Analysis of the Toyota Scandal

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The Toyota Scandal from 2007 to 2010, which entails the company recalling more than 6 million care of their eight hot-selling models, has been selected for analysis. The issue was a major crisis that not only involved huge cost but also resulted in a significant problem related to corporate ethics and production.

Explanation and Analysis of the Major Ethical Challenge Facing the Corporate Leadership

 The biggest ethical challenges that the company faced regard trust and honesty. Before recalling the faulty cars, the organization has delayed in responding to the claims and even denied stating that the driver has pressed the wrong pedal. Further, the firm first argued that the floor mat was faulty and later changed their reasons for malfunctioning computer cable, which impacted the performance of the engine. Toyota is one of the corporations known for producing quality vehicles. The company had become a benchmark for many other institutions across the world and symbol for effective and quality operations (Chin, Chan & Lam, 2008). However, for the last few years, the organization has been struggling to offer safe cars. The problem is not experienced in a single brand or region, but multiple products and various locations around the world. As such, the firm has been recalling one model after the other, which shows that corporate leadership has lost its vision of offering quality vehicles. Developing and releasing defective products to the market has created considerable trust issues from the customers. As such, people have been losing the confidence of the market, which has resulted in a significant decrease in Toyota’s market share (Chin, Chan & Lam, 2008).

Analysis of the Corporate Leadership's Response to the unfolding Scandal

Skills and Competencies a global leader should have

 The organization’s leadership handles the case by attempting to communicate with the customers and dealers where they explain transparently that some things had gone wrong. They also showed that the company was made up of people that were dedicated to quality.  They launched as a campaign in Europe named “Your Toyota is My Toyota.”  Further, leaders such as Akio Toyoda apologized and explained that the company was fully committed to working transparently to reestablish its reputation (Jokinen, T2015). The customers and dealers supported the organization as they appreciated that the firm had made effort to contact them individually.

Another important strategy the firm’s leadership used regards improving the firm’s brand. Akio Toyoda considered the approach as one of the most critical milestones for recovery. They reestablished the guidepost so that each person at the Toyota confirmed the corporation’s vision, which reemphasized the foundations and values of the brand: quality and safety as well as a contribution to the society (Chin, Chan & Lam, 2008). Hence, the strategy allowed Toyota to exceed the customers’ expectations. In addition, they began developing brand architecture with regions under the Haroshi Takada, the head of the Toyota sales and marketing with the goal of redefining their brand journey. During the next 18 months, the role of the leaders was to listen, understand, analyze, and suggest as well as inspire. Each plant would implement their own plans adhering to the same framework and transparency became the rule at all levels of production (Chin, Chan & Lam, 2008). Toyota made considerable effort to impress the customer, which would in turn improve their brand.

Leadership Skills and Competencies were lacking in Corporate Leadership

 Toyota’s leadership was lacking the ability to maintain a commitment to quality. At some point, they became more focused on increasing manufacturing activities and profits rather and forgot the importance of quality of the products generated. Further, the company failed to recognize that building and maintaining commitment is the basis for establishing process and priorities (Boddy, Ladyshewsky & Galvin, 2010). Also, the corporation failed to communicate effectively upon realizing the cars were faulty. The leaders should have communicated the issue to all the involved stakeholders immediately.

How Leadership Might have Avoided the situation in the First Place

 The way the organization would have avoided the situation in the first place would have been by instituting effective quality improvement measures. Although they created a different organization that was meant to check all products to certify that they were of the required standard later, leadership at Toyota should have ensured such measures were working efficiently. They also need to have established office of regional chief quality officers to check the products to prevent comprising the quality of the cars (Pless & Maak, 2011). When the scandal occurred, Akio Toyoda decreased manufacturing and stopped all the ongoing plants and decided to dedicate a big part of the engineering team to solving the quality issues, which the company should have done before.  Hence, the leaders would have been able to restore confidence and quality as well have allowed them to improve their performance.

The relationship between the response of the scandal and the Seriousness of the Event

Indeed, the response to the scandal is equal to the seriousness of the event. Akio Toyoda was even willing to decrease manufacturing and focus on developing new policies and make the customer central partner and every action of the company was focused on meeting customer satisfaction.

Alternative Strategy for Handling the Scandal

 Toyota should have created a team to lead inquiry to find the cause of the problem. They should have invested in developing a system that would allow reporting of any issues in the production or supply chain system (Quinn & Van Velsor, 2010). At the same time, the company needs a democratic leader who is able to oversee that all policies are followed effectively.


Boddy, C. R., Ladyshewsky, R., & Galvin, P. (2010). Leaders without ethics in global business: Corporate psychopaths. Journal of Public Affairs, 10(3), 121-138.

Chin, K. S., Chan, B. L., & Lam, P. K. (2008). Identifying and prioritizing critical success factors for coopetition strategy. Industrial Management & Data Systems, 108(4), 437-454.

Jokinen, T. (2015). Global leadership competencies: a review and discussion. Journal of European Industrial Training, 29(3), 199-216.

Pless, N. M., & Maak, T. (2011). Responsible leadership: Pathways to the future. In Responsible Leadership (pp. 3-13). Springer, Dordrecht.

Quinn, L., & Van Velsor, E. (2010). Global responsibility: What it takes to get it right. Leadership in Action: A Publication of the Center for Creative Leadership and Jossey‐Bass, 29(6), 8-13.

January 19, 2024



Corporations Management

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