Toyota Example of Crisis Communications Fail

TOYOTA: EXAMPLE OF CRISIS COMMUNICATIONS FAIL 8

Abstract

The current vehicle recalls by Toyota Corporation raises concerns onthe company’s effectiveness to communicate with the public. Mediafocus and administrative intervention over the issue of its faultycars, kept Toyota on the limelight. The communication crisisuncovered the influence of social media as a powerful communicationtool. It is impossible for companies to control social media. Hence,they have to ensure that during a crisis, they employ the platform tocommunicate transparently to the public. Communication is paramountto the success of a company. Specifically, during a crisis, companiesshould use social media wisely to ensure transparency concerning thepredicament.

Crisis communications are the messages distributed by companies toexternal and internal sources when facing a problem. Regardless ofthe form of communication, selected, effective crisis communicationdepends on the capability of the company to ensure transparency. Anyattempts to conceal the crisis taint the image and destroys the trustof the company to the public. Toyota is an illustration of crisiscommunication failure. In 2010, the company was compelled to recallits cars following issues that the accelerators were faulty. Toyotatook long to respond to the crisis, in addition to providingconflicting information. The outcome was a massive drop in sales,poor reputation and reduced consumer loyalty (Hein, 2010).

Problem Identification

The image and brand of the company is damaged due to the extensiverecalls, covered by media prompting reactions from clients andshareholders. Toyota’s mission is in guaranteeing its clientsquality and excellent car manufacturing. However, with the millionsof vehicles faulty, Toyota’s mission statement raises doubt. Apartfrom selling a life-threatening product, more doubt arises fromrecent information on the company’s acceptance to pay $1.2 billionsettlement, aimed at concluding investigations over the acceleratorissue (Douglas &amp Fletcher, 2014). It creates the presumption inthe public’s mind that Toyota was aware of its faulty vehicles, butignored to notify NHTSA of the need for immediate recalls.

Lack of transparency is another problem facing Toyota. The companywas aware of the crisis from 2002, which it attributed to an electricproblem. Later, the fault was said to be due to sticking floor mats.Years later to 2010, the company still provided misleadinginformation to the public and NHTSA, with emerging proof that thechallenge may be attributed to the accelerator pedal itself (Hein,2010). Toyota was more focused on saving the image of the companythat it gave minimal consideration on the impact of not beingtransparent with the public. It was only after people started to diewhile driving the product that Toyota started to provide informationon the crisis. Additionally, Toyota’s social media communicationlacks professionalism in addressing clients and investors. Thetwitter and facebook have minimal information concerning the crisis.

The recalls negatively affect the company in general through reducedsales. Other stakeholders affected include managers, investors,workers and customers. The managers are faced with the task ofredeeming the status of the company, as well as resolving thenumerous case files from customers. The reduction in profit andfinancial status of Toyota means investors may choose to invest inother companies. It also poses a threat to workers unaware of thepermanency of their jobs. The company may resort to downsizing as ameasure to save costs and reduce further losses. Stakeholders thatbenefit from the crisis are Toyota’s competitors. More clients willopt to purchase vehicles from other automobile manufacturers, whomthey suppose will provide safer vehicles.

Resources

It is obvious that Toyota will spend a lot of money in solving thecrisis. There are financial costs linked with the problem. Resourcesavailable include the money that the company will use. It isimportant that Toyota recalls all faulty vehicles and ensures thatprior to their release they have been counterchecked to avoid arepeat of the crisis. The company will have to pay all theindividuals that have been affected by their faulty vehicle, afterdecisions have been made by the court, to resolve the numerous casesfiled against the company. In addition, Toyota will use money to paygovernment. Another resource is social media. By realizing that thecommunication culture is changing, Toyota will need to employ thenumerous communication channels in reassuring clients that the crisisis being managed. It also ensures that they maintain transparencywith the public.

