Corporate Communication

Finn FRANDSEN & Winni JOHANSEN

ICN Business School - MIEX

Case study

Bonotti Paolo Cantarello Claudio Ferrarotti Matteo Lorenzo Pikulina Ekaterina Riccetti La

Vision
Reuse and recycling of goods. Environmental leadership (http://www.toyota.com/abo ut/news/community/2011/10/ 20-1-Environmental.html) new marketing opportunities Respect of different nationalities, decline nationalism Leader in global regeneration and in the application of IT Create safely, securely and comfortable vehicles

Culture
Toyota Way To base management decisions on a "philosophical sense of purpose" To think long term To have an employeecentered process for solving problems

Image
Regardless of the series of technical problems and recalls according to the Brand Perception Survey 2011 Toyota has managed to maintain brand loyalty and positive feelings from the customers. The survey was based on seven categories: safety, quality, value, performance, design/style, technology/innovation, and environmentally friendly/green. Score 147 144 121 102 93 90 84 69

Best Brand To add value to the organization by developing its Toyota people Ford To recognize that Honda continuously solving root Chevrolet problems drives organizational learning. BMW Total quality management Kaizen MercedesBenz Volvo Lexus

QUESTION NO. 1: Read the Toyota case study and answer the following question: Consider the vision articulated by Toyota and its alignment with the companys image with external stakeholders and the internal culture. Is there sufficient alignment between vision, culture and image? What gaps emerged and how can Toyota address these gaps? CULTURE/ IMAGE GAP ANALYSIS Since its foundation Toyota Company has formulated a set of principles and values that it followed until 2009. Until 2009 the company managed to stick to its principles and show a great performance. Orientation on the long-term strategy let the company achieve the reputation of one of the most safe, environmentally friendly and reliable company. By the organization of various events, offering different promotional programs and campaigns, launching high-tech and hybrid vehicles Toyota differentiated itself from the competitors, set an effective communication with its stakeholders and became on the leaders in car industry. Outstanding culture of continuous improvement implemented by Toyota was a role model for other companies. And after all a career in Toyota was associated with a stable and promising one as the Company demonstrated a concern about its employees and considered the team-building, creativity and motivation one of its key points. That's why we can say that until 2009 Toyota was consistent with its corporate culture and values and was associated by its stakeholders with the stability, safety, innovation and environmentally conscious company. Since 2009 Toyota have had a series of technical problems that led to several vehicles recalls. Here we can see the emerged gap between the culture and the image of the company as its reputation was seriously damaged as the company was not more seen as a safe and reliable one that has always been a priority. Nevertheless due to the quick response to the media provocations, address of the company's director to the customers and effective complaints response Toyota has smoothed out the situation and in 2010 showed a good results in a customer service poll.

(see sources). Despite media criticism of Toyota, our poll proves that the company handled its recall crisis effectively and efficiently and has emerged relatively unscathed in the minds of the public. The perception of the brand appears to have been well-maintained and proves just how essential good customer service is to the overall performance of the company.

