A. Introduction
Toyota Motors Corporation (Toyota) is a ¥25.69 trillion (US$256.91 billion at ¥100.00:$1 exchange rate used in the 2014 annual report) automotive manufacturing enterprise (Toyota, 2014, p. 26) with four major market regions globally, namely: Japan (home), North America, Europe, Asia, and Other regions (see section C for details). Since 2010, it grew 35.57% from ¥18.95 trillion. Its return on equity has grown from 2.1% in 2010 to 13.7% in 2014, or 6.5 times. Moreover, its return on assets grew 6.7 times from 0.7% in 2010 to 4.7% in 2014.
Toyota has one core product (automobiles) and core service (financial services) (Toyota, 2014, p. 29-30), both of which have international reach (see section B. for details). Its four business units, however, are grouped based on its automotive products: Lexus International, which manages its flagship luxury brand Lexus; Toyota No. 1, which oversees the Japan, North America, and Europe regions; Toyota No. 2, which oversees the Asia region and all the emerging markets; and Unit Center, which manages parts and production as well as research and development (Toyota, 2014, p. 5-8). Unlike the other three business units, Lexus International is directly under the supervision of the president.
B. Core Businesses
As mentioned in section A, Toyota has one core automotive products and one core financial services (Toyota, 2014, p. 29-30). Automotive product lines comprised the largest source of Toyota’s net revenues, representing 90.24 percent of all its net revenues in 2014. Financial services comprised only 5.39 percent of its total net revenues.
Lexus: The Lexus brand is Toyota’s premier global luxury brand. It sold 518,000 units in 2007, which increased to 523,000 units in 2013, driven primarily from the redesigned GS and IS lines, which were introduced in 2012 and 2013, respectively. (Toyota, 2014, p. 5).
Corolla: The highest-volume model in Japan was the Corolla, which reached a sales turnover of 25.45 million units in 2013 (Toyota, 2014, p. 6). It is a mainstay brand in the United States, which experienced robust sails.
Vios: Indonesia had a distinctive mark in the history of Toyota as the first to manufacture the Vios line for export markets (Toyota, 2014, p. 7). By August 2014, Toyota has 27 hybrid models available and one plug-in model distributed in 80 countries around the world.
Prius: The Prius is distinctive for being the first mass-produced hybrid vehicle in the world when it left the manufacturing line in December 1997 (Toyota, 2014, p. 11). Other hybrid brands include Auris and Yaris (Toyota, 2014, p. 6). In 2012, the global sales of Toyota’s hybrid vehicles reached 1 million for the first time. By 2013, cumulative sales passed the 6 million sold units (Toyota, 2014, p. 11).
Other brands: Toyota’s other popular lines include compact minivans (e.g. Voxy and Noah), sedans (e.g. Camry), larger vehicles (e.g. Highlander, Tundra, and RAV3), and luxury crossover SUVs (e.g. Harrier) (Toyota, 2014, p. 6).
C. Home and International Markets
In 2014, vehicle production in Toyota’s overseas markets surpassed home production for the second year in a row, while its sales volume more than triple in overseas market than in Japan (Toyota, 2014, p. 28). Toyota currently has four major market regions (Japan, North America, Europe, and Asia) and a confluent of emerging markets (Other region). Japan comprised its home market region, while North America, Europe, Asia, and Other, comprising its overseas market.
In terms of regional production levels, the Japan market led with 48.1% of Toyota’s total vehicle production, followed by Asia (21.5%) and North America (19.5%). In terms of percentage of total vehicle sales, North America leads at 27.5%), followed by Japan (25.9 %), and then the “Other” regions (19.4%). Moreover, in terms of net revenues, Japan was also the largest regional market in 2014, contributing 44.19% of Toyota’s net revenues. North America followed (25.09%), then Asia (15.08%), Europe (8.42%), and Other (7.22%) (Toyota, 2014, p. 29).
However, in terms of volumes sold (excluding mini-vehicles), North America led the regional markets with around 19,000 units sold at 36% market share. Europe followed with some 17,000 vehicles sold at a market share of 7.0% at 4.5%. Toyota Asia sold more than 6,000 vehicles at slightly above 15%. Toyota Japan sold the least number of vehicles (around 3,000 vehicles) at 45 percent market share.
The North American markets include the United States and Canada. As of 2014, Toyota’s European regional market includes 18 national markets: Germany, France, the United Kingdom, Italy, Spain, the Netherlands, Belgium, Portugal, Denmark, Greece, Ireland, Sweden, Austria, Finland, Switzerland, Norway, Poland, Hungary, and the Czech Republic (Toyota, 2014, p. 29). The Asian regional market has nine national markets: Indonesia, Thailand, the Philippines, Malaysia, Singapore, Vietnam, Taiwan, South Korea, and Brunei Darussalam. Its “Other” regional market consists of emerging markets in Central America, South America, Oceania, Africa, and the Middle East.
The conceptual history of corporate social responsibility often refers to Friedman’s single social responsibility (i.e. “there is one and only one social responsibility”: Friedman, 1982, p. 133) theory as its foundation (Bowie, 2012, p. 2). Friedman’s sole social responsibility concept pertains to the fiduciary obligation of the corporate executive to manage the business for its owners who are his employers (Friedman, 1970, p. 126). The top executive is, thus, directly responsible to his employers both in ensuring that the business make profits for the owners as well as ensuring that all resources in the business must be allocated to support the interests of the owners, not the interests of any other stakeholders, including the society. According to Friedman, this responsibility, provided it is in conformity to the basic rules of society are both “embodied in law and in ethical custom” (1970, p. 126).
In a sense, the executive has fiduciary responsibility to the business owners, like an attorney to his client, and should not be violated because it is something that people are required to do (Fryer, 2015, p. 2). It is from this fiduciary sense of obligation that the expectations of the Toyoda Precepts from its employees: “Always be faithful to your duties, thereby contributing to the company and to the overall good” (Toyota, 2013, p. 34). And it is also from this employees’ faithfulness that the sense of family in Toyota’s culture emanates: “Always strive to build a homelike atmosphere at work that is warm and friendly” (Toyota, 2013, p. 34). And it is from these essential philosophies that the 1997-revised Toyota Guiding Principle number 5 springs: “Foster a corporate culture that enhances both individual creativity and the value of teamwork, while honoring mutual trust and respect between labor and management” (Toyota, 2013, p. 34). Explicitly, Toyota views its CSR activities through the lenses of the stakeholder theory (Garriga and Mele, 2004, p. 60-62); that is, as a ‘corporate stakeholder responsibility’, which calls for a commitment and stakeholder engagement (Freeman, Velamuri, and Moriarty, 2006, pp. 6-10) and reflected everywhere in the seven Toyota Guiding Principles (Toyota, 2013, p. 34). However, our focus in this section pertains to Toyota’s employee engagement behavior.
Toyota’s employee engagement approach involves bilateral communication for teamwork building and fostering a culture of unity, mutual trust and responsibility consistent with a sound labor-management relationship (Toyota, 2015, p. 10-01). The company implements this approach through two communication methods: joint labor-management roundtable conferences or meetings, which occurs many times a year; and the conduct of employee satisfaction