THE consequences of poor crisis management could severely damage  the  reputation  of a company, hence  every company  must be prepared for   crisis. This  is the case with  Toyota, one of  world’s leading auto makers.
So , as  pointed out,  poorly managed crisis  has the  potential  to damage  the  image  of the company as the number one automotive brand, with $30.5 million brand earnings, according to Interbrand. Should we expect the Toyota brand to move down Interbrand’s list next year? Depends on how they manage the situation.
At least for now, Toyota needs to stop the bleeding or it could cede its brand earnings to its automotive counterparts. Since Jan. 15, Toyota’s stock has tanked 430 points, or 10.4 per cent  while Honda and Ford have seen a mere 4.3 per cent  and 2.1 per cent  decline, respectively. While the auto market is slumping, Toyota’s stock is falling like a rock compared to its competitors. Toyota can minimalise damage through effective crisis management
Crisis management is the process by which an organisation deals with a major unpredictable event that threatens to harm the organisation, its stakeholders, or the general public. Three elements are common to most definitions of crisis: (a) a threat to the organization, (b) the element of surprise, and (c) a short decision time. Venette  argues that  crisis is a process of transformation where the old system can no longer be maintained. Therefore the fourth defining quality is the need for change. If change is not needed, the event could more accurately be described as a failure or incident.
In ‘Why Bad Things (Like Recalls) Happen to Good Companies (Like Toyota)’, the author, Susan Cramm analyses the implication of the recall. Cramm is   the founder and president of Valuedance. A former CFO and CIO, she is an expert on IT leadership. She is the author of 8 Things We Hate About IT.
A bunch of smart people are trying to figure out what “happened” at Toyota. The following story is starting to emerge: Once upon a time there was a car manufacturer known for its reliable and innovative products. After years of being held as an exemplar of cultural alignment and production efficiency, the perfect storm of rapid growth, communication breakdowns, and inadequate oversight resulted in a series of product defects that has caused deaths and put many consumers at risk.
Is this the complete story?  Not even close. The complete story is too complex to be summarized in simplistic sound bites. But stories make us feel better. If we can explain it, we can fix it. The reality is often too complex to be “fixed.” Simplistic analysis of complex matters serves up a false sense of security that makes us believe we can create perfect systems.
Success in business, and in life, is not about eliminating risks, it’s about managing them. In spite of your best efforts, Murphy’s Law will rule and stuff is going to hit the fan. The leader’s job, in a world that is never simple or predictable, is to build safety nets so that when problems occur, they can be quickly reported and dealt with. Anticipating problems is the only prudent course in a world where every company has data issues, buggy software, and security incidents.
One of the fundamental risk management principles in IT — and other engineering disciplines — is the controls review. This process identifies potential exposures (for example, Toyota’s acceleration problems) and what can be done to rapidly identify, report, and resolve them. In coping with daily pressures, controls reviews often go by the wayside. As a result, many potential unintended consequences remain unanticipated and uncontrolled.
Leaders understand that their companies are living a precarious existence. Almost two-thirds of C-level executives are convinced that their organisations are at risk from information- and technology-based disruption. As these leaders witness the Toyota story unfold, they are experiencing a strange set of emotions: relief — naturally — combined with anxiety knowing that their company may be next in line.
In the real world, bad things happen to good companies. Be sure, in every change you make, after you have designed what should happen, to take the same amount of time to plan for the unintended disruptions that, you hope, will never come to fruition.