BUSINESS  ETHICS  
 

NAMES OF GROUP 5:
Đỗ Hoàng Xuân Quỳnh
Ngô Đinh Tiến
Nguyễn Thị Thu Thuỷ
Trần Hoàng Hiếu

CLASS: SB0768
LECTURE: Mr. Trần Khánh

Ho  Chi  Minh  City  ,  01/2015  

 ETHIC  IN  BUSINESS  –  GROUP  5  
 
 
 

Table  of  Contents  

Abbreviations  ....................................................................................................................................  3  

Abstract  ................................................................................................................................................  3  

I.   Introduction  ................................................................................................................................  4  

1.   Company  information  ......................................................................................................................  4  

2.   Problem  research  ..............................................................................................................................  5  

II.   Literature  review  .....................................................................................................................  5  

1.   Business  ethics  and  CSR  ..................................................................................................................  5  

2.   Producer  responsibility  ...................................................................................................................  6  

III.   Analyze  .......................................................................................................................................  6  

IV.   Conclusion  ..............................................................................................................................  10  

V.   References  ...............................................................................................................................  11  

 
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Abbreviations  
CPSC   Consumer Product and Safety Commission

CSR     Corporate  social  responsibility  

MOT   Minister of transportation

NHTSA   National Highway Traffic Safety Administration  

OICA   Members  represent  the  global  auto  industry  that  drives  economic  progress  

SUA   Sudden  unintended acceleration

TMC   Toyota Motor Corporation  

TREAD   Transportation recall enhancement and documentation art

USA   United  State  of  America

Abstract  
The reason of this study is giving readers an overview of Toyota Motor Corporation.
Moreover, investigating how Toyota deal with SUA scandal. In analyze part, give personal
opinion about the way that Toyota handle these difficult problems and what they had earned or
lost from crisis by an ethical or unethical way. In conclusion, ethics in business and
management CSR are basis things but important for every company desire to have persistent
development.

 
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I. Introduction  
1. Company information

Toyota Motor Corporation is a Japanese automotive manufacturer, which was

headquartered in Toyota, Aichi, Japan. The company founded by Kiichiro Toyoda in 1937 as a
spinoff from his father's company Toyota Industries to create automobiles. Three years earlier,
in 1934, while still a department of Toyota Industries, it created its first product, the Type A
engine, and, in 1936, its first passenger car, the Toyota AA. Toyota Motor Corporation
produces vehicles under 5 brands, including the Toyota brand, Hino, Lexus, Ranz, and Scion.
It also holds a 51.2% stake in Daihatsu, a 16.66% stake in Fuji Heavy Industries, a 5.9% stake
in Isuzu, and a 0.27% stake in Tesla, as well as joint-ventures with two in China (GAC Toyota
and Sichuan FAW Toyota Motor), one in India (Toyota Kirloskar), one in the Czech Republic
(TPCA), along with several "nonautomotive" companies. TMC is part of the Toyota Group,
one of the largest conglomerates in the world.
As many large multinational company in over the world, Toyota also owned very clearly
vision and mission to guide the development of quality products and lasting credibility.
Through improvements of conventional technology, as well as pioneering efforts in the
application of new technologies, Toyota is taking great steps to develop eco-cars that will help
the earth decreases air pollution problems. The goals of corporation towards such as the most
respected, the most successful, delighting customers, wide range of products, the best people
and the best technology. Mission of Toyota is to provide safe & sound journey. Toyota is
developing various new technologies from the perspective of energy saving and diversifying
energy sources. Environment has been first and most important issue in priorities of Toyota
and working toward creating a prosperous society and clean world.
In 2013, they became the multinational corporation consisted of 333,498 employees
worldwide and, as of November 2014, is the twelfth-largest company in the world by revenue.
Toyota was the largest automobile manufacturer in 2012 (by production) ahead of the
Volkswagen Group and General Motors. In July of that year, the company reported the
production of its 200-millionth vehicle. Toyota is the world's first automobile manufacturer to
produce more than 10 million vehicles per year (OICA, 2012- 2013). As of July 2014, Toyota
was the largest listed company in Japan by market capitalization (worth more than twice as
much as #2-ranked SoftBank) and by revenue.

