Ethical Dilemmas Facing Toyota - Case Study Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Title : Ethical audit report Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2010 Table of content Executive summary 3 1.0 Introduction 4 1.1 Ethical dilemmas facing Toyota 6 1.2 Importance of the dilemmas 9 1.3 Solutions to ethical dilemmas 9 1.4 Toyota ethical practices and values 12 2.0 Recommendations 15 3.0 Conclusion 16 Garry, C., 2010, what is Business Ethics? Retrieved December 23, 2010 from, 19 19 Dionne, S. & Kate, L., 2010, Toyota Moves to Discredit Its Critics, Retrieved December 23, 2010, from 20 Rosevear, J., 2010, Toyota's Problems: 8.5 Million and Counting, Retrieved December 23, 2010, from 20 Executive summary The study majors on the ethical audit of Toyota Company. The main areas of focus in the study include: the ethical dilemmas facing Toyota, importance of these dilemmas, solutions to the dilemmas in Toyota Company, Toyota ethical practices and values, and lastly recommendations and conclusions. The company is one of the largest multinational organization which deals with the manufacture of automobiles. The main headquarters of this organization are Japan and many other plants are located in the other nations across the world. Business ethics considers some form of professional or applied ethics which evaluates the behaviour which a business adheres to in its daily activities; this is in terms of the individual or group actions or the relationship between the operations of the workers and the activities of the organization in the achievement of the set goals and objectives. 1.0 Introduction Ethics of the business are the behavioral look of its values. The values are real they do not depend on the business conscious identification. Public declarations of business values are getting famous, but these types of documents are not often reflected in behaviour. According to Fisher (2009 p.56), publishing the value of an organization is just the process’s first stage. This ensures promotion of values, embedded and incorporated into daily activities and behaviour. It is very rare for ethical performance of an organization to be monitored to give progress feedback. The actual values of business in use establish its ethical performance. Discovering the gap between reality and rhetoric can outline ethical problems and unethical behavior. An organization always gains from knowing this gap. An ethical audit assists an organization to be well knowledgeable about the place in which its operations may have ethical vulnerabilities. The audit is a section of an assurance procedure based on assessment of risk of an organization. This always gives a response to the panel on how the business is performing. Henderson (1992 p.67) notes that an ethical audit outlines possible ethical problems that staffs might face in case unethical behaviour takes place. For instance, chances for fraudulent conduct, conflicts of interests, supply-chain activities, cost-reducing pressures, and cultural norms conflicts. An ethical audit also outlines gaps among the formally affirmed values and those that are exercised under the daily realities pressure. The audit comments on means in which structure and procedures work for staffs or against them creating a sound decision and behaving ethically. They propose means of developing the working environment and enhancing its transparency. Baines (2006 p.104) argues that the ethical audit informs on the organization’s ethical performance, comprising the effect on stakeholders and meanings of organization’s reputation. It gives assurance to the panel on how the business is doing against its established values. The audit normally assists work towards creating a baseline from which development may be determined and considered in future. Baines (2006) argues that, Toyota Company is one of the largest multination organizations, which deals with manufacture of automobiles. The main headquarter of this organization is in Japan and many other plants are located in other nations across the world. Business ethics considers some form of professional or applied ethics that evaluates the behaviour that a business adheres to in its daily activities. Toyota Company complies with the ethics, laws as well as the internal rules and regulations in carrying out business activities. The company does not act contrary to the society’s established rules or carryout measures which could be criticized by the society. It is a belief within the company that to be a good corporate citizen, it is important to ensure that compliance permeates the entire organization. 1.1 Ethical dilemmas facing Toyota Daft (2009 p. 79) notes that the profound changes in the current world and Toyota’s integration in global economic procedures resulted in the problem’s development associated to ethical area. Therefore, it is important to emphasize that the difficulty of the application of work teams principle to every units of the organization functioning in various nations in the world may be a severe ethical dilemma. Menzel (2007 p.49) argues that in reality, this principle is always obligatory to employees and the whole organizations of Toyota operating in various nations in the world. Possibly, this may result to cultural disagreement since Toyota business culture is basically defined by the cultural context of Japanese that may not be applicable to employees operating in western nations. Likewise, another significant ethical problem is the search for profit and the preservation of primary image of Toyota. This implies that the international development of the company outcomes in the creating of plants and personnel’s employment in third world countries that threatens to the decline of the primary observation on Toyota as a dependable, Japanese organization manufacturing vehicles of higher quality. Toyota has accepted in engaging in unethical conduct as far as the safety of its cars is concerned. It