Toyota Company: Corporate Social Responsibility

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Toyota is a multinational company founded in Japan and it is the leading automobile car maker and seller in the world. It was incorporated in 1937. Its founder is Kiichiro Toyoda. According to fortune global survey 500 of 2008, it was the fifth-largest company in the world. The company is structured in no extraordinary way and has departments like any other multinationals in the world; however, the achievement of the company has made it different in performance. In 2008, it was able to surpass General Motor Company as the world’s largest automobile seller. What has made the company go this far? The answer is in the quality of its management and the interaction of the brand as well the loyalty that it derives from its customers. The company involves itself in numerous social corporate responsibilities in its effort to strengthen its base and “give back to the society”. Social corporate responsibility is a strong marketing persuasion tool that companies of rate have adopted. It aims to create a cross-relationship and network between the customer and the company (Hino, pp. 1-6). This paper analyzes business ethics with Toyota Company as our guiding company.

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Business ethics/Corporate Social Responsibility

The company realizes that its success is dependent on the loyalty that they get from their customers, one of the ways of ensuring that they get customers’ attention and loyalty to the company eventually develops. When we talk of an ethical business it means that the business is conducted in a way that goes in line with the generally accepted morals in society (Visser, Matten, Manfred & Tolhurst, p. 4). Corporate social responsibilities are actions that a company commits itself to do, not for its income generation but projects that benefit society. The responsibilities that the company has engaged in include; building medical centers and hospitals, building schools, scholarships to students, and charity work. An example of this is the numerous projects that the company is undertaking in Kenya, Africa they include; During the tree planting season in Mau forest, Toyota Kenya played a major role in offering sponsorship. It has been participated actively in the ongoing companies to eradicate poverty. In doing so it has offered many young Kenyans a chance in accessing mechanic training at an affordable rate. This has increased economic development and reduced the dependency rate. With the skills the young people get from such training, they can put up their enterprises where they employ others from the villages especially the school dropout, and train them on how to go about the day-to-day operations.

Describe tools and Techniques Used By the Firm to Implement Their Ethics Program

The realization of the company for the need to take care of its customers is realized early enough and is first seen in its mission statement that is encompassed in five working principals, they are Kaizen (continuous improvement), teamwork, Challenges, Respect and Genchi Genbutsu (go and see). Other than the fact that the above principals are internal principals the company extends them to society and their customers in general. For instance, it has been argued that their principle of going and seeing is focused on the customer and the society where the teams are expected to go to the entire society and fetch how the company can assist the general population. Such a case occurred in Kenya in Rift valley province, where the company sent representatives; when they realized that the area required a school it sponsored the construction of a secondary school in the area.

In the recognition of the need to well interact with the outside world, the company has a full-time corporate social responsibility manager, the manager doubles as organizational culture manager and social corporate manager. He is the one who is responsible for researching for areas that the company can assist and plan the amount of money to be invested in the particular program in a certain area. This proves that corporate responsibility is not a by the way in the company but a strong point at the management system level. In the various countries that the company has branches, there is an allocation for a certain amount that is aimed to be “given back” to the community (Wheeler & Sillanpää, p. 12).

Who Has Internal Ownership Of The Issue?

The management of the company takes the issue of ethical business as a serious line of management like any other line; this has made the company have a full-time manager who is mandated with ensuring that the company assistance in the society is felt. This is through numerous programs that the manager and sub-managers head.

Describe the Formal Ethical Code in the Chosen Company

There is a research department that has the aim of undertaking the policy of Genchi Genbutsu (go and see). The section is supposed to survey the market and come up with various recommendations that are aimed to improve the services. As it conducts this duty, the issue of technology came up and the company had to implement the change. Innovation is seen as a necessity in the firm both the Japan headquarters and the rest of the subsidiaries. The effectiveness has been seen when the employees have innovated different products that are supposed to abide by the general principles of the company. The combinations have lived to the task of continuously improving their processes to a point that it was able to surpass general motors. This is in line with the company’s principle of Kaizen. In the components statements, it has an express statement that is adhered to that is “adding value to the organization by developing its people” as people are being developed and empowered they are enthusiastic and come up with the innovations.

Internal Focus

This is the set ways of doing things in a company, it is the way that the company is designed so as it can fulfill the needs of its customers and that of the stakeholders. Corporate governance involves how a company is managed to create and distribute increasing value to its stakeholders. This includes the structure of the board (audit, nomination, and compensation committees), management/board relationships, carrying out value-creating activities, shareholders ‘ rights, record keeping, information disclosures, and management compensation and its disclosure. The holy trinity of good corporate governance is the notion of shareholders’ right to question board/ management decisions, transparency, and management’s and board’s full accountability for their actions. Effective corporate governance is where the shareholders have a right to regularly question the decisions of the board and management, the decisions of the board and management are transparent and both are fully accountable for their actions. This is ethical behavior in its true sense. Transparency and accountability force management and the board to be disciplined and be ethical in everything they do. Therefore, ethical boards and management are high ineffective corporate governance. There is a direct link and a positive correlation between a company’s competitiveness and financial performance on one hand and the effectiveness of its corporate governance and its ethical behavior on the other hand (Jastram, p. 45).

