What Is a Case Study?

When you’re performing research as part of your job or for a school assignment, you’ll probably come across case studies that help you to learn more about the topic at hand. But what is a case study and why are they helpful? Read on to learn all about case studies.

At face value, a case study is a deep dive into a topic. Case studies can be found in many fields, particularly across the social sciences and medicine. When you conduct a case study, you create a body of research based on an inquiry and related data from analysis of a group, individual or controlled research environment.

As a researcher, you can benefit from the analysis of case studies similar to inquiries you’re currently studying. Researchers often rely on case studies to answer questions that basic information and standard diagnostics cannot address.

Study a Pattern

One of the main objectives of a case study is to find a pattern that answers whatever the initial inquiry seeks to find. This might be a question about why college students are prone to certain eating habits or what mental health problems afflict house fire survivors. The researcher then collects data, either through observation or data research, and starts connecting the dots to find underlying behaviors or impacts of the sample group’s behavior.

Gather Evidence

During the study period, the researcher gathers evidence to back the observed patterns and future claims that’ll be derived from the data. Since case studies are usually presented in the professional environment, it’s not enough to simply have a theory and observational notes to back up a claim. Instead, the researcher must provide evidence to support the body of study and the resulting conclusions.

Present Findings

As the study progresses, the researcher develops a solid case to present to peers or a governing body. Case study presentation is important because it legitimizes the body of research and opens the findings to a broader analysis that may end up drawing a conclusion that’s more true to the data than what one or two researchers might establish. The presentation might be formal or casual, depending on the case study itself.

Draw Conclusions

Once the body of research is established, it’s time to draw conclusions from the case study. As with all social sciences studies, conclusions from one researcher shouldn’t necessarily be taken as gospel, but they’re helpful for advancing the body of knowledge in a given field. For that purpose, they’re an invaluable way of gathering new material and presenting ideas that others in the field can learn from and expand upon.

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  • Uzma Ehtesham 1
  • Asif Amin Kuchey 2
  • 1. Assistant Professor, Deptt. of Management Studies, Al-Falah University, Faridabad, India
  • 2. Research scholar Al-Falah University, Faridabad, India


Purpose: This paper tries to identify the unethical practice carried out by the Toyota. It also tries to examine the impact of these unethical practices on their respective employee performance, their employee relations, company credibility, and on the society. Lessons can be learned from these experiences and preventive measures can be applied across international borders to improve business conduct in other developing economies.

Design / Methodology/ Approach- The present research paper is conceptualized and is based on case study analysis in order to find the impact of Toyota’s unethical practices on the stakeholders

Findings: By analyzing the Toyota’s case study, it was found that due to Toyota’s ignorance of safety people lost the trust in Toyota cars and opted for other cars. Hence the brand reputation of Toyota’s was crashed.

Limitations: Present research is conceptualized and is purely based on case study analysis; ergo the limitations of this paper is lack of primary data

Practical implications: this case can act as an example for the other companies and therefore better regulatory setups can be formed to avoid such incidents in future

paper-2 Issue-5 Full paper page 11-17 Uzma Ehtesham Jul-2016.pdf

Files (698.3 kb).

Toyota Ethical Issues and Social Responsibility

Identification of ethics and social responsibility issues facing the company.

Toyota Motor Corporation is an international automobile and financial company, respected for its quality and reliable products; to remain competitive; the company’s management makes timely decisions. In all operations, the company aims to be ethical; it also extends a hand of appreciation to the public through corporate social responsibilities (CSRs). When determining the operation base and the CSRs to undertake, the company considers different issues likely to influence the direction of the projects or decisions.

There has been come ethical issues faced by the company, for example in early 2010, Toyota Company was faced by a problem when some fault vehicles got their way to the market and lead to deaths particularly in the United States of America. The company was considered not to be taking good care of its customers and the public.

The brands of vehicle could accelerate themselves to an uncontrollable level they even led to death. The move or the experience that the company got at the time forced the management to appraise in person on the case and recalled all faulty automobiles.

