Toyota's Communication System

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Toyota’s External Communication, Brand Image and Identity – An Analysis

“Miller, Toyota’s then-group vice president for environment and public affairs wrote to his colleagues in an e-mail ‘We are not protecting our customers by keeping this quiet. The time to hide on this one is over. We need to come clean’ ”

“Mike Michels, vice president of external communications replied ‘Now I talked with you on the phone, we should not mention about the mechanical failures of acc. pedal because we have not clarified the real cause of the sticking acc pedal formally, and the remedy for the matter has not been confirmed.’ ”

(Margasak & Thomas, 2010)

3.1 Introduction: Communication System at Toyota

The role of present corporate communication ideology in most organisations has historical links to ‘Public Relations’ (PR), which in fact has taken the shape of corporate communication in recent decades with added disciplines to provide ample information for its internal and external stakeholders. As PR was considered more tactical in providing company information to stakeholders, media or individual, the corporate communication functions in organisations was broadly structured and transparent to all its stakeholders (Cornelissen, 2008). The flow of communication in all directions and forms keeps the employees, the management, the stakeholders and other related resources in same pace to achieve the organisation objectives which reflects the “image, brand and reputation” of that organisation (Van Riel & Fombrun, 2007, p. 13). This chapter discuss the external communication system; related communications of the recent recall[1]; the brand image, reputation and identity factors affected by communication in Toyota Motor Corporation majorly focussing on the recent issues and developments.

Having gained its name as the world’s biggest car maker, the mammoth multi-national organisation Toyota “currently has 52 bases in 27 countries in addition to design and R&D bases in 7 countries” (Toyota, 2010). When it comes to communication system, Toyota uses both “product-led communication around specific products and corporate-led communication around identified themes” (Cornelissen, 2008, p. 244). In 2003, the advertising department and the PR department of Toyota were combined to form corporate communication structure (Cornelissen, 2008, p. 247), which covers marketing communications, organisational communications and management communications (Van Riel & Fombrun, 2007, p. 22). As stated by a national manager PR and advertising at Toyota, Canada to a newspaper,

We combined all the departments to ensure that we were speaking with a consistent voice and sending out a consistent message all the time. … all three elements – Internet, PR and advertising – working together, you find tremendous efficiencies. (Cornelissen, 2008, p. 247)

3.2 Effectiveness of External Communication System at Toyota

“The exchange of information and messages between an organization and other organizations, groups, or individuals outside its formal structure is termed External communication” (BNET Business Dictionary, 2010). An effective external communication with product quality ensures enhancement of company reputation and public image. Toyota operates a separate external communication department guided by a corporate manager, under the mainstream corporate communication. Toyota follows a set of guiding principles in which principles 2 and 6 focuses on corporate communication activities.

“2. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities.

6. Pursue growth in harmony with the global community through innovative management” (Toyota Motor Corporation, 2006)

As mentioned in its “code of conduct” Toyota maintains an open and fair communication with all its stakeholders to form strong, healthy and sustainable relationship whilst “enhance[ing] its corporate image and transparency” (Toyota, 2006). Operating in different countries with diversified cultures and practices, the communication in these subsidiaries are decentralised, enabling communication within its staff and departments. Shortcomings in communication in these subsidiaries are overcome by “meet[ing] with communication staff from Toyota Headquarters”. (Cornelissen, 2008, p. 247). The strength and integrity of Toyota’s communications is quite evident given that many statements put forth as part of their external communications were mostly fulfilled with due diligence. An instance to site in this regard is the “advertorials in the Japan Times enlightening the readers about the company’s ‘green’ or environmentally friendlier cars. In addition, the automaker has been intending via its leaf care logo to convey its ‘commitment to reduce the environmental impact of products, plants and processes’ ” (Cornelissen, 2008). In addition, Toyota has acted responsibly for all of its external communication completely accepting the fact that they are vulnerable to commit mistakes as they address diverse listeners.

In 1998, a print issue of Jet magazine contained an advertisement with the following caption: “unlike your last boyfriend, the Corolla goes to work every morning” (CWJ, 2001) and again in 2001 a postcard distributed targeting youth population depicted an African American features with the gold version of Toyota model. Both entered the controversies of racism and Reverend Jesse Jackson, American civil rights activist minister, was behind this protest and also announced a boycott for a very minimum of black and Hispanic people among Toyota dealers and board of directors. Toyota offered its sincere apologies “to anyone who was offended by the postcard.” claiming that “Toyota is a good company that made a mistake in this instance and is determined to improve (Cornelissen, 2008, p. 245).” The following statement was issued by Toyota in the same year addressing both these ads:

Some discussion of this issue (involving the controversial postcard) has referred to a 1998 print ad for Corolla that highlighted the car’s legendary reliability. Intended for general magazine media, it played upon classic conflicts in young male-female relationships. The ad featured a picture of the Corolla and does not depict an African American couple or any people, as has been reported. (Cornelissen, 2008, p. 246)

The post card ad wasn’t checked and approved internally before submitting for print was stated as a reason by a Toyota executive for the controversies (CWJ, 2001).