CULTURE/VISION GAP ANALYSIS: From our point of view Toyota had a sufficient alignment between culture and vision. Toyota has successfully applied the values it promoted and communicated to the stakeholders that showed an obvious consistency in culture and vision until the crisis. By following a Toyota production system that represented the value of constant development and improvement Toyota achieved the reputation of one of the most successful, safe and reliable company and differentiated itself from the competitors. In 2009 Toyota undermined its reputation and leadership by the recall and we were able to see the discrepancy between the values that Toyota had been promoted (total quality management, but also long-term oriented culture) and what it actually showed (quality-related problematic issues and management commitment for customer-care policy without a good implementing strategy). In our opinion, fascinated by the fast growth, Toyota concentrated on volume growth and not on quality care as best value, creating the gap. VISION/IMAGE GAP ANALYSIS: Before the recall problem crisis the vision and the image of the firm were greatly aligned: the main stakeholders of the firm were customers (what do they expect from Toyota? They want to buy good quality-economic cars ), employees (what do they expect from Toyota? Good wages, good place to work), business partners (what do they expect from Toyota? They expect to build a good network of firms to create values, win-win solutions with suppliers), global society and local community (what do they expect from Toyota? environmental-friendly cars, commitment of the firm in social issues), shareholders and investors (what do they expect from Toyota? Good return on investment). The vision of the firm focused on the needs of each category of stakeholder: what the corporate wanted to offer to each of them was well aligned with their real expectations. After 2010 recalls, however, the perception that different categories of stakeholders had of Toyota changed: customers started to put into doubt the reliability of Toyotas products causing a misalignment between the corporate promise (reliability at affordable price) and what was really perceived by customers, in some ways, Toyota was not giving to its customers what they expected to receive from it. As a counter move, Toyota management promised the adoption of a customer-oriented, more transparent policy (from a strategic point of view, they tried to move vision adapting to the change in image). This strategy did not give the expected results because other recalls followed briefly later, causing a further decline in the alignment between vision and image.

To our mind to address the gap more efficiently it's necessary to:
show to the stakeholders that the company admits the problems and responsible for them prove the capacity to solve these problems quickly to stress on quality development and not just the profit growth to make the communication strategy more efficient and transparent trying to diversify from their competitors values: as some actors are appearing in the same clusters lead by Toyota the management should plan to add new values To plan anti-crisis scenario

QUESTION NO. 2: Read the Toyota case study and answer the following question: Consider the overall communication strategy of Toyota, including its strategic intent and positioning, the themed messages and message styles in Toyotas communications. Given the challenges ahead for Toyota, how would you change the communication strategy in terms of strategic intent, themes messages and message styles? In the last two decades, Toyotas strategy has been mainly focused on environmental care and safetys improvement. Already from 1992, they adopted a set of Guiding Principles leading to providing clean and safe product, as well as they created the Toyota Earth Charter. Both of them where aimed to enhance to quality of life and positively linking people, cars and the environment. This is enforced in the 2010 Global Vision Programme, which points out same strategic objectives, such as encouraging the reuse and recycle of goods and 15% market share enlargement in car makers market through the exploitation of emerging marketing opportunities (e.g. China and India). Concerning the corporate reputation, they aim to expand the appeal and the reliability of the company, getting the support of more fans. Another milestone of Toyotas strategy is the zeronize and maximize approach. The first one refers to the minimization of negative aspects people associate to cars, basically centred on the environmental pollution. In this sense, a practical goal is to reduce of 15% the carbon dioxide emission. On the other hand, maximizing is related to automobile positive features and Toyotas aim is to sell safe reliable and convenient cars. Regarding positioning, the company wants to excel in the usage of IT in cars in order to increase customers safety, as well as in the respect of the environment. For instance, with the launch of the new PRIUS and the Lexus LS Hybrid, in 2003, they decided to create a Leaf Car logo to associate the companys image to the nature. With the formula 1 participation, Toyota managed to obtain a double result: internally, it increased employees pride for being part of the firm and, externally, it helped connecting the brand with high technical performances. Formula 1 shows attracted partners and fans, even though they couldnt communicate as they wanted concepts like safety and reliability. The looking forward approach accompanied by the continuous research for new environmental technologies is the main message Toyota wants to communicate nowadays. In fact, themed messages are aimed to change or reinforce perceptions in line with the vision of how the company wants to be known. In this case, Toyota is trying to be seen as a company which prevents future and is already prepared to face it in the most environmental friendly way. Moreover, the stress has been put on respecting different cultures and ethnicities, to create a positive and peaceable network between the car maker and all people from different nationalities. Given the challenges ahead for Toyota, we believe that it is heading towards the right direction. Assumed that ecofriendliness and reliability are values that other car makers have recently enhanced, it is necessary to reach other customer targets through exploiting the emotional aspects and the enjoyment of driving a Toyota car. In this way, they have been following management stages after a crisis: they evaluated new market potentialities and now they are learning a new car making style, developing after crisis actions. For this reason, they will need an effort from their engineers, who will be able to create more fashionable and dynamic cars, starting from the expertise already consolidated in the IT field. A good tool to communicate this message and consolidate oneself image are social medias. Toyota is already present on the web through Facebook and Twitter, but is planning to create the first social network for an automotive company in collaboration with Microsoft, called Toyota Friends. Regarding television 1 advertisements, they already started changing the core messages, from a convenient based campaign to a more 2 3 young and stylish one . Still insisting on the eco-friendly purpose , through the creation of hybrid versions for all 4 5 Toyota models , they should continue emphasising this new attractiveness . Moreover, it could be important for their image to be associated with international sport events, which would underline the new dynamic and active philosophy. Going on with the sponsorship of events like the IAAF World Championships in Athletics, the Goodwood Festival of Speed, the Americas Cup, AFL and NRL, would be as crucial as 6 organising initiatives like the Australian Toyota V6 HiLux Heroes . Finally, a good strategic and positioning tool would be, in our opinion, the enhance of engine performances and the decrease of prices regarding hybrid cars, which would make them more affordable putting the basis for the future they are heading to.

