Introduction

Lets Go Places, this unique and catchy tag line belongs to no other then one of the top
automobile manufacturer in the world, Toyota Motor Corporation. Selling almost 10 million
vehicles worldwide in 2012, Toyota was known for its reliability and fuel saving vehicles. Toyota
has always thrived on good customer relationship and provides customers with the products they
need. Toyota Motor Company Ltd. was established in Koromo Town, Japan in 1937 by Mr.
Kiichiro Toyoda. Toyota also has a global network of design and 'Research and Development'
facilities, embracing the three major car markets of Japan, North America and Europe. Across the
world, Toyota participates enthusiastically in community activities ranging from the sponsorship
of educational and cultural programs to international exchange and research.
Although they have always been associated with safety and reliability, in 2009 there was a recall
for some of the models and this started to increase in 2010. This happened when they recalled 8.5
million vehicles that were having problems that were attributed to faulty accelerators, floor mats
getting stuck in gas pedals and brake problems. The problem started when one duty police officer
and his family were travelling in August 2009 with their car, a Toyota Lexus, unexpectedly
accelerated and crashed into another vehicle, tumbled over an embankment and burst into
flames. This incident lead to the death of the man. Initial investigation reports identified that the
car may have been fitted with the wrong floor mats, which could have slipped and entrapped the
accelerator pedal. As of January 2010, 21 deaths were alleged due to the pedal problem since
2000 and the company has recalls off almost 9 million vehicles worldwide. Although Toyota
tried to shift the blame of the issue to its suppliers, CTS, the damage was done. Toyota also
however said the replacement of the faulty products will still be done by CTS.
Some US owners that had their recalled vehicles repaired and still reported accelerator pedal
issues, leading to investigations and the finding of improper repairs. The recalls further led to

additional NHTSA and Toyota investigations, along with multiple lawsuits. On February 8, 2011,
the NHTSA, in collaboration with NASA (which were called for their expert opinion on
computer technologies related issues), released its findings into the investigation on the Toyota
drive-by-wire throttle system (one of the suspected issue of the sudden acceleration). After a 10month search, NASA and NHTSA scientists found no electronic defect in Toyota vehicles and
they concluded driver error or pedal misapplication as responsible for most of the incidents. The
report ended stating, "Our conclusion is Toyota's problems were mechanical, not electrical." This
included sticking accelerator pedals, and pedals caught under floor mats.
However, on October 24, 2013, a jury ruled against Toyota and found that unintended
acceleration could have been caused due to deficiencies in the Electronic Throttle Control
System (ETCS). Michael Barr of the Barr Group testified that NASA had not been able to
complete its examination of Toyota's ETCS and that Toyota did not follow best practices for real
time life critical software, and that a single bit flips which can be caused by cosmic rays could
cause unintended acceleration. Also the run-time stack of the real-time operating system was not
large enough and that it was possible for the stack to grow large enough to overwrite data that
could cause unintended acceleration (Business News USA, 2013 November). As a result of the
finding and ruling, Toyota finally entered into settlement talks with its plaintiffs. They finally
agreed to a US 1.1 billion settlements with plaintiff and although it was finally settled outside
court, this issue has made critics label Toyota as an unethical business organization. In February
2010, CEO Akio Toyoda announced he was creating a Global Special Task Force to tighten the
system of delivering quality product to customers. A month later Toyota launched a similar task
force in North America to work with the Global effort. This move was aimed at improving the
flow of information between the task force and the main head quarters (hq) and so that previous
quality issues will not come again. The recall saga also saw some major names in Toyota
organization quitting their job as a the heat got to them, two Toyota chief engineers and three
quality control managers resigned from their job. Toyota main supply chief manager, Takumi
Arito, also quit his position during the tense time.
Ethical Problem Faced by Toyota
Unethical business practice is not a recognition a company will be proud off. Toyota during the
crisis of recall received this unassuming award to their name and brand. It tarnished their

