ethical issues on toyota

7/30/2019 Ethical Issues on Toyota

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TOYOTA MOTORS COPORATIONS

Introduction

Toyota Motor Corporation, commonly known simply as Toyota, is a multinationalcorporation headquartered in Japan. At its peak, Toyota employed approximately 320,000

people worldwide. It is the world's largest automobile makerby sales.

The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father'scompany Toyota Industries to create automobiles. Three years earlier, in 1934, while still adepartment ofToyota Industries, it created its first product, the Type A engine, and, in 1936,its first passenger car, the Toyota AA. Toyota also owns and operates Lexus and Scion

brands and has a majority shareholding stake in Daihatsu and Hino Motors, and minorityshareholdings in Fuji Heavy Industries, Isuzu Motors, Yamaha Motors, and MitsubishiAircraft Corporation. The company includes 522 subsidiaries.

Toyota is headquartered in Toyota City, Aichi and in Tokyo. In addition to manufacturingautomobiles, Toyota provides financial services through its Toyota Financial Servicesdivision and also builds robots. Toyota Motor Corporation (including Toyota FinancialServices) and Toyota Industries form the bulk of the Toyota Group, one of the largestconglomerates in the world.

Company Overview

The Toyota Motor Company received its first Japanese Quality Control Award at the start ofthe 1980s and began participating in a wide variety ofmotorsports. Due to the1973 oil crisis,

consumers in the lucrative U.S. market began turning to small cars with better fuel economy.American car manufacturers had considered small economy cars to be an "entry level"

product, and their small vehicles employed a low level of quality in order to keep the pricelow.

By the early sixties, the US had begun placing stiff import tariffs on certain vehicles. TheChicken tax of 1964 placed a 25% tax on imported commercials vans. In response to thetariff, Toyota,Nissan Motor Co. and Honda Motor Co. began building plants in the U.S. bythe early eighties.

In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, theToyota Motor Corporation. Two years later, Toyota entered into a joint venture with GeneralMotors calledNUMMI, theNew United Motor Manufacturing, Inc, operating an automobile-manufacturing plant in Fremont, California. The factory was an old General Motors plant thathad been closed for two years. Toyota then started to establish new brands at the end of the

1980s, with the launch of their luxury division Lexus in 1989.

Business Ethics | Toyota Motors 1
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In the 1990s, Toyota began to branch out from producing mostly compact cars by addingmany larger and more luxurious vehicles to its lineup, including a full-sized pickup, the T100(and later the Tundra); several lines of SUVs; a sport version of the Camry, known as theCamry Solara; and theScion brand, a group of several affordable, yet sporty, automobilestargeted specifically to young adults. Toyota also began production of the world's best-selling

hybrid car, the Prius, in 1997.

With a major presence in Europe, due to the success ofToyota Team Europe, the corporationdecided to set up TMME, Toyota Motor Europe Marketing & Engineering, to help marketvehicles in the continent. Two years later, Toyota set up a base in the United Kingdom,TMUK, as the company's cars had become very popular among British drivers. Bases inIndiana, Virginia and Tianjin were also set up. In 1999, the company decided to list itself ontheNew Yorkand London Stock Exchanges.

Toyota Deutschland's headquarters in Cologne

In 2001, Toyota's Toyo Trust and Banking merged to form the UFJ, United Financials ofJapan, which was accused of corruption by the Japan's government for making bad loans toalleged Yakuzacrime syndicates with executives accused of blocking Financial ServiceAgency inspections. The UFJ was listed amongFortune Magazine's largest money-losingcorporations in the world, with Toyota's chairman serving as a director. At the time, the UFJwas one of the largest shareholders of Toyota. As a result of Japan's banking crisis, the UFJwas merged again to become Mitsubishi UFJ Financial Group.

In 2002, Toyota managed to enter a Formula One works team and establish joint ventureswith French motoring companies Citron and Peugeot a year after Toyota started producingcars in France.

Toyota ranked eighth on Forbes 2000list of the world's leading companies for the year 2005.The company was number one in global automobile sales for the first quarter of 2008.

On December 7, 2004, a U.S. press release was issued stating that Toyota would be offeringSirius Satellite Radios. However, as late as January 27, 2007, Sirius Satellite RadioandXM

Satellite radio kits were not available for Toyota factory radios. While the press releaseenumerated nine models, only limited availability existed at the dealer level in the U.S. As of2008, all Toyota and Scion models have either standard or available XM radio kits. MajorLexus dealerships have been offering satellite radio kits for Lexus vehicles since 2005, inaddition to factory-equipped satellite radio models.

