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M.

Rahim Ejaz

Learn How to Conduct Business Ethically

What is the importance of business ethics?


Business ethics reflect the behavior of a business firm with rest of the world. The dealing of a
business house with its consumers, rivals, associated firms and every other body defines its
business ethics to be good or bad. The history has many instances, where renowned business
brands lost their reputation and were fined for following undesirable business manners. These
ethics can help a business to grow and remain in healthy competition, though todays
competitive world is discouraging small and big business brands to remain ethical. With WSI
business opportunity, you can learn methods of becoming sue.

What we have learnt from the course of Business Ethics?


Course Description:
Business ethics is an important part of any industry. Students or managers, unfamiliar with
many ethical challenges, behaviors, or regulations will find themselves struggling in business
industries that include finance, accounting or human resource management, marketing and
retail.
Today's managers must necessarily concern themselves with ethical issues, because unethical
behavior creates legal risks and damage to businesses as well as employees and consumers.
Business ethics have become an integral part of business education in general. A student or
manager who is well-versed in ethical behavior in practices, not only in the domestic market
but internationally, will find him or herself better prepared to deal with issues or situations
that may arise that don't always involve easy answers or decisions.
Each one of us, from the individual consumer to the CEO of an international corporation, is
affected in some way by business ethics during the course of his or her life. Therefore,
everyone has a stake in the ramifications resulting from unethical business decisions.
This business ethics course offers an introduction into the concept of values, morality, as well
as cultural beliefs and upbringing in all areas of business, from consumer rights to corporate
social responsibility. Decisions made by shift managers or corporate presidents may affect
thousands of individuals or entire communities. Consumers today expect and demand
integrity, honesty, and transparency in all levels of their environment. Understanding those
expectations is the key to communicating core values and behavior not only to employees,
but society in general.

Business Ethics | Toyota Motors

M. Rahim Ejaz

Why the business ethics is so important in the Managerial Business?


Audience
Managers and supervisors who want to learn how to create an ethical work environment and
encourage ethical behavior and discourage unethical behavior in their employees.
Objective

Demonstrate characteristics of ethical managers.


Identify ways to ensure ethicality in the workplace.

Follow steps for handling ethical dilemmas brought to you by subordinate employees.

Identify causes of unethical behavior.

Identify methods for recognizing a subordinate employee's unethical behavior.

Follow an intervention process for ending unethical behavior.

Understanding Business Ethics and Ethical Issues

Identify seven characteristics ethical managers possess.


Identify the three categories of ethical management.

Demonstrate characteristics of ethical managers.

Demonstrate the moral ethical management style.

Identify common human resource issues.

Identify criteria used to handle ethical issues where all solutions violate ethical
principles.

Simulation Overview:

Addressing Subordinates' Ethical Issues

Identify ways to ensure ethicality in the workplace.


Identify the steps for handling ethical dilemmas brought to you by subordinate
employees.

Follow steps for handling ethical dilemmas brought to you by subordinate employees.

Identify the steps of the whistle blowing process.

Recognizing an Employee's Unethical Behavior

Identify causes of unethical behavior.


Identify methods for recognizing a subordinate employee's unethical behavior.

Follow an intervention process for ending unethical behavior.


Business Ethics | Toyota Motors

M. Rahim Ejaz

Simulation Overview:

My personal experience about the Business Ethics Class


I have learned a lot from Business Ethics both professionally and personally. I am a very
spiritual person to begin with so I knew from the time I signed up that I would enjoy this
class.
One of the things I liked the most was Cases and Ethical Queries. Through those two
exercises I was able to view other people's opinions on some very important issues. It has
definitely helped me to see why our society is struggling with ethical issues. It also makes
me ask "how did we let it get this far?"
I think through this class I have found the answer. I believe it is because we, Pakistanis,
have no absolute authority. That is why some of my fellow students answered some of the
questions that pertained to whether a certain issue is right or wrong as it would depend on the
situation or they would never want to be known as the whistle blower. I don't believe that
there are any gray areas. Stealing is wrong no matter the situation or what the person has
stolen. Society today tells us that there are these gray areas, but that is only used to make
excuses for our wrongs because let's face it no one wants to be wrong.

