This essay is about Toyotas Social Responsibility analysis. Here I will talk about what Social Responsibility is and how it is good for a company to be socially responsible. We will look at Toyotas Social Responsibility dimension.
Social Responsibility for a company is when a company thinks about acting in an ethical way, sustaining the environment as well as its operations and abiding by the law. Just like the name states it is to be socially responsible. Now looking at Toyota in the SR perspective. Ever since its birth in 1935 it has always been a responsible company, not so much to the environment at first but always toward their customers, partners and stakeholders. Through their “Customer First Policy” and “Toyoda’s Five Principles” although it’s not until 1992 that the “Toyota Earth Charter” was formulated. There are many advantages in being a Socially Responsible company or else the trend wouldn’t be caught on by big companies such as Toyota, Nike, Bank of America and Dell. One of the advantages is that it is easier to attract and retain talented people as many young professionals nowadays refuse to work with employers with a bad reputation. Youth these days are very opinionated. For an individual company some SR issues will be more important than others or it’s just the way they market themselves like Toyota who is projecting themselves as a green car manufacturer while Volvo chooses safety to be its competitive edge. CSR can help you differentiate yourself from your competitors.
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What’s more is that a purely Defensive CSR move may create weaknesses compared to a CSR Pro-active move. A good example of this is 2007 when Renate Kunast the Green MP and former environmental Minister urged German consumers to turn to buy the Toyota Prius instead of the German made BMW and Volkswagen for the Prius’s lower Co2 emissions. Strong Pro-active CSR strategy for Toyota has given Toyota a head start in the green car market. The Prius Generation 1 development project started in 1993. The aim was to develop a car for the 21st century that would cut fuel consumption in half and must be ready before the second millennia comes. The Toyota Hybrid system combines a gasoline engine with an electric motor for power source. The first Generation Prius debut in Dec 1997 as the first of its kind to be put into mass production. Then later on in 2003 the Generation 2 was released with better fuel efficiency and more utilities. After the Generation 2 launched the accumulated worldwide sale of the Prius reaches 1.27 million units in April 09. The Generation 3 came out in May 09 with a more affordable price and more fuel efficiency. A firm that champions CSR may obtain a reliable and honest reputation that comes with being socially responsible in addition some customers may assume that products from a responsible company are of higher quality. Therefore advertising that infers that the company has CSR attributes can benefit a company’s reputation like Toyota who uses CSR as a way of innovation, competitive edge and to improve its reputation. An example of a CSR stunt is when Toyota Motor, USA, Inc partnered with SunPower Corporation to install a 2.28 megawatt solar electric power system on the roof of TMS Ontario Parts Center. The system will be owned and financed by a third party. So essentially what this means is Toyota will get both financial and environmental benefits without any expenses. Toyota will get both brand exposure and promotion at the same time for virtually free of capital cost. When completed in 2008 the photovoltaic system was the largest single roof solar power installation in North America. On the other hand this second example is one of Toyota’s Ad series that aired in late 2007 featuring Toyota owners thinking up imaginative ways to destroy their cars so that they could buy a newer Toyota model. The announcer in the ad refers to this as the Toyotathon Phenomenon. Toyota meant for this ad to be humorous for the gist of it is that you should demolish your old car so that the insurance can buy you a new Toyota. However numerous trade groups most notably the Coalition Against Insurance Fraud wasn’t laughing at all when they saw this ad. Thus after a stern letter from Dennis Jay the Executive Director of the Coalition to Toyota (which is also posted on the Coalition’s website) expressing this concern about the ad’s unintended message. For even though it is unspoken it is clear that insurance will pay for the replacement. Dennis further states that this ad can only undermine Toyota’s Golden brand image. In response Cindy Knight the Marketing Communications Public Relations Manager for Toyota’s Torrance California USA headquarters said that the ad was supposed to be humorous and it was not intended to suggest any particular course of action for viewers. Also that we appreciate your concern but we have faith in the general public’s common sense and humor. This ad clearly does more harm than good to Toyota’s brand image for the ad is indirectly suggesting unethical courses of action to the viewers which flies in the face of the Guiding Principles of Toyota numbers one and six.
Up until now I was just talking about how ethical Toyota was with some examples and also examples unethical blunders. Next I will talk about the real crisis that has engulfed Toyota for the past two years which also worsened by Toyota’s unethical conduct. The heart of the problem is the reoccurring sudden acceleration in a variety of Toyota’s cars causing accidents which resulted in injures even death. First the blame was on the floor mats and later on the acceleration pedals which suggest that Toyota is not doing a thorough investigation into this. Incidences still occur on the 19th Feb 2010 after the massive recall of 6 million cars worldwide. Complaints about this acceleration problem have increased greatly after Toyota’s announcement of recalls in Sept 09. Another cause for contentment is that Toyota’s black box. This is because Toyota has been reluctant to provide access to its boxes and will only do so when forced by law enforcement or court order. Toyota spokesman says that ” The device is still experimental and that they have found anomalies in the data and believed that it is not reliable for accident construction.” Apparently only Toyota can decipher the black box’s information. This is a stark contrast to the US “Big three automakers” whose black box can be read by anyone with readily available diagnostic tools. Toyota is losing credibility here without their transparency. What’s more of all the complaints filed to the government about speed control problems from all the brands of car makers Toyota has the worst record for complaints. Toyota’s registered one speed crash complaint for every 20,454 vehicles sold in the US while Ford is 1/64,679, Honda 1/70,112, and General Motors 1/179,821 sold in the US. Another fact is that Toyota has been slow to respond to safety concerns and according to the NYT Toyota makes design changes without informing customers about the problems with the car already on the road. Even Toyota’s spokesman James Wisemen admits that they could have communicated better as a company. By being slow to respond to mounting safety issues and concealing machine defects from customers is majorly unethical thus Toyota’s credibility took a huge blow from this. Toyota should have told the truth because their reputation demands it. In the end the numbers of safety problems from the public records are greater than the ones released by Toyota. Prudence should suggest there be more internal scrutiny in Toyota. In addition the US Department of Transportation will seek a 16.4 million dollar fine for the charges of not timely reporting issues about the acceleration pedals. To take this even further the Transportation Secretary Ray Lahood announced that there is proof that Toyota has knowingly hidden information about the dangerous defects for months without telling US officials and has done nothing to protect million of drivers that are at risk. Risking other people’s lives for the sake of company security is illegal not to mention immoral. To make matters worse is the incident in Japan 06/03/10 when a Japanese women crash from sudden acceleration. Neither the local dealer nor Toyota responded to her inquires plus the authorities downplayed the whole thing. In the end the women was advised to admit fault so that her will be fixed for free. Toyota’s stance in this mess is defensive and at time defiant, it seemed that Toyota is either indifferent or just didn’t see the problem as a priority.
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Thus Toyota went from a high quality to a bumbling or indifferent company in the eyes of customers. Toyota should have acknowledged that the safety problem must be fixed in an open fashion and should show more transparency to the public. The black box should be decrypted and customer readily notified about product defects. With such a long history of excellence it is a shame to see a company of this caliber breaking rules which they are the pillars of their success. [i]
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