 
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2. Problem research

Even thought Toyota is a famous brand name about quality product and creditability, they
also had recalled their product many times. There are some popular cases of Toyota’s recall,
the first time is from November 2009 through 2010, Toyota had recalled more than 9 million
cars and trucks worldwide in several recall campaigns, and briefly halted production and sales.
Toyota initiated the recalls, the first two with the assistance of the U.S. NHTSA, after reports
that several vehicles experienced unintended acceleration. The second time is in October 2012,
Toyota announced a recall of 7.43 million vehicles worldwide to fix malfunctioning power
window switches, the largest recall since that of Ford Motor Company in 1996. The move
came after a series of recalls between 2009 and 2011 in which it pulled back around 10 million
cars amidst claims of faulty mechanics. In March 2014, Toyota agreed to pay a fine of US$1.2
billion for concealing information and misleading the public about the safety issues behind the
recalls on Toyota and Lexus vehicles affected by unintended acceleration. The latest case
occurred in early November of 2014, Toyota USA enlisted a recall involving defective inflates
and propellant devices that may deploy improperly in the event of a crash, shooting metal
fragments into vehicle occupants. More than 7 million vehicles are potentially affected in the
United States. This recall just effected vehicles equipment with Takata airbags released after
the year 2000 in North America. The airbags were manufactured by Takata automotive
manufacturing. Toyota is offering a free repair to all effected vehicles worldwide. The fault in
the Takata air bags also affected other North American automobile manufacturers.
The reason of this study is to investigate the reason why Toyota had recalled their product
so many times as mentioned, find out what they would do to handle these difficult situations
and what they had earned or lost from crisis.

II. Literature  review  

1. Business ethics and CSR

At the most basic level of every company, business ethics are nothing more than the code
of values and principles that govern the actions, regarding what is right versus what is wrong.
As Peter Robinson, CEO Mountain Equipment Co-op said ethics is the new competitive
environment that every company have to handle (Business ethics, Third Edition, p18). CSR
refer to the responsibilities that a business has to the society in which it operates. From an

 
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economic perspective, a business is an institution that exists to produce goods and services
demanded by society and, by engaging in this activity, the business creates jobs and wealth
that benefit society further. The chairman of the Dayton- Hudson Corporation, Kenneth
Dayton, explained that “If business does not serve society, society will no long tolerate our
profits or even our existence” (Business ethics, Third edition, p230).
Ethical behavior and CSR can bring significant benefits to a business. For example, they
may attract customers to the firm's products, thereby boosting sales and profits; make
employees want to stay with the business, reduce labor turnover and therefore increase
productivity; attract more employees wanting to work for the business, reduce recruitment
costs and enable the company to get the most talented employees; attract investors and keep
the company's share price high, thereby protecting the business from takeover. On the
contrary, unethical behavior or a lack of CSR, by comparison, may damage a firm's reputation
and make it less appealing to stakeholders. Profits could fall as a result.
In the present, because of development of information systems, the customer are quite
difficult in choosing product’s brand name, they not only choose goods based on its quality,
but also the background of that brand. Vedan is a real example, in the past, their business
worked very well, but when they had a scandal about sewage collection and treatment that had
caused not only pollution to Thivai river, but also effect not good to people health and they
had avoided all their liabilities. After unethical news was declared, the more people known
that news, the more people seem to boycott them. It ledto their business
On the contrary, as one of the leading companies in Vietnam, Vinamilk is highly aware of
its influence to the community and the sustainable development of the society. They
understand that the success of a business is reflected in not only its financial performance in
each annual report but also, and more importantly, in the prominent and sustainable values that
it could bring to people. With its legitimate interests and practical activities, Vinamilk is
popular brand name and has been known as the "Brand for the Community".

2. Producer responsibility

In CSR, producer responsibility is the main issue that this study wants to emphasize. It as
referring to area of law in which manufacturers, distributors, suppliers, retailers, and others
who make product available to the public are held responsible for the injuries those producers
cause. Producer responsibility as an area of law is traditionally limited to producers in the
form of tangible personal property.