The case of Toyota was broadcasted in international and national media a point that made the sales of the company reduce (Habisch, Jonker and Martina 1-123).

Toyota being in the automobile industry has been blamed for environmental damage; the damage has been attributed to the company’s products, vehicles, which use fossil fuels to run.

When fossil fuels are burnt, they produce green house gasses that have been a major talk in environmental debates, for the reason the company has been considered unethical. However, despite the moves and criticism gotten from environmental conservatisms, the company has continued to improve its products and has innovated battery vehicles (electronic vehicles).

Identification of key stakeholders and explanation of their involvement and influence

There are a number of stakeholders in Toyota as far as ethics and corporate social responsibilities plans are concerned. The stakeholders are both internal and external players; internally Toyota is divided into departments performing different tasks. Internal team is expected to be creative, inventive and innovative to come up with approaches to ethical and CRS programs.

The company has embarked on enforcement of its operating strategies: the company operates under five principals, they are Kaizen (continuo’s improvement), teamwork, Challenges, Respect and Genchi Genbutsu (go and see): to be ethical, the company aims at fulfilling the above objectives.

Another set of the company’s stakeholders that affect the ethical code of business in the company is the external environment like customers and the society; there is a level of quality that customers expect from the company, the level forces the company to adopt high ethical operations. The company takes social corporate responsibilities as advertising and marketing tools, they offer the company a competitive advantage as communities value the efforts made by the company.

The government and community-based organizations are other stakeholders; the main areas that these organizations get involved is in offering a minimal base and rate of operation that the company should uphold, for instance the environment movements require some level of emission from the company’s products and operations.

When the company is compiling with such regulations, then it has to conduct its businesses ethically. International bodies and regulations are other stakeholders which the company has as stakeholders, there are a number of international conventions, protocols , and agreements that define the way business should be conducted, they include Kyoto protocol, Stockholm agreements, Doha round of talks, Rio de Janeiro, 3-14 June 1992, European Commission, and The International Institute for Sustainable Development (IISD).

However, these organizations are more concerned on pollution matters and environmental protection. The company is listed in Asian stock exchange whereby the public can buy shares in the company. The employees have a policy that ensures that they also have shares in the company, all this are stakeholders.

The government and the 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 public benefit from social corporate responsibilities programs (Habisch, Jonker and Martina 1-123)

Identification of company’s stance

Although Toyota has been concerned on ethical and CSR issues, it waited until 2005 when the company developed a CSR policy, in the policy the company’s stance which is “CSR POLICY: Contribution towards Sustainable Development.” The policy team section has been upgraded to full departmental level managed by team of experts; the sector looks into economic, social, political and environmental issues in the company. The department has been successful in innovating environmental technologies in both products and processes.

The stance is seen as a combination of pragmatic, ethical, or strategic stance; the broad approach of the stance offers flexibility in country. The success of the structure can be seen in different areas which include development of products that are internationally accepted and automating its process to meet international standards. The stance is not limited to guidance in CSR and ethical issues but takes massive research to advice the company on consumers expectations. The following are the policies that are contained in the stance:

  • Contribution towards a prospectus 21 st century society
  • Pursuit of environmental technologies
  • Voluntary actions and
  • Working in corporation with society

The above action policies are implemented using the framework of:

  • Action plan
  • Toyota Green purchasing Guidelines
  • Biodiversity guidelines
  • Initiative at the new Toyota R&D center

Let us evaluate the success of the company using a Carroll’s Pyramid of Corporate Social Responsibility.

Carroll Pyramid of Corporate Social Responsibility is as follows:

Carroll Pyramid of Corporate Social Responsibility.

At the base of the pyramid, the company profit objectives; when the company economic welfare has been looked into, the company lays the base of other corporate responsibilities and ethical code of conducts.

The pyramid can be expanded as follows:

The efforts of the company look into all areas of ethical concern, the major drive of the company is to have products that are accepted internationally and whose connect with the people (Toyota official website).