In 2007, Toyota released an update of its full size truck, theTundra, produced in twoAmerican factories, one in Texas and one in Indiana. "Motor Trend" named the Tundra"Truck of the Year," and the 2007 Toyota Camry "Car of the Year" for 2007. It also beganthe construction of two new factories, one to build the RAV4 in Woodstock, Ontario, Canadaand the other to build the Toyota Prius in Blue Springs, Mississippi, USA. This plant was

originally intended to build the Toyota Highlander, but Toyota decided to use the plant in

http://en.wikipedia.org/wiki/Toyota_T100http://en.wikipedia.org/wiki/Toyota_Tundrahttp://en.wikipedia.org/wiki/Toyota_Camryhttp://en.wikipedia.org/wiki/Toyota_Solarahttp://en.wikipedia.org/wiki/Scion_(car)http://en.wikipedia.org/wiki/Scion_(car)http://en.wikipedia.org/wiki/Toyota_Priushttp://en.wikipedia.org/wiki/Toyota_Team_Europehttp://en.wikipedia.org/wiki/Toyota_Team_Europehttp://en.wikipedia.org/wiki/Toyota_Motor_Europehttp://en.wikipedia.org/wiki/TMUKhttp://en.wikipedia.org/wiki/Indianahttp://en.wikipedia.org/wiki/Virginiahttp://en.wikipedia.org/wiki/Tianjinhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Toyo_Trust_and_Bankinghttp://en.wikipedia.org/wiki/UFJhttp://en.wikipedia.org/wiki/Yakuzahttp://en.wikipedia.org/wiki/Yakuzahttp://en.wikipedia.org/wiki/Mitsubishi_UFJhttp://en.wikipedia.org/wiki/Formula_Onehttp://en.wikipedia.org/wiki/Citro%C3%ABnhttp://en.wikipedia.org/wiki/Peugeothttp://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Sirius_Satellite_Radiohttp://en.wikipedia.org/wiki/Sirius_Satellite_Radiohttp://en.wikipedia.org/wiki/Sirius_Satellite_Radiohttp://en.wikipedia.org/wiki/XMhttp://en.wikipedia.org/wiki/XMhttp://en.wikipedia.org/wiki/Toyota_Tundrahttp://en.wikipedia.org/wiki/Toyota_Tundrahttp://en.wikipedia.org/wiki/Toyota_Tundrahttp://en.wikipedia.org/wiki/Toyota_Camryhttp://en.wikipedia.org/wiki/Toyota_RAV4http://en.wikipedia.org/wiki/Toyota_Priushttp://en.wikipedia.org/wiki/Toyota_Highlanderhttp://en.wikipedia.org/wiki/Toyota_T100http://en.wikipedia.org/wiki/Toyota_Tundrahttp://en.wikipedia.org/wiki/Toyota_Camryhttp://en.wikipedia.org/wiki/Toyota_Solarahttp://en.wikipedia.org/wiki/Scion_(car)http://en.wikipedia.org/wiki/Toyota_Priushttp://en.wikipedia.org/wiki/Toyota_Team_Europehttp://en.wikipedia.org/wiki/Toyota_Motor_Europehttp://en.wikipedia.org/wiki/TMUKhttp://en.wikipedia.org/wiki/Indianahttp://en.wikipedia.org/wiki/Virginiahttp://en.wikipedia.org/wiki/Tianjinhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Toyo_Trust_and_Bankinghttp://en.wikipedia.org/wiki/UFJhttp://en.wikipedia.org/wiki/Yakuzahttp://en.wikipedia.org/wiki/Mitsubishi_UFJhttp://en.wikipedia.org/wiki/Formula_Onehttp://en.wikipedia.org/wiki/Citro%C3%ABnhttp://en.wikipedia.org/wiki/Peugeothttp://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Sirius_Satellite_Radiohttp://en.wikipedia.org/wiki/Sirius_Satellite_Radiohttp://en.wikipedia.org/wiki/XMhttp://en.wikipedia.org/wiki/Toyota_Tundrahttp://en.wikipedia.org/wiki/Toyota_Camryhttp://en.wikipedia.org/wiki/Toyota_RAV4http://en.wikipedia.org/wiki/Toyota_Priushttp://en.wikipedia.org/wiki/Toyota_Highlander


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Princeton, Indiana, USA, instead. The company has also found recent success with its smallermodels the Corolla and Yaris as gas prices have risen rapidly in the last few years.

