Organizational behaviour - Issues and solutions: A case of Toyota

Author: Iloka Benneth Chiemelie

Published: 15-October-2014

CHAPTER 1

INTRODUCTION

As the world slowly turns into a global community, what companies do and how they do it is important for their sustainability. The main reason behind this is because customers are now more careful of what they buy and whom they buy from, thus companies need to watch their behavior n order to ensure customer loyalty. Thus, this paper will seek to demonstrate such understanding of how organizational behavior can influence performance of companies with Toyota.

1.1 Context

Increase in globalization has peeved way for companies to take advantage of foreign markets raw materials availability and low labor price to increase their profitability, or increase profitability by offering their products and services to foreign market. There have been an increased in technology advancement in the last two decades, and it has pushed organizations across the world towards restricting their operations in other to function around teams and also enable more rapid, adaptive, and flexible responses to unexpected outcomes from the operations process (Kozlowski & Ilgen, 2006, p. 77). However, the shift in work structure is not taking a single dimension as a number of forces are actually accelerating such shift. This shift has produced an environment that is increasing stressful and emotionally taxing which also features high competition, constant transformation, technological innovation, high level of uncertainty, demand for best practices, increased pressure for diversity of skill, rapid response and successful adaptation (Kaifi & Noori, 2010; Kozlowski & Ilgen, 2006). Thus, organizational behavior has been defined as a new source of competitive advantage because the way companies react to these changes will affect how customers perceive them and are willing to patronize their services.

1.2 Purpose of studying this topic

The purpose of studying this topic is to analyze a recent issue in Toyota Motors USA and how the company addressed such issue. This analysis will then be used to measure what the company did right and wrong as well as recommend ways forward in order to avoid such issue in the future.

1.3 Aims and objectives of assignment

1.      To understanding understand what organizational behavior is all about;

2.      To analyze a recent issue in Toyota Motors USA;

3.      To analyze organizational behavior adopted by Toyota in the course of solving such issue; and

4.      To recommend solutions for avoiding such issues in future as well as solving it if it reoccurs.

CHAPTER 2

METHODOLOGY

Basically, this paper is divided is six section. The first section introduces what is to be done and how it will be done in terms of research approach and objectives. The second section is the methodology and it is designed to analyze the whole process of the research. Following success with the first and second section, the third section analyzes the case of Toyota in relation to recent events that occurred in the company. This is followed by the review of relevant literatures on organizational behavior, which is the fourth chapter. The fifth chapter is the analysis of what Toyota did right and wrong in relation to organizational behavior theories discussed in the literature review and this section will set up the background for the final conclusion and summary of the whole paper as well as recommendations on way forward for the company.

CHAPTER 3

CASE DESCRIPTION

The San Diego emergency services received a terrifying phone call on the 28th of August 2009 and it came from the back of a Toyota Lexus. The car accelerated out of control and all passengers onboard died from the accident. The issues want that passengers died onboard a Toyota car, the issues was how the management reacted to it.

3.1 Description of company

Established in 1937, Toyota is a Japanese auto-maker that has helped in revolutionizing the automobile industry. It has wide range of vehicles for both private and commercial purposes, and it is well represented across markets in the world. Its business principles are based on these five philosophies:

1.      Always be faithful to your duties, thereby contributing to the Company and to the overall good.

2.      Always be studious and creative, striving to stay ahead of the times.

3.      Always be practical and avoid frivolousness.

4.      Always strive to build a homelike atmosphere at work that is warm and friendly.

5.      Always have respect for spiritual matters, and remember to be grateful at all times (Toyota, 2014).

3.2 Context of case

The context of this case is centered on understanding what went wrong with the Toyota Lexus, how the company addressed to such issue and what the general public think of their response. Such an understanding will help establish a critical review of the case, address necessary measures to ensure that such issue is doesn’t repeat, and rebuild strong reputation for the Toyota brand in USA. The analysis is presented in detail in the 5^th section of this paper.

CHAPTER 4

LITERATURE REVIEW

4.1 Context

In general terms, organizational behavior is viewed as a field of study geared towards recognizing, explaining and developing the right attitude and behavior of people (be it individuals or group) within an organization. It is based purely on scientific knowledge and applied practice. In accordance with Kaifi (2010), researchers and practitioners can make use of the “RED Analysis” in order to understand issues in organizational behavior. The RED Analysis reads:

R – Recognize

E – Explain

D – Develop

In essence, Kaifi (2010) made known that the process of diagnosing organizational behavior revolves around the cycle of recognizing areas of concern for the company, understanding as well as explaining both short-term and long-term implication of each behavior, and eventually developing the best approaches and strategies that the organization can adopt in order to transform into a robust, dynamic, stable and high-performing entity. In the course of conducting such transformation, it is important to understand that organizations need strong management that is capable of controlling the behavior of the organization.

