1) Poison Pill?

 A poison pill is a defense tactic utilized by a target company to prevent or discourage hostile

takeover attempts.
 Poison pills allow existing shareholders the right to purchase additional shares at a discount,
effectively diluting the ownership interest of a new, hostile party. 
 Poison pills often come in two forms—the flip-in and flip-over strategies.
 Types of Poison Pills
 There are two types of poison pill strategies—the flip-in and flip-over. Of the two types, the flip-in
variety is more commonly followed.
 Flip-in Poison Pills
 A flip-in poison pill strategy involves allowing the shareholders, except for the acquirer, to purchase
additional shares at a discount. Though purchasing additional shares provides shareholders with
instantaneous profits, the practice dilutes the value of the limited number of shares already
purchased by the acquiring company. Here's an example. Let's say a flip-in poison pill plan is
triggered when the acquirer purchases 30% of the target company’s shares. Once triggered, every
shareholder—excluding the acquirer—is entitled to buy new shares at a discounted rate. The
greater the number of shareholders who buy additional shares, the more diluted the acquiring
company's interest becomes. This makes the cost of the bid much higher.
 Flip-Over Poison Pills
 A flip-over poison pill strategy allows stockholders of the target company to purchase the shares of
the acquiring company at a deeply discounted price if the hostile takeover attempt is successful. For
example, a target company shareholder may gain the right to buy the stock of its acquirer at a two-
for-one rate, thereby diluting the equity in the acquiring company. The acquirer may avoid going
ahead with such acquisitions if it perceives a dilution of value post-acquisition.

2) How it’s adversely affecting the vaunted

culture of Toyota?

a) A Culture of Cross-Cultural Contradictions and Frictions: The Inside Toyota Story!

 Toyota pays relatively low dividends and hoards cash, which smacks of
inefficiency. Most of Toyota’s senior executives are Japanese men, whereas top
management in successful Western corporations is more diverse.
 The company’s roots are in a rural suburb of Nagoya called Mikawa, and they run deep,
accounting for its managers’ humility and strong work ethic. Toyota doesn’t plan to relocate its
headquarters to Tokyo as rivals like Honda have done.
  By any standard, the company pays executives very little. In 2005, Toyota’s top
executives earned only one-tenth as much as Ford’s. Their compensation was
lower than that of their counterparts at the 10 largest automobile companies, save
Honda.
 Toyota managers also rise through the hierarchy slowly: In 2006, the company’s

executive vice presidents were on average 61 years old—close to the retirement

age at many non-Japanese companies.
b) Sneak-peak of Nepotism attracting social-virus to slowly destroying the “Toyota Way”:
 At Toyota is the influence the founding Toyoda family wields even though it
controls just 2% of the company’s stock. The Toyoda’s (CEO family title) appear to
have a say in most key decisions, but it isn’t clear why they exert power.
 The company’s presidents came mostly from the family’s ranks for decades, and
although three nonfamily executives have been president over the past 13 years,
there’s speculation that the next president will once again be a Toyoda.
 After many years of stellar leadership, last year Akio Toyoda, the grandson of
the company's founder, became CEO. And while Toyota's issues have
gestated for some time before Toyoda took the reins, his spectacular
mishandling of the crisis demonstrates that he wasn't ready for the job.

c) Toyota’s operations are efficient, but it uses employees’ time in seemingly

wasteful ways.

The effect of Poison-pill made many people who attended meetings at Toyota stopped
to participate in the discussions. The company assigns many more employees to
offices in the field than rivals do, and its senior executives spend an inordinate amount
of time visiting dealers. Toyota also uses a large number of multilingual coordinators.

d) Vagueness of the goals that the company made, worsened the scenario of poisoning!
 Many of Toyota’s goals are purposely vague, allowing employees to channel their
energies in different directions and forcing specialists from different functions to
collaborate across the rigid silos in which they usually work.
 For example, Watanabe , MD , Toyota, has said that his goal is to build a car that makes
the air cleaner, prevents accidents, makes people healthier and happier when they
drive it, and gets you from coast to coast on one tank of gas.

e) Leadership Conflict Turns Destructive: Corporate toxicity getting intensified!

