Toyota Company Case

1.0 Introduction

Based on the Toyota Company, this report was about analysis and investigation of business ethics. According to Crane & Matten (2007), business ethics is the study of business situations, activities, and decisions where issues of morally right and wrong are addressed which means that business ethics had taught us how to differentiate the right or wrong and distinguish between the ethical or unethical actions or situations. It is hard to let Toyota to practice business ethics in order to meet stakeholders requirements and satisfaction which caused by consideration of company profit and reputation.

In this report, the author had conducted a research on Toyota's business ethics using the stakeholder analysis. The ethical dilemmas are poor products quality, poor conditions of work or employment and sexual harassment and these had negatively impacted on its stakeholders such as the victims, government, company, media, competitors, customers, civil society and the employees. In other word, a stakeholder of a corporation is an individual or a group which either is harmed by, or benefits from, and whose rights are violated, or respected by the corporation actions (Evan and Freeman, 1993). Following the research, this report also evaluated the importance of these ethical dilemmas and how Toyota had dealt with these dilemmas. The actions taken are to recall the products, investigations, paying compensations to the victims, improved conditions of work and apologizes to the victims. One appropriate theory was discussed in this section. The last part of the report discusses about Toyota's best practices and values such as corporate social responsibility and corporate governance.

1.1 Background of Toyota

Toyota Motor Corporation was headquarters at Aichi in Japan. It employed about 300,734 people worldwide. It was the largest car company in Japan and eleventh largest car company around the world. Sakichi Toyoda was the productive inventor of first engine of Toyota; name Toyoda (トヨダ) in the 19th century. Toyoda means "fertile rice paddies". With the help of Kiichiro Toyoda, Sakichi's son, had established and change the name to Toyota Motor Corporation as the newly formed word of Toyoda. And finally, Toyota Motor Corporation had developed and produced new brands of vehicles that can refer in appendix 1.

2.0 Ethical Dilemma

Although Toyota Motor Corporation was successful, earned a lot of profits in the industries and the largest automaker; they faced some unethical issues which had negatively influenced their stakeholder, reputation and profit. Although Toyota knew that it had to conduct its business with principles, values, and standard but they had failed to do so because their aim was focus on the maximization of profit. This resulted in ethical dilemmas such as poor of quality, poor conditions of work/employment, and sexual harassment.

2.1 Poor Product Quality

In 2012, Toyota had reach its sales target till 9.76 million vehicles and made the high profit compared to 2011, including North America, Europe Japan and the rest of Asia. It was reported that Toyota has received many complaints about its poor quality products such as floor mat, gas pedal, brake and steering. There were 34 cases of complaints. According to The U.S National highway Traffic Safety Administration (NHTSA), 56 people died due to the problem on acceleration of Toyota vehicles.

On 28 August 2009, an off duty California Highway Patrol Officer, Mark Saylor together with his wife, daughter, and brother in law who were travelling on a Toyota Lexus ES350 were killed in San Diego. It was reported that Saylor was driving his car at 120 mph when it hit another car, launched off an embankment, rolled several times and the car burst into flames. Before the accident, Saylor's brother in law, Chris Lastrella had called the police station and told the police that the car's accelerator was not under control and the brake was not functioning. After the investigation, the police discovered that the floor mat had interfered with the gas pedal that triggered the accidental acceleration of the vehicle. This horrible accident has spread like wildfire where ABC News, CNN News, Los Angeles Times questioned the reliability of Toyota's vehicles. Toyota denied responsibility and blamed its dealership for not installing the proper floor mat to the car. Besides, it also blamed the driver for not using the other systems of the car to prevent such accident.

In 2006, Koua Fong Lee killed 3 people while driving his Toyota Camry and was jailed for 8 years. He testified that he had pressed the brakes but it did not stop. However, two mechanical engineers who examined the case claimed that the vehicle was fine. After several years of explaining to the victim's family, he was released and they had sued Toyota.

According to the 2010 JD Power Initial Quality Study, Toyota had dropped its ranking from 6th to 21st because of its poor product quality. From the 100 vehicles surveyed, the problem has increased from 101 to 117. Based on the annual report 2009 Toyota Motor Corporation's sales had dropped from 1.35 million units, or 15.1%, to 7.57 million units, net revenues decreased 23.2% to ¥18.6 trillion and operating income fell ¥2.6 trillion to a loss of ¥394.8 billion. This has greatly affected the employees where there was a sharp decline of job.

On the other hand, customers of Toyota were confused and lost their trustworthiness on Toyota's products. Some customers had stopped driving their Toyota's cars fearing for their safety. Besides, the dealerships were having a hard time where they had to attend to endless of customers' complaint about Toyota's products. Therefore, competitors such as General Motors, Ford were profiting and had taken advantages of this situation by offering US$1000 incentives and low financing rates to owners of Toyota to help to pay off their lease.

2.2 Poor Conditions Of Work /Employment

The second ethical dilemma of Toyota is poor conditions of work and employment where it had received many complaints and lawsuits. This shows that it did not practice any human rights of employment. It was reported that an estimated of 200 to 300 workers had serious illness, depression and death due to overwork in Japan. There was a case of Kenichi Uchino who was a 30 years old engineer, died due to overwork at Toyota Prius Plant in Nagoya City. He had worked for Toyota about 13 years and his main job was checking vehicles bodies for any defects. He was said to work for 14-hour shifts per day and had