Case Detail

Case Summary

Unintended Acceleration: Toyota’s Recall Crisis

Case Number: 5-311-504, Year Published: 2011

HBS Number: KEL598

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Authors: David Austen-Smith; Eitan Zemel

Key Concepts

Politics, Communication, Corporate Governance, Crisis Management, Cross-Cultural Relations, General Management, Government Policy, International Business, Leadership, Organizational Structure, Public Relations, Regulation, Reputations, Risk Management, Decision Making,  Organizational Culture, Organizational Design, Social Responsibility, Society and Business Relations

Abstract

In late 2009 Toyota became the subject of media and U.S. government scrutiny after multiple deaths and injuries were attributed to accidents resulting from the unintended and uncontrolled acceleration of its cars. Despite Toyota’s voluntary recall of 4.2 million vehicles for floor mats that could jam the accelerator pedal and a later recall to increase the space between the gas pedal and the floor, the company insisted there was no underlying defect and defended itself against media reports and regulatory statements that said otherwise. As the crisis escalated, Toyota was further criticized for its unwillingness to share information from its data recorders about possible problems with electronic throttle controls and sticky accelerator pedals, as well as braking problems with the Prius. By the time Toyota Motor Company president Akio Toyoda apologized in his testimony to the U.S. Congress, Toyota’s stock price had declined, in just over a month, by 20 percent—a $35 billion loss of market value.

Learning Objectives

Understand the strategic and reputational nature of crises,
Recognize the challenges of managing a crisis,
Learn the requirements for building trust in a crisis,
Understand the challenges of managing a crisis that may not be the company’s fault,
Identify the strategic business problem in a crisis,
Understand how corporate structure may help or hinder effective crisis management,
Understand the media landscape and its impact on crisis management.

Number of Pages: 16

Extended Case Information

Teaching Areas: Strategy

Teaching Note Available: Yes

Geographic: United States

Industry: Auto Manufacturing

Organization Name: Toyota Motor Corporation

Organization Size: Large

Decision Maker Position: President (CEO)

Decision Maker Gender: Male

Year of Case: 2009