Case Study Description of Toyota: Accelerator Pedal Recall (B)
"This is a supplement to Toyota: Accelerator Pedal Recall (A). In January 2010, global automotive manufacturer Toyota faced the task of notifying customers of a recall that involved a faulty accelerator pedal on 1.7 million vehicles, spread across eight different models. In some cases the faulty accelerator pedal was found to stick in depressed position and be slow to return to the idle position, causing unintended vehicle acceleration. With the throttle stuck in the open position a vehicle would continue to accelerate while the driver is trying to brake and slow the vehicle down. Toyota had already come under intense public scrutiny in the previous year over an existing floor mat recall that affected 4.2 million vehicles. Lessons in the automotive industry had been learned the hard way from tire manufacturer Bridgestone. A public backlash occurred in 2003, with class action law suits against Bridgestone for faulty tires that caused some vehicles to roll over. In an attempt to reach the masses, Toyota created a letter to customers that was featured in major newspapers and on its own website. The letter released caused anger and outrage as Toyota stayed clear away from apologizing to consumers. Instead it talks about the companies 50 year heritage and how they are halting production to focus on fixing the vehicles that are on the road. Just days later Toyota drafted and released a second letter to customers. This time they attempt to use better language, but missed the mark on taking full accountability for the problem."
Swot Analysis of "Toyota: Accelerator Pedal Recall (B)" written by Jana Seijts, Paul Bigus includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Toyota Pedal facing as an external strategic factors. Some of the topics covered in Toyota: Accelerator Pedal Recall (B) case study are - Strategic Management Strategies, Crisis management, Decision making, Leadership, Organizational culture, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Toyota: Accelerator Pedal Recall (B) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion,
there is backlash against globalization, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Toyota: Accelerator Pedal Recall (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Toyota: Accelerator Pedal Recall (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Toyota Pedal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Toyota Pedal operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Toyota: Accelerator Pedal Recall (B) can be done for the following purposes –
1. Strategic planning using facts provided in Toyota: Accelerator Pedal Recall (B) case study
2. Improving business portfolio management of Toyota Pedal
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Toyota Pedal
Strengths Toyota: Accelerator Pedal Recall (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Toyota Pedal in Toyota: Accelerator Pedal Recall (B) Harvard Business Review case study are -
Innovation driven organization
– Toyota Pedal is one of the most innovative firm in sector. Manager in Toyota: Accelerator Pedal Recall (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Toyota Pedal has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Toyota: Accelerator Pedal Recall (B) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Toyota Pedal is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Toyota Pedal has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the Toyota: Accelerator Pedal Recall (B) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Learning organization
- Toyota Pedal is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Toyota Pedal is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Toyota: Accelerator Pedal Recall (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Toyota: Accelerator Pedal Recall (B) firm has clearly differentiated products in the market place. This has enabled Toyota Pedal to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Toyota Pedal to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Toyota Pedal digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Toyota Pedal has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Toyota Pedal in the sector have low bargaining power. Toyota: Accelerator Pedal Recall (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Toyota Pedal to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Toyota Pedal are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Toyota Pedal is one of the leading recruiters in the industry. Managers in the Toyota: Accelerator Pedal Recall (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Toyota Pedal
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Toyota Pedal does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Toyota: Accelerator Pedal Recall (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Toyota: Accelerator Pedal Recall (B) are -
Interest costs
– Compare to the competition, Toyota Pedal has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Toyota: Accelerator Pedal Recall (B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Toyota: Accelerator Pedal Recall (B) can leverage the sales team experience to cultivate customer relationships as Toyota Pedal is planning to shift buying processes online.
Products dominated business model
– Even though Toyota Pedal has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Toyota: Accelerator Pedal Recall (B) should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Toyota Pedal is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Toyota Pedal needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Toyota Pedal to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Toyota: Accelerator Pedal Recall (B) HBR case study mentions - Toyota Pedal takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Lack of clear differentiation of Toyota Pedal products
– To increase the profitability and margins on the products, Toyota Pedal needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Toyota Pedal has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring
– The stress on hiring functional specialists at Toyota Pedal has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Toyota: Accelerator Pedal Recall (B), in the dynamic environment Toyota Pedal has struggled to respond to the nimble upstart competition. Toyota Pedal has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Toyota Pedal supply chain. Even after few cautionary changes mentioned in the HBR case study - Toyota: Accelerator Pedal Recall (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Toyota Pedal vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Toyota Pedal needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Opportunities Toyota: Accelerator Pedal Recall (B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Toyota: Accelerator Pedal Recall (B) are -
Learning at scale
– Online learning technologies has now opened space for Toyota Pedal to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Buying journey improvements
– Toyota Pedal can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Toyota: Accelerator Pedal Recall (B) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Better consumer reach
– The expansion of the 5G network will help Toyota Pedal to increase its market reach. Toyota Pedal will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Toyota Pedal can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Toyota: Accelerator Pedal Recall (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Toyota Pedal can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Toyota Pedal to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Toyota Pedal can use these opportunities to build new business models that can help the communities that Toyota Pedal operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Toyota Pedal is facing challenges because of the dominance of functional experts in the organization. Toyota: Accelerator Pedal Recall (B) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Toyota Pedal to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Toyota Pedal to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Toyota Pedal in the consumer business. Now Toyota Pedal can target international markets with far fewer capital restrictions requirements than the existing system.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Toyota Pedal can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Toyota Pedal can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Loyalty marketing
– Toyota Pedal has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Toyota: Accelerator Pedal Recall (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Toyota: Accelerator Pedal Recall (B) are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Toyota Pedal can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Toyota Pedal can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Toyota Pedal with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Toyota Pedal can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Toyota: Accelerator Pedal Recall (B) .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Toyota Pedal business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Toyota Pedal high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Toyota: Accelerator Pedal Recall (B), Toyota Pedal may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Toyota Pedal in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Toyota Pedal is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Toyota Pedal needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Toyota Pedal will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Toyota Pedal.
Weighted SWOT Analysis of Toyota: Accelerator Pedal Recall (B) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Toyota: Accelerator Pedal Recall (B) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Toyota: Accelerator Pedal Recall (B) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Toyota: Accelerator Pedal Recall (B) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Toyota: Accelerator Pedal Recall (B) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Toyota Pedal needs to make to build a sustainable competitive advantage.