http://www.cbc.ca/world/story/2010/02/09/prius-recall-toyota.html
---- "I apologize for causing trouble and worries for many customers over the quality and safety of Toyota,"
Summary:
Toyota is the world’s largest automaker. Most of its consumers are located in North America and Japan. Recently, Toyota Vehicle Company recalled 2.3 million vehicles. There were insurance statements reporting that the safety procedures of brakes have not been met. Recall was made on Tuesday, February 9, 2010. At the Toyota conferences, spokesperson made apologies and carried out concerns from customers. This recall had led the U.S. National Highway Traffic Safety to investigate further into the safety situation due to the increase of crashes. Toyota also recalled the vehicles that they supply for government rental. The problem linked to the State Farm Insurance and they were not satisfied with the responsibilities they have to take up.
Connections:
In chapter 4, we are introduced to the Cash-to-Cash-Cycle. One of the Cash-to-Cash-Cycle components includes Warranty Service; it stated that the seller is responsible, to some extent, for production replacement or repair. The Toyota recall had increased the expense for the company. Therefore, the company will be left with less cash to operate. To measure performance, the return on investment is calculated reflecting the market shares. Consequently, the recall of Toyota vehicles defeated the stockholders’’ confident to invest in Toyota. This would lead to the crash of market shares that the company owns; the projection of unearned revenues will decrease and so will the revenue itself. The recall will increase the expense of Toyota will increase due to net loss.
Reflections:
I think that Toyota did the right thing, recalling the automobiles, because buyers’ safety is very essential to the company. Luckily, they recalled the vehicles before any injuries occur. If there are concerns due to injuries that the vehicles outlaid that would be a big crash in the market shares and stocks. “Better be late than sorry”. I feel pity for those buy who acquired Toyota but after the recall it appeal to the consumers that they have brought a piece of worthless junk. Toyota Company was a profitable company because they were known to reduce their expenses and increase their market shares. But after these recalls, their share will be decreased drastically; Toyota is no longer an efficient company. However, it seems to consumers that Toyota’s priority interest is not customers; safety but MONEY. The company made cars and passed false safety to increase their market shares then a recall was made market shares went right down; they do care less about customers’ safety.
Tuesday, March 2, 2010
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ReplyDeleteIn Chapter 4, we learned that warranty services affect the amount of cash available at the end of the cash-to-cash cycle. With 2.3 million recalls, I doubt Toyota has enough funds to offset the cost of the repairs they are obligated to do. This might cause problems in the future when Toyota is trying to recover from their loss--as they will be faced with cash shortages and maybe even huge debts. Stocks for Toyota will go down after this scandal, due to lack of trust. Investors' ROI will decrease because their return was less than their return before the recall took place. Finally, Toyota has a responsibility to ensure the safety of their customers--but they failed by choosing to manufacture cheaply, thus lowering the end quality of the product. I agree with Tiffany; Toyota seems to be a company concerned more about earning money than customer safety.
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