In this assignment, you will submit your final operations improvement plan (OIP)
ID: 429788 • Letter: I
Question
In this assignment, you will submit your final operations improvement plan (OIP). Your final OIP should be divided into five basic components:
Process Identification.
Process Improvement.
Defining the Problem Statement.
Measurement Strategy.
Data Collection and Evaluation Tools.
You have developed each of these components as individual assignments and you have updated them as your OIP has developed. Take into consideration all of the research and groundwork you have completed thus far. Incorporate feedback from previous assignments as well as the tools, techniques, and methodologies you have examined throughout the course. Finalize your comprehensive OIP as if you were to present it as a formal recommendation to the organizational leaders of the Toyota Motor Corporation. Focus your writing appropriately for that audience.
Your final OIP should include the following elements:
A problem statement, including an overview of the Toyota recall crisis, with a brief history and description of the situation.
A description of the key challenge or problem you have chosen to address in Toyota's organizational processes, and an analysis of its organizational impact, based on theories and models of global operations management.
An executive summary of the collected and processed data (actual data, if possible, or assumed data, if necessary).
A cost-benefit analysis based on your data.
A description of your innovative and sustainable solution that reflects strategic global operations management concepts and practices.
Your recommendations for supporting the improvement of the selected process, based on practices of global operations management.
An explanation of the data or findings that validates your recommendations.
The visuals, diagrams, and flowcharts you have developed to support and integrate your analysis into general business management planning and decision-making processes.
A conclusion.
A comprehensive reference list.
Explanation / Answer
Running Head: Operations Improvement Plan - Toyotas recall crisis
Operations Improvement Plan
Toyotas recall crisis
HK Manji
Chegg.com
The problem statement:
There are multiple reasons that caused Toyotas recall crisis. It includes supply chain mismanagement and its stringent cost control etc. The root on ethical dimension also should be investigated. These are:
An overview of the Toyota recall crisis:
Originally, it attributed the safety issue to the floor mats and denied defective vehicles design; subsequently, its quality problems cannot be covered up any longer. Consequently, in order to protect its own business interests and corporate image, Toyota took the chances and did not recall involving vehicles. Even when appearing in the U.S. Congressional hearings, Toyoda firmly insist that electronic throttle control system has nothing to do with the safety issue, throwing the issue of pedal safety to Toyotas suppliers. According to U.S. lawmakers, more specifically, Toyota hid internal test data in its secret book and refused to hand over evidence of safety defects involving its cars. At the same time, documents obtained by the Congressional Oversight and Governmental Reform Committee demonstrated that Toyota deliberately withheld key information of crash victims. Finally, Toyota could not hide about its intention to try to conceal the defect or reduce the recall range, which is also a direct challenge to its reputation.
A brief history and description of the situation:
Toyota could not effectively adhered to ethics and managed public relations in the United States, Apart from its quality defect, more and more people began to accuse of Toyotas loss of ethics as a big business before and during its recall. Despite under multi-accusation and criticism, lacking initiative, Toyota did not respond timely. Clearly, Toyotas approach is not a right one that a responsible company should adopt when problems exist. To some extent, this is not a blunder of its decision-making but the lack of business ethics.
Toyotas CSR policies should be accountable for this activity. Toyota adopted the reactive one unfortunately; it did not make an active response, let alone an effective one. Toyotas reaction is passive and slow all the time, which also illustrated its attitude as prevaricated, procrastinate and arrogant. The company lost sight of its long-term philosophy, a key principle behind The Toyota Way.
A description of the key challenge or problem:
Toyota's crisis management could be improved by adhering to the following recommendations:
- Restore the Situation;
- Re-establish Image and Credibility;
- Revise its Vulnerabilities.
An analysis of its organizational impact:
Dimensions of quality that were not properly addressed by Toyota, prior to this crisis are:
An executive summary of the collected and processed data:
1. General Background of Toyota:
Toyota Motor Corporation is a multinational corporation headquartered in Japan. Through tremendous development, it currently boasts about 183 billion in annual sales and is the worlds largest automaker, which has the business of which covers many countries and territories including America, Europe, Africa and Asia (Pride et al, 2009, p243). Since its foundation, Toyota continuously conducted business activities under the guiding principle of contributing to the development of a prosperous society through the manufacture of automobiles. The guiding principle, as well as Toyotas CSR policies, serves as the foundation of its business (Toyota Official Website, 2010). However, now Toyota faces a series of embarrassment caused by its vehicle recall. In the beginning of 2010, due to a defect in its accelerator pedals, the company recalled eight million cars around the world. The global large-scale recall focalized Toyota once again.