The automobile industry is quite demanding as far as ethical and social responsibilities are concerned, they are at the point of focus by national and international bodies more so when it comes to the issues of environmental conservation and being efficient.

Mitsubishi is another international automobile company; it has ethical and corporate social responsibility functions at it heart, in every automobile it produces, it ensures it meets international accreditation of quality, before releasing to the market, the company quality team has to ensure that ever thing is intact.

The efforts have not gone untested; the company’s Glanti model has been accused of brake failures and color fades. There are a number of corporate social responsibilities that the company has embarked on; they include environmental conservations, public educations, and has embarked on massive automation to facilitate ethical business.

According to environmental report 2009 by US Environmental Agency, Mitsubishi has reduced its water wastage by 50%, this is through recycling and proper water use. The recycling is seen as a move to conserve the environment in line with EU environmental rules and Kyoto protocol.

US Environmental Agency has congratulated the efforts taken by Mitsubishi to conserve the environment. It is of the view that if other motor industries follow the same trend, then the world is likely to reduce emissions by half. Pollution from Mitsubishi Motors Corporation can be controlled as a form of corporate responsibility (internal) or a company can embark on massive cleaning of the environment.

Mitsubishi is also a key player in carbon emission reduction through:

  • Adopting fuel efficient production methods like use electricity instead of coal when heating, this is estimated to reduce its in factory emission by 20% A project to develop electric motor vehicles is in an advanced stage
  • The company has embarked on improved technology on it vehicles to ensure that they are fuel efficient
  • The company have started making bio-diesel engine vehicles; they are seen as the breakthrough to future environmental conservation

When comparing Toyota and Mitsubishi, Toyota is doing better; this is so because of the massive innovations that it has come up with in products and processes. Although Mitsubishi is having effective CRS, its coverage is lower than that of Toyota, this may be agued its because of the differences in operating base, since Toyota is the world largest automobile maker while Mitsubishi comes in as seventh (Mitsubishi Corporate website)

The areas that both companies should look into are weak points and leakages in the company resulting from lack of 100% seal of holes that might result to unethical businesses. The company’s quality report of 2009 has almost claimed that the company’s products quality is incomparably high, however, it was a matter of time before they believe failed the test of time.

The five operating policies adopted by the company are strong source of drive and should shape the company’s direction, when it comes to ethical matters, the policies should be adhered to the dot. Advocators for good citizenship acknowledge the benefits that can be acquired from continuous improvements; they are of the view that businesses need to undertake research in their line of business to invent and innovate better ways of working than the current ones.

From the course, I have appreciated the benefits that a company can derive from being ethical and the power of corporate social responsibility as a marketing tool. Previously, I had less interest in CSR programs and their effect on a business, after the course I clearly understand the benefits and the approaches it should take. The course was an eye opener; I now can tell companies that are ethical, them who respect stakeholders and those who have no interest.

The efforts made by Toyota can be applauded, the company has automated its internal structures and is making products that are ethically accepted; to attain the ethical objective as required by the policies; the company is constantly innovating and inventing other ways of operating that are environmentally friendly.

Some of the projects that the company has implemented as corporate social responsibilities have continued to change lives; for example the company’s education programs in developing countries has eradicated poverty and assisted communities. Such systems have a life touching effect; other programs that are aimed at environmental conservation are building to much needed sustainable development agendas attainments.

The efforts made by Toyota has slightly made me respect the company and wish I would get a chance to work with the compact; at least it has made efforts and the efforts are yielding positive results. On paper and according to Toyota code of conduct, the company complies with internationally ethical values and has CSR efforts. The processes that the company has adopted in the efforts of being ethical are a great blessing to the company and societies; they include automation, recycling processes and refurbishment of products.