TOYOTA MOTORS COPORATIONS


Introduction
Toyota Motor Corporation, commonly known simply as Toyota, is a multinational
corporation headquartered in Japan. At its peak, Toyota employed approximately 320,000
people worldwide. It is the world's largest automobile maker by sales.
The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's
company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a
department of Toyota 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 minority
shareholdings in Fuji Heavy Industries, Isuzu Motors, Yamaha Motors, and Mitsubishi
Aircraft Corporation. The company includes 522 subsidiaries.
Toyota is headquartered in Toyota City, Aichi and in Tokyo. In addition to manufacturing
automobiles, Toyota provides financial services through its Toyota Financial Services
division and also builds robots. Toyota Motor Corporation (including Toyota Financial
Services) and Toyota Industries form the bulk of the Toyota Group, one of the largest
conglomerates in the world.

Business Ethics | Toyota Motors

M. Rahim Ejaz

Company Overview
The Toyota Motor Company received its first Japanese Quality Control Award at the start of
the 1980s and began participating in a wide variety of motorsports. Due to the 1973 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 price
low.
By the early sixties, the US had begun placing stiff import tariffs on certain vehicles. The
Chicken tax of 1964 placed a 25% tax on imported commercials vans. In response to the
tariff, Toyota, Nissan Motor Co. and Honda Motor Co. began building plants in the U.S. by
the early eighties.
In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, the
Toyota Motor Corporation. Two years later, Toyota entered into a joint venture with General
Motors called NUMMI, the New United Motor Manufacturing, Inc, operating an automobilemanufacturing plant in Fremont, California. The factory was an old General Motors plant that
had 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.
In the 1990s, Toyota began to branch out from producing mostly compact cars by adding
many 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 the
Camry Solara; and the Scion brand, a group of several affordable, yet sporty, automobiles
targeted 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 of Toyota Team Europe, the corporation
decided to set up TMME, Toyota Motor Europe Marketing & Engineering, to help market
vehicles 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 in
Indiana, Virginia and Tianjin were also set up. In 1999, the company decided to list itself on
the New York and London Stock Exchanges.
Toyota Deutschland's headquarters in Cologne
In 2001, Toyota's Toyo Trust and Banking merged to form the UFJ, United Financials of
Japan, which was accused of corruption by the Japan's government for making bad loans to
alleged Yakuza crime syndicates with executives accused of blocking Financial Service
Agency inspections. The UFJ was listed among Fortune Magazine's largest money-losing
corporations in the world, with Toyota's chairman serving as a director. At the time, the UFJ
was one of the largest shareholders of Toyota. As a result of Japan's banking crisis, the UFJ
was merged again to become Mitsubishi UFJ Financial Group.

Business Ethics | Toyota Motors

M. Rahim Ejaz

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

Toyota ranked eighth on Forbes 2000 list 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 offering
Sirius Satellite Radios. However, as late as January 27, 2007, Sirius Satellite Radio and XM
Satellite radio kits were not available for Toyota factory radios. While the press release
enumerated nine models, only limited availability existed at the dealer level in the U.S. As of
2008, all Toyota and Scion models have either standard or available XM radio kits. Major
Lexus dealerships have been offering satellite radio kits for Lexus vehicles since 2005, in
addition to factory-equipped satellite radio models.
In 2007, Toyota released an update of its full size truck, the Tundra, produced in two
American 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 began the
construction of two new factories, one to build the RAV4 in Woodstock, Ontario, Canada and
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
Princeton, Indiana, USA, instead. The company has also found recent success with its smaller
models 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 $3
billion 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 investigating
the safety of its vehicles. An article released by the Associated 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, Toyota
purposely and repeatedly delayed safety regulations by avoiding defect investigations and
obstructing government inquiries into safety concerns.
The Associated Press also states, "The new documents show the financial benefit of delay. In
the presentation, Toyota said a phase-in to new safety regulations for side airbags saved the
company $124 million and 50,000 man hours. Delaying a rule for tougher door locks saved
$11 million."
Business Ethics | Toyota Motors

M. Rahim Ejaz

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 their
problems disappear.

However, consumers have found themselves victims of a PR spin game in which Toyota
would recall a limited amount of vehicles at certain times of the year to avoid a massive
recall. At the same time, Toyota was producing new vehicles with known safety flaws and
advertising 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 to
Toyota" 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 department
responsible for crash test ratings, to falsely improve Toyota's safety record while hiding the
fact that NHTSA and the Department of Transportation were neither adequately staffed nor
compensated 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
upon everyday. We now have a situation, in which we must now question the validity of all
safety 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 this
doesn'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 half
of the last century. Tell the consumer your product is safe, make them feel at ease while using
it, and derail the government and whistle-blowers who are trying to show just how dangerous
your product is.

