CIA -1

BUSINESS MANAGEMENT
(PROF-MS. NILOFER)
BY: ADNAN SHEIK
2BCOM F&A-C
1912203
TOYOTA

INTRODUCTION

Toyota Motor Corporation is a Japanese multinational automotive manufacturer headquartered

in Toyota, Aichi, Japan. In 2017, Toyota's corporate structure consisted of 364,445 employees
worldwide and, as of September 2018, was the sixth-largest company in the world by revenue.
As of 2017, Toyota is the largest automotive manufacturer. Toyota was the world's first
automobile manufacturer to produce more than 10 million vehicles per year which it has done
since 2012, when it also reported the production of its 200-millionth vehicle. As of July 2014,
Toyota was the largest listed company in Japan by market capitalization (worth more than twice
as much as number 2-ranked SoftBank) and by revenue.

Toyota is the world's market leader in sales of hybrid electric vehicles, and one of the largest
companies to encourage the mass-market adoption of hybrid vehicles across the globe. Toyota is
also a market leader in hydrogen fuel-cell vehicles. Cumulative global sales of Toyota
and Lexus hybrid passenger car models achieved the 10 million milestone in January 2017.
Its Prius family is the world's top-selling hybrid nameplate with over 6 million units sold
worldwide as of January 2017.Toyota is listed on the London Stock Exchange, New York Stock
Exchange and Tokyo Stock Exchange.
Toyota's management philosophy has evolved from the company's origins and has been reflected
in the terms "Lean Manufacturing" and “Just in Time Production”, which it was instrumental in
developing. Toyota's managerial values and business methods are known collectively as the
Toyota Way. Many businesses worldwide have adopted a similar approach to manufacturing.

In April 2001, Toyota adopted the "Toyota Way 2001", an expression of values and conduct
guidelines that all Toyota employees should embrace. Under the two headings of Respect for
People and Continuous Improvement

Toyota, which earlier was the world's third-largest automotive manufacturer behind
American General Motors and Ford, produced for the first time in history more vehicles than
Ford in 2005, and in 2006 even more than General Motors and has been the world's largest
automotive manufacturer since then, except in 2011 when, triggered by the 2011 Tōhoku
earthquake and tsunami, it fell to the number 3 position behind General Motors and
German Volkswagen Group.

History

The production of Toyota automobiles was started in 1933 as a division of Toyoda Automatic
Loom Works devoted to the production of automobiles under the direction of the founder's son,
Kiichiro Toyoda. Its first vehicles were the A1 passenger car and the G1 truck in 1935. The
Toyota Motor Company was established as an independent company in 1937 Vehicles were
originally sold under the name "Toyoda", from the family name of the company's founder,
Kiichirō Toyoda. In April 1936, Toyoda's first passenger car, the Model AA, was completed.

By the early 1960s, the US had begun placing stiff import tariffs on certain vehicles. The so-
called "chicken tax" of 1964 placed a 25% tax on imported light trucks. In response to the tariff,
Toyota, Nissan Motor Co. and Honda Motor Co. began building plants in the US by the early
1980s.

Toyota received its first Japanese Quality Control Award at the start of the 1980s and began
participating in a wide variety of motorsports. Due to the 1973 oil crisis, consumers in the
lucrative US market began turning to making small cars with better fuel economy. American car
manufacturers had considered small economy cars to be an entry-level product, and their small
vehicles employed a low level of quality to keep the price low. Conservative Toyota held on
to rear-wheel-drive designs for longer than most. Toyota then started to establish new brands at
the end of the 1980s, with the launch of their luxury division Lexus in 1989.

Toyota has grown from its origins in Japan during the 1930s to become a large multinational
corporation. It displaced GM and became the world's largest automobile maker for the year
2008. It held the title of the most profitable automobile maker (US$11 billion in 2006) along
with increasing sales in, among other countries, the United States.

