion in fees, lawsuits, and expenses but it also has put laid their reputation at great risk. on the line . While the root cause of the recalls has been contested in the Press, the biggest weakness revealed is the company’s convoluted and inefficient reporting structure. If vehicle problems are not detected in the factory through rigorous safety tests , they become apparent to consumers on the road. Customers provide dealerships with feedback through in-person and over-the-phone complaints (i.e. and bringing their vehicles in for servicing ) . Yet, currently At present, there is no centralized information system to capture this type of data at the dealership level and relay it to 1 http://www-odi.nhtsa.dot.gov/cars/problems/recalls/recallproblems.cfm
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the key decision makers at the corporate level. Perhaps Toyota’s rapid growth has finally caught up to the automotive giant, but the time has come to recognize that no amount of regional offices or face-to-face meetings can compensate for a lack of an information system infrastructure to provide top-level decision-makers with business-critical data .
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Customer Moment of Value Jim Press, president of Toyota Motors North America, claims that Toyota’s main philosophy is to “enrich society through the building of cars and trucks”. According to Press, this idea serves as the plateau for Toyota’s daily goal of ensuring customer reliability and mobility. The company also aspires and believes it is their obligation to build better cars and be
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BADM64_ProjectSubmission2_Toyota(2) - Too Big to Fail? The...

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