10.1. Organizational Growth Pains

In its early days, Toyota followed a Japan-centric approach to international management where key functions and decision making were centralized at headquarters. This was in stark contrast to General Motors, which had established autonomous regional subsidiaries. Instead, Toyota put priority on pushing a full line of its products into every market. Only from the mid-1980s onward did it begin to delegate manufacturing and sales authority to regional headquarters. As they learned from the IMV project, delegation is a pressing issue. The complexity of a global approach increases exponentially with every plant Toyota adds to its global network, with new employees, new supply lines and distribution centers, and new transportation networks requiring more and better communication, coordination, and training.

Toyota's regional units now participate in decisions made about their operations. So far, this has worked because employees share and practice the Toyota Way, but it becomes increasingly difficult with the rapid addition of new plants across the globe. Cracks are already appearing, most prominently in the form of increasing vehicle recalls due to defective components common to many models. From 2003 to 2004, Toyota recalls almost doubled from 975,902 to 1,887,471 vehicles worldwide, dropping by 29 percent to 1,339,219 cars in 2006. In 2007, Toyota recalled nearly 700,000 vehicles worldwide.[] These recalls affected every product line, including Lexus ...

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