Recommended Solutions

The initial step taken by the company in dealing with the crisis wasthe recall of all faulty vehicles. Hence, their trust is reducedmaking it less likely that new customers will purchase from them. Thefirst recommendation lies in restoring clients and investors’loyalty to Toyota (Heller &amp Darling, 2012). This means that extrasteps will need to be taken in ensuring that more clients do notconsider the option of competitors. To restore trust, the companymust be candid and employ a personal approach in handling affectedclients. Although they may have to respond to many press and publicquestions, they need to ensure that they maintain honesty allthrough. In the past it has been apparent that providing conflictinginformation has only been detrimental to the company. Thus, byproviding truthful information, it is possible that clients will onceagain rebuild their trust in the products. Though press releases andpublic communication will communicate the remorse of the company tothose affected, it is important that Toyota consider a more personalapproach to handling those that have been affected. For instance,company representatives can be assigned the role of directly dealingwith customers that report issues related to faulty vehicles.Personal approach may also be achieved through offering free servicesto clients, which endorses them to return their cars for timelyrecall.

Toyota should adopt the effective use of social media networks. Thenetworks are an opportunity for the company to ensure transparency byconstantly posting about their crisis management progress. Thecompany’s twitter account in Europe is rarely active, which appliesto that in Canada (Hein, 2010). Social media, which involve twitter,facebook and blogs, have altered the way news spread. Althoughconventional communication channels, like television, newspaper andradio may still be effective, they do not provide the samecommunication effect as social media. News spread faster throughsocial media and it is easier to reach a larger percentage ofreaders. Social media also facilitates the exchange of ideas amidreaders. This means that people can comment and review news. Notably,social media is not controlled. In conventional communicationchannels, it is possible for a company to state what information theywant publicized. Contrary, anyone with information about a companycan simply post the information online making it public withinseconds of disclosure, in turn raising public debate.

Toyota should form a crisis management system, which ensures thatthe company is prepared for such crisis (Rajasekera, 2013). Therecommendation makes sure that during a crisis, Toyota has all theapplicable strategies to handle and communicate the problem to thepublic. It solves the problem of providing conflicting information tothe public by ensuring that solely the crisis management departmenthandles the crisis. The system responds to the needs of stakeholders.Investors will need to be informed the impact of the crisis on thecompany. Similarly, workers will need reassurance that their jobs aresecure. It also ensures that clients who recall their vehicles areappropriately compensated.

Implementation

The public relations department is tasked with the responsibility ofmarketing the company. The recommended solutions will be implementedthrough the public relations employees. Creating social mediaplatforms is an easy task, which can be assigned to an expert in thefield. The employee should also follow up on social media and ensureconstant updates and responses to the public. Toyota cannot stay putwaiting for the problems to be resolved. It should concentrate onwinning back loyalty as soon as possible. This means offering highlydeveloped features and better quality products. It should put forwardbetter value for clients, ensure that safety is paramount in itsproducts and enhanced fuel efficiency. Company engineers should alsobe involved in implementation of the solutions. The engineers areaccountable for guaranteeing that all vehicles are in perfectcondition prior to release. This time engineers will have to takemore measures in ensuring safety.

Evaluation

The crisis communications recommendations are necessary inempowering the company to communicate with clients, investors andemployees (Rajasekera, 2013). Disseminating information on its own isnot effective because the information should be managed.Implementation of the solutions will be effective. By using socialmedia to communicate, clients and investors are able to get feedbackon their concerns. The endeavor slowly restores their loyalty toToyota. A personal approach towards customers demonstrates that thecompany realizes its mistakes and is apologetic. It is expected thatthe customer will feel that their issues are considered and resolved.Thus, they may opt to still purchase the company’s vehicles. Thecrisis management system effectively avoids and tackles such anincident in prospect. This ensures that the company reduces negativepublic coverage and is able to recover from the crisis eventually.

References

Douglas, D &amp Fletcher, M. A. (2014, Mar. 19). Toyota reaches $1.2billion settlement to end probe of accelerator problems. TheWashington Post. Retrieved from http://www.washingtonpost.com/business/economy/toyota-reaches-12-billion-settlement- to-end-criminal-probe/2014/03/19/5738a3c4-af69-11e3-9627-c65021d6d572_story.html#

Hein, A. (2010, Mar. 30). Toyota: Example of a Crisis CommunicationFail. The Cline Group. Retrieved fromhttp://www.theclinegroup.com/2010/03/30/toyota-example-of-a-crisis- communications-fail/

Heller, V. L &amp Darling, J. R. (2012). Anatomy of crisismanagement lessons from the infamous Toyota Case. EuropeanBusiness Review, 24 (2), 151-168.

Rajasekera, J. (2013). Challenges to Toyota Caused by RecallProblems, Social Networks and Digitisation. Asian Academy ofManagement Journal, 18(1), 1-17.