3.3 Barriers to communication

Cross-linguistic communications in multi-national firms operating in different countries are often seen as a barrier to effective use of the common business language ‘English’. Literal translations look like transliterations and change the intended meaning. For instance, a translation of sign from Japanese to English read “Japanese garden is the mental home of the Japanese” (Ricks, 1983, p. cited in; Gibson, Blackwell, & Hodgetts, 1998). Toyota had also been encountering these communication issues during the recall. But being regarded as the world’s largest car company, poor communication cannot justify the reason for recall as human lives were at stake (Tomas, 2010).

But the fact that auto manufacturer Toyota is a paradigm of operational skilfulness cannot be traversed. High-quality, cost-efficient and reliable cars at low production cost is an achievement of Toyota’s far-famed production system and it agile to the variations in market and demands of the customers. Looking at the other side of the operations, surplus information is spread across through various meetings and internal communication practices at Toyota. Moreover, it employs more multilingual organisers to collapse the cultural and language barriers across all its operating sites for smoother communications at headquarters (Osono, Shimizu, & Takeuchi, 2008).

Communications impede, speedy growth and few oversights have led to product deficiency and resulted in a number of casualties and risk factors among Toyota users (Cramm, 2010). This was one of the major reason for the recall of approx. 8m cars by Toyota from all over the world, soon after the issue gained importance in media after a 911 call crying out for help from one of the Lexus user near San Diego. Speaking through an interpreter, Toyoda (CEO of Toyota) said, “Once we thoroughly explored and tried to identify the root cause, we came to realize the problem was rather with communications than with quality itself.” (Maynard, 2010). This is a perfect example of a reputed and renowned carmaker losing control of its basic principles of communication (Vlasic, 2010).

3.5 Brand Image and Reputation

Brand image is defined as “the set of beliefs held about a particular brand” (Kotler, 1988, p. 197) or “a set of associations, usually organized in some meaningful way” (Aaker, 1992, pp. 109-110).

Since 2001, Toyota showed an improvement in brand-image rankings as reported by Interbrand. Interbrand has widest geographical presence comprising of a diverse range of perceptive and rigorously analytical thinkers. Until 2006, Toyota continued to benefit from the “green halo effect” of the Prius and was in the limelight of media for its environmental benefit. Toyota maintained its national inheritance as well catered the expectations of the customers and dealers as a genuinely global brand as like Lexus its luxury brand (Interbrand, 2010). In the latest Global Pulse study 2008 from the Reputation Institute, a private, New York City based research and consulting firm, the Japanese automaker is ranked No. 1 on a list of the 600 largest companies in the world for having the best reputation (Kirdahy, 2008). This study highlights “Toyota as the only car company in the top tier of reputation leaders”. The Global Pulse 2008 conducted its study among the world’s largest 600 companies based on value, admiration, belief, good will of the consumers.

During 2008, Toyota faced its first fall in past 70 years because of hard economic situation. About 21 per cent net revenue had plunged down and had a drop of 15 per cent in vehicle sales. Sales of hybrid Prius which was the bestselling model for Toyota slowed down when fuel prices went to peak during the summer which had a record hit. Also there were talks that the company may create a separate brand for its bestselling model Prius, adding few other models to the queue. By the start of 2011 Toyota is expected to have 100 dealerships under “green”, where the most of the constructing parts are made of renewable primary products. In addition to its recall of cars from various parts of the world which collapsed its image and reputation to a greater extent, the act of going green worsened its brand image and as a result, Toyota took a dip in ranking (Interbrand, 2010).

3.6 Conclusion

The Japanese giant has been targeted by the media and experts for their total mismanagement of the recall issue. Experts claim that the main issue surrounding the recall were due to the cultural divide in crisis management and adoptability of the Japanese firms to the globalization and the accompanying need to interact with the global customers.

According to Kunio Inoue of corporate communication studies who is an adjacent professor of management at Toyo University states that, “When a company faces problems, the most reassuring message comes from the CEO…. If communication is mismanaged, that can increase worries among Toyota’s stakeholders.” He added that this recall issue will spoil the reputation of the company rather than building the brand image (Naz, 2010). Even though the initial apologizes from Toyota to the public doesn’t have a positive impact, it has to identify the root cause and provide a permanent solution and as well compensation to all its customers which will take more years to regain its originality. Reacting to the crisis, most of the shareholders could lose their faith in Toyota and sell shares anticipating that Toyota’s damaged reputation will affect its revenue in the near future. (John Madlisen, Toyota’s reputation could be tarnished for years, http://news.bbc.co.uk/1/hi/business/8498036.stm, Feb4th 2010).

This report has focused on the importance of external communications citing best practices adopted by the giant Japanese car maker – Toyota. Barriers to communications specifically to Japanese companies were highlighted. Further, shortcomings in the effectiveness of external communication at Toyota and its impact on the company’s brand image were illustrated. It is also evident from the analysis above that Toyota was not able to handle the crisis situation which clearly depicts that crisis management is also vital for effective functioning of organization.

Bibliography

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[1] Toyota recently, beginning September 2009, recalled most of its vehicle after serious issues raised on faulty accelerator pedal and other related issues. This was the biggest recall in the history of Toyota which started with 4.3m and reached approx. 8m till date as stated in the Guardian (Allen & Sturcke, 2010).

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