2. Ethical Problem Involved in Toyotas Recall:
Apart from its quality defect, more and more people began to accuse of Toyotas loss of ethics as a big business before and during its recall. Despite under multi-accusation and criticism, lacking initiative, Toyota did not respond timely. Originally, it attributed the safety issue to the floor mats and denied defective vehicles design; subsequently, its quality problems cannot be covered up any longer. In order for protecting its own business interests and corporate image, Toyota took the chances and did not recall involving vehicles. Even when appearing in the U.S. Congressional hearings, Toyoda firmly insist that electronic throttle control system has nothing to do with the safety issue, throwing the issue of pedal safety to Toyotas suppliers. More specifically, according to U.S. lawmakers, Toyota hid internal test data in its secret book and refused to hand over evidence of safety defects involving its cars. At the same time, documents obtained by the Congressional Oversight and Governmental Reform Committee demonstrated that Toyota deliberately withheld key information of crash victims. Finally, Toyota could not side track its intention to try to conceal the defect or reduce the recall range, which is a direct challenge to its reputation.
Toyotas approach appears to be not at par of a responsible company should adopt when problems exist. This is not only a blunder about its decision-making but also the lack of business ethics to some extent.
3. Effects of the Ethical Problem to Toyota:
Toyotas recall problem seems not to be curbed but ever-widening. Toyota still has to face the U.S. criminal probe and litigation even after having recalled a wide scope of vehicles. The fact that is more severe, having been its market seriously affected. The company also suffered a crisis of confidence worldwide, which is a serious threat to the worlds top-ranked automaker undoubtedly. It appears that Toyota paid a terrible price due to ethical dilemma rather than quality problems.
A cost-benefit analysis based on the data:
Toyota exceeds General Motors in 2008 as the worlds largest automaker. In the process it introduced a relentless cost control procedures reducing its concern for quality simultaneously. Toyota acknowledged that in the past decades, it was committed to expanding business scale and economic benefits, elevating market share and lowering costs; while giving up priority to product safety.
While expanding its global scale Toyota has been addicted to the competition with General Motors. However, its proud Lean Manufacturing loses control after rapidly spreading all over the world, with the balance between minimum cost and optimal products being broken. In order to maintain constant revenue, Toyota place cost reduction overwhelmed, largely abandoning stakeholders interests; therefore its product quality problems are boomed to arise. In a sense, it is because Toyota ignored a balance of interests of stakeholders that contributed to its present ethical dilemma.
A description of innovative and sustainable solution that reflects strategic global operations management concepts and practices:
1. Violation in Corporate Social Responsibility (CSR):
Toyota gradually went away from the traditional Corporate Social Responsibility (CSR) it has been proud of in a sense in the harsh reality of cut-throat competition. Toyota attached great importance to economic benefits but neglected Corporate Social Responsibility (CSR).
Corporate Social Responsibility comprises of three concepts, which include Corporate Social Responsibility (CSR1), Corporate Social Responsiveness (CSR2) and Corporate Social Rectitude (CSR3). It is viewed as a business concern for societys welfare; a capacity to treat the stakeholders of the firm ethically in a responsible way, as interpreted by the renowned managers considering both the long-range interest of the company and its harmonious relationship to the surrounding society. Hopkins suggested that it is to create the higher and higher standards of living for people both within and outside the company as its wider aim, while preserving the profitability of the corporation.
CSR2 can be reactive, defensive or responsive. Toyota adopted the reactive one unfortunately; it did not make an active response, let alone an effective one. It was not until the crisis went beyond control that Toyoda appeared to apologize to the consumer and explained the situation. Toyotas reaction was passive and slow all the time, which also illustrated its attitude as prevaricated, procrastinate and arrogantly undisputed in its CSR2 process.
When it comes to CSR3, it refers to the moral correctness of the policies or actions taken. Frederick in 1987 indicated CSR3 involved a pervasive sense of rightness, respect and humanity that would put publics values and ethics at the center of the companys concern, policies and main decision-makings. However, in its recall process, Toyota treated consumers in different regions in significantly differentiated way. Compared to the large amount of recalled vehicles in U.S. and European markets, the number of those in Japanese, in particular Chinese market was very small. In China, the worlds fourth largest market of Toyota in 2009, the recalled number was only 75,552, only accounting for one-tenth of Toyotas total sales in China, and one-third of the quantity recalled in Japan. What is more, type recalled is only the RAV4, while others are excluded. However, they belong to the list of Camry, Corolla and Highlander that has been recalled in U.S. market. Meantime, observant people have found such a delicate situation. In the U.S., in addition to apologizing, Toyota would also pay a high cost, which was comprised of not only the huge recall loss and kinds of fine, but also claims, from U.S. consumers. Yet for Chinese consumers, Toyota was unwilling to provide alternatives, let alone financial compensation. Undeniably, Toyota is quite familiar with the hidden rules in Chinese auto market, where a comprehensive recall system has not been established, and it is adopting an appropriate way in accordance with Chinese law to deal with the recall. However, for Toyota---a company who always seek excellence, not breaking the relevant laws and regulations is not enough to convince people. In the CSR3 context, Toyota did not serve Chinese customers who are the same important to it equally, although its discrimination against Chinese consumers is not an ethical behavior within the law.