is evident that Toyota has been dragging in working upon the safety defects, even though it has praised itself for working on the defects. In 2007, Toyota intentionally and constantly delayed safety controls by preventing defect investigations and hindering government investigation into safety concerns. In this situation, Henderson (2006 p.98) argues that it is easy to view that something was not right, but how can things happen this way. Toyota is an organization that has constant improvement. Instead, the company in some way found a means to defend negotiation with the state to create their problems vanishes. Toyota customers have been affected by safety defects in which the Toyota manufacturing company has recalled a number of its vehicles at a given times of the year to prevent huge recall. At similar period, Toyota has been manufacturing new motor vehicles with recognized safety defects and advertising them to be the safest and of high quality on the road. Ferrell (2009) argues that this illustrates that Toyota planned with national highway traffic safety administration (NHTSA), the state department in charge of crash test ratings, to untruly improve safety record of Toyota while not disclosing the fact that the transportation’s department and NHTSA were neither sufficiently staffed nor rewarded to contract with safety’s influx concerns suggested by consumers. The greater predicament with this disgrace is that it has developed a precedent for dishonesty and unethical conduct when vehicle’s safety that majority of us uses and relies upon daily is concerned. Therefore, the validity of every wellbeing scores given out to all motor vehicles need to be questioned. Toyota is recognized for their merger busting, which has spoilt many less developed countries in the world. This minimizes the living standards of people in these less developed states. In United States, there are one thousand eight hundred cases in which workers at Kentucky plant have been hurt, fired and removed from the compensation slip. This occurs at a speed of four hundred Americans per annum working at Toyota. Toyota creates their plants in the nations that are very poor to take the low wages advantage in these countries. Majority of workers have been maintained as temporary employees for more than four years. The aim of Toyota Company is to lower the Americans average wages, and Honda appears to support them. Toyota is among the most profitable organizations in the world, yet they do not pay their employees relative to the profit that they usually create. Therefore, Toyota normally utilizes the cheapest materials and low-income employees to manufacture their motor vehicles. 1.2 Importance of the dilemmas According to Honda Chalice (2005 p.117), these dilemmas have enabled Toyota to produce motor vehicles that are in some way cheaper as compared to those manufactured by general motors, thus making it the largest manufacturer of automobiles in the world. With Toyota, an individual can have comfort minus frustration. By employing its quality advantage, Toyota creates systems of motor vehicles from economy to comfort that minimizes the frustration of motor vehicle ownership. 1.3 Solutions to ethical dilemmas Toyota is currently solving its ethical dilemmas through adoption of various ethical theories. The organization has adopted the rights ethical theory. In this theory, the rights set onward by a society are guided and given the first priority. Cross (2006) notes that rights are believed to be ethically acceptable and valid since a huge or ruling population supports them. People may also provide rights to other individuals if they possess the capability and resources to do so. The society need to decide the rights it desires to support and provide to its members. In order for a society to decide the rights that it desires to pass, it must determine the aims and ethical priorities of the society. According to Lee (2005), Toyota is currently using the rights ethical theory to solve its teams work application dilemmas. The organization is copying with advancement of general ethical values and advancement of the general organization culture, which could be used in all company’s units located in various areas of the world. They also engage in advancement of highly independent organizational arrangements, which could independently expand the organizational culture that satisfy the requirements of local personnel. In case of search for profit and the preservation of primary image issues of Toyota, the organization has created an efficient system of management throughout its globe chain of production. The casuist ethical theory compares present ethical problem with examples of same ethical dilemmas and their results. This permits one to establish the severity of the circumstance and to develop the best probable solution according to experiences of others. Normally an individual will discover paradigms that symbolize the extremes of the circumstance so that a compromise can be arrived at, that will confidently comprise the wisdom got from previous examples. Toyota therefore, is employing this theory to solve the harsh conditions that their workers are going through in different parts of the world. The company has reviewed most employees’ wages. Hitt (2009), observes that most workers are currently being paid higher salaries as compared to what they used to get. The company ensures that all the protective gears that their workers might require are easily available. This has reduced the injury cases in the organization. Through adoption of the casuist ethical theory Toyota has developed a compensation scheme that ensures all the employees receives their pay roll. The workers employed by Toyota in many parts of the world have lately found their welfare improving due to adaptation of this theory by Toyota. According to Ferrell (2009 p. 78), the utilitarian theory of ethics is the ability of an organization to