The Concept of Business Ethics in Toyota - Case Study Example

In order to fully understand the concept of ethics, it is imperative to begin by giving a brief explanation of the meaning of the term ethics. Basically, ethics refers to “the rules or principles that define right and wrong conduct,” (Robbinson, 1993, p.14). Ethics in a company mainly derive from the organization’s value system. DesJardins (2006) defines values as those tenets that are essential and enduring in the running of the organization and they should not be compromised for any financial gain since they help to shape the operations of the company which make it distinct from other companies. However, organizations during the contemporary period often encounter ethical dilemmas in their operations. Some companies are forced to engage in unethical conduct for the sake of their organizations while at the same time conveniently ignoring the needs and interests of the other stakeholders that are impacted by the operations of the company. As such, this paper has been designed to critically evaluate how the issue of ethics impacted on the operations of Toyota. Companies often face an ethical dilemma where they fail to create a fine balance between their profit oriented goals and the interests of the targeted customers. There is a tendency by most people to perceive a certain situation in a different way. For instance, people may view the same situation in different ways where some of them may not be able to distinguish between something that is right from something that is bad. This constitutes an ethical dilemma and it can severely impact on the operations of the organization if due care is not taken when dealing with the situation. In its quest to become the world’s top automobile manufacturer, Toyota found itself in an ethical crisis that led to the recall of more than 9 million vehicles in two recalls, one in 2007 and the other one in 2009 (Connor, 2010). Toyota announced that some of its vehicles had sticky gas pedals which constituted a serious threat to the motorists driving the vehicle. The company was forced to halt the production of some of its top selling cars in the US and it recalled more than 9 million vehicles worldwide. In two separate recalls. According to Connor (2010), the company lost billions of dollars from lost sales as well as the costs incurred during the recall of the defective vehicles. Toyota has been known for top quality vehicles but it took a heavy hit after failing to maintain the quality of the vehicles it manufactured as a result of its aggressive growth strategy it had adopted in a bid to surpass General Motors as the world’s top automobile manufacturer. However, this strategy did not go down well with the company since it overlooked the aspect of quality which was synonymous with the company’s track record. The need to maintain high ethical standards with regards to quality is very important since it determines the credibility of the company among customers from different parts of the globe. What worsened the situation of Toyota is that different explanations were given with regards to the source of the problem. This showed that Toyota had deviated from its ethical way of doing business where safety concerns are given priority. Toyota manufactures cars that are sold the world over and it has the responsibility of double checking that it is using the right parts sourced from different suppliers. According to Connor (2010), Toyota sourced the problematic gas pedals from a company called CTS of Elkhardt of Indiana. However, it is also alleged that Toyota started experiencing this problem way back in 1999 before outsourcing this task to the above mentioned company. However, the blame squarely belongs to Toyota because it overlooked safety precautions that compromised the quality of the vehicles it sold to different customers. The major problem that was made by Toyota in this case is that it did not seriously consider two very important aspects that can positively contribute to the operations of the company namely responsibility and accountability. Ethically, a company like Toyota should be accountable for its actions and it should also uphold the principle of corporate social responsibility (CSR). In business, there are certain values which should not be compromised for financial gains. According to Keane (2010), Toyota put profit before safety of the customers. The reporter quotes the House Oversight and Government Reform Committee Chairman Edolphus Towns, a New York Democrat, saying that “There is striking evidence that the company was at times more concerned with profit than with customer safety.” This led to 34 deaths linked to the defective vehicles offered by the company. To a larger extent, it can be noted that Toyota deviated from its ethical responsibilities of ensuring that it maintains quality of the vehicles it sold to different customers. This situation could have been avoided if the company had serious considered the importance of maintaining quality when it is manufacturing automobiles. There are various stages involved in the manufacturing of vehicles and special care should be taken at every manufacturing stage of the cars so as to ensure that quality is maintained. The other problem is that the company prioritised its need to obtain the number one position