A

REPORT ON

ETHICAL ANALYSIS OF

TOYOTA RECALL (FIVE CRITICAL LESSONS)

BEHAVIOUR

ETHICAL UNETHICAL

Group No : 8 Group Name : KAIZEN

Name of the student 1

 Roll No.

Rahul Parekh 1236

Jaladhi patel 1237

Priyanka Patel 1238

Varsha Patel 1239

Dolly Rana 1240

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Ethics is the accepted norms and behavioral set of the group of people. The
norms and acceptable behaviors are very subjective and not absolute. They differ
as the culture, religion and country differs. Even in the different organizations the
ethical norms vary a lot.

But even though ethical norms are not universal, ethic is universal. In the business
world also the customers also expect the ethical behavior from the company’s
employees and top management. The top management of any organization is the
maker of the ethical behavior in the company by setting the policy and
disciplinary rules.

This report gives the analytical view about the ETHICAL BEHAVIOUR of the top
automobile company-TOYOTA.

We all know about the recall of around 9.5 million cars (4.1 million cars, involves
potentially sticky gas pedals and 5.4 million cars whose gas pedals could get stuck
on floor mats) by Toyota in 2009.

To connect the class room theories wiyh the practical business world is very
important. This is true for all the field of education.
3
We are really thankful to Prof. Pathik Variya to give the inspiration to connect and
analyze the ethical behavior of Toyota Company.

This is helpful to us in broading our analytical ability. He also inspires us how to

decide whether the decision or behavior of Toyota is right or wrong? Ethical or
Unethical?

We really understand that how difficult is to judge the behavior of Toyota from
the view point of ethics. But thorough understanding of theoretical aspects helps
in analyzing Toyota recall issue. And the credit goes to Prof. Pathik Variya.

NO TOPICS PAGE NO.

.
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 1 Introduction 6

2 Ethical Or Unethical? 8

3 Issue Intensity
10

4 Utilitarianism
12

5 Justice and Fairness 13

6 Human rights 15

7 Integrative social contracts 16

8 Moral responsibilities – Blame or Praise 17

9 Individual vs. Corporate Responsibilities 20

10 conclusion 21

11 Work distribution chart 22

11 Bibliography 24

TOYOTA RECALL is the going on discussion in the automobile world. Being the
number one automobile company in the world, to recall cars more than one time
because of the defects is a major issue. It badly affects its brand value, the trust of
the customers and the reputation of the organization. Experts have given five
critical lessons on this whole issue.

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But this issue involves the damages, injuries and death of human beings, it is
necessary to evaluate this issue from the view of Ethics.

The five critical lessons are as follows:

1) Aggressive growth can create unmanageable risk.

2) Get the facts quickly and manage your risks aggressively.
3) Your supply chain is only as strong as your weakest link.
4) Accept Responsibility. 
5) Take the Long View.

We have analyzed this whole issue by applying different theories of ethics. Of

course not all aspects of the ethics are applicable in this one issue. So, we have
applied only those which are relative to this issue. The branch of ethics is very larg
and hence it is not possible to cover all aspects of it.

The following are the theories which we have applied:

1) Deciding the issue intensity

2) Utilitarianism
3) Justice and Fairness
4) Human rights
5) Integrative social contracts
6) Moral responsibilities – Blame and Praise
7) Individual vs. Corporate responsibility

The delay in recall of the 9.5 million cars in 2009 and repeated problems of
defective parts in car is a major concern. Because of such defects like sticky gas
paddle, floor mate there are many injuries and death. Hence it is necessary to
look up at the whole issue at the ethics point of view with reasonable care.