 There comes a point when otherwise healthy conflict
turns toxic, even destructive. Experts have seen it happen
too many times, and when it does, it can plunge a
successful company into a tailspin from which it might
never recover. Case in point: the leadership crisis
festering inside Toyota.
 Wall Street Journal chronicled the long-standing feud
between the founding Toyoda family and Toyota's non-
family leadership faction. For generations, the pendulum
 of Toyota's corporate leadership has swung from one to
the other.
 Now, the warring factions have taken their long-standing
feud to new heights of public, personal attacks on each
other. The family faction is led by Akio Toyoda, current
CEO and 53-year old grandson of the company founder.
 Mr. Toyoda, CEO and his allies have been saying openly
that when he took the top job last year after a 15-year
hiatus for the Toyoda clan, he inherited a company
weakened by nonfamily predecessors who sacrificed
quality for faster growth and fatter margins.
 Mr. Toyoda's opponents - former company
presidents Katsuaki Watanabe and Hiroshi Okuda - have
an entirely different views.They say Toyota's current
troubles are less a quality crisis and more a management
and public-relations crisis of Mr. Toyoda's making,
reflecting their longstanding warnings that he wasn't
ready to run a global corporation.
 Like so many big companies before, in its relentless drive
to become the world's largest auto maker, Toyota's
management took its eye off the ball. In other words,
growth became its priority,while the unique aspects of its
culture and operational competencies responsible for its
success to this point, became secondary.
Poison Pill After-effects –
“Nevertheless, instead of working together to resolve critical issues facing the company, Toyota's

leadership has devolved to juvenile finger-pointing. And, if this once-great company's leadership doesn't

get its act together, well, as I said before, "not only will its recovery be long and painful, but it may not

recover at all. It happens."

3) What Toyota Should Have done to save itself?
 The Toyota Production System TPS constitutes for its ‘hard’ innovation that allows the
company to keep improving the way it manufactures vehicles; in addition, Toyota has to
master its “soft” innovation that relates to corporate culture. The hard and the soft
innovations should work in tandem. Like two wheels on a shaft that bear equal weight,
together they move the company forward.
 Studies of human cognition show that when people grapple with opposing insights, they
understand the different aspects of an issue and come up with effective solutions. So Toyota
should foster contradictory viewpoints within the organization and should challenge
employees to find solutions by transcending differences rather than resorting to
compromises. This culture of tensions would generate innovative ideas that Toyota
implements to pull ahead of competitors, both incrementally and radically.

 Embrace diversity: A diverse workforce presents challenges in terms of region,

customs and communication. In these situations, it is important to not just accept
differences, but Toyota should fully embrace them across its entire business. It can be an
extremely humbling experience to open Toyota’s operations to differing cultures and
lifestyles. Embracing those differences and leveraging a shared vision is crucial in making
Toyota’s business successful. 

 Toyota needs to map out a sense of what those differences mean in terms of how people
conduct themselves in the workplace and what their sensitivities and motivations may be
so you can create an environment that enables all people to contribute and be effective.

 Promoting diversity in the workplace requires efforts by everyone. Developing and

implementing a diversity training program throughout your company is a great step.

 Promote open communication: When managing employees from different parts of the
world, successful companies realize that good communication is everything. For
multinational companies, the level of communications in place may determine a
business's life or death. For instance, if Toyota has branches in the United States and
Philippines, Toyota shall need a good system in place to communicate tasks and progress
due merely to the fact that when one workday ends, the other begins.

 Foster strong relationships among workers: Toyota should focus on this aspect. Team-
building is often an overlooked part of the business world. Building meaningful
relationships among employees is important, to keep everyone engaged in their work and
performing group tasks efficiently.