Organizational behavior is an applied discipline, which means that students are actually not trained in organizational behavior. Instead, they are educated in organizational behavior and made co-producers in the learning process” (Nelson & Quick, 2011, p. 25). In order to study organizational behavior, one needs to have a background understanding of psychology, sociology, axiology, anthropology and philosophy. From the psychological view point, ho organization performs is dictated by human beings and mental process; the anthropological view is that culture, beliefs, and languages possessed by individuals in an organization determines how the organization performs; while a sociological view is that the development of social and human behaviors determines how organizations performs; philosophical vie has it that ethics and morals of an individual will determine how organization will function; and axiological view is that individual’s values determine how organizations function. These differences in views complicate the understanding or organizational behavior and it influences outcome of such from different angels.

4.2 Culture

Culture is defined as people’s way of life in the general sense, and research have made known that it has direct influence how organizations behave. For instance, studies have found that organizations from high power distance cultures autocratic and commanding in their reaction to issues, while those from lower power distance culture seem to be more open and welcoming to new opinions when solving issues (Zand 1972; Zand 1997; Lewis and Weigert 1985). Thus, culture has a strong influence on organizational behavior.

4.3 Change

Existing notions have it that change is the only thing that is constant. The implication is that change can sometimes happen even without our own description, which makes it necessary for companies to always monitor their behavior in order to ensure that occurring changes are in line with their desired corporate goals. Change is defined in the corporate sense as a company’s desire to shift from its present belief (way of doing things) to another belief without necessary changing their corporate objectives (Bharadwaj and Matsuno 2006).

4.4 Structure

Many of the organizational researchers have the view that organizations are systems with the two basic types of organizational system being open and closed. An open system is such that engages in constant interaction with its environment and majority of the modern organizations are open systems. A closed systems however does not depend on its environment and it can even function without consuming any external resources. In order to survive, an open system need to interact with the environment by consuming and exporting resources to and from the environment.  Be it an open or closed organization, people represent the human resource with the skills and the purpose of any organization is highlighted in its visions, goals and mission which stands out as their overall purpose of existing, while the plans of the organization represent their strategy, competitive advantage and objectives, and the main priority is to drive the organization towards excelling and in most cases increase revenue generation is the outcome. In accordance with Schwartz, Jones, & McCarty (2010), it is important to note that no matter the value organizations produce, the measurement in dollars and cents, or goods and services is never enough. Kaifa (2010) as drew out the four Ps for understanding organization systems and behavior as illustrated in the figure 1 below.

Figure 1: 4Ps of organizational systems

Source as adapted from: Kaifa (2010)

An open system has both internal and external functionality with the each of the system having a direct impact on the other. For instance, what customers do (external system) does affect the organization and behavior of staffs (internal system). Thus, when organizations are descried as a system, emphasis are placed on the open system. An organization makes use of input (resources) from the external environment and then processes them into outputs which are also distributed to the environment (Robbins & Coulter, 2005, p. 35). A good example of open system organization is Toyota, which transforms raw materials (e.g. steel and fiber glass) into cars (finished products). On that account, this research will reference above literatures to understand recent organizational behavior in Toyota motors with reference to what happened and how the company addressed it.

 CHAPTER 5

ANALYSIS

In order to analyze this case, Kaifi’s (2010) RED analysis as discussed in the literature review will be adopted.

Following the tragic end of passengers onboard a Toyota Lexus brand, the company didn’t react fast. Belated recalls and communication as well as disclosures and pubis apologies meant that more damage was done to the company’s reputation than the original accident and this affected their sales, market share, and confidence level of investors and consumers – further resulting to the company’s image plunging down from 30% to 19% in accordance with Consumer Reports Survey.

Although the accident occurred in August 2009, the company was only able to issue disclosure on the accident two months later and released a statement that their findings show the company’s floor mat warning to be in line with set standards, and that Toyota brands are among the safest on road. The National Highway Traffic Safety Administration (NHTSA) was quick to refute such claims by condemning it as “inaccurate and misleading,” which further embarrassed the Toyota brand. 

In the November of 2009, the company finally admitted to defects in it accelerator pedal in some vehicles with promise to find the cause of such defects and made issuance of recalls on affected vehicles. However, the installation of “brake override system” to solve this issue resulted in the detection of another defect, which meant that the company was forced to employ the services of external auditors and investigators to look into the issue.

While the initial thought was that the issue is just a technical failure, it soon became clear that it is more than just technical failure as critics became to saying that the course of the accident is due to Toyota shifting from their original corporate culture of “Kaizen” (continuous improvement) and “Genchi Genbutsu” (inspecting problems at the source) to a “high growth and profitability culture.” Also critics pointed out the company’s management that wad made up of 29 male Japanese nationals and no foreigner and stated that the management was very conservative, rigidly centralized, and mono-national, which influence their slow response to addressing issues with their brand as subordinates did not find the management easily accessible and approachable. The high level of hierarchy and centralized structure of the management also limited the speed and accuracy of information flow, and in process stifled the agility of the company’s response.