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External Focus

This is where the company is interested in undertaking programs for the benefit of its customers. It invests in projects that it does not benefit but those that are aimed to assist society in general. Ethically, any organization should demonstrate society’s welfare concern. Corporate social responsibility on the other hand is a term often used about the concept of organizational responsibility as applied to business organizations and the larger environment they operate in. This includes creating and distributing increasing value for all the stakeholders and supporting community welfare initiatives in education, health, and the physical environment. These responsibilities have largely been ignored, and to a large extent, abused in the recent past through shameful, fundamentally flawed, and value-destroying practices by certain companies. These responsibilities are, however, taking center stage in managements’ strategic thinking in global businesses today. Organizations now feel that they must meet the “Triple p” bottom line expressing the expectations of stakeholders concerning the firm’s contribution to profit, planet, and people to get a ‘license’ to operate sustainably (Sun 32).

Who Are The Stakeholders? How Are They Recognized By The Company?

The company is listed on the Asian stock exchange whereby the general public can buy shares in the company. The employees have a policy that ensures that they also have shares in the company, all these are stakeholders. The government and the general public also would like to get ethically correct products from whichever the company and thus are included in the context of stakeholders. Shareholders are recognized by paying them dividends and the government by taxes. The general public benefit from social corporate responsibilities programs (Porter & Mark, 22).

What Type Of Relationship Does The Company Have With Its Stakeholders?

The shareholders have loyalty in the company; this can be learned from the increasing price of the shares.

Employees, Consumers, Suppliers and Competitors, Civil Society, Government and Regulation

Toyota is divided into small teams with team leaders and given a certain task that they are supposed to perform and improve accordingly. Innovation is seen as a necessity in the firm both the Japan headquarters and the rest of the subsidiaries. The effectiveness has been seen when the employees have innovated different products that are supposed to abide by the general principles of the company. The combinations have lived to the task of continuously improving their processes to a point that it was able to surpass general motors. This is in line with the company’s principle of Kaizen. In the components statements, it has an express statement that is adhered to that is “adding value to the organization by developing its people” as people are being developed and empowered they are enthusiastic and come up with the innovations. The company employs people at various levels of competitiveness. On the other hand, they have their training school called Toyota Technological Institute at Chicago that among other duties is used as the breeding ground of the employees. It has a policy that enables graduates of different diversities relevant to the particular task at hand to join the company and grow in the company (Rowe, p. 34). They also recruit from all over the world. This efficiency is what has made the company such a success, especially in the areas of innovation. In the institution, it offers scholarships to people with potential especially in the motor and designing of motor vehicles these are deliberate measures that are aimed at continuously improving its processes. The organization of activities is such that it always matches the core principles that formed the company. When we analyze the above process of doing things, we can see how the organization has been well structured and we see what has made it prove better than the other companies. The organization of the people according to their potentials and encouraging them to effectively exercise their talents and innovations has yielded the results. As much as many companies operate under the control of the company, the central power can be felt in them this is all organization; the top management can be congratulated for the task. The technology adopted by the company can be seen from two angles. One in the marketing strategies and two in the continuous improvement of its processes when the company was set up in 1937, it is obvious that technological advancement has been attained in the entire world. No company is the way it is and if any I can bet it’s a company that has no progress. There is a research department that has the aim of undertaking the policy of Genchi Genbutsu (go and see). The section is supposed to survey the market and come up with various recommendations that are aimed at improving the services. As it conducts this duty, the issue of technology came up and the company had to implement the change. Other than just implementing it started a long-term policy to ensure that there is continuity in the works. Secondly, another area that the company has improved is the fuel consumption in the vehicles. This has been ongoing and in the 1980s it saw the company get a Japanese Quality Control award, this was due to the rewarding innovations especially in the fuel section that the company had gotten. On the same angle in 1973, during the world fuel crisis, the company was able to penetrate the American market when Americans preferred automobiles from the company due to its low fuel consumption. All the above are not coming to the company as mere luck but are deliberate planning and organizing of the available physical and human resources. A lot more than the company intends to bring are the electric automobiles that are in the testing stage.

Define the Orientation of Company’s Existing Ethics Program

Just like organizational culture ethics in a business are tough to newcomers immediately they join the company; some checks and balances are set to ensure that there is compliance to the ethics set. The need for an ethical business is recognized and the mechanisms wanted to ensure that business is conducted correctly are put in place.

Is There An Effort Made At Social Accounting?