The automaker narrowly topped global sales for the first half of 2014, selling 5.1 million
vehicles in the six months ending June 30, 2014, an increase of 3.8% on the same period the
previous year. Volkswagen AG, which recorded sales of 5.07 million vehicles, was close behind.

In November 2015, the company announced that it would invest US$1 billion over the next 5
years into artificial intelligence and robotics research. In 2016, Toyota invested in Uber. The
invested amount is not public information. In March 2016, Toyota partnered with Yanmar to
create a fiberglass pleasure boat using Yanmar outboard marine diesel engines or Toyota inboard
engines.

According to the 2017 Fortune Global 500, Toyota is the fifth largest company in the world.
Since the recession of 2001, it has gained market share in the United States. Toyota's market
share struggles in Europe where its Lexus brand has 0.3% market share, compared to nearly 2%
market share as the US luxury segment leader. On August 27, 2018, Toyota announced an
investment of $500 Million in Uber's autonomous cars.

2009 – 2011 VEHICLE RECALLS

Issue
In August, 2009, the improper installation of an all-weather floor mat from an SUV into a loaner
Lexus sedan by a dealer led to the vehicle’s accelerator getting stuck, causing a tragic, and fatal
accident.

In January 21, 2010, was begun after some crashes were shown not to have been caused by floor
mat incursion. This latter defect was identified as a possible mechanical sticking of the
accelerator pedal causing unintended acceleration, referred to as Sticking Accelerator Pedal by
Toyota.

Affects
. Sales of multiple recalled models were suspended for several weeks as a result of the
accelerator pedal recall, with the vehicles awaiting replacement parts. As of January 2010, 21
deaths were alleged due to the pedal problem since 2000, but following the January 28 recall,
additional NHTSA complaints brought the alleged total to 37.

Legal Consequences Faced

Toyota was put to trial in the US court for four years. Eric H. Holder Jr., the United States
attorney general was assigned the case. 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.

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.

Toyota had reached a $1.2 billion deal with the Justice Department to settle a four-year criminal
investigation, the largest ever for a carmaker in the United States, was imposed.

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.

Measures Taken/Policies Passed

As of January 28, 2010, Toyota had announced recalls of approximately 5.2 million vehicles for
the pedal entrapment/floor mat problem, and an additional 2.3 million vehicles for the
accelerator pedal problem. Approximately 1.7 million vehicles are subject to both. Certain
related Lexus and Pontiac models were also affected. The next day, Toyota widened the recall to
include 1.8 million vehicles in Europe and 75,000 in China. By then, the worldwide total number
of cars recalled by Toyota stood at 9 million.
The recalls were in the following manner:
Sep 26, 2007 – US: 55,000 Toyota Camry and ES 350 cars in "all-weather" floor mat recall.

Nov 02, 2009 – US: 3.8 million Toyota and Lexus vehicles again recalled due to floor mat
problem, this time for all driver's side mats.

Nov 26, 2009 – US: floor mat recall amended to include brake override and increased to 4.2
million vehicles.

Jan 21, 2010 – US: 2.3 million Toyota vehicles recalled due to faulty accelerator pedals (of
those, 2.1 million already involved in floor mat recall).
Jan 27, 2010 – US: 1.1 million Toyotas added to amended floor mat recall.

Jan 29, 2010 – Europe, China: 1.8 million Toyotas added to faulty accelerator pedal recall.

Feb 08, 2010 – Worldwide: 436,000 hybrid vehicles in brake recall following 200 reports of
Prius brake glitches.

Feb 08, 2010 – US: 7,300 model year 2010 Camry vehicles recalled over potential brake tube
problems.

Feb 12, 2010 – US: 8,000 MY 2010 4WD Tacoma pick-up trucks recalled over concerns about
possible defective front drive shafts.

Apr 16, 2010 – US: 600,000 MY 1998–2010 Toyota Sienna for possible corrosion of spare tire
carrier cable.

Apr 19, 2010 – World: 21,000 MY 2010 Toyota Land Cruiser Prado and 13,000 Lexus GX 460
SUV's recalled to reprogram the stability control system.
Apr 28, 2010 – US: 50,000 MY 2003 Toyota Sequoia recalled to reprogram the stability control
system.

