CRISIS MANAGEMENT

Presented By Heena Ajwani - 05 Anagha Bansod - 07 Zulfikar Chandiwala - 12 Ravina Hemrajani - 24 Vandana Nagrani - 39 Saquib Shaikh - 58

Introduction

Toyota was founded in 1937 with its headquarters in Japan Since its inception, Toyota has grown to become the worlds leading manufacturer It also held the label of being the most lucrative vehicle manufacturer in 2006

Introduction
Toyota has based its business success on three main pillars: 1. Focus on quality 2. Toyota Production System (TPS) that has been widely recognized and admired by other auto-manufacturers 3. Design and build the vehicles based on most innovative and advanced technology

These foundational principles have been serving Toyota well over the years and allowed it to achieve the status of not only the biggest auto manufacturer in the world, surpassing the long-standing position of General Motors in that capacity, but also the most profitable carmaker.

However the end of 2009 and the beginning of 2010 have been marked as one of the darkest periods in the automakers history, when not only the safety of their vehicles, but also the business reputation, integrity, and trustworthiness of the company had been called into question

The beginning of a Crisis

It all started with the horrifying crash on August 28, 2009 when a family of four died in a 2009 Lexus ES 350 which accelerated out of control to the estimated speeds in excess of 100 mph. The phone call placed by one of the occupants in the vehicle indicated that the car had no brakes.

The beginning of a Crisis

This incident severely tormented the reputation of Toyota globally Toyota faced a nightmare situation for any brand, but particularly for one that staked its reputation on safety and quality

Toyota reported a record annual net loss of US$4.2 billion

What happened next :

Toyota was forced to recall 2.4 million cars after problems with braking, floor mats and acceleration pedals in its vehicles.
The recalls led Toyota to stop sales and production of eight of its most popular models.

After the recalls, Toyota went into crisis management mode and announced a fix for the accelerator problem

What is Crisis Management?

Crisis management is the process by which an organization deals with a major event that threatens to harm the organization, its stakeholders, or the general public. Three elements are common to most definitions of crisis: (a) a threat to the organization, (b) the element of surprise, and (c) a short decision time.

Importance of PR in crisis management

Develops good relations with customers. Helps to Build and create reputation and image of the company. Maintains Companys Credibility. Way of communication

Toyotas response to Crisis

Various crisis management initiatives were undertaken by Toyota to regain the trust of customers and restore its image as a quality automaker.

As part of its crisis management process, Toyota placed ads in print and television media, involved executives and used social media platforms to address its customers.

Toyotas response to Crisis

Toyotas response to the crisis are listed as follows: It recalled 8-10 million of its Toyota and Lexus vehicles sold worldwide.

Toyota promised to beef up quality control and said he would head a special committee to review quality checks, go over consumer complaints and listen tooutside experts to develop a fix.
Set up customer relations handling complaints and delivering service for faulty brakes

Toyota made changes to its website in an attempt to win over customers trust again

Toyota CEO apologized publicly for accidents that occurred

Did it work ?
No.

The response given by Toyota was late and didnt satisfy its customers. Some of the reactions from public:"Toyota needs to be more assertive in terms of providing consumers comfort that the immediate problem is being addressed and that it can deal with these crises," said ShermanAbe, a business professor at Hitotsubashi University in Tokyo. The PR should be dealing with the media convincingly which is very important in critical situations.

Reasons for failure :

We may infer at least two problems that existed in the company at the time: Lack of understanding by the company top executives of the potential gravity of the situation and its negative repercussions

Absence of the clearly developed policy and procedures for managing public relations in situations involving high-profile issues of consumer safety

Recent news:
Toyota Motor Corporation President Akio Toyoda spoke at a press conference in Japan and announced that he would personally take a lead toward improving the quality around the world by establishing a global quality task force The highlights of his plan were as follows: Improve Quality Inspection Process Enhance Customer Research Establish an Automotive Center of Quality Excellence Support from Outside Increased Communication Improve regional autonomy

Recommendations by PR experts
Develop formal policy and internal communication procedures that can be activated the moment the crisis occurs Communicate quickly and as accurate as possible under the circumstances. Do not delay initial communication until all fact-finding is complete. Give immediate acknowledgment of the issue and reassurance that the company is working on the solution

Recommendations by PR experts
Establish direct and candid relationship with the media through issuance of timely news releases, answering media inquiries, conducting live press conferences, utilizing internet communications for frequent updates Adopt the policy of honest of and full disclosure of the companys findings Always follow up and, where appropriate, make amends to those affected.

Conclusion
Toyota being one of the worlds largest automaker should ensure efficient crisis management and Public relations in order to protect their reputation and retain their customers in the market. Effective steps should be taken in order to reinstall their quality and reliability of their products. The defects in their product design have to be corrected and safety of the customer should be ensured. It should formulate and plan for crisis and respond to the public immediately without delay and ensure trust among the customers.

BIBLIOGRAPHY
1. http://parttimembadegree.com/business-schoolcases/toyota-recalls-pr-management-crisis/ 2. http://sixestate.com/0413-case-study-toyotas-social-mediaoutreach/ 3. http://prpretaporter.wordpress.com/2011/09/06/crisismanagement-toyota-case/

4. http://www.scribd.com/doc/51601975/CRISISMANAGEMENT-AT-TOYOTA
5. http://www.youtube.com/watch?v=7fHL1Ug7Y0&feature=relmfu

Thank You