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Before let us have a look at other unfair practices carried out at
Toyotas plants.
Toyota’s manufacturing plants back home in Japan resemble some of the
worst sweat shop in the world.
Their operation plant have been described as “slavery” & “human
trafficking”. Toyota has thousand of “Karoshi” claims each year. This team
means “over worked to death”.
Their plants have very suicide rate as well and when an injury has occurred
to an employee, on the job they are layer off, and receive no
compensation.
So it shows that Toyota is lacking in protecting the human rights & safety of
their own employees in the organization which is against the law of
government.
Toyota is well known for their union busting, which has destroyed many
small countries around the world and reducing the standard of living
amongst the countries citizens.
There are already 1800 instances in the US where employees at the
Kentucky plant have been injured fired and they disappear from the
compensation pay roll.
This happen at the rate of 400 Americans per year working at Toyota.
Toyota builds their plants in the poorest state to take the advantage of the
lowest wages in the country. Many workers have been kept as temporary
workers for over 4 years.

The above points show that Toyota is not an ethical organization. It does not care
for its employees safety and health. Because of its bad labor policies the suicide
rate is very high, and it is unethical from the view of human rights and
justice/fairness.

In cases such as this, investigators almost always start with two time-worn
questions. 

What did you know?

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 And when did you know it?

Answers to those questions provide the groundwork for analysis of a company’s

response and handling of a problem. 

Were employees encouraged to flag safety issues to senior management? 

Were sufficient resources devoted to investigating the problems?  
When did the board become aware of the situation and what did it do
about it?

To evaluate the issue from the ethical point of view we need to get the answers of
the above questions.

Whether the Toyota’s behavior is ethical or not we need to look at this issue from
the following 4 theories of ethics.

1. Utilitarianism
2. Justice and Fairness
3. Human rights
4. Integrative social contracts

But before that we need to look at and decide the issue intensity of this issue.

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 ISSUE
INTENSITY

1. Greatness of harm: How many people will be harmed?

The problem of Sticky gas paddle causes a great injuries and death of
people and hence is a great harm.
2. Consensus of wrong: How much agreement is there that this action is
wrong?
After the government presser and opposed by many people Toyota
has finally accepted its fault and agreed to recall 9.5 million cars. In
past it has gave assurance that such mistake will not repeat but the
result is nothing. No extra and sincere efforts are made by Toyota.
3. Probability of harm: How likely is it that this action will cause harm?
There is a high probability of harm to the drivers of the Toyota car
because of the sticky gas paddle which causes the problem in
accelerator.

4. Immediate of consequences: Will harm be felt immediately?

There are immediate harms, injuries and death of the drivers and
passengers using the Toyota cars.
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n 5. Proximity to victims: How close are the potential victims?
There is a close relation with victims and hence the issue intensity is
high.

6. Concentration of effect: How concentrated is the effect of the action on

victims?
What happen where we are going on a road at the constant speed
and suddenly our accelerator stops working? Not only we but the
other car drivers and passengers are going to be heart because of our
car.

From the above analysis it is clear that

Ethical decisions are made solely on the basis of their outcomes or

consequences such that the greatest good is provided for the greatest
number.

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 Benefits
(profit) This delay has saved $124 million
50,000 man hours can be saved
The financial loss to the company by
way of compensation to the injured
people if Toyota accepts its fault and
recalls 9.5 million vehicles.

Losses (cost) The deaths of 60 (approx) people are

already there and the probable death
will be very high if Toyota has not
recalled the defective cars.
Many people are injured. (57)
Accidents which have taken placed and
future accidents if it will not recall
We cannot measure the value of lives
which are affected by this problem

From the utilitarian view Toyota’s behaviour

CONCLUSION
is UNETHICAL

According to right to justice the Toyota must follow the following guidelines:

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N
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E WHAT SHOULD TOYOTA HAVE TO DO?
1)

2)

3)
Organizational rules are enforced fairly and impartially and follow
all legal rules and regulations.

Protects the interests of underrepresented stakeholders and the

rights of employee particularly of its customers who are affected
by the defects in cars.
The cost and benefits must be distributed equally i.e. the
employees or managers who are responsible must be punished
and should pay adequet compensation to suffered people.

And let us see what Toyota has done

WHAT TOYOTA HAS DONE?