reputation and almost brought the company to its knees. One of the reasons Toyota was branded
as an unethical company is because the poor quality control that was done at Toyota assembly
plant. Although they have a department with personals to look after quality control, it was found
later that Toyota purposely delayed rectifying the found problems. A company with a corporate
philosophy of Customer first. Quality first certainly failed to take action on this major issue of
quality. This problem started to happen as Toyota was trying to catch up with General Motors as
the number one car maker in the world. As they chased quantity, soon quality was starting to fall.
Even when in 2007, a magazine which was known by many as a guide book in buying quality
cars, Consumer reports Magqazine, stopped promoting Toyota brand models in its magazine. It
was evident that Toyota was growing faster that it could and at pace that it could not afford to
slow down. In fact, Toyotas management was found later to have had early knowledge of a
manufacturing and performance flaw with its accelerators and gas pedals, and failed to act. The
company is not only potentially guilty of criminal acts, but its management is guilty of customer
abuse. Whenever management places its bottom-line interests ahead of the safety and lives of its
customers, it should be terminated. (Thomas H., 2010). It was in fact alleged that Toyota was
proud it diverted potential higher cost by reducing in quality control. 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. Although Toyota has tried
to rubbish the allegations, their action certainly sides with the allegations.
Another reason Toyota was branded as an unethical business company was because its
ignorance and carelessness on safety issues. While they promote slogan like Drive a Toyota.
Youll never stop, although this slogan was unveiled in the aftermath of the recall process, this
shows Toyota didnt priorities customers safety like they promise or advertise it. In 16th March
2010, a government probe was launched a month after the automaker found itself in a storm of
negative publicity and lawsuits over the issue of sticky pedals, which have led to fatal crashes
caused by sudden unintended acceleration. In 1st April 2010, Toyota faced mounting pressure as
the government opened another probe of brake problems with the Prius, a crown jewel of its
lineup. The brake system was reported to be a problem in the hybrid, the allegations of
momentary loss of braking capability while travelling over uneven road surface, potholes or
bumps. (Japan Today Toronto, 2010) Toyota says the problem rests with an electronic control

module (ECM), a tiny circuit board that controls the operation of the engine. This is an ethical
issue because not only Toyota prioritized profit over safety; they also purposely neglected safety
issues which were detected early on. This matter of neglect has made its customers who believed
in Toyota safety promise having put their lives in danger and some even lost their live. There was
also a criminal offense in which a man was charged with manslaughter because he drove his car
and took another life on the road. He was later released after this Toyota problem occurred. This
could have been a true case or a luck which sided with the guy who was charged. But
nevertheless Toyota negligence brought a man to be a criminal and another live lost for its chase
to be profitable.
Toyota also made another unethical management issue when they were found out to having an
unethical working condition for their workers. Although not directly related to the recall
issues, but that incident brought to light another problem that Toyota was avoiding all this while.
Although Toyota was reportedly earning millions in profit each year, they were found to have a
working condition which was not suitable for workers. Japanese people are known for their
hardworking and no complaint attitude among the workers. It was found that Toyota Japanese
manufacturing plant resembles one of the worst sweat shops in the world. In an advanced
country this was an unacceptable practice and not to say especially from one of the biggest
revenue earning company in the world. Their operations have been described as "slavery" and
"human trafficking". (NLC, 2008, pg.39) Toyota has thousands of "karoshi" claims each year.
This term means "over worked to death". (NLC, 2008, pg.11) Their plants have very high suicide
rates as well. And when an injury has occurred to an employee, on the job they are layed off, and
receive no compensation. Toyota is well known for their union busting, which has destroyed
many small countries all around the world. Toyota builds their plants in the poorest states to take
advantage of the lowest wages in the country. (NLC, 2008, pg.29) Many workers have been kept
on as temporary workers for over 4 years. Their goal was to lower the average wages in America,
and Honda was eagerly backing them to achieve it. (NLC, 2008, pg.31) Toyota is one of the
worlds most profitable corporations, yet the more profits they make, the more they lower worker
wages. (New York Times, 2007)
Ethical Analysis

In year 2010, Toyota recorded a net loss of 437 billion yen, its first loss in 59 years. That is the
economical impact of Toyotas unethical behavior. This loss came after the massive recall and
the new parts which need to be reordered in order to changed. Apart from that, sales also dropped
14% in the US market while North America, Toyota biggest overseas market, sales dropped to
almost 20%. It was estimated the total recall cost could top up to 5 billion US dollar. JP Morgan
in its estimation put Toyota's total, one-time recall related costs could total 400 billion yen, plus
an additional 100 billion yen for settling litigation-related costs. The loss is increased with the
offer given to attract buyers back to purchase their product. American buyers are given 0%
interest for 60 weeks and high discounts. Doing this, profit margin in an already tight sector
drops even further. Toyota was made to understand the hard way, the price you need to pay
economically for being unethical.
In March 2014, Toyota Motor Corp, agreed to pay a $1.2 billion penalty to end a U.S. criminal
probe into sudden unintended acceleration that led to the recall of more than 10 million vehicles.
This was the legal implication of Toyotas unethical behavior. Apart from the payment, Toyota
also will admit to wrongdoings and have them be fully monitored and reviewed by an
independent committee. This was done to end the legal cases that were brought to them after the
series of recall that almost brought Toyota to its knees. Lawsuit to Toyota felled into three
categories;
1) Traditional product liability claims, brought on behalf of people killed or injured in
crashes allegedly caused by the accelerators;
2) Claims that seek to recover cars lost value caused by the accelerator problem; and
3) Shareholder suits that seek to recover for the drop in the companys share price following
disclosure of the accelerator problem.
Toyota has to do this as US was one of their top markets and their ambition is to become the
number one vehicle manufacturer in the country. Customers were charging them for lose value
liability, this happened as many who just recently purchased Toyota vehicles saw their car value
drop significantly after this recalls. Lost value liability were new and brought to the court only
when Toyota case happened. Shareholders of the company especially in the US share market
where the shares were traded, were also unhappy over this recall as this dropped their share