foresee the effect of a particular action. According to this theory, the option that provides the greatest benefit to many people is the option that is ethically okay. The main advantage about this theory is that it can compare same inferred solutions and apply a point system to establish the option that is more important to majority of individuals. This point system gives a reasonable and rationale discussion for every decision and permits an individual to utilize it on a case-by-case circumstance. Toyota manufactured several cars to ease the frustration of owning a car, but later the cars had to be recalled because of their faulty brakes. In this case, the utilitarian seems to have chosen an unethical decision. Goldenberg (2007 p.102) argues that the unexpected faulty brakes are judged as unethical because they did not benefit the customers. The Toyota adopted the utilitarian theory because the theory could easily identify the consequences of faulty brakes in their manufactured vehicles. Using the theory, the company compared the inferred solutions and discovered that the best solution that would benefit their customers is to recall all the vehicles that had faulty brakes. Toyota uses the A3 technique in crisis solving. In this technique, the idea is to work out problems as a team by concentrating at the symptoms, knowing the business context, and recognizing the root causes. You can expand or minimize the piece to fit the paper. The original method utilizes ISO A3 because it is a fine size to apply in a workshop, then after sometime it is placed on the notice board of the team. The A3 scheme was primarily developed by Toyota and was listed for the paper dimension on which it was published. Toyota utilized the A3 technology to assist expand its well-known Toyota production system. 1.4 Toyota ethical practices and values According to Adshead (2003 p.34), Ethics depends on moral’s set and ethical values. These values need to be absolute, that is, an individual must consider them more seriously to dominate any being rationalization, limitations, ego, or individual faults. When everything fails, an individual often return to values to guide him or her. Unfortunately, it is not always that easy and disagreement about the type of values that should be reign supreme often prevails. Fortunately, in the field of business ethics, managers often assist their workers since their values are worker’s values. In Toyota one of the best ethical values practiced is honesty, that is honesty in communication and honesty in conduct. Honesty in communications refers to intent to express the truth in a best way and avoid passing information in a way that might mislead or deceive. Honesty in conduct forbids stealing, fraud, and trickery. Cheating is a destruction of trust and fairness. All lies are unethical. Therefore, in any organization honesty among the employees and the managers is very important. Honesty within an organization enables them to easily adopt ethical theories such as the deontological theory. Integrity connotes steadiness and strength. This implies being at a high level by practicing the highest standards of ethics. In case an organization demonstrates integrity it portrays completeness and soundness among the organization and employees character. Toyota should practice this ethical value since it is the best value an organization can adopt to enhance its development. This type of ethical value makes it possible for the company to adopt utilitarian ethical theory. Responsibility is also another ethical value that an organization needs to practice. Blaming of other people, claiming victimhood, or ignorance may resolve short-term problems, but refusing to be responsible corrodes respect and solidity within an organization. Ethical individuals take responsibility for their deeds. This action portrays the capability to be responsible in both big and small stuffs. Therefore for an organization to a achieve this, they need to adopt virtue ethical theory. According to Rosevear (2010 p. 202), Quality should be beyond creating the best commodity, but should proceed to each aspect of work. An individual who identifies quality and struggles for it every day has a deep sense of self-respect, attentiveness, and pride achievement that influences everything. From a person’s memos to his or her presentations, anything that he or she touches should display professionalism and quality. Therefore, Toyota needs to practice this ethical value to improve on its reputation and quality of the products they manufacture. To achieve this, an organization needs to adopt virtue ethical theory. Guffey (2008 p.67) notes that trust is a very important ethical value that an organization should practice. It is not easy to earn trust, and it is even harder to win back trust ones an organization or individual lost it. For the continuity of the business, anybody who comes across an individual or the company needs to have confidence and trust in how business is conducted. Organizations should avoid those activities that might make them loose trust. Michael (2010 p.97) notes that respect is another thing that organizations are required to practice. It is not about feelings alone, but an expression of honor, worth, and reverence for someone. It is important to respect the company’s laws, colleagues at work, the company in general and its properties, and ourselves. For organizations to achieve this ethical value, they need to adopt rights ethical theory. Two or more workers jointly create a team. It is an organization requirement to work openly and supportively in groups whether unofficial or official. Organizations that often encourage teamwork have high chances of developing. According to Mark (2002 p.103), teamwork ensures good relationship among workers, thus making them more innovative and efficient. Business leaders and executives should support ethical standards within an organization. Garry (2010 p.4) argues