In 2009-2010, the company was heavily in debt and had to request a loan of more than $3billion from a bank backed by the Japanese government.

Ethical issues of Toyota

Toyota admits to purposely neglecting safety concerns and delaying recall investigations

to save money

Toyota has finally admitted to engaging in unethical behavior when it comes to investigatingthe safety of its vehicles. An article released by theAssociated Press late Sunday night,confirms that Toyota not only dragged its feet when looking into safety defects, but also

patted itself on the back for doing so.

In a 2009 presentation called, "Wins for Toyota Safety Group," it shows that in 2007, Toyotapurposely and repeatedly delayed safety regulations by avoiding defect investigations andobstructing government inquiries into safety concerns.

The Associated Press also states, "The new documents show the financial benefit of delay. Inthe presentation, Toyota said a phase-in to new safety regulations for side airbags saved thecompany $124 million and 50,000 man hours. Delaying a rule for tougher door locks saved$11 million."

In a situation like this it is easy to see that something went wrong, but how can things go so

wrong. Toyota is a company that has a mantra of "kaizen," or continuous improvement.Instead they somehow found a way to justify negotiating with the government to make theirproblems disappear.

However, consumers have found themselves victims of a PR spin game in which Toyotawould recall a limited amount of vehicles at certain times of the year to avoid a massiverecall. At the same time, Toyota was producing new vehicles with known safety flaws andadvertising their vehicles to be the safest and highest quality vehicles on the road.

A further look into the documents reveals several other reports entitled "Wins for Toyota &Industry," including "favorable recall outcomes," "secured safety rulemaking favorable toToyota" and "vehicles not in climate legislation." Another page lists "key safety issues,"including "Sudden acceleration on ES/Camry, Tacoma, LS, etc."

What this goes to show is that Toyota conspired with NHTSA, the government departmentresponsible for crash test ratings, to falsely improve Toyota's safety record while hiding thefact that NHTSA and the Department of Transportation were neither adequately staffed norcompensated to deal with influx of safety concerns raised by consumers.

The larger problem with this scandal is that it has created a precedent for corruption and

unethical behavior when it comes to the safety of vehicles that so many of us use and depend

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upon everyday. We now have a situation, in which we must now question the validity of allsafety scores given out not only to Toyota vehicles but to all motor vehicles.

Every company that engineers and manufactures a product strives to save costs, so thisdoesn't blow us away. What does shock us is how irresponsible and uncaring the U.S.

government that we employ to represent and serve us, continues to f*ck us over.

This problem is reminiscent of what tobacco companies did to smokers during the latter halfof the last century. Tell the consumer your product is safe, make them feel at ease while usingit, and derail the government and whistle-blowers who are trying to show just how dangerousyour product is.

Unethical Behavior of Toyota

There have been many academic studies done on Toyota and articles created based on thesestudies. Toyotas manufacturing plants back home in Japan resembles some of the worstsweat shops in the world. Their operations have been described as "slavery" and "humantrafficking". Toyota has thousands of "karoshi" claims each year. This term means "overworked to death". Their plants have very high suicide rates as well. And when an injury hasoccurred to an employee, on the job they are layer off, and receive no compensation.

Toyota is well known for their union busting, which has destroyed many small countries allaround the world. Reducing the standards of living amongst the countries citizens.

There are already 1800 instances in the US where employees at the Kentucky plant have beeninjured, fired, and they disappear from the compensation pay roll. This happens at a rate of

400 Americans per year working at Toyota. Toyota builds their plants in the poorest states totake advantage of the lowest wages in the country. Many workers have been kept on astemporary workers for over 4 years.

Their goal is to lower the average wages in America, and Honda seems to be backing them.Toyota is one of the worlds most profitable corporations, yet the more profits they make, themore they lower worker wages.

So essentially Toyota uses the cheapest materials, and the poorest workers to manufacturethem.

A Closer look at the Toyotas Sudden Acceleration Problem

In light of a recent tragedy in which an off-duty CHP officer and three members of his familywere killed, many have raised questions about what the true cause may have been.