Unethical Behavior of Toyota


There have been many academic studies done on Toyota and articles created based on these
studies. Toyotas manufacturing plants back home in Japan resembles some of the worst
sweat shops in the world. Their operations have been described as "slavery" and "human
trafficking". Toyota has thousands of "karoshi" claims each year. This term means "over
worked to death". Their plants have very high suicide rates as well. And when an injury has
occurred 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 all
around 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 been
Business Ethics | Toyota Motors

M. Rahim Ejaz

injured, 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 to
take advantage of the lowest wages in the country. Many workers have been kept on as
temporary 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, the
more they lower worker wages.
So essentially Toyota uses the cheapest materials, and the poorest workers to manufacture
them.

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 family
were 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 than
first explained by Toyota issued a statement pointing to the installation of an improper floor
mat from another vehicle, as we previously reported as the cause of the crash. Then just one
month after the crash involving the Saylor family, Toyota issued the largest call in company
history, affecting 3.8 million vehicles dating back to 2004.
Yet some believe that the issue goes beyond the floor mats and lands likely in what many
believe to be a flawed design with the highly computerized engine control system which
lacks 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 of
implicit agreement.
In addition to the attorneys of victims, survivors, press organizations, and Toyota considering
alternatives, there have also been nine different federal inquiries and investigations since
2000. Of the nine cases involving federal probing, only two cases pointed to the floor mats as
the definite cause. Of the remaining cases, five have dismissed Toyota of fault, one pointed to
a 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 to
follow the directions outlined within the owners manual, which reads, If you have to make
an emergency stop, press and hold the power switch for more than three seconds. A Toyota
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 the
drivers in-depth knowledge of the owners manual is not practical, pointing to the need for a
more obvious solution. Safety experts also pointed out the fact that modern brake-assist
systems operate with a vacuum powered assistance a vacuum that is reduced or eliminated
under full throttle. The result is that considerable force on the brake pedal may result in
minimal stopping power.
To demonstrate the problem of relying on power-assisted brakes in the case of sudden and
uncontrollable acceleration, the attorney for Guadalupe Gomez explained the details of his
Business Ethics | Toyota Motors

M. Rahim Ejaz

clients case, He [Gomez] was held hostage for 20 miles on a Bay Area freeway by a 2007
Camry 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 that
driver.
According to The National Highway Traffic Safety Administration there is still an open
investigation 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 up
with payments. He kept hoping that things pick up and he could start making his payments
again but then one day there was a pounding on his front door. A man had already hooked up
his car to a tow truck and was ready to cart it off but just wanted to give him his business card
just in case.
He told my friend that the car would be at a certain location for at least a month in case he
could catch up with his payments. A last ditch effort phone call to Toyotas financial
department to stop the repossession was in vain. They refused to take the last bit of money on
a 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 additional
miles 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 to
pay all the back payments, plus cleaning costs, more magical fees and then they sprung it
on 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 to
live. They didnt keep the car at the location specified by the tower in the county where he
was 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 went
about auctioning off the car. They deliberately sold it for less than half its fair market value
and expected him to pay for their losses. Thats insane! The law usually understands the
concept of fair market value but apparently not in the case of a repossessed auto and how car
companies 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 it
wasnt his fault that he lost his job because of the unethical actions of banks in creating this
crapping economy.
Business Ethics | Toyota Motors

M. Rahim Ejaz

Toyotas once Unbeatable Business Model


Shocking, yes? But no less shocking than Toyota, the world-class manufacturing quality
expert, recalling millions of cars across its product lines. Three generations after its founder
created 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. (Toyotas
CEO just recently committed to creating a senior level quality committee to look into the
problem.)
May not yet be truly resolved. While the accelerator fix has been identified, its unclear
whether theres an electrical system glitch causing some uncontrolled accelerations.
Are not being presented truthfully. Toyotas leaders make false statements that put Toyota in
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.

Business Ethics | Toyota Motors

M. Rahim Ejaz

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
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 or
blocked. 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.

Business Ethics | Toyota Motors

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M. Rahim Ejaz

Problem Solving Using the Toyota A3 Method


The idea is to solve problems as a team by looking at the symptoms, understanding the
business context, and identifying the root causes. You can grow or shrink the sheet to fit the
paper. 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 of
2007. My objective this time was to explore layouts, shapes, and alignment. Please forgive
my 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 for
the paper size on which it was printed. Toyota used the A3 methodology to help develop its
famed Toyota Production System (TPS).
Steve includes both a blank template, and a fully completed example. The basic steps of the
A3 method is
1. Theme or Background (What should be happening?)
2. Current Condition (What is happening? and Context)
3. Cause Analysis (Symptoms and Causes)
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?)

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