Chapter 5

http://www.cbc.ca/consumer/story/2010/04/13/con-lexus-don-not-buy.html



Summary

Toyota has another problem with their car. On Tuesday 13, 2010, Toyota announced that they will suspend sales of the 2010 Lexus GX 460 SUV. The problem with the SUV is that there could be a possibility of the car flipping over during an unusual turn. This problem was discover during the handling tests. Before the problem was discovered, Toyota already sold 149 GX 460 SUV in Canada. In order to get back the SUV from their owners, Toyota will supply owners of the faulty car with a loan car.


Reflection

The connection I had made between this article and chapter 5 is the cash-to-cash cycle and the lead/lag relationship. The problem of the SUV is going to cause a problem with Toyota’s cash-to-cash cycle because Toyota used cash to purchase the materials to build the car (outflow of cash), but they will have a hard selling their inventory of cars due to the danger the vehicle presents. Since won’t be sales, so there will be no cash inflow. Without cash inflow, they won’t be able to generate new cash to purchase new materials. This causes a knot between the “inventory purchased” and “inventory sold” phase.


Reflection

The problems of Toyota cars are just piling up over the pass year. First the brakes and now the rolling over issue. These aren’t minor car problems. These are problems that have a high impact on the passengers lives. Personally, I think the reason for these problems is that there is problem with the management level of the company. Now Toyota will have a hard time recovering from these faults. The reputation that they had build up for years had suddenly gone down the drain. In order for Toyota to recover, I think Toyota has to first bring back the confidence of the customers to the Toyota cars.