Production of a company is out of utilizing the available resources in the community, this means that it is the society that enables production to take place, there is thus the need for a company to look back and assist the society that has enabled it to be the way it is. On the other hand, there is the need to engage the entire community not only as customers but also as stakeholders, this will assist the business to be able to market itself more easily since the population feels part of the company. It is thus important to be socially accountable (Norman, p. 4).

Are Measurable Results Gathered And Analyzed?

The results that are gathered is dependent on a certain industry, for example, there are companies whose smoke that they emit affect the iron sheets of the neighborhood, third can be data that can be collected for analyzing the need and the level, as well as which type of social corporate responsibility that a company will invest in. The above is an example of a measurable parameter but some others cannot be well quantified, but they are felt, an example of this is ozone depletion by manufacturing companies, it is true that it is there and can be felt but quantifying it is the problem (Manne, p. 2).

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How Well Does The Program Address The Dimensions Listed Above?

There is no perfect method that can be used to evaluate the level at which a company should give back to the community through social responsibility, and at the same time, the definition of ethics varies with an individual. The method gives a good approach to the way to go about it (Habisch, André, Martina Wegner,$ Schmidpeter, p. 48).

Provide Industry (Internal and/Or External) Comparison

A well ethically built company should set goals and targets to reach as far as the integrity of its production is concerned. There should be a limit that it sets to ensure that whatever the trade it is engaging in there is harmony with the general public. On the other hand, some national and international standards are set; this particular industry should aim to surpass the expectations. Some industries define the level of efficiency for example when it comes to waste management, for example, a particular company should ensure that it works within this limit.

External Perception

When customers and the general public finds that a certain company is concerned with its welfare, they perceive the company from a positive angle, the brand of the company is the one that benefits. The community becomes opinion leaders to the benefit of the company.

Has The Company Ever Faced An Ethical Challenge? If Yes Describe How It Dealt With It

Yes; in early 2010, Toyota Company was faced with a problem when some fault vehicles got their way to the market and led to deaths particularly in the United States of America. The brands of the vehicle could accelerate it and thus lead to death. The general public felt that the company was not acting towards its benefit (Crane & Matten, pp. 158-162).

Is There Any Evidence That The Program Is Influential In The Overall Business Strategy Of The Company? Describe and Provide the Proof

During that time the company sales were influenced, it reduced drastically; the entire world started fearing to buy Toyota products.

Based On the Evidence You Have How You Would Rank This Firm as Ethically Committed

The company can be said that respect the need to conduct business ethically; it values its customers and society in general. However, some areas need to be improved more so because of the kind of business that the company undertakes that can endanger a great number of people (Thilmany, pp. 167- 174).


Managerial and appropriate ethical behavior is central to the success and effectiveness of organizations anywhere in the world today. Businesses are so interconnected, in terms of products and information flows that ethical behavior in one country or one part of the globe has an immediate impact on other countries or parts of the globe. Consequently, attempts should be made by governments and business leaders to incorporate standard management practices in their operations to enhance the efficiency of these flows. Ethical standards and codes are key in this process because of the globalization of e-world business today.

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Works Cited

  1. Crane Andrew and Matten Dirk. Business Ethics. Oxford University Press: Oxford, 2004.
  2. Habisch, André; Jan Jonker, Martina Wegner, R. Schmidpeter (eds.). Corporate Social Responsibility across the Europe. Heidelberg: Springer, 2005
  3. Hino, Satoshi. Inside the mind of Toyota: management principles for enduring growth. Tokyo: Productivity Press, 2006
  4. Jastram, Sarah. “The Link between Corporate Social Responsibility and Strategic Management”. CIS Papers No.17. Hamburg: Centre of International Studies, 2007.
  5. Manne, Henry G. “Milton Friedman Was Right”. The Wall Street Journal. 2006.
  6. Norman, Wayne; Chris MacDonald. “Triple Bottom Line: a Critique”. 2010.
  7. Porter, Michael; Mark Kramer. “The Link Between Competitive Advantage and Corporate Social Responsibility” (PDF). Harvard Business Review. 2006.
  8. Rowe, James. “Corporate Social Responsibility as Business Strategy“. CGIRS-Reprint-2005. Center for Global, International, and Regional Studies, University of California, Santa Cruz. 2005. Web.
  9. Sun, William. How to Govern Corporations So They Serve the Public Good: A Theory of Corporate Governance Emergence. New York: Edwin Mellen, 2010.
  10. Thilmany, Christian. “Supporting Ethical Employees.” HR Magazine, Vol. 52, No.2, 2007, pp. 105–110.
  11. Visser, Wayne, Dirk Matten, Manfred Pohl, and Nick Tolhurst (Editors). The A to Z of Corporate Social Responsibility. London, England; New York, NY: Wiley, 2007.
  12. Wheeler, David; Maria Sillanpää. The Stakeholder Corporation: a blueprint for maximizing stakeholder value. London: Pitman, 1997.

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