that, Foundational principle for any company should be to give a secure workplace, to guard the environment, and to be useful in the community. Therefore, corporate citizenship is an important ethical value that organizations need to practice. There is no organization that can exist without profits. Each worker should know how he or she contributes to the company’s profitability. The common goal for every worker should be to create a strong, profitable organization that will last. 2.0 Recommendations In response to the critics and the business dilemmas associated with Toyota Company the management is recommended to be a bit flexible on its leadership principles. Catherine (2002) argues that as a multinational organization, some of the plants of the organization are located in areas whose cultures and customs are completely different. For example, the principle states that certain quantity of products should be manufactured and distributed within a specified period of time may not be applicable to all nations, especially the developing ones because of the economic instability in these countries. To reduce the critics that the company is receiving from the public and the media, the management should ensure private and confidential information are well secured. The members of the public particularly from Japan claim that Toyota vehicles are not safe. They are blaming these motor vehicles for causing most of the serious injuries or fatalities. This criticism is supported by the information acquired by the media reporters, after learning the operations of the internal organization. Though the management is finding it hard to hold some of its confidential information due to its large size, they should make an agreement and a rule governing all the concerned personnel, that is, the organization general manager should hold conventions with the employees to discuss issues that concern the organization and those that boost their working morale. For instance, the president of the Akio Toyota Company met with the employees early this year, for the first time to discuss some sensitive issues that entail their relationship with the public and boost their morale by showing some sense of concern. In his speech he assured customers that Toyota vehicles are very safe. Such meetings should also be organized in all units, to boost the performance of the entire organization. 3.0 Conclusion From our discussion we can easily conclude that Toyota is a successful international company that is faced by various ethical dilemmas. It is also important to note that Toyota has contributed to the development of many nations in the world since the strategy of the company is always to promote the growth of international market. From our discussion it is evident that Toyota works worldwide, this implies that, it has established its plants in many parts of the world. Therefore its vehicles are recognizable worldwide. For any company to be globally recognized they need to establish their plants in different parts of the world. It is also important to note from our discussion that international organization needs to understand the culture of different nations that they wish to invest in. Therefore they should not apply uniform culture in every country that they have invested in. 4.0 Bibliography Fisher & Lovell, 2009, Business Ethics and Values: Individual, Corporate and International Perspectives Third Edition, FT Prentice: Hall London Henderson, V, E., 1992, what is Ethical in Business? McGraw Hill: New York. Baines, K, B., 2006, Ethical wills: putting your values on paper Edition2, Da Capo Press: Cambridge. Daft L, R., 2009, Organization Theory and DesignAuthorEdition10, Cengage Learning: New York. Menzel, C, D., 2007, Ethics management for public administrators: building organizations of integrity, M.E. Sharpe: New York. Ferrell O, C, & Ferrell L., 2009, Business Ethics: Ethical Decision Making and Cases Edition7, Cengage Learning: New York. Henderson, H, & Sethi S., 2006, Ethical markets: growing the green economy, Chelsea Green Publishing: London. Kurtz D, L, & Mackenzie H, F., 2009, Contemporary Marketing Edition2, Cengage Learning: New York. Chalice, R., 2005, Stop Rising Healthcare Costs Using Toyota Lean Production Methods: 38 Steps for Improvement, ASQ Quality Press: New York. Cross, B, F., 2006, West's legal environment of business: text and cases: ethical, regulatory, international, and e-commerce issues Edition6, Cengage Learning: New York. Lee K & Carter S., 2005, Global marketing management: changes, challenges and new strategies, Oxford University Press: Oxford. Hitt A, M & Hoskisson E, R., 2009, Strategic management: competitiveness and globalization: concepts & cases Edition8, Cengage Learning: New York. GOLDENBERG, H., 2007, FAMILY THERAPY: AN OVERVIEW, Cengage Learning: New York. Daft L, R., 2009, Organization Theory and DesignAuthor Edition10, Cengage Learning: New York. Guffey E, M., 2008, Business communication: process & product, Cengage Learning: New York. Murdoch, H., 2004 , Auditing (and communicating) your way to an ethical supply chain, Corporate Responsibility Management, Retrieved December 12, 2010. From, Garry, C., 2010, what is Business Ethics? Retrieved December 23, 2010 from, Catherine R., 2002, Descriptions of Ethical Theories and Principles, Retrieved December 23, 2010 from, Michael. C., 2010, Stockholder, Manager, and Creditor Interests: Applications of Agency Theory. Retrieved December 23, 2010 from, Dionne, S. & Kate, L., 2010, Toyota Moves to Discredit Its Critics, Retrieved December 23, 2010, from Rosevear, J., 2010, Toyota's Problems: 8.5 Million and Counting, Retrieved December 23, 2010, from Toyota Motors Corporation (2003). Environmental and Social Report: Compliance. Retrieved December 19, 2010 from < http://www.toyota.co.jp/en/environmental_rep/03/comp.html> Mark S. P., 2002, Ethical Values for Business Success, Retrieved December 23, 2010, from Read More