The peolple who are injured are not compensated fairlly.
The people or managers of Toyota who are personally
responsible for this issue are not at all punished. They must
be punished both financially and legally.
Toyota has not paid enough compensation to the relatives
of the people who are dead because of the defects in the
vehicles.

12
O
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,
According to human rights Toyota must have done the following:

1) Concerned with respecting and protecting individual liberties and privacy.

2) Seeks to protect individual rights of conscience, free speech, LIFE AND
SAFETY, AND DUE PROCESS.

Toyota has done the following:

1) Toyota has violated the right of life and safety and due process of its
customers by providing unsafe cars with defects fo sticky gas paddle and
floor mates.
2) Also Toyota has made delay in call back of that defective vehicals and tried
to avoid the investogation of the problem.

Ethical decisions should be based on existing ethical norms in industries

and communities in order to determine what constitutes right and wrong.

Based on integration of the general social contract and the specific contract
between community members the company needs to work

Toyota has violated this view because

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 Initially it has denied accepting the responsibility of the defects in its
cars.
This problem is not at the first time. In past also such problem was
occurred and at that time Toyota has given surety that such defects
would not be repeated in future. It had established a new value
system and quality assurance but it has not kept those promises.
Toyota has not accepted the general norms of the society by giving
the unsafe products which causes the death and injuries to the
society at large.

Who is morally responsible?

When do we hold people Morally Responsible for their Acts and their Effects?
When the person
KNOWINGLY and FREELY
Performed or brought about an action/effect which was morally wrong for the
person to perform/bring about.

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Toyota at last has admitted that it has purposely neglected safety concerns
and delayed recall investigation to save money.
According to an article released by the ‘Associated Press’ it is confirmed
that Toyota not only dragged its feet when looking into safety defects, but
also patted itself on the back for doing so. Other evidences also prove that
Toyota has purposely and repeatedly delayed safety regulations by avoiding
defect investigation and obstructing government inquiries into safety
concerns.
The Associated Press also states that Toyota has the financial benefits of
delay. This delay has saved $124 million and 50,000 man hours.
Toyota was very well aware about this problem. We can say this because
Toyota has the mantra of ‘KAIZEN’ or continuous improvement.
And one research also states that 73% of the employees of any company
are very well aware about the unethical or wrong practices carried out in
their company. Hence the managers and top managements are definitely
aware about this problem.
Instead they somehow found a way to justify negotiating with the
government to make their problems disappear. At the same time Toyota
was producing new vehicles with known safety flaws and advertising their
vehicles to be the safest and highest quality vehicles.

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O
T
A
H
N
S
Y
1
2
3
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Now, we need to focus on whether the individuals are responsible held or the
corporate as a whole?

Why individual members of Toyota

are held responsible?
17
Why Toyota corporate as a whole is
held responsible?
.
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 Not all employees of the Toyota Corporate is a real entity.
are unethical. Toyota can act in the world
May be the assembly line independently of its members.
employees and quality control One research shows that 73% of
department are liable. the employees are aware about
Of course they have to obey the the unethical practices carried
orders of their bosses, but here out in their organization and
the ISSUE INTENSITY is very hence all of them are
high they have to raise their responsible.
voice as WHISTLE BLOWER.
The top level managers of
Toyota are definitely aware
about this problem and hence
they are fully responsible for
the unethical behavior and they
must be punished.
View point Does Toyota Ethical or Unethical?

