2.

7TOYOTA: CORPORATE SOCIAL RESPONSIBILITY

The history of Toyota Motor Corporation (TMC) which is a Japan based-company begins when it is
established at 1937 by the founder, Kiichiro Toyoda. (Toyota Motor Corporation n.d.) Since then,
the company has started to emerge into the industry of automobile manufacturing until now. As of
today, Toyota is one of the world’s leading company manufacturing vehicles and parts. In order to
move fast to keep pace with other competitors and to maintain its position and reputation in the
business, Toyota has practiced the Corporate Social Responsibility (CSR) policy which is
“Contribution towards Sustainable Development”. (Toyota Motor Corporation n.d.) With this
policy, Toyota does not only concentrate in maximizing its profit as they also contribute in taking
care of the welfare of the society and the environment. Nowadays, most of the consumers are
highly educated and environmentally conscious as they are demanding for more than just a high
quality or a reasonable price product. Therefore, Toyota has to make sure that they can balance up
the needs of the society and consumers. Besides producing high quality vehicles, Toyota also has to
respond to the environmental issues which have been occurred.

In this new era, Toyota is taking every steps and precautions to protect the environment. They may
proclaim that they have done good to the society by implementing some policies or concepts such
as the introduction to the hybrid cars. But how far could they go? One of the good examples is
when Toyota Prius was first launched in 1997. Many has criticized and questioned about the Prius’s
green concept which uses the hybrid system. Production of hybrid cars is one of the responses of
Toyota towards the issue of global warming and the limits of fossil fuel. (Toyota Motor Corporation
n.d.) In producing this car especially the battery itself, it actually causes more harm to the
environment. One of the biggest concerns about this car is that Prius battery contains nickel metal
hydride. (Prius Outdoes Hummer in Environmental Damage 2007) Based on the newswire, the
nickel is mined and smelted at a plant in Sudbury, Ontario which leads to environmental damage to
the surrounding area. This has further leads the NASA’s astronaut trainees to practice moon rovers
around the Sudbury plant which is badly destructed. (Prius Outdoes Hummer in Environmental
Damage 2007) Also, there are many critics who comment on the shipping footprint of the nickel
battery. The smelted nickel from Sudbury is shipped to Wales for refinery and to be made into
nickel foam at China. The completed batteries which are made in Japan would be then shipped to
United States when the car is ready. (Hodges 2009) This has creates doubt about Toyota’s
environmental aspect as the production process of the battery is not helping in reducing emissions
but in fact, the shipping process has already consumed a lot of fossil fuels which would lead to air
pollution.

Back in 2003, Toyota is questioned about its philosophies towards green environment. Toyota is
facing a lawsuit from The Department of Justice and the Environment Protection Agency for
violating Clean Air Act. (BJS, 2003) Upon Toyota’s application for Certificates of Conformity, it
has claimed that Toyota has sold 2.2 million vehicles which were different from the statements in
the application. According to the United States government, Toyota has failed to disclose limitation
in the operation of the on-board diagnostic system that checks for leaks in vehicles. (BJS, 2003)
Because of the leakage problem, Toyota is involved in causing pollution as fuel that vapours into
the air would lead to the ozone pollution. Due to this matter, the consumers of Toyota vehicles do
not know that they are actually indirectly involved in polluting the environment. Another case
which leads to a doubtful thought about Toyota’s environmental friendly principles is when Toyota
is sued by California at year 2006. (Glaister 2006) Toyota and several other automakers are to take
the blame for producing large amount of vehicles that releases huge quantities of carbon dioxide
which contributes to global warming. According to the state’s Democratic attorney general, global
warming is bringing harm to California’s economy, environment, public health and agriculture.
(Glaister 2006) Though Toyota is making revolution by producing hybrid cars and building more
fuel-efficient vehicles, Toyota’s image and reputation are blemished by the lawsuits that it faced
before.

In spite of the criticism of the nickel battery and the lawsuit cases against Toyota, the company has
actually poured a lot of effort in protecting the environment. Based on Toyota’s sustainability
concept, it has focused on three areas comprise of technology, manufacturing and social
contribution. (Toyota Motor Corporation n.d.) Research and Development (R&D) is categorized in
the area of technology and one of the R&D that Toyota has created is that they have engineered its
own flower species. (Merchant 2009) The carbon dioxide released by its Prius assembly operations
is offset by this new plant species. The flowers are derived from the cherry sage and gardenia which
helps to absorb nitrogen oxides and to reduce the heat of the atmosphere. (Merchant 2009) Toyota
should be praised because it has discovered something special in those flowers. Both the flowers
have unique characteristics as the sage’s leaves can absorb harmful gases whereas gardenia’s leaves
can reduce the temperature of the factory’s surroundings by creating water vapor in the air.
(Blackburn 2009) With this, Toyota can concentrate in finding and doing research in advanced
technology to produce hybrid cars as they have found a greener way to reduce the emissions of the
manufacturing process. This also has shown that Toyota has gone beyond their industry area to look
for alternatives and new innovations to preserve the environment. Their action would definitely
build up its reputation and image among the stakeholders especially the consumers.

In committing towards sustainable development, Toyota is also taking initiatives to develop the
manufacturing process through a greener way. It cannot be denied that Toyota is actually polluting
the environment during the process of manufacturing and producing the vehicles and car batteries.
Hence, Toyota is designing and manufacturing its vehicles based on the concept of three R’s which
consists of reduce, reuse and recycle. (Toyota Europe n.d.) Toyota has been manufacturing vehicles
 with recyclable materials as cars are actually built by plastics that are difficult to be recycled.
Therefore, Toyota has created Toyota Super Olefin Polymer which is a special recyclable plastic to
make car bumpers and other parts. It can then be recycled and used for many times. (Toyota Europe
n.d) Besides, Toyota also has indirectly encouraged the consumers and dealers to be involved in
recycling program. For example, each of the battery of the Prius car has a phone number on it to
ensure every battery goes back to Toyota for the purpose of recycling it and dealers are to be paid
$200 for each battery. (Richard 2005) Other than that, Toyota has also stepped in further in the area
of recycling. For instance, Toyota has built up a waste collection systems. It is for the purpose of
retrieving used parts such as tyres, batteries and oil filters from European dealers to send them back
for recovery. (Toyota Europe n.d.)