May 21, 2010 – Japan: 4,509, US: 7,000 MY 2010 LS for steering system software update

July 5, 2010 – World: 270,000 Crown and Lexus models for valve springs with potential
production issue.

July 29, 2010 – US: 412,000 Avalons and LX 470s for replacement of steering column
components.

August 28, 2010 – US & Canada: approximately 1.13 million Toyota Corolla and Toyota Matrix
vehicles produced between 2005 and 2008 for Engine Control Modules (ECM) that may have
been improperly manufactured.

February 8, 2011 – US: NASA and NHTSA inquiry reveals that there were no electronic faults
in Toyota cars that would have caused acceleration issues. However, accelerator pedal
entrapments remains a problem.

February 22, 2011 – US: Toyota recalls an additional 2.17 million vehicles for accelerator pedals
that become trapped on floor hardware.

Aftermath
Toyota stopped producing vehicles on certain production lines for the week of February 1, 2010,
to assess and coordinate activities. In addition to recalling vehicles, Toyota announced that it
would install brake override systems on all Lexus, Scion and Toyota vehicles by the end of 2010.

Economic impact
The recall came at a difficult time for Toyota, as it was struggling to emerge from the recession
and had already suffered from a resultant decrease in sales, and the low exchange
rate from yen to US dollars. On the day the recall was announced in the US, it was also announced
that 750 jobs would be cut at Toyota's British plant at Burnaston, near Derby. Also, it was
estimated that each Toyota dealership in the US could lose
between US$1.75 million to US$2 million a month in revenue, a total loss
of US$2,470 million across the country from the entire incident. Additionally, Toyota Motors as a
whole announced that it could face losses totaling as much as US$2,000 million from lost output
and sales worldwide. Between 25 January and 29 January 2010 Toyota shares fell in value by 15%.
According to analysts, Toyota owners (including owners of cars not recalled) may also be
economically affected by the recall, as the damage to Toyota's reputation could negatively affect
the resale value of used cars.

Manufacturer changes
In addition to its recall efforts, a new global quality committee to coordinate defect analysis and
future recall announcements was announced by Toyota in early 2010, along with a Swift Market
Analysis Response Team ("SMART") in the U.S. to conduct on-site vehicle inspections,
expanded Event Data Recorder usage and readers, third-party quality consultation, and increased
driver safety education initiatives. Industry analysts noted that the recall response was a
challenge for The Toyota Way manufacturing philosophy, because the recalled parts were not
due to factory errors or quality control problems, but rather to design issues leading to consumer
complaints. As a result, better communication of consumer issues with management was
needed, and so the global quality committee aimed to be more responsive to consumer concerns.

Competitor reactions
One day after Toyota's announced sales suspension General Motors began offering
a US$1,000 cash rebate targeted toward Toyota owners. By February 1, 2010 Ford, Chrysler,
and Hyundai were offering similar incentives.

Public image
According to a Rasmussen poll released on February 8, 2010, Toyota is viewed very favorably
by 22% of Americans, favorably by 59%, and unfavorably by 29%. The poll also found 72% of
Americans have followed the recent Toyota news stories "somewhat closely" and 31% "very
closely". A second Rasmussen poll released on February 12 found 23% of Americans believe the
federal government is criticizing Toyota to aid General Motors of which it is the majority owner,
38% disagreed, and 39% were unsure.

2014 RECALL
Issue
In early November 2014, Toyota USA enlisted a recall involving defective inflaters and
propellant devices that may deploy improperly in the event of a crash, shooting metal fragments
into vehicle occupants.
This recall only affects vehicles equipped with Takata airbags released after the year 2000 in
North America. The airbags were manufactured by Takata automotive manufacturing.

The models recalled by the company included Camry, Corolla, Matrix and Highlander. Two of
those models were made by joint manufacturing ventures and sold under other brands: the
Pontiac Vibe and the Subaru Trezia. Some of the vehicles were made as early as 2004.