Issue Intensity High

Utilitarianism Unethical

Justice and Unethical

Fairness
Human Rights Unethical

Integrative social Unethical

contracts
Moral Morally Responsible
responsibilities – We can blame Toyota, NHTSA and
Blame and Praise Supplier

Individual vs. No Black and White Answer- Both way

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Corporate Responsibility
responsibility
Name of the student
Work done

Varsha Patel (1239) Formatting and Typing(50%)

Issue intensity(100%)
Utilitarian (50%)
Human rights (60%)
Integrative social contracts
(60%)
Moral responsibilities – Blame
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 and Praise (50%)
Individual vs. Corporate
responsibility (50%)
Dolly Rana (1240) Typing (50%)
Integrative social contracts
(40%)
Moral responsibilities – Blame
and Praise (30%)
Individual vs. Corporate
responsibility (25%)
Issue intensity

Priyanka patel Utilitarian (50%)

(1238) Moral responsibilities – Blame
and Praise (25%)
Individual vs.Corporate
responsibility (25%)
Justice and fairness
Human rights (20%)
Time line (history of Recall)
(100%)

Rahul (1236) Justice and fairness (80%)

Help in other information

Jaladhi Patel (1237) Human rights (20%)

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Toyota Recall Timeline
1986

• In September, NHTSA orders its first recall of Toyota cars because of “speed control”
problems related to a faulty cruise control system in models as far back as 1982. A second
investigation into sudden-acceleration dangers with Toyota vehicles takes place that same year.

1999

• Toyota recalls the popular Lexus RX for problems with an electronic control unit that causes
the headlights and taillights to turn on and off without warning.

2000

• Toyota discontinues using mechanical linkage in their throttle systems in favor of an electronic
throttle control system.
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2003

• In February, NHTSA conducts the first of many defect investigations regarding speed control
problems. The first two involve the Camry and Solara models.

• In April, Toyota internally deals with an “unwanted acceleration” incident during the
production testing of the Sienna model.

• In July, NHTSA opens first probe of sudden-acceleration complaints in Lexus sedans at

owner’s request.

2004

• In March, after another customer petition, NHTSA opens a wider probe into Lexus Sedans.
NHTSA also informs Toyota that the agency is opening an investigation into unwanted
acceleration and vehicle surge complaints in 2002-2003 Camry and Solaris models. Toyota’s VP
for regulatory affairs, Christopher Tinto, and another of his employees Christopher Santucci,
“work closely” with NHTSA and manage to narrow the investigation to 11 incidents involving 5
crashes. Both Mr. Tinto and Mr. Santucci are former NHTSA employees.

• In July, NHTSA closes its investigations again, claiming no defects were found. NHTSA turns
down two more requests from owners for new looks at the problem. NHTSA cites lack of
resources as the reason for that decision.

2005

• CTS, a manufacturer, begins to make pedal assemblies for Toyota.

• In August, NHTSA conducts an evaluation of the Camry after reports of “inappropriate and
uncontrollable vehicle accelerations.”

2006

• By January, NHTSA had opened a second investigation and had received questionnaires sent to
Camry owners. Hundreds are returned from owners with reports of problems of acceleration and
braking. NHTSA says the claims are of “ambiguous significance” and closes the investigation.

• Toyota group global sales of 8.808 million vehicles exceed GM’s by 128,000, making it the
world’s biggest automaker.

• In August, NHTSA receives more complaints about the accelerator issues with the Camry
models that covers model years from 2002-2006.

• In September, NHTSA opens a third investigation. Another Camry owner petitions the
administration to investigate multiple “engine surging” incidents he experienced.
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• Toyota’s Tinto writes NHTSA and says that Toyota found no abnormality in the throttle
controller and blames water damage from driving in heavy rain as the reason for any problems
that might exist.

• NHTSA fails to identify the problem and closes the investigation citing “the need to best
allocate limited administration resources” as the reason for the closure. Again – even if true –
very strange.

2007

• In March, NHTSA launches probe into floor mats in Lexus models. Toyota says “issue is not a
safety concern.”

• On July 26, for the first time, NHTSA verifies fatal crash link to floor mats. Toyota eventually
settles with the family for an undisclosed amount.

• In August, NHTSA upgrades its investigation to an “engineering analysis.” This means the
agency will do vehicle testing instead of just reviewing complaints or single vehicles and
crunching questionnaire numbers as done in the past.

• In September, under pressure from NHTSA, Toyota recalls 55,000 Camry and Lexus models
because of suspected floor mats that interfere with the accelerator pedal.