Source: China News (up to 10 February, 2010)
2. Toyota puts its Focus on Shareholders but not Stakeholders:
From a general view it seems that corporate stakeholders show the trend of proliferation and diversification. Therefore, it is necessary to clarify and thus effectively balancing the interests and needs of various stakeholders. To achieve this, it can draw reference to the Shareholder and Stakeholder Model. The Shareholder Model, known as an external and independent orientation, is to improve the wealth prospects of investors. On the other hand, firms who adhere to the Stakeholder Model promote an internal control focus and will promote its performance and thereby offer favorable returns for stakeholders who share an interest in the company. This will stimulate a supportive and positive environment for the company. In the recall, the stakeholders facing Toyota is not just consumers, but also government, regulators, competitors and media etc. Hence, Toyota should not only be quick to solve problem in recall, but also be cautious to balance its stakeholders expectations and needs. Kakabadse (2004) pointed that the pursuit of profit for shareholders may become secondary when aim of Shareholder Model sharply conflict with the broader stakeholders requirements. Put in another way, Stakeholder Model should be preoccupied with wealth creation for shareholders; if not, there will remain great contradictions between corporate economic benefits and stakeholders interest, leading enterprises into ethical censure. Toyotas recall problem is a typical one.
Recommendations for supporting the improvement of the selected process, based on practices of global operations management:
A. Restoring the Situation:
Now the primary task for Toyota is to contain the intensified situation. It has been found that product recall has become one of the recognized best practices to maintain corporate reputation when quality problem and crisis emerged. So it is acceptable that Toyota recall all of its defective vehicles regardless of their amount. Although great expenditure on recall is unavoidable and the brand may be frustrated severely, but consistent large-scale recall will allow consumers to experience Toyotas sincerity and faith; that is, its ethical commitment as a responsible big business, which will enable Toyota to win more loyal customers. From the viewpoint of long-term, it is still beneficial and adoptable. At the same time, compared with that about its vehicle defects, the criticism is more about Toyotas passive attitude. So Toyota should lower its profile to actively cooperate with all involved stakeholders including those investigation departments to expect a clear description of the incident.
B. Re-establishing Image and Credibility:
Toyotas original good image in the minds of consumers has been subverted because of the recall to a certain extent. If Toyota had made sincere response to consumers, the product problem may not turn into huge crisis. So it is urgent for Toyota to take positive actions and re-establish its image and credibility. Some practical ways to be considered are as follows:
C. Revise its Vulnerabilities:
Business ethics can be achieved by management as the same as a companys commercial objective. Communication plays an essential role among them. Besides, the reason why Toyota fell into troubled water is not just confined to those ones stated above; it is also because Toyota failed to meet the expectations of international media and consumers to handle problem diplomatically because there were flaws in respect of its communication management. In fact, Toyota still followed the traditional Japanese-style communication, which is often procrastinate and burdensome as a multinational corporation. Meanwhile, as far as the balance between the interests of stakeholders is concerned, the issue worthy to review for Toyota is still its communication management with stakeholder. Nevertheless, it is never too late to correct. The lessons drawn from this crisis is that Toyota should stress and enhance its communication management. Moreover, strategic communication should be emphasized for Toyota, which must not only be used as a means or method of conflict resolution, but also as a tactic from the strategic perspective. It is far enough to launch kinds of internal and external communication mechanisms to establish strategic communication; various communication methods, such as international public relations, lobbying and advertising etc. should be viewed as the most important strategy. Toyota should pay more attention to the communications great influence for multinational company to solve or eliminate ethical conflict.
Conclusion:
Laura Hartman, the past president of the Society for Business Ethics, said that business ethics, whose focus is on corporate citizenship and ethical management behaviors, recognizes principled leadership, moral awareness and participates in social changes. In the process of internationalization of business, the biggest challenge a company is facing derived not only from its business objective, profit, the strategy or the technology; but also from the lack of business ethics, which support its very ongoing survival. Toyota is one that suffered ethical crisis caused by its vehicle recall. It attached more importance to economic benefits than Corporate Social Responsibility, and also focused on shareholders but not stakeholders which produced its current ethical dilemma. As can be seen from the Toyota case, an enterprise, however big may be, must respect ethical issues. An effective communication, as a tactic or a strategy, can help to solve ethical conflicts and balance interests of stakeholders in this regard.
In short, business ethics is going from the edge to the center of management and becomes the strategy of corporation. So any corporation should value ethics and regard it as the starting point of any decision-making and action. Only when its wealth objective is consistent with the expectations and request of both the public and society, it can get enough support and achieve further success.