According to a recent article in the Los Angeles Times, there may be more to the story thanfirst explained by Toyota issued a statement pointing to the installation of an improper floormat from another vehicle, as we previously reported as the cause of the crash. Then just onemonth after the crash involving the Saylor family, Toyota issued the largest call in companyhistory, affecting 3.8 million vehicles dating back to 2004.



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Yet some believe that the issue goes beyond the floor mats and lands likely in what manybelieve to be a flawed design with the highly computerized engine control system whichlacks a fail-safe mechanism for emergency situations. The need for a fail-safe mechanism is

being currently considered as a possible solution by Toyota, putting them in a position ofimplicit agreement.

In addition to the attorneys of victims, survivors, press organizations, and Toyota consideringalternatives, there have also been nine different federal inquiries and investigations since2000. Of the nine cases involving federal probing, only two cases pointed to the floor mats asthe definite cause. Of the remaining cases, five have dismissed Toyota of fault, one pointed toa loose part, and one case is still open.

At the current time the only way to shut the vehicle off in a similar emergency would be tofollow the directions outlined within the owners manual, which reads, If you have to makean emergency stop, press and hold the power switch for more than three seconds. AToyota spokesperson points out that this will also disable power assisted steering and

braking.

In a case such as Saylors where the owner is unfamiliar with the vehicle, relying on thedrivers in-depth knowledge of the owners manual is not practical, pointing to the need for amore obvious solution. Safety experts also pointed out the fact that modern brake-assistsystems operate with a vacuum powered assistance a vacuum that is reduced or eliminatedunder full throttle. The result is that considerable force on the brake pedal may result inminimal stopping power.

To demonstrate the problem of relying on power-assisted brakes in the case of sudden anduncontrollable acceleration, the attorney for Guadalupe Gomez explained the details of hisclients case, He [Gomez] was held hostage for 20 miles on a Bay Area freeway by a 2007Camry traveling more than 100 mph. Gomez was unable to turn off the engine or shift into

neutral and then burned out his brakes before slamming into another car and killing thatdriver.

According to The National Highway Traffic Safety Administration there is still an openinvestigation into sudden acceleration events involving Toyota vehicles.

Toyota Financing, Repossession & Unethical Auction

An acquaintance had his car repossessed after losing his job and not being able to keep upwith payments. He kept hoping that things pick up and he could start making his paymentsagain but then one day there was a pounding on his front door. A man had already hooked uphis car to a tow truck and was ready to cart it off but just wanted to give him his business cardjust in case.



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He told my friend that the car would be at a certain location for at least a month in case hecould catch up with his payments. A last ditch effort phone call to Toyotas financialdepartment to stop the repossession was in vain. They refused to take the last bit of money ona credit card my friend had and off the car went.

Well not only did the car not remain at the location specified by Toyotas tow truck driver(some 50 miles away from my friends present location), it was transported 200 additionalmiles away making it totally impossible for him to get it back.

Within a week and a half of the tow, Toyota sent him a letter informing him he would have topay all the back payments, plus cleaning costs, more magical fees and then they sprung iton him that they moved the car to some city he had never heard of. They didnt take the car

back to the dealer from whom he purchased it 50 miles away, in a town where he used tolive. They didnt keep the car at the location specified by the tower in the county where hewas now living. They took it to never-never land! So even if he could catch up on his

payments, how on earth was he going to make the journey to the new location? He couldnt.

The reason I say Toyota Motors financing department sucks is the manner in which they wentabout auctioning off the car. They deliberately sold it for less than half its fair market valueand expected him to pay for their losses. Thats insane! The law usually understands theconcept of fair market value but apparently not in the case of a repossessed auto and how carcompanies play the repo game. At least not in California. Its unethical. And the law should

be changed to provide a measure of fairness to the poor chap who gets his car towed away.

I know you could argue that he was his own fault for not making his payments. Well itwasnt his fault that he lost his job because of the unethical actions of banks in creating thiscrapping economy.

Toyotas once Unbeatable Business Model

Shocking, yes? But no less shocking than Toyota, the world-class manufacturing qualityexpert, recalling millions of cars across its product lines. Three generations after its foundercreated Toyota on a philosophy that built quality into every step, it turns out that Toyotas

quality has been steadily eroding.

Today, Toyotas quality issues are deep and systemic.

After all, the companys problems:

Involve multiple components, vehicles and years of manufacture. Create dangerous safety issues failing brakes and uncontrollable self-accelerating gas

pedals. Were surfaced years ago yet are leading to recalls only under regulatory pressure.