in the market through embarking on an aggressive strategy to manufacture vehicles on a large scale. However, there are dangers likely to be encountered if a company adapts this strategy. Quality is compromised like the case that was experienced by Toyota. Instead of gaining the desired top market position in the market, the aggressive manufacturing strategy backfired on the company since it was forced to recall more than 9 million vehicles. Its desire to dominate the automobile industry compromised its ethical standards which severely impacted its reputation. This unfortunate incident could have been avoided if the company had focused on its core business not to compromise its values for financial gains. Organizations operate in environments that are comprised of different stakeholders. Some of these stakeholders are either directly or indirectly affected by the operations of the company hence efforts should be made so as to ensure that the interests of the stakeholders are given priority. Once the values and interests of the stakeholders have been compromised, this can cause severe repercussions to the company involved. Companies should consider the long tradeoffs between its interests as well as those of the stakeholders so as to be in a position appeal to the interests of the stakeholders (Caroll, 1996). As noted in the case study of Toyota, it can be seen that the company faced major drawbacks in its operations since it was forced to withdraw all defective vehicles from the market. This also posed a serious viability problem to the company since found itself in a predicament that it had to effectively deal with this crisis in order to win the interests of the targeted customers. There are various laws as well as norms that guide the operations of all organizations in each country. Toyota maintains that it is responsible for the vehicles it sells to different customers across the globe (Connor, 2010). This means that the company should have maintained its commitment to ensure that all the vehicles it manufactures pass the quality test. However, the company was reluctant to enforce this very important strategy in its operations. Instead of curing the problem that led to its demise, the company could have emphasised its workers to ensure that they uphold the principle of maintaining high quality in their operations. Once quality is compromised, the customers will slowly lose the trust they would have vested in the company. It is quite difficult to attract a new customer than to maintain the ones already existing. Therefore, the company should have maintained its reputation such that it would not find itself in a predicament where it would be forced to beg the customers to treat the unfortunate incident as a mistake. There are many benefits that are likely to be obtained if a company maintains high quality. In this case, it can be seen that Toyota is a renowned automobile company the world over and it only needs to maintain this reputation in order to operate viably. The other important step that could have been taken into consideration by the company is the aspect related to treating the customers as valuable assets. Ignoring the safety concerns of the customers showed that it was now concentrating on its profit oriented goals. This did not go down well with the customers who ended up doubting the authenticity of the company in terms of the vehicles it sold. If the company had been guided by the ethical and societal rules and principles, it could have improved its reputation by focusing on its core business. Given that Toyota is a well known company as a result of its reputation, it could have continued to enjoy this glory in the motor industry. This could also have enabled the company to focus on improving the vehicles it offers rather than deviating from its business while attempting to appeal to the stakeholders to accept its predicament as a genuine mistake. The company could also have managed to attract more customers on top of the millions of customers it has the world over. The company could also not have lost a significant amount of revenue through lost sales as a result of the massive recall of the defective vehicles. Over and above, it can be seen that ethics are very important in the operations of organizations during the contemporary period. Failure to adhere to ethical principles can severely impact on the viability of the organization. This has been aptly illustrated in the discussion of the case study of Toyota which encountered a serious ethical problem that led to a recall of more than 9 million vehicles as a result of the defective gas accelerator pedals which were not safe on the vehicles. References Connor, M (January 31, 2010). Toyota Recall: Five Critical Lessons. Business Ethics. The Magazine of Corporate Responsibility. Viewed from: . Caroll, B.A. (1996). Business and society: Ethics and stakeholder management. 3rd Edition, Ohio: South-Western College Publishing. DesJardins, J. (2006). An introduction to business ethics. 2nd Edition. Boston. McGraw Hill international Edition. Keane, A.G. (February, 24 2010). ‘Toyota Put Profit Before Customer Safety, Towns Says.’ Bloomberg. Viewed from: . Robbins, S.P. (1993). Organisational behaviour: Concepts, controversies and Applications. 6th Edition. 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