Clearly, the above analysis points out two distinct elements that influenced organizational behavior as corporate culture and management. Being a global firm and operating in the USA, one would expect that Toyota will have managers from the US as a reference guide, but instead they maintained a completely Japanese management team, which meant that the corporate culture was adrift the national culture of USA. The United States wants to know what happened and they needs answers fast or they will directly attack those responsible for that. However, the Japanese culture is more of high power distance, which meant that individuals can’t just attack their superior or even present their own ideas. They management has final decision and it resulted in slow response to the issue. Thus, trust was damaged, reputation was weakened and the brand suffered huge financial loses as a result of that.

5.1 company’s culture

The corporate culture of Toyota is based on two Japanese values as:

1.      “Kaizen” (continuous improvement) and;

2.      “Genchi Genbutsu” (inspecting problems at the source

5.2 Change

Normally, arguments are made to sense that trust is an important tool for successful cooperation and effectiveness in any given organization (Zand 1972; Zand 1997; Lewis and Weigert 1985; McAllister 1995; Lane 1998; Rousseau, Sitkin, Burt, and Camerer 1998; Nooteboom 2002). Such arguments are based on the understanding that trust is very important in all aspects of our social life. It bind friendships together (Gibbons 2004), it helps in facilitating negotiation and bargaining (Olekalns and Smith 2005), it reduces the cost of transaction between firms (Bharadwaj and Matsuno 2006), and it even aid in resolution of political conflicts between countries (Kelman 2005). Trust is also important in the investment world as there are arguments (such as Lorenz, 1988) that trusts helps to establish effective assets investment by reassuring the parties involved that there won’t be any form of abuse of bargaining power once the agreement has been established. It is a very basic and important tool in any productive and positive social process as it has been proven to be an important predictor of outcomes like how companies behave (Zalabak, Ellis, and Winograd 2000), organizational citizenship behavior (Van Dyne, Vandewalle, Kostova, Latham, and Cummings 2000), employees’ commitment to an organization (Aryee, Budhwar, and Chen 2002), and employees’ loyalty (Costigan, Ilter, and Berman 1998). Building trust between the company and stakeholder has been described as a positive tool for increased productivity and sustainability in the business as it increases employees’ commitment and productivity, customers’ loyalty, and positive image in the eyes of the public (Zhang et al. 2008). However, one should also understand that the process of building trust between a company and the stakeholder is not simple or easy because it involves numerous factors coming together (Zhang et al. 2008).

In the case of Toyota, the case study has clearly pointed out that delayed reactions and misleading information released in the process of resolving the accident issue resulted in poor brand image while also decreasing the company’s reputation. Thus, customers were reluctant to purchase or remain loyalty and investors were also less willing to invest in Toyota. This resulted to huge financial loses to the company, which makes it important to understand how the company can resolve this issues in order to ensure that such cases doesn’t occur in the future and reputation is restored.

5.3 Structure influencing the ability to change

While it is important to restore consumers’ trust, one should note that building trust is very difficult because of numerous problems. First, the process of building trust is interactive and involves more than one individual who come together in order to learn about how worthy each other’s trust is (Zand 1972; Zucker et al. 1996). Secondly, the definitive system of dynamics in both trust and distrust are based on positive feedbacks, which are used to reinforce initial behavior (Zand 1972). Thus, the company will focus on addressing the issues identified as such will result to reverse effect and the process will involve:

5.3.1. Re-structure management to American style – it was identified that the Japanese management system adopted by the company gave no room for transparency and direction questioning, which means that delays where experienced as a result of the centralized and hierarchical nature of the Toyota management team. Thus, it is recommended that the company should seek to address this issue by adopting more of an open management system as is accustomed with the American culture. This is because it will create the right room for employees to share ideas with the management, decentralized decision making and foster faster reaction to critical issues as is common in American brands, and then increase overall reputation of the brand in the face of stakeholders due to their fast response to issues.

5.3.2. Re-establish its Japanese organizational culture – it was noted in the case that Toyota was formerly used to the culture of continuous improvement and seeking to understand root cause of any given problem. However, their quest for increased productivity and profitability meant a culture change to speedy delivery. Thus, numerous technical importance where neglected and the outcome is poor quality products. On that accord, it is important that the company shifts its focus based to its original culture as such will ensure that it continuously improves in its product delivery while also taking extra measures to understand the causes of issues within its environment instead of providing misleading information as experienced in this case. This approach will involve defining change as its priorities, hiring more American managements, communicating the needs to change in its workforce and monitoring the change process in order to ensure that it meets desired outcome.

CHAPTER 6

CONCLUSION

Right from the onset of this paper, the purpose was defined as to gain an understanding of recent event that happened in Toyota and apply such event with organizational behavior in order to understand how the company addressed such issue and how their approaches can be amended for better performance with addressing corporate issues. The papers shows that Toyota was not successful in handling it as it delayed response and later released unrealizable information, which led to people associating the brand with poor reputation. Thus, it is recommended that the company performs a management overhaul to include USA managers who understand the US market better and also reverse to its original corporate values of: constant innovation and finding the root of issues from its source.

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