Affects
The announcement affects around 2 million vehicles in North America, which may be
experiencing problems with an air bag cable and seat rails.

Shares in Toyota fell as much as 4.9% before closing 3% down in Tokyo. The stock has tumbled
more than 15%.

Measures Taken/Policies Passed

The affected vehicles had been recalled by Toyota. The number of vehicles recalled totaled to
more than 7 million cars. Toyota offered free repair to all the defective cars worldwide. Also if
there was any accident or problems faced by the car owner was duly compensated by Toyota.

Toyota plans to inspect and, if necessary, replace parts including seat rails, steering column
brackets, engine starters, windshield wiper motors and air bag cables.

WORKER SUICIDE (2019)

Issue
An engineer at Toyota killed himself after being constantly ridiculed by his boss, authorities
have ruled. The 28-year-old worker was repeatedly called an idiot by his boss, and told he should
die. The young engineer’s boss bullied him with constant insults, ordering him not to take days
off and ridiculing his educational background, since his undergraduate degree was from a less
elite school, according to an investigation into the case. The engineer told those around him that
he could not endure the harassment and would rather die to be freed from suffering. The engineer
took some time off in 2016, citing mental stress. When he returned to work, Toyota assigned him
to another section, but he was still working on the same floor as his former boss.
Analysis
Toyota Motor Corp. acknowledged the case after reports of the ruling emerged. The case came
amid growing awareness of problems with what the Japanese call “power harassment”. A
regional labor bureau ruled in September that the 2017 suicide entitled the victim’s family to
compensation under a law regarding job-related deaths.

The case highlights a tragic but endemic problem in Japan, where a workaholic corporate culture
and zealous loyalty to an employer are often taken for granted. Despite government efforts to
change that, workers often forego vacations and put in many hours of overtime without pay. Few
workers would opt to leave such a respected company as Toyota; job-hopping tends to be for the
adventurous in Japan, where mid-career job changes usually result in steps down, not
advancement.

The Japanese workplace is also fraught with social pressures. Being liked by co-workers and
maintaining harmony tend to take precedence over assessments of performance and ability.

Toyota released a statement saying that it will make efforts to prevent recurrences and ensure the
health of its employees.

This was not the first case relating to labor deaths due to stressful working environment.

On February 9, 2002, Kenichi Uchino, aged 30 years, a quality control manager, collapsed then
died at work. This was one of the first reported cases relating to labor death in Toyota. As the
vehicles manufactured by the company is always in demand, the workers often go through
stressful working environment to complete the given objectives. The quality control manager
was under such stress as to complete the quality testing for a lot, which was to be shipped.
Kenichi had not slept properly for weeks prior to his death and was stressed and pressurized by
his superiors for the accomplishment of the task,

On January 2, 2006, an unnamed chief engineer of the Camry Hybrid, aged 45 years, died from
heart failure in his bed. The engineer was pressurized by his superiors. He was given more than
the optimum amount of work which led him to deep stress, eventually becoming the cause of his
death. The family of the deceased was compensated as prescribed by the law relating to workers
death at work.
CONCLUSION
Even after facing various consequences Toyota has managed to capture a dominant position in
the automobile industry around the world. The sales have been increasing in year by year and
various technological improvements are visible in the vehicles produced.

In 2018 Toyota placed third behind Volkswagen and Renault-Nissan-Mitsubishi business

alliance selling 10.5 million cars worldwide.

It is the world’s second largest manufacturer of automobiles, trucks, robots, buses. In addition to
manufacturing automobiles, the company also provide financial services to its customers.

The company has come with the idea of sustainable development of society, through inventing.
The company’s marketing strategy assist it significantly in attaining harmony between people,
society and global environment (Toyota Vision and Philosophy 2010).

Toyota wishes to take back its top position in worldwide sales by implementing innovative
marketing strategies and producing technologically advanced vehicles at affordable prices. There
is active participation by the company in producing using eco-friendly measures.