 
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According to Common Law Consumer protection or Product Responsibility Law and
American Law Agency require producers, distributors, retailer to have to be responsible for
injuries, damages caused by their product errors or people related to that product. Producer
responsibility was based on the legal principle about carelessness, warranty period or the
absolute responsibility. It is said that producers, distributors or retailer may have to be
responsible for injuries caused by their products, include precautions applied. According to an
adjudicator in San Diego (American), a card manufacture of had to pay for a woman who gets
damage for the car of producer. The company paid 369 million dollars, include fines and
compensation cost.
American has many laws to protect consumer. Each law is implemented and supervised by
a federal government agency. For instance, US CPSC have the responsibility to prevent
consumer from being damage by their using product.
MOT issued standard of importing car securities. It is condition for car companies to
export to America. In addition, federal law requires producers to compensate for marking
errors about securities standard. For instance, there are more than 40.000 cases (National
Highway Traffic Safety Administration, 2014), which automobile producers have to recall
their error products to replace and fix.
Businesses should know that their product not only become aims of federal laws and
regulations but also become the same strict regulations. Before entering a new product into the
market, it is necessary to careful consideration of law relate to consumer. Moreover,
businesses should have some social responsibilities because it makes many benefits to firm
and creates their believe in customer.
To sum up, some example above show it is necessary for firm to follow a law which
consumer protection. Business ethics are easily overlooked by the potential entrepreneurs
because they often have other priorities such as marketing, financial matters and new ideas to
consider. However, It has more powerful influence on the existence of a business operation.
They can create a positive image of a business that boosts the growth and sales by increasing
consumer trust. On the other hand, breaching business ethics could create serious damaged
causing customers turn their backs on a business.

 
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III. Analyze    
After researching, the group had found a reliable article provides the information about the
problems of Toyota led to large recalls that was a SUA problem occurred on their car but
Toyota was not an only company had to faced with this scandal. In 1980s, Audi care barely
survived its and they solved this problem by recalls on their cars then installation of a shift-
interlock system. However, before Audi did it, NHTSA were just concluded these case as
driver error, the accidental placement of the foot on the accelerator instead of the brake. After
that, the Audi SUA problem unfolded quickly.
The Toyota problems began in 2007, when a couple has a serious accident when they
drove their 2005 Toyota Camry. The main cause was the Camry accelerated suddenly. There
were other accidents involved to SUA, but the agency of NHTSA didn’t pursue the issue
because they didn’t reveal any issue with the accelerator or component part. The SUA scandal
continued in some Toyota and Lexus models. There were some factors that attributed like
floor-mat, mechanical defect, Electronic defect, etc. But the explanation couldn’t be applied.
Toyota convinced NHTSA replaces the floor-mats in 55000 vehicles solved the problem.
However, Accident involved to SUA still continued. In 2009, because of the seriously SUA
accident of Mark Saylor’s family, with the clearly evidence, Toyota still stuck in the SUA
scandal. Following the Saylor accidents, more SUA report declared, Toyota was left with few
choices. Toyota had largest recall in history with million vehicles were fixed. But in 2010,
NHSTA still received a lot of complaints from Toyota owner about SUA. Toyota was fine
$16.4 million for its failure to timely report the complaints about SUA. At least one of the
case can be concluded that driver error, one Prius driver call 911 about SUA problem, but the
police concluded that the driver committed hoax. Plaintiff’s lawyer release figures on
consumer reporting problems about SUA event. Later, the TREAD (transportation recall
enhancement and documentation art) imposes criminal charge against Toyota that mislead
federal regulator. The situations that indicate Toyota were aware of the issues but didn’t
disclose the problem.
Through the article, reader can see how Toyota deal with SUA scandal. Despite, the
awareness of the scandal they still hided. As mention above about the necessary level of ethics
and CSR in business that must be considered as the core of an organization in order to have
sustainable development. However, through the way Toyota deal with SUA scandal, they
shown their breach of trust. In a simple way, SUA is a big problem and repairing it take a lot

 
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of time for researching and fixing. In the case, when their problems began, they had to made
ethical decisions, between disclose or not their SUA problems. Because, if they announced the
SUA immediately when they have no solution, SUA would cause seriously the reputation for
Toyota and their financial issues would be effected badly. Their business could be dropped
into bad situation. In the worst scenario, Toyota’s brand name would be destroyed. In the
opposite side, if they kept hiding their problem, accident was cause by SUA problems would
be increasing day by day, number of people died by this accident could not control.
Toyota always has a stringent policy about quality guarantee. Because of SUA, Toyota
was contrary with their slogan "High quality starts with the customers". But the reputation
damaged would be less if they quickly announce SUA and fix it immediately. In that case,
Toyota also suffered a huge expense in recall and fix their vehicles.
After some accident, Toyota not only ignore fixing their problem but they also gain a small
amount profit by convincing NHTSA replace the floor-mat and save 100 million dollar. That
was an unethical solution but very clever of Toyota. In an internal newspaper, "Win" for
Toyota. The word "Win" means not only Toyota recovered the bad effect on the company
reputation, but customers also revived their belief on this small move. Plus, Toyota also
gained a sizeable profit. They sought profit from their mistake. However, the replacement of
floor-mats just fixed a small fraction of failed vehicles. Crash still going on, complaints
continued to be send to them. Just after the Saylor’s accident, a car accident which killed
patrol officer Saylor’s family, SUA problem became public and Toyota have no more choice.
They establish the largest recall in history when the scandal nearly destroyed the big auto
brand. In general, the recall was the compelling action to save the auto brand rather than an
ethical move
In addition, the user moral is an issue need to be mentioned. A Prius driver call 911 about
his SUA problems and the outcome that police concluding that the driver committed hoax.
Foolish driver. Maybe he wants a compensated amount from Toyota about complaining SUA
error on his Prius. In our judgment, greed led him to this unethical action.
However, nothing can hide forever, Toyota was fine with 16,4 million dollars by NHSTA
and was imposed criminal charge by TREAD. Despite the directly damage to the financial and
reputation, Toyota still very lucky when their brand still exist. Toyota apologized in public and
continued to respond customers complain about SUA error, furthermore, they still continued
repaired recalls vehicle. That was considered a good action to correct their mistakes. Also,
Toyota redesigned their product for the next generation car to minimizes SUA error.
 