value. Many shareholders felt upset that a company of Toyota image could just ignore safety
concerns when it was one of their main image carriers. Again Toyota learned through a hard and
expensive way the implications of being an unethical company.
When Toyota recalled happened, it was done in a big way with as many as 10 million vehicles
being recalled. This happened after a life was lost due to their wrong actions. In an ethical
analysis to Toyotas unethical practice, we can find that there were many wrong decisions made
that caused Toyota its reputation, money and drop in sales. One of main reasons all the problem
happened was because Toyota ignored safety and quality concerns and put profit and production
ahead of them. This ignorance caused Toyota massive loss in profit and reputation and not to
mention many legal cases were charged on them. Apart from that in terms of ethical analysis, the
manpower management of Toyota was also questioned after it was found out that the working
condition for their employees were not suitable. Low wages coupled with long working hours
showed that Toyota was being ignorant in its part and this made it practice unethical
management. Overlooking human condition over profit is also against the law set by the United
Nation. Working condition has to be in their standard, in order for employees to perform their
job. Toyota clearly overlooked and worse ignored all this in order to achieve higher profit margin
and there were reports that the safety issue that lead to millions of recall was also due to
ignorance and not technical failure. This ignorance coupled with lack of ethics practice made
Toyota loss their high standard of reputation set by their founder.
Recommendations
The safety issues created by Toyota ignorance became a major problem for them both in terms of
profit and customer satisfaction. Many customers felt cheated by them as previously they were
promoting and boosting on their supreme in quality and safety. Many even bought their vehicles
because of this reasons. In order to change the perception of their customers towards their brand
Toyota tried many ways to regain their customers trust on their brand but it will take time and
records to prove their efforts. Ethical decision making process is by far the most important
process for any organization nevertheless a company like Toyota who thrive on selling vehicles
that carry people, which means lives are involved. Based on this Toyota has to start fresh in its
organization mindset. To be ethical in decision making must be their main concern. Although an
ethical division never exist in any organization but in this case Toyota can appoint a third party
who are independent to watch their over their decision making process. Toyota must show their
customers that they are putting safety and quality ahead of profit. They must be willing to be
sharing their quality control process and their safety priority. Although appointing a third party

agency can jeopardize Toyotas design and process secret, but after this incident, all Toyota needs
is being open and transparent with their process.
Another matter Toyota must look into is their employees wellbeing. Customers are also picky
when it comes to support companies who do not have a good reputation in employees wellbeing.
This is more so important to Toyota because their main target customers are people who are from
the middle class who also work in companies like Toyota. Having to buy a product from a
company that abuses its employee will surely leave a bad taste in them. This will certainly affect
their sales to their target market. To improve on the wellbeing of their employees, Toyota needs
to revamp its human resource department and bring a fresh start to their cause of having a
workable workplace. Toyota was reported to have overworked their employee, paid them lower
than average wages and ignored their wellbeing to the point that suicide was normal occurrence
in their production company. Toyota new human resource department must place the highest
priority on safety and health programs and policies at work, so that each employee is able to
work without undue concerns, and strive to prevent accidents and injuries from happening at
work. Also, they will need to comply with local applicable laws and regulations to governing
employees for the working hours, including overtime work. In addition, support efforts to
improve the health of employees through health promotion activities at work, guidance for
preventing illness, and other means.
Conclusion
The conclusion is Toyotas recall of their vehicles brought them bad reputation and they were
branded as an unethical company by the customers and the auto industry. Legal battles and new
parts order made them lose billions in revenue and made all the hard work that was done over the
years wiped out by ignorance and carelessness. Toyota has to understand that safety and quality
must come before profit and volume. Both will increase together if done well. Toyota has to start
fresh again and must avoid mistakes in any occurance. They have to take time to regain
customers trust and they have to show the world they are taking efforts in doing so. Also they
must change the way they treat their employees and make the workplace suitable to work.

(2956 words)

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