1 2

http://www.youtube.com/watch?v=t7WLJPgeNt8 http://www.youtube.com/watch?v=9EiubkaQ9Yo&feature=related 3 http://www.youtube.com/watch?v=W5QoNXDv9N0&feature=related 4 http://www.youtube.com/watch?v=ApIKJNuHMUM 5 http://www.youtube.com/user/ToyotaEurope#p/c/DD37D1FE8D25FA92/2/nVCHovmajoI 6 http://hiluxheroes.toyota.com.au/

QUESTION N. 3: Read the Toyota press release and answer the following question: What kind of crisis response strategies has Toyota applied in its press release from January 21, 2010?

In the official press release from January 21, 2010 Toyota announces the recall of approximately 2,3 million vehicles, due to sticking accelerator pedals on determined car models. The first part is an introduction to the problem, followed by what Toyota has been doing. Investigating some reports of sticking accelerator pedal mechanisms, they noticed that there is a possibility that certain pedals could get stuck in a partially depressed position or return slowly to the idle position. This is a problem which cannot be associated to floor mats, for which Toyota had already started a recall action of approximately 4,2 million cars. Then there is a third part based on focusing and listing all car models which will not be involved in the recall process. In the conclusion, they give customers some guidelines and instructions in order to avoid danger when the problem occurs. Regarding the communication strategy adopted by Toyota, we notice that they prefer to entirely hold the responsibility, communicating and explaining the problematic situation, instead of denying or being evasive, as the theoretical approach suggest. A possible critic we can move about this, is the delay of their reaction. First, Toyota uses a minimizing approach (isolated reports, certain vehicles, there is a possibility that certain *+ 7 MAY , in rare instances,), while introducing a corrective action (we have initiated this voluntary recall action). Then, giving details about car models and conditions concerned with this malfunctioning, they still insist on minimizing (Certain in the models list, The condition is rare, *+ in certain conditions *+ MAY become harder *+ in the worst case, stuck in a PARTIALLY depressed position.). They also point out the models without risks, bounding the problem in order to restructure the brands reliability. At the same time, it is clear their intention for a corrective action to reassure stakeholders (Toyota is working quickly to prepare the correction remedy). Finally, they provide suggestions about the best behaviour car drivers should have in case of troubles, reinforce the intention of continuing investigation and give a complete assistance through a dedicated Customer Experience call centre. That shows once again their willingness to undertake corrective actions, hiding an implicit mortification behind this words.