May not have had the attention of top management until after all hell broke loose. (ToyotasCEO just recently committed to creating a senior level quality committee to look into the



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problem.) May not yet be truly resolved. While the accelerator fix has been identified, its unclearwhether theres an electrical system glitch causing some uncontrolled accelerations. Are not being presented truthfully. Toyotas leaders make false statements that put Toyotain a better light, only to rescind these comments when a government agency points out the

truth.

He winning value promise

Toyotas compelling and unique value promise propelled Toyota to surpass GM as the

worlds largest automobile manufacturer: With Toyota, you can have comfort without

frustration, a welcomed relief in an industry formerly fraught with reliability issues from all

but Honda.

Leveraging its quality advantage, Toyota built a line of cars from economy to luxury that

reduced the frustration of car ownership (Lexus versus Mercedes/BMW and Camry versus

GM/Chrysler/Ford brands). Its brands also increased comfort compared to Hondas reliable

line. The Prius extended Toyotas brand promise into its hybrid engine cars.

The root cause of the Toyotas quality problems

No one would expect 100% perfection on Toyotas part. Suppliers and designs change,

materials have defects, etc. in manufacturing companies. But quality issues in multiple parts

and vehicles and a growing number of recalls over the years point to the deeper cause of

Toyotas quality issues.

New automobile component technologies (more electronic and less mechanical) should have

led to new quality systems and far more careful attention to drivers experiences than Toyota

provided. Whether it was over-confidence in its historical quality systems or pressure to keep

production and profits rolling as demand grew, internal forces precluded a relentless drive to

fine-tune internal systems to Toyotas value promise as technology changed.

This drive to align everything to the value promise while generating profitability should be

front and center in any strategic leaders agenda. Instead, Toyota maintained its brand

promise in external communications, but failed to align internal decisions with its value

promise.

Another piece of evidence that Toyota lost an internal focus on its value promise comes in

Toyotas reactions to its quality issues. Toyota fixed new cars being produced without

recalling cars in the field, delayed communicating quality issues to customers and regulators

and made many misstatements to the public. Toyotas historic value promise for sure didnt

drive these decisions. Rather, Toyotas reactions have raised frustration and reduced



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perceived reliability of the Toyota brand, the opposite of its value promise.

The lesson

Growth often destroys brands. As companies get larger, C-Suite leaders lose the pulse of the

business at the same time that communication channels to the C-Suite become convoluted orblocked. Growth and profits become aims, while delivering on the value promise becomes

secondary or even forgotten. A disconnection arises between what is promised and what is

then delivered that erodes brand equity.

Hopefully Toyota will learn the lesson that a business value promise must drive all internal

actions and decisions. It will take an incredible communicator to instill a singular focus on

the value promise all over again, a focus Toyotas founder created and his son and grandson

lost. Meanwhile, Ford and Hyundai are driving their cars and messaging right through the

hole Toyota left in the market.

Do you regularly ask or hear in meetings, What should we do in light of our value promise?

If not, make sure everyone in your organization knows your companys value promise and

get busy with alignment. Your Toyota moment may not be as public. But the lost reputation,

revenue and profits will nevertheless be substantiated.

Problem Solving Using the Toyota A3 Method

The idea is to solve problems as a team by looking at the symptoms, understanding thebusiness context, and identifying the root causes. You can grow or shrink the sheet to fit thepaper. The original technique uses ISO A3 because it is a good size to use in a workshop,then later place on a team notice board.

The simple example in the spreadsheet is based on a real situation I encountered at the start of2007. My objective this time was to explore layouts, shapes, and alignment. Please forgivemy choice of colors m no graphic artist. I hope you find the A3 technique useful.

The A3 system was originally created by the Toyota Motor Corporation and was named forthe paper size on which it was printed. Toyota used the A3 methodology to help develop itsfamed Toyota Production System (TPS).

Steve includes both a blank template, and a fully completed example. The basic steps of theA3 method is

1. Theme or Background (What should be happening?)2. Current Condition (What is happening? and Context)

3. Cause Analysis (Symptoms and Causes)



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4. Target Condition (Draw the solution)

5. Implementation Plan (Actions: Who, What, When, Where)

6. Follow Up (How will you know when you have fixed the root cause?)


ethical issues on toyota

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