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The processing to resolved scandal was considered expensive lesson for Toyota.
Companies generally can’t predict when crises might occur. But if Toyota resolved the issue
ethically, they would not have suffered serious damaged. The lesson for Toyota in this case
was: "Get the facts quickly and manage your risks aggressively".

IV. Conclusion    
This study showed and analyzed Toyota’s problem. It is important for business operation
to be responsible to customer and society. In order to, protect customer and benefit of
corporations, government imported many laws with investigators. Moreover, some people
took advantage of Toyota to destructive their image. The relationship between social
responsibility and business ethical show how it is necessary to keep a consumer and develop
company’s position in the market. Beside that, consumer should self-consciousness and
expands their knowledge to protect themselves.
This study has revealed that ethical in business is very significant to the realization of
organizational success. It is also concluded that adopting good ethical behavior will increase
business sales, profit, customer retention and loyalty. It makes an increase of the number of
investors to invest corporation to expand production and influence market.
In conclusion, for giving recommendation for all the firms desire to be successful that
business ethics are important. When they have to carry out any decision, the very first thing
they should consider is their ethical problems, whether that decision will brings good or bad
effect to firm’s image. Moreover, they should not disregard customer’s problems. Especially,
their problems correlate to their products and services.

 
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V. References  
• "Toyota  Company  History  from  1867  to  1939".  Toyota.  Retrieved  October  
11,2010  
• "Toyota  Concept  Vehicles-­‐-­‐  RAV4  EV".  Toyota  USA.  Retrieved  2012-­‐01-­‐22.  
• "Toyota  for  investors,  Frequently  Asked  Questions".  Japan:  Toyota  Motor  
Corporation.  2007-­‐02-­‐02.  Retrieved  2008-­‐07-­‐02.  
• Aqua  Tops  Prius  as  Best-­‐Selling  Car  in  Japan".  Product  Design  and  Development  
(PDDnet).  Associated  Press.  2012-­‐10-­‐06.  Retrieved  2012-­‐11-­‐10.  
• Dobson,  J.  (1997).  Finance  Ethics:  The  Rationality  of  Virtue.  New  York:  Rowman  &  
Littlefield  Publishers,  Inc.  ISBN  0-­‐8476-­‐8402-­‐4.  
• Drahos,  P.;  Braithwaite,  J.  (2002).  Information  Feudalism:  who  owns  the  
knowledge  economy.  London:  Earthscan.  ISBN  1-­‐85383-­‐917-­‐5.  
• Duska,  R.  (2007).  Contemporary  Reflections  on  Business  Ethics.  Boston:  Springer.  
ISBN  1-­‐4020-­‐4983-­‐8.  
• Elliott,  C.;  Turnbull,  S.  (2005).  Critical  Thinking  in  Human  Resource  Development.  
London:  Routledge.  pp.  141–154.  ISBN  0-­‐415-­‐32917-­‐5.  
• Frederic,  R.  E.  (2002).  A  Companion  to  Business  Ethics.  Massachusetts:  Blackwell.  
• Hans  Cheong  (2012-­‐05-­‐30).  "Corolla  World’s  Top  Selling  Nameplate,  Focus  
World’s  Best  Selling  Model".  New  Sunday  Times.  Retrieved  2012-­‐08-­‐05.  
• James  R.  Healey.  “89  Deaths  May  be  Linked  to  Toyota.”  USA  Today,  May  26,  2010.,  
p.  1B  
• James  R.  Healy  and  Sharon  Sike  Carty.  “Toyota  Memo:  Savings  on  Safety.”  USA  
Today,  February  21  .  2010.  P.  2B  
• Jayne  O’Donnell,  “Toyota  Could  Face  Criminal  Charge  Related  to  Recall.”  USA  
Today,  March  11,  2010,  p.  3B.  
• Jim  Motavalli  (2010-­‐07-­‐16).  "Toyota  and  Tesla  Plan  an  Electric  RAV4".  New  York  
Times.  Retrieved  2010-­‐07-­‐18.  
• John  Voelcker  (2012-­‐08-­‐02).  "2012  Toyota  RAV4  EV:  First  Drive  Of  Tesla-­‐
Powered  Crossover".  Green  Car  Reports.  Retrieved  2012-­‐08-­‐04.  
• John  Voelcker  (2012-­‐10-­‐16).  "2012  Toyota  Prius  Plug-­‐In  Hybrid:  Is  It  An  Electric  
Car,  Or  Not?".  Green  Car  Reports.  Retrieved  2012-­‐11-­‐10.  