QUESTION NO. 4: According to you, how should Toyota have handled the product recall crisis at the international or global level? How did Toyotas product recall crisis develop in your home country? Even if we know that today Toyota recovered from the recall crisis they were going through few years ago, the company took important risks with its weak communication strategy. This international debacle could have been avoided if Toyota would have taken into consideration the previous signals regarding defects on brakes, accelerator pedals and floor mats in the United States. It gives the impression that they have been hiding the truth from their clients and it prevented them from being able to anticipate and prepare the coming storm. Right after the accident that killed 4 persons on August 2009 and the numerous recalls from that period, clients all over the world were worried, fearful and wanted answers. They wanted Toyota to be present, to give explanations. In such a situation it is essential to keep clients confidence and at that moment clients wanted more than a cold press release delivered after long months of silence. Instead, Toyota should have taken immediate action insisting, reassuring people on the fact that it was just a safety recall. They clearly mishandled time before and during the crisis. The Asian giant should have been proactive regarding its communication strategy by working closely with media and social networks to reach out rapidly as much clients as possible (which is essential when it comes to international companies like Toyota). By waiting before delivering information to the public, Toyota let rumors and scandal grow until it took global proportions. If they would have reacted on time locally, it would not have attained that extent. Then, when they finally decided to speak, Toyotas leaders gave only little information on the situation and blamed floor mats. Instead, they should have recognized their mistakes and admitted that they had failed at some point. They should have brought more responses and more transparency to their clients in order to control damages and prevent the crisis from spreading. And, in addition to communicate heavily, on time and clearly, Toyota before everything, should have shown contingency. They should have mobilized every single person in the company to diffuse one clear message from headquarters to dealers and from Japan to the rest of the world in order to give appropriate answers to the clients. A crisis management team should have been implemented in each country to make sure that corrective actions were properly and fully taken.
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The words written capital letters mean an implicit minimizing action.

If Toyotas product recall crisis has been seen as the most challenging crisis in the companys history and one of the better examples of communication failure all over the world, it seems that it has been less disastrous in France. Even though Toyota had to recall almost 164,000 vehicles (which is the most important recall campaign ever led in the country), the Japanese brand managed to attenuate the consequences by deploying a quite efficient logistic plan. On the first place, they banked a lot on their Internet website. Each client could enter the serial number of his vehicle and check if his car was affected or not by the recall. If the answer was yes, the client was invited to let his address and phone number in order to be contacted by a Toyota employee. It has been quite of a success since more than 40,000 people used this website to get in touch with Toyota. On the second place, Toyota reinforced its hotline: additional employees especially gathered to handle the panic at the call center were in charge of calling the clients to fix an appointment with their closest dealer. In addition to the logistic plan strictly speaking, Toyota also launched a large communication campaign regarding the recall. A letter has been sent to all the people owning a car mentioned in the black list. The group also alerted clients via the press paying for an information page in each national newspaper. Another reason why Toyota France suffered less than Toyota U.S is that there had been no real incident in France. Therefore, French Toyota clients did not really feared the accident that would have taken place on vehicles in the United States. Nevertheless, Toyotas reputation has been damaged also in France. Toyota Frances C.E.O was heavily criticized for having published in the press an open letter which did not really show any regrets. If in France and Italy, the crisis seemed to have been managed in the same way, in Russia on the contrary, it did not even seem that they had problems.
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SOURCES : http://www.consumerreports.org/cro/cars/new-cars/news/2011/01/2011-car-brand-perceptionsurvey/overview/index.htm http://www.businessweek.com/managing/content/jun2011/ca20110624_657612.htm http://www.toyota-global.com/ http://www.roadtestreports.co.uk/news/index.php/2010/07/20/press-release-toyota-tops-poll-on-best-customerservice/ Joep Cornellissen, Corporate Communication: A Guide to Theory and Practice Mary Jo Hatch, Bringing the Corporation into Corporate Branding

We consulted a considerable number of references for our research, but we mention here just the sources that we considered the most reliable.