Product-Harm Crisis

Product-Harm Crisis





Mastering the management of crisis process is what every firm have to deal with at some time. In this case about Toyota, it provides an in-depth look at the crisis that the company faced and how the management responded to the issue. For a firm to maintain growth, there must be progress for the firm as well as a positive market image (Lei et al., 2012). This paper aims at evaluating the term product-harm crisis in regards to Toyota case study, identifying the issues that the leaders must solve, analyzing successful and unsuccessful organizational changes as well as suggesting recommendations that the firm can utilize in managing this crisis and also recover brand loyalty in the industry.

Product-Harm Crisis

Product-harm crisis alludes to when the company’s products are said to be dangerous, perilous and hazardous to the customers. A product crisis can influence the entire product subcategory of the product and for the most part, prompts a product recall deliberately, or the government controllers can lead to the recall. On account of Toyota, its product harm-crisis was activated by accident, which was caused by a Lexus as its accelerator got stalled out, and the vehicle squashed killing four individuals. Product crisis has impacts which could be a product recall cost as well as lost sales (Pan & Chen, 2014). In the long haul, the crisis would harm the notoriety of the organization.

Problems that Leaders Must Solve

The leadership in Toyota company need to reestablish its organization’s notoriety as well as customer loyalty. Customers over the world respond diversely towards product-harm crisis. Research demonstrates that buyers have a tendency to get over a crisis and its impact if the organization declares a deliberate recall and is free in charge of its product. Toyota recall was constrained by the government, and this negatively affected the company’s reputation. People, in general, did not trust the clarification given by the organization, and this has upheld public trust regarding Toyota company (Rajasekera, 2013). This has negatively affected the organization. Toyota is being perceived as unethical due to its failure towards responding, acknowledging as well as correcting mechanical defects. Moreover, its leadership need some procedures in seizing control, have knowledge regarding the safety issues as well as leading a systematic response. Ultimately, crisis management is the main test for the company’s leadership to instruct, as well as to internalize information towards stakeholders regarding the image of the company as it survives a crisis (Lei & Chang, 2016). The Company leaders have to address the reduction in sales, recall costs, managing the already done damages towards the brand reputation as well as resolving the lawsuits due to severe injuries and also death caused to its consumers. In addition, Toyota leadership must effectively tackle the bad financial effect as well as the damages, which destroyed the company’s accumulated wealth. In this case, voluntary recall can help in boosting trust in a firm, and the reputation, which Toyota company had built can result in questioning the firm’s advertising practices.

Organizational Successful and Unsuccessful Changes

Digitization of the vehicle is a risk that is related straightforwardly with the recall. With advanced PCs, car producers have embraced computerized frameworks to control and improve the working and vehicles performance. Amid past Toyota recalls, the organization had guaranteed to build up a database that would demonstrate imperfections and report them with the goal that it could monitor client complaints that are vehicle-related in a quick manner. The current recall checked on that the organization did not make the database, or it did not provide much consideration regarding the data gathered by the database in an all-around planned manner. This circumstance might be another chance for an organization that has the way to watch and responds to client complaints in time. This is an issue the leaders at Toyota need to deliver to keep up its market share and to stay away from the circumstance that occurred to Sony.

The social media power was exposed by the crisis. Media significantly affected the crisis management. Toyota had understood the significance of the social network prior, and it has included fans Facebook amid the crisis. Nonetheless, watching a company’s performance in an informal community does not demonstrate everything (Germann et al., 2014). Toyota has to watch its rivals. The analysis demonstrates that Hyundai, a car manufacturer from Korea, has expanded its fans on social networks at an extraordinary rate. There must be a reason for this expansion, and Toyota needs to find what it is. To monitor the trends of rivals is indispensable for any organization as it encourages the organization to win over its rivals. Product-harm crisis prompts a brand crisis that would prompt losses in sales volume as well as market share. This is one of the significant crisis that Toyota leadership need to illuminate. After the recall, the stock costs of Toyota began dropping radically. Be that as it may, the impacts on the stock cost were not all that overwhelming in light of the fact that they began to rise after the Toyota president Akio went to the United States public hearing in 2010 (Bliesemann de Guevara, 2014).

Organizational change can be difficult in implementing, and this might determine whether is successful or unsuccessful. In this case, Toyota’s organizational change that was unsuccessful was the utilization of a defect database in monitoring customer grievances. In one of the announcements displayed to the United States Congress, the Toyota president declared that the growth rate of Toyota was expanding at a high rate, and they concentrated on expanding the sales of autos as opposed to offering consideration regarding quality and client complaints (Cleeren et al., 2013). In any case, utilization of social networks by the organization was a win. The organization has included its fans Facebook notwithstanding amid the crisis. Media can be of huge help to an organization towards managing its crisis.


The major recommendation would provide use of social network sites. An organization can utilize social media towards spreading organization message to people in general, and if legitimately utilized, it can help watch out for the general population. Individuals depend more on social networks, for example, Facebook as well as Twitter amid the crisis. Tapping on the social networks, one can get ongoing data from clients and rivals. Toyota could likewise utilize the web to create software and database, which monitor and report abscond and the client complaint. Using this database, Toyota will have the capacity to follow up on its client objections all the more proficiently. Besides, Toyota needs to stress its quality of vehicles as opposed to the volume of sales, which they make (Bliesemann de Guevara, 2014). Towards winning its client as well as public trust back, they should manufacture cars of higher quality and keep away from a future recall. Cars digitization can be an approach to monitor as well as maintaining quality in the automobiles it manufactures.


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Cleeren, K., Van Heerde, H. J., & Dekimpe, M. G. (2013). Rising from the ashes: How brands and categories can overcome product-harm crises. Journal of Marketing77(2), 58-77.

Germann, F., Grewal, R., Ross, W. T., & Srivastava, R. K. (2014). Product recalls and the moderating role of brand commitment. Marketing Letters25(2), 179-191.

Lei, H. S., & Chang, S. C. (2016). Innovative thinking of food safety management for the traditional baking industry in Taiwan-yu Jan shin the butter shortbread. International Journal of Organizational Innovation (Online), 8(3), 282.

Lei, J., Dawar, N., & Gürhan-Canli, Z. (2012). Base-rate information in consumer attributions of product-harm crises. Journal of Marketing Research49(3), 336-348.

Pan, W. H., & Chen, Y. L. (2014). A case study of the corporate turnaround strategies. International Journal of Organizational Innovation (Online)7(2), 63.

Rajasekera, J. (2013). Challenges To Toyota Caused By Recall Problems, Social Networks, And Digitisation. Asian Academy of Management Journal18(1).

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