• Documents now obtained from Toyota show that the carmaker noted that it had saved $100
million by conducting a limited recall as opposed to a full recall. The company said that
was a “win.”

2008

• In January, NHTSA, again, at a customer’s request, launches probe of sudden acceleration in

Tacoma pickups. The complaints involve 478 incidents where 2004-2008 model year Tacoma
engines allegedly sped up even when the accelerator pedal wasn’t pushed.

• In August, after an eight month review, NHTSA closes the Tacoma investigation, claiming to
find no defect despite hundreds of complaints. This is the eighth investigation of Toyota
vehicles since 2003. Over 2600 complaints of Toyotas and “run away cars” have been
reported. 271 of these complaints were rejected by NHTSA without even asking Toyota for
data.

2009

• In April, NHTSA receives another petition, this one to investigate throttle-control problems
unrelated to floor-mat issues in the Lexus ES vehicles.

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• In August, the fatal crash of a Lexus ES350 in California kills four people. NHTSA quickly
links this incident to floor mats.

• In October, Toyota recalls 3.8 million vehicles related to the floor mat issue.

• In November, Toyota expands the floor mat recall by over a million vehicles.

• NHTSA investigations of Toyota and allegations of Unintended Acceleration rise to 13 in a 25

year period resulting directly in four recalls.

2010

• On January 21, Toyota issues recall for 2.3 million vehicles for sticking accelerator pedal.

• On January 26, Toyota halts production and stops selling eight models under pressure from
NHTSA.

• On January 27, Toyota expands the pedal recall by 1.1 million vehicles.

• On February 5, Toyota admits problems with brake software in 2010 Prius Hybrids.

• On February 8, Toyota recalls 2010 Prius, 2010 Lexus HS 250h, 2010 Camry Hybrids, and the
Sai (sold only in Japan) due to faulty brake systems. This recall affects 437,000 vehicles
worldwide.

• On February 12, Toyota recalls 2010 Tacoma due to a dangerous drive shaft condition.

• On February 16, Toyota begins to “look into” steering problems with its Corolla models.

• On February 18, it was learned that NHTSA had excluded eight early reports of deaths linked
to the sudden acceleration problem. That may well bring the total deaths to 42.

• On March 11, Toyota officials were forced to turn over a memo produced by its own factory
workers in 2006, which raised their fears about safety issues in the manufacturing process. The
memo is a “smoking gun” that proves management was made aware of a looming disaster due to
an emphasis on profits over production standards.

• On March 24, new evidence emerged revealing that both Toyota and the National Highway
Traffic Safety Administration knew that reported sudden acceleration incidents were linked to a
glitch in the vehicles’ electronic system. In August 2002, Toyota Motor Corp. issued a Technical
Service Bulletin warning every dealership in the country that Camrys were reportedly surging
out of control and that recommended adjustments to the electronic controls could fix the
problem. Toyota also sent the bulletin to NHTSA, which issued an internal memo
acknowledging Toyota unintended acceleration (UA) in 2002 and 2003 Camrys. The document
was never made public until a group of attorneys submitted a copy of it to CNN.
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• On April 8, an internal e-mail was uncovered, in which from Irv Miller to a Japanese colleague,
dated Jan. 16 of this year. At the time, Miller was Group Vice President, Environmental and
Public Affairs, one of the company’s top spokespeople. In the email, Miller says, “I hate to break
this to you but WE HAVE A tendency for MECHANICAL failure in accelerator pedals of a
certain manufacturer on certain models.” (These words were capitalized in the email.) He goes
on to say, “We are not protecting our customers by keeping this quiet. The time to hide on this
one is over” and says, “we need to come clean.”