 
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• John  Voelcker  (2014-­‐10-­‐03).  "Toyota  Racks  Up  7  Million  Hybrids  Sold  Since  
1997".  Green  Car  Reports.  Retrieved  2014-­‐10-­‐04.  
• Margaret  A.  Jacobs,  “BMW  Decision  Used  to  Whittle  Puntive  Awards.”  Wall  Street  
Journal,  September  13,  1999,  p.  B2.  
• MiCheline  Maynard,  “U.S.  Is  Seeking  Maximum  Fine  Against  Toyota.”  New  York  
Times,  April  6,  2010,  p.  A1.  
• Milo  Geyeln,  “How  an  Internal  Memo  Written  26  Years  Ago  Is  Costing  GM  Dearly.”  
Wall  Street  Journal,  Sptember29,  1999.  Pp.  A1,  A6  
• Patrick  Rall  (2012-­‐05-­‐30).  "Toyota  Prius  becomes  3rd  bestselling  nameplate  in  
the  world".  Torque  News.  Retrieved  2012-­‐08-­‐05.  
• Sharon  Sike  Carty,  “  They  Died  in  Toyotas,  Leaving  Many  Questions.”  USA  Today,  
March  1,  2010,  p.  1A.  
• Sherry  Boschert  (2006).  Plug-­‐in  Hybrids:  The  Cars  that  will  Recharge  America.  
New  Society  Publishers,  Gabriola  Island,  Canada.  ISBN  978-­‐0-­‐86571-­‐571-­‐4.  
• Sudden  Unintended  Acceleration  Redux:  The  Unresolved  Issue.  ‘’  6  The  Safety  
Record  13  (June  2009).  
• Toyota  Europe  Press  Release  (2013-­‐04-­‐10).  "Buoyant  First  Quarter  Hybrid  Sales  
For  Toyota  In  Europe".  Toyota  Europe.  Retrieved  2013-­‐04-­‐19.  1,412  units  sold  in  
2012  
• Toyota  News  (2012-­‐11-­‐08).  "Cumulative  sales  of  Toyota  Motor  hybrids  top  2M  
units  in  Japan,  4.6M  worldwide;  1.02M  from  Jan  to  Oct.".  Green  Car  Congress.  
Retrieved  2012-­‐11-­‐10.  
• Toyota  News  Japan  (2013-­‐08-­‐06).  "Toyota  launches  Corolla  hybrid  models  in  
Japan".  Green  Car  Congress.  Retrieved  2013-­‐08-­‐31.  
• Toyota  Press  Release  (2013-­‐04-­‐17).  "Worldwide  Sales  of  TMC  Hybrids  Top  5  
Million  Units".  Toyota.  Retrieved  2013-­‐04-­‐20.cccccn  
 
 
   

 
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Group assessment table

No. Name Individual tasks Assessment

1 Đỗ Hoàng Xuân Quỳnh (leader) I. Introduction (problems

research)
II. Literature review
(Business ethics and CSR)
IV. Conclusion
Editing and designing the
report

2 Ngô Đinh Tiến II. Literature review − Hard working.

(Producer liability) Completed mission

IV. Conclusion on time

V. References

3 Nguyễn Thị Thu Thuỷ I. Introduction (Company Completed mission

introduction) on time

4 Trần Hoàng Hiếu III. Analysis Completed mission

on time. Good
supporter
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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