In order to contribute to the society, Toyota has involved in various environmental activities. One of
them is shown by Toyota’s support of Planet Ark’s National Tree Day. National Tree Day is one of
the Australia’s biggest community tree planting events which falls on August 1, 2010. (Tree Day
n.d.) It is a special day where all the Australians would gather around to join this event. All of them
are working towards the same motive which is to lending a helping hand to plant and to care for
native trees and shrub to improve the environment they live in. (Tree Day n.d.) Toyota has
demonstrated its concern and care for the environment by joining this event. Toyota has been
supporting Planet Ark and National Tree Day since 11 years ago. (Toyota Motor Corporation
Australia Limited n.d.) Ever since Toyota joins this event, its partnership with Planet Ark and
National Tree Day are being appreciated and they are working in a collaborative way. All Toyota’s
dealers, staffs and brand ambassadors are being encouraged to participate and to support this special
day. Their supports can be shown by Toyota’s contribution of planting almost 15 millions of trees to
reduce the effect of global warming. . (Toyota Motor Corporation Australia Limited n.d.) This
action is a good example and role model for society as Toyota would influence the society to
contribute to National Tree Day as well.

As an automobile manufacturer, Toyota is facing challenges and obligations everyday throughout the whole
process of a vehicle starting from the development until the disposal stage. In my opinion, it is not easy to be
one of the largest companies. For instance, Toyota has to face pressures given by the government,
stakeholders and the society to fulfill and to respond towards their needs for a better product and a better
environment. It has been a tough and long journey for Toyota to achieve what they have now because
throughout its company’s history, they have been criticized and many comments have been given which are
against their every action. Though they might not be a hundred percent environmental friendly company,
they are actually giving a large proportion of contributions in helping the society to achieve a healthier
environment. Which automobile company can be a fully hundred percent based environmental friendly
company? I doubt there are any companies who can successfully do so. All in all, every company including
Toyota needs to fulfill their responsibilities towards the society and environment in order to have a better life
and world. Our future generations are very much depending on their actions which are taken today.
 2.8 SWOC ASSESSMENT

Toyota’s Strengths (Internal Strategic Factors)

Global supply chain

Rapid innovation capabilities

Toyota has one of the strongest brands in the global automotive industry. The company’s global
supply chain is also a strength that enables resilience and market-based risk minimization.
Furthermore, Toyota has an organizational culture that facilitates rapid innovation, which is crucial
for long-term competitive advantage. This part of the SWOT analysis shows that Toyota’s strengths
support its position as one of the biggest automobile manufacturers in the world.

Toyota’ s Weaknesses (Internal Strategic Factors)

Toyota’s weaknesses point to possible inefficiencies in the organization. This element of the SWOT
analysis model determines the internal strategic factors that serve as obstacles to business growth.
Toyota’s main weaknesses are as follows:

Secrecy in organizational culture

Effects of product recalls in recent years

Toyota’s global hierarchical organizational structure prevents maximum flexibility of regional

operations. Also, the company’s culture of secrecy is a weakness that reduces response times in
addressing emerging problems. In addition, Toyota implemented massive product recalls starting in
2009.

These recalls weaken the firm because the recall processes consume business capacity that could be
used for product distribution instead. This part of the SWOT analysis shows that Toyota could
improve its performance through adjustments to reduce the weaknesses based on its organizational
structure and culture.

Opportunities for Toyota (External Strategic Factors)

Toyota’s opportunities are mainly based on technological and economic trends. This element of the
SWOT analysis model identifies the external strategic factors that the firm could use to improve its
business. Toyota’s most significant opportunities are as follows:

Growing markets in developing countries

Rising demand for fuel-efficient automobiles

Growing interest in advanced electronics in vehicles

Developing markets present the opportunity for Toyota to increase revenues by further penetrating
these markets. Also, the current trends of increasing demand and interest for higher fuel efficiency
and advanced electronics present the opportunity for Toyota to focus its innovation on these
directions. In addition, the weaker Japanese Yen versus the U.S. Dollar means higher
competitiveness of products and components exported from Japan to the U.S. This part of the
SWOT analysis shows that Toyota must emphasize market penetration and innovation to exploit its
opportunities.

Threats Facing Toyota (External Strategic Factors)

The threats to Toyota’s business are based mainly on the competitive landscape. This element of the
SWOT analysis model determines the external strategic factors that could reduce the firm’s
performance. In Toyota’s case, the main threats are as follows:

Growing market presence of low-cost competitors

Rapid innovation of competitors

Toyota faces the threat of competition with low-cost automobiles from Korean, Chinese and Indian
manufacturers, which have been increasing their presence in foreign markets. Toyota also
experiences the threat of rapid innovation of competitors like GM, Honda, and Ford. This part of
the SWOT analysis shows that Toyota must ensure competitive advantage, such as through
innovation.

Recommendations based on Toyota’s SWOT Analysis

Toyota’s SWOT analysis identifies key issues, such as the effects of competition and the company’s
weaknesses based on its organizational structure and culture. To address the threats based on
competition, Toyota needs to maximize its competitive advantage based on its innovative
capabilities. The company can also further adjust its culture and structure to optimize its flexibility
in decision-making and problem solving.