The moves are compliant with international environmental conservation measures; the invention of electronic motor vehicles (EMVs) is seen as a major breakthrough in energy industry which has been threatened by increasing use and chances of depletion of oil reserves. on the other hand emissions from motor vehicles have been a major contributor to green gasses, the invention is expected to assist in a great deal.

The company has embarked on quality management policies, they include TQM (total Quality Management), Six Sigma, and CRM (Customer relations management) policies; although the policy has made the company more profitable, its spillovers are ethically accepted moves like reliable, affordable and efficient automobiles.

In modern contemporary societies, there is a growing concerns on environmental conservation, management and restoration; this has been facilitated by enlighten among consumers and other business stakeholders calling for companies to act ethically and involve themselves in corporate social responsibilities.

Toyota has embarked a number of measures to make its compliant with international ethical code of conducts. To act ethically, the company is guided by its CSR Policy document of 2005 and guidance of its implementation team.

Works Cited

Habisch, André, Jonker Jan, and Martina Wegner. Corporate Social Responsibility across the Europe . Heidelberg: Springer. 2005. Print

Mitsubishi Corporate website. Mitsubishi,2011. Web.

Toyota official website. Toyota , 2011. Web.

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Impact of Unethical Practices On Business Environment: A Case Study On Toyota

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Is this content inappropriate, international journal of marketing & financial management, volume 4, issue 5, jul-2016, pp 11-17, issn: 2348 –3954 (online) issn: 2349 –2546 (print),, download full paper : http://www.arseam.com/content/volume-4-issue-5-jul-2016, impact of unethical practices on business.

Purpose: This paper tries to identify the unethical practice carried out by the Toyota. It also tries to examine the impact of these unethical practices on their respective employee performance, their employee relations, company credibility, and on the society. Lessons can be learned from these experiences and preventive measures can be applied across international borders to improve business conduct in other developing economies.

Design / Methodology/ Approach-The present research paper is conceptualized and is based

Contact us : [email protected] ; submit paper : [email protected] download full paper : www.arseam.com 11.

1. Introduction

Business involves a number of objectives including profit maximization within a framework

1.1. business ethics.

way involves distinguishing between “right” and “wrong” and then making the “right” choice. It is relatively easy to identify unethical business practices. For example, companies should not use child labour. They should not unlawfully use copyrighted materials and processes. They should not engage in bribery. According to Investopedia, “Business ethics is the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Law often guides business ethics, while other times business ethics provide a basic framework that businesses may choose to follow to gain public acceptance.”

2. Literature Review Ferrell, Fraedrich and Ferrell (2004) suggest that business ethics comprises moral principles and standards that guide behavior in the world of business. Whether a specific behavior is right or wrong, ethical or unethical is often determined by the public as embodied in the mass media, interest groups and business organizations as well as through individuals, personal morals and values. Thus, ethics in business is directly related to social values, norms and global business trends and is negatively related to corruption in society. In this research, evidence of social discontent with business conduct is sought through a review of significant business issues reported publicly as unethical practice. 1.1. What is ethical behavior in business? Sobhan (2000) argues that the supreme ethics in any society must be founded on the principle of justice. A society, which deprives its most productive citizens of resources despite their proven integrity in the use of such resources, is likely to perpetuate poverty as well as underdevelopment and will in the process erode the foundations of a democratic society. Wood (1992) suggests that ethical actions are not, in the final analysis, the responsibility of the individual alone. Instead, most actions are the result of managers and employees following the norms of accepted behavior in the companies in which they work. As Bangladesh is an economy in transition the evolutionary process of transforming its business ethical values, norms and moralities has greatly hampered its organizational development. Business organizations are not yet fully implementing international standards or codes of ethics. Trevino and Nelson (1995) define ethics as the principles, norms and standards of conduct governing an individual or group. They also comment that two types of factors influence ethical behavior: characteristics of the individual and the characteristics of the organization. England (2006) suggests that ethical decisions are made by business