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List of Recalled Toyota models
Toyota has recalled more than 9 million vehicles worldwide amid concerns of sudden
unintended acceleration

According to Toyota’s official web site,

Vehicles included in the recall for  floor mat entrapment are:

 2010 Tacoma
 2005-2010 Avalon
 2007-2010 Camry
 2009-2010 Corolla
 2008-2010 Highlander
 2009-2010 Matrix
 2004-2009 Prius
 2005-2010 Tacoma
 2007-2010 Tundra
 2009-2010 VENZA
 2006-2010 Lexus IS 250
 2006-2010 Lexus IS 350
 2007-2010 Lexus ES 350

Vehicles included in the recall for “sticky” accelerator pedal are:

 certain 2009-2010 RAV4

 certain 2009-2010 Corolla (not including VINs beginning with “J”)
 2009-2010 Matrix
 2005-2010 Avalon
 certain 2007-2010 Camry (not including hybrids or VINs beginning with “J”)
 certain 2009 Camry Hybrid
 certain 2010 Highlander (not including hybrids or VINs beginning with “J”)
 2007-2010 Tundra
 2008-2010 Sequoia
 2009-2010 GM Pontiac Vibe (manufactured by Toyota)

Vehicles recalled for both floor mat and sticky accelerator pedal:

 certain 2007-2010 Camry

 certain 2009-2010 Corolla
 2009-2010 Matrix
 2005-2010 Avalon
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  certain 2010 Highlander
 2007-2010 Tundra

NOTE: The NHTSA is investigating 2009-2010 Corollas for reported problems involving loss of
steering control. A recall has not been announced, but these vehicles may be inspected for
steering defects when they are taken to dealerships for floor mat and accelerator pedal repairs.

The following vehicle is being recalled due to possible cracks in the joint portion of the drive
shaft:

 certain 2010 four-wheel-drive Tacoma (approximately 8,000)

The following vehicle is being recalled for frame rust inspection and possible repair:

 certain 2000-2003 Tundra

The following vehicles were recalled for a software update for the anti-lock brake system
(ABS):

 2010 Prius
 2010 Lexus HS 250 h

Additionally, 7,300 2010 model year Camrys have a brake hose defect that could lead to greater
vehicle stopping distances.

Only five models are not affected by current recalls:

 Sienna
 Yaris
 4Runner
 FJ Cruiser
 Land Cruiser

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1. http://www.scribd.com/doc/31604081/Ethical -Issues-on-Toyota , 10 Aug, 2010
2. http://www.NHTSA.com/doc/546/inq_toyotarecall date- 12 Aug 2010
3. Brand Management Strategy, ‘Critical lessons from Toyota Recall’ p. 13 of Richard Hood.
4. Reading materials provided by Prof. Pathik Variya, Faculty at DDU, Nadiad
5. http://www.designnews.com/article/446480-Toyota_s_Problem_Was_Unforeseeable.php, 13
Aug 2010
6. http://articles.latimes.com/2010/jan/30/business/la-fi-toyota-pedal30-2010jan30, 12 Aug
2010
7. http://business-ethics.com/2010/01/31/2123-toyota-recall-five-critical-lessons/, 12 Aug
2010
8. http://hosted.ap.org/dynamic/stories/U/US_TOYOTA_RECALL?
SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT, 13 Aug 2010
9. http://www.ctscorp.com/publications/press_releases/nr100127.htm, 13 Aug 2010
10. http://www.rmmag.com/MGTemplate.cfm?
Section=RMMagazine&NavMenuID=128&template=/Magazine/DisplayMagazines.cfm&IssueID=
344&AID=4080&Volume=57&ShowArticle=1, 13 Aug 2010
11. http://www.toyota-lawsuit.com/toyota-recall/toyota-recall-timeline/ 13 Aug 2010
12. http://www.toyota-lawsuit.com/toyota-recall/list-of-recalled-toyota-models/ 14 Aug 2010
13. http://www.reuters.com/article/idUSN3024383920100430, 14 Aug 2010
14. http://money.cnn.com/autos/storysupplement/toyota_timeline/ 14Aug 2010
15. http://findarticles.com/p/articles/mi_qa5427/is_201007//ai_n54363580/ 14 Aug 2010

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