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The Toyota Recall Scandal and companies` attitudes towards maximizing profits for Shareholders
Boris Becker Oliver Kotkas Roel Aarten
” Rebecca Lindland (February 2010) Problem statement Toyota Motors. this case study explores the recent Toyota problems and tries to dig down to the fundamental parts of ethics involved. Theoretical approach In the analysis of Toyota’s ethical business values from the theoretical perspective. Where does this shift of mindset derive from? The Company´s headquarters in Japan and the US did not work together as an entity. Applied generally. There is no 100% safety. Again. Of course a technical mistake occurs at some products from time to time. the above stated problematic would fall under the indifference or even bad columns (Taking no or only insufficient action to prevent harm being done mixed with dishonesty and ignorance). This leads to the main research question: To what extent could this scandal from an ethical standpoint have been prevented or treated better by Toyota previous or at the time of the public degradation? There were many hints and events years before the recalls that showed there was a certain lack of quality in Toyota‘s products and pedals of some cars. quality and reliability… A defect in their product is appalling to them. known is that many people lost their lives by driving with malfunctioning Toyota cars and much more people lost their trust in Toyota. and they easily did.Introduction “The company [Toyota] has built itself on pillars of safety. The organization lacked in the quality assurance. linked to cost-benefit analysis (p. cited often for its high quality but still achievable products and good ethical principles has been involved lately in a “pedal” scandal that changed perception of many consumers. 128. the problem was between legal and illegal terms.1 of Fisher and Lovell Toyota seems shifting on the Ethics and Morality scale. but can the Toyota case be considered as negligent or reckless in some stages? The broader problems were known to the company officials. putting revenues first. so was there some management failure? We think that there is serious reason to believe that Toyota US has lost itself in pursuit of being the biggest and forgot its philosophy in a way that products are more prone to failure than before. And why do we think so? We believe that next to purely mechanical reasons. trying to out-compete GM and other American car manufacturers as well as cost cutting were main topic. In business ethics. why Japanese companies have such high ethical standards and a need . however. however they were neglected and not researched and communicated well enough. Using the Table 2. They blamed others for car accidents and tried to sweep the problem under the rug. Toyota as a role model company was always doing good actions to community as such. Effective lean. as will be seen in the case study. Toyota immediately changed to good (preventing harm being done and further positive action to please the consumers). not the companies much respected philosophy and values. its implications and future consequences for Toyota and other parties involved. The extent of the scandal is not yet fully known.production. prevent customers from further harm. They had to comply with public and legislation. showing a sort of arrogant attitude. so there is a certain change of attitude over time. employees and management members on a global scale. in any company. Fisher & Lovell) and the trend in companies to focus of the “increase in shareholder value” as THE main goal and thereby leaving other stakeholders and product characteristics behind. first the article by Taka & Foglia (1994) will be used to demonstrate the importance of ethical business in Japan. why not before the ´big boom´? All in all. implications for businesses will be shown. Basically. sort of unthinkable. The article will be used to lay the basis for a wider understanding. but the scope of this paper will only be limited on the problem and its implications. This paper aims at outlining the background of the scandal. there must be some underlying ethical problem that is worth looking at. When the scandal was becoming a public main topic.
Throughout the paper the focus will be on three main topics. Another article by Keegan et al.g. the ethical perspectives in building relationships. stakeholder theory. The faulty and malfunctioning assembly parts from CTS of Elkhardt (Connor. Over 8 million cars were finally recalled. like deontological ethics can be applied to Toyota in respect of their principles. (1989) very briefly underlines the question of shareholder revenue as the main goal and if there is a coexistence of cost cutting and quality assurance possible. 2010) have been suggested to be the reason for the current crisis at Toyota. Fisher & Lovell. The second topic. This article indicates the importance to understand other concepts. Another main stakeholder in this particular case is the Japanese Headquarters and US NTSB. than only the transfer of the Toyota Production System to succeed in the highly volatile car industry. due to unintended acceleration of the throttle. The specific stakeholders involved in this case include not only the consumers. and to analyze from an ethical perspective whether they are cutting costs in critical areas in order to satisfy their shareholders needs.) Additional case description In addition to what is mentioned above. Application of ethical principles & horizon assignments So. throughout this case Toyota’s ethical behavior with regards to its customers and other stakeholders involved in the scandal will be analyzed. Theory of the book. This case report will focus on the extent at which the company and its shareholders have adopted an ethical stance towards these issues. 143. As a third scientific article the research by Pardi (2005) will be used to analyze Toyota’s previous failures in the past. The article analyses the ethical concerns that are deeply shaped by the characteristics of the Japanese leadership style (JLS) and the normative environments from which it arises. also encourage the incremental innovation that enhances Japanese companies’ business performance. we can say that this case shows us five lessons that we could remember for looking in the book for our individual assignment and then try to apply them to the specific theoretical setting that is given (ethical values. which proved to have major malfunctions. and the board of directors in placing more importance on issues of cost rather than on values of safety and reliability. By investigating the article by Gundlach and Murphy (1993). which are associated with the ethical advantages. which indicates a reason to look into the ethical perspectives of exchange inside of Toyota.of acting socially responsibly towards the rest of the world. who have been harmed or disadvantaged by buying what they believed to be a safe car. which handles the issue of whistleblower or witness. concluding from the depth of research at this point of time. consequentialist ethics (e. judgments. management behavior) and vice versa use the Ethical principles and horizon assignment to get worked into the ethical foundation. . The cause of this malfunctioning system has been investigated. where Toyota will be looked from the eight different categories of ethical response. but also the employees involved in the production of this type who could have acted with more care and diligence in building the car. The article specifically explains the importance of mutual adjustment and relationship between the Japanese and British managers that failed in the 1990’s UK factory. the discourse test) and more ambiguously `organization ethic´ (p. biased answers and solutions of the general ethical approaches. Firstly. the justification of whistle blowing will be analyzed. individual responses to ethical situations will be discussed. This resulted in many car accidents. but several other lawsuits against Toyota for unreliable and dangerous products and their negligent and slow way of actions are still running. As of 2004 Toyota started the production of an electronic throttle control system. In the third part emphasis will be laid on the influence of stakeholders and corporate governance. the interrelationship of law and ethics in exchange and dimensions of ethical change will be handled to build the main cornerstones for Toyota’s ethical principles in dealing with it’s suppliers. reflection. Those will be helpful to conduct a good analysis and proceed with writing this paper in focused and a well shaped view. The article will be used to show that the same characteristics of the JLS. of which several lethal crashes. terminology.
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