Contact Us : [email protected] ; submit paper : [email protected] download full paper : www.arseam.com 13

people, based on the following considerations: 1) how employees can feel fulfilled professionally; 2) how customers can be satisfied; 3) how profit be assured for the stakeholders or shareholders; and 4) how the community can be served. Trevino and Weaver (1997) linked the matter of concern about ethics in business practices to three factors: a) ethical failures diminish reputation; b) articulating ethical standards now makes it easier to respond to criticism later; and c) adoption of ethical standards is a hallmark of a profession. Shafique (1996) commented that ethical behavior appears to be largely influenced by a range of factors including the law, government regulation, social pressure, industry sector, ethical codes and personal standards. He observed that banking, despite being a highly regulated industry in most countries, has not gone untouched by ethical crises. He identified some unfortunate examples of unethical practices including abuse of inside information for personal gain, theft, discrimination, embezzlement, pursuit of profitability at the customer‟s expense, money-laundering and insider-loans. Boatright (2004) observes that the financial services industry still operates largely through personal selling. Personal selling creates innumerable opportunities for abuse and although finance professionals take pride in their level of integrity in the industry misconduct does occur. Shaw (2007) emphasizes that if people within business are to build their reputations on integrity and have a keen sensitivity to the ethical dimensions of their decisions, they must be guided by sound moral standards.

3. Objective of the study

4. Methodology 5. This paper is based on the TOYOTA case study and is used to examine the impact of unethical practices on the business environment. The case study method is a “preferred strategy when “how” or “why” questions are being posed, when the investigator has little control over events, and when the focus is on a contemporary phenomenon within some real-life context” (Yin, 1989, p.13).

5.1. Hypothesis i. H0: There is no significant impact of unethical practices on the stakeholders of Toyota.

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5.2. an outline of the case study.

On January 26, 2010, the company suspended the sale of eight models and announced that beginning the following week it would temporarily shut down five North American assembly plants. The company did not make public that it took these steps at the direction of the federal government, but the next day, Department of Transportation secretary Ray LaHood effectively called Toyota on the carpet by publicly stating that his agency had directed Toyota to suspend its operations—a statement that Toyota had to confirm. On February 5, Toyota president Akio Toyoda finally appeared at a press conference. Facing the media, he apologized and announced a task force involving outside experts. But by now—after multiple explanations—the damage had been done. Toyota temporarily shut down its manufacturing plants at a cost of $54 million a day; monthly car sales dropped below 100,000 for the first time in more than a decade; Toyota‟s U.S. market share fell to its lowest level since January 2006; the company‟s stock dropped 16 percent; Consumer Reports removed its “buy recommendation” on eight Toyota models; the Department of Justice and the Securities and Exchange Commission initiated investigations; and Congress opened up its own inquiry, complete with public hearings. By 2011, two years after ascending to the top, Toyota was passed by GM as the number one carmaker in the world.

And even though a subsequent NHTSA study came out generally supporting Toyota‟s claim that there were no defects in the technical sense, and Toyota has since worked to claw its way back to its previous position in the public eye, Toyoda acknowledged that Toyota‟s crisis response, like the warden and prisoners in Cool Hand Luke, suffered from a failure to communicate.

5.3. An analysis of Toyota’s ignorance on safety measures

Contact us : [email protected] ; submit paper : [email protected] download full paper : www.arseam.com 15.

ii. People no longer trusted the brand and opted for other cars iii. They have to halt the sales of eight of its top selling models in the U.S and recalled more than nine million cars worldwide. Because of this they have suffered billions of losses. iv. In order to be a market leader in terms of quality, Toyota ignored the safety measures v. People lost their lives due to uncontrollable acceleration in Toyota cars vi. Toyota weren‟t honest with the public. They played a blame game an held suppliers responsible of the problem. vii. Unwillingness of Japanese executives to work with North American regulators. The result for Toyota was a public rebuking from the NHTSA and the public perception that the company had something to hide. viii. Loss of revenue as they had to pay $66 million in civil penalties. ix. Lack of transparency as Toyota was accused of hiding the data accelerator pedals. Thus the null hypothesis will be rejected and alternative hypothesis will be accepted

6. Conclusion Toyota‟s reputation was based on its commitment to quality, reliability, customer focus, and excellence in design and manufacturing. The problem begins when an off-duty California policeman was driving a Toyota Lexus that accelerated in excess of one hundred miles per hour and crashed, killing the officer and his family. The incident received news coverage that featured a recorded cell phone call to 911 documenting that the acceleration was uncontrolled, and the driver had no part in the sudden acceleration. This incident due to uncontrollable acceleration led to the recall of 3.9 million vehicles in the U.S. on September 29, 2009 ascribed to floor mat problems leading to sticking accelerator pedals. The problem grabbed national attention in late January and early February 2010: An additional 2.3 million vehicles were recalled for sticking accelerator pedals. Toyota suspended sales of eight models in North America, expanded recalls to Europe and China, and shut manufacturing plants.

Later, Toyota‟s responses were seen as inadequate and began to strain the trust of the public, car buyers, regulators, and government officials. Toyota vehicle sales in the U.S. fell 16% in January 2010 and 8.7% in February compared to the same months in 2009. Also lack of transparency, unwillingness to cooperate with the regulatory body caused a sense of insecurity between their stakeholders especially between their customers and suppliers. This resulted in the decline of sales as no one was willing to buy the Toyota cars Contact Us : [email protected] ; submit paper : [email protected] download full paper : www.arseam.com 16 International Journal of Marketing & Financial Management, Volume 4, Issue 5, Jul-2016, pp 11-17 ISSN: 2348 –3954 (Online) ISSN: 2349 –2546 (Print),

like Lupe. She is still traumatized by the accident, and she refused to buy another Toyota car. So, Lupe opted for a Honda Accord.

References Alex Mezey et al (2013, “TOYOTA, INC. A Case Study in Communicating Bad News”, USC Marshall, school of business, center for Management Communication http://classic.marshall.usc.edu/assets/155/25393.pdf Accessed on 04/05/2016 Bribery and corruption: ground reality in India A survey by EY‟s Fraud Investigation & Dispute Services Practice. http://www.ey.com/Publication/vwLUAssets/Bribery_and_corruption:_ground_reality _in_India/$FILE/EY-FIDS-Bribery-and-corruption-ground-reality-in-India.pdf Business Ethics. http://www.investopedia.com/terms/b/business-ethics.asp Boatright, J. (2004). Ethical issues in financial services, in Ethical Theory and Business, (7e), Beauchamp, T & Bowie, N. (Eds.), Pearson-Prentice Hall, New Jersey. Boatright, J. (2009). Ethics and the Conduct of Business, (6e), Prentice Hall, David Fan et al (2011), “The Toyota Recall Crisis: Media Impact on Toyota‟s Corporate Brand Reputation” https://www.amstat.org/sections/srms/proceedings/y2011/Files/400172.pdf. England, L. (2006). Business Ethics, Available at http://owl.english.purdue.edu/owl/resource/560/10/, Accessed 23/10/2010. Ferrell, O., Fraedrich, J. & Ferrell, L. (2004). Business Ethics: Ethical Decision Making and Cases, (6e), Houghton Mifflin Company, Boston, USA. How Toyota Crashed Its Brand http://www.mrmediatraining.com/2013/02/06/case-study- how-toyota-crashed-its-brand/ Accessed on 2/05/2016 Toyota Is Fined $1.2 Billion for Concealing Safety Defects http://www.nytimes.com/2014/03/20/business/toyota-reaches-1-2-billion-settlement- in-criminal-inquiry.html?_r=0 Accessed on 2/05/2016 Trevino, L. & Nelson, K. (1995). Managing Business Ethics - Straight talk about how to do it right, John Wiley & Sons Inc., New York. Shafique, M. (1996). „Business Ethics in the banking Sector, Journal of the Institute of Bankers Pakistan, Vol. 73, The Institute of Bankers in Pakistan. Victoria Wise et al, “Ethical conduct in business: a case study analysis using Bangladesh experiences”, Problems and Perspectives in Management, Volume 8, Issue 4, 2010. Woods R. (1992). Creating Ethical Corporate Cultures, in Ethics in Hospitality Management, Hall, S. (Ed), Educational Institute, Michigan, USA.

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Toyota Is Fined $1.2 Billion for Concealing Safety Defects

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By Bill Vlasic and Matt Apuzzo

  • March 19, 2014

Eric H. Holder Jr., the United States attorney general, talked in impassioned tones on Wednesday about Toyota’s behavior in hiding safety defects from the public, calling it “shameful” and a “blatant disregard” for the law. A $1.2 billion criminal penalty, the largest ever for a carmaker in the United States, was imposed.

Mr. Holder said the department’s four-year investigation of Toyota found that the company concealed information about defects from consumers and government officials, putting lives at risk because of faulty parts that caused sudden, unintended acceleration in several of its models.

But Toyota wasn’t the only company on everyone’s mind.

General Motors is now the subject of a Justice Department inquiry over its failure to recall cars with a defect that is linked to 12 deaths. And while Mr. Holder did not address questions about the G.M. inquiry, he said the Toyota case would be a model for its newly vigilant approach to automotive safety.

“Other car companies should not repeat Toyota’s mistake,” Mr. Holder said at a news conference in Washington. “A recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”

In the Toyota settlement, the Justice Department agreed to defer prosecution on one count of wire fraud for three years, provided that it pays the financial penalty and submits to a continuing independent review of its safety processes.

Toyota said in a statement that it had made fundamental changes in its corporate structure and internal safety controls since the government started its investigation four years ago.

“Entering this agreement, while difficult, is a major step toward putting this unfortunate chapter behind us,” said Christopher P. Reynolds, chief legal officer of Toyota’s North American division.

The agreement comes as the Justice Department is beginning to investigate the failure by General Motors to fix Chevrolet Cobalts and other models equipped with defective ignition switches that can shut off engines and disable air bags.

Last month, G.M. announced it was recalling 1.6 million of the cars. The automaker’s chief executive, Mary T. Barra, has repeatedly apologized and vowed to cooperate with investigations by the National Highway Traffic Safety Administration and two congressional committees.

Ms. Barra declined to talk about a possible Justice Department inquiry when asked during a briefing with reporters on Tuesday.

Prosecutors said that Toyota concealed problems related to floor mats and sticky accelerator pedals and made misleading statements to consumers in an effort to defend its brand image.

Toyota recalled more than 10 million vehicles in 2009 and 2010 for problems related to unintended acceleration. The company modified gas pedals and floor mats and made brake-override systems standard on new models.

While regulators have not given an exact number of deaths associated with the defect, the company still faces many wrongful death and personal injury lawsuits.

The company, which also has paid $66 million in civil penalties, said Wednesday that it had made internal safety changes including starting rapid-response teams to investigate potential defects.

“At the time of these recalls, we took full responsibility for any concerns our actions may have caused customers, and we rededicated ourselves to earning their trust,” Mr. Reynolds said.

While the $1.2 billion penalty is the biggest ever for a carmaker, it still represents a small fraction of the more than $60 billion that Toyota has in cash reserves.

And although Toyota sales fell in the short term during the recalls, the company has recovered most of the market share it lost in the United States.

Even with its resurgence, Toyota felt pressure internally to reach a deal. There has been a growing sense among executives that a prolonged investigation would ultimately do more damage to the automaker’s image in the United States than a settlement, people with knowledge of the company’s thinking say.

The hours-long grilling of Akio Toyoda, the chief executive, in Congress in 2010 shocked many Toyota executives, and has served as a constant reminder of the consequences of falling out of public favor in the United States, these people say.

As for federal investigators, people briefed on the Toyota investigation said the F.B.I. used the same techniques applied to inquiries into financial fraud at companies like Enron.

Investigators discovered internal Toyota documents that acknowledged serious problems with its vehicles. They matched those documents with the company’s public statements, which played down the problems, according to one federal law enforcement official who spoke on condition of anonymity.

“That’s when we knew for sure that this was a criminal fraud case,” the official said. “That’s what you’d call a smoking gun.”

And while authorities would not comment on G.M. specifically, investigators who worked the Toyota case came away with the view that this was a priority industry because, here, corporate fraud could kill people.

Congressional committees and regulators have asked G.M. for company documents that detail how the automaker discovered problems with ignition switches as far back as 2001.

The company has admitted in filings with federal regulators that it had proposed fixes for the problem on at least two occasions, but did not follow through.

Ms. Barra said Tuesday that G.M.’s own investigation had yet to yield answers as to how the problem was allowed to continue.

The internal inquiry is being led by a former United States attorney, Anton R. Valukas, and will take several months.

An earlier version of this article misstated at one point the year of a crash that killed one woman and injured another. It was 2007, not 2005.

How we handle corrections

Hiroko Tabuchi contributed reporting

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Business Ethics at Toyota - Case Study Example

Business Ethics at Toyota

  • Subject: Business
  • Type: Case Study
  • Level: Masters
  • Pages: 10 (2500 words)
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The Toyota Recall Crisis Case Study

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Integration of moral values with ethics for sustainable development in the auto industry research analysis on 5 auto industry related incidents; GM faulty ignition left 100 dead and paid $2 billion in civil settlements and fines; and Toyota recall of the unintended acceleration caused 89 deaths United States and costed over $1.2 billion to address the economic loss. The 1978 recall of the 14.5 million Firestone and 2000 Ford Explorers highway rollovers equipped with firestone tires killed 271 people; Takata defective airbags by Japanese Auto makers agreed to pay $1 billion in penalties and fines in recall of 70 million airbags in 42 million vehicles with 11 deaths and 150 injuries and 100 million worldwide recalls; and Volkswagen emission deceptions in violation of Clean Air Act and with payment of $4.3 billion in criminal and civil penalties with overall settlement of $22 billion in fines and settlement in United States for 600, 000 vehicles. What are the perspectives on ethics and sustainability in the auto industry by millennials who are projected dominate the workforce Auto Industry by 2020? The research findings detailed the agreement of participants that Volkswagen cheating software; Firestone treads peeling off; Takata airbag explosions; and Toyota sticky gas pedals were all unethical actions; the strategies shared by participants included selection of individuals with moral thus improving company culture. JEL: L62, Q52, Q53, D23, D83, F63 M12, M14, K32, O13, Q54, Q56


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Introduction I couldn’t find better than Toyota Motor Corporation as a positive example of a business organization that acted ethically when they had encountered an ethical dilemma, where the management took an ethical decision to initiate a recall for 9 million cars and trucks worldwide after reports that several vehicles experienced unintended acceleration. Next, in this article we’re going to elaborate more about the recall that happened with Toyota in 2009 and 2010. We will talk about Toyota’s management decision and the plan that they followed in their recall campaigns, and finally the positive and negative consequences.

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This study employs a content analysis to examine news coverage concerning Toyota’s recall crises from January 16, 2009, through November 21, 2012, in the following media: The New York Times, The Washington Post, USA Today, and the news releases listed on the Toyota official website. We examine how the media frame Toyota’s crises and responses, and whether the news coverage varied between mass media and Toyota’s releases. The findings shed light on the crisis communication in terms of response strategy selection. In tracking the ethics of the Toyota crisis in the years since its inception, combined with a content analysis conducted in this paper, the authors attempted to integrate the literature of crisis management with that of ethics in public relations. Ethics should be foremost among the considerations of an organization’s reputation and a primary factor of successful crisis management. The Toyota case has far reaching implications for ethical crisis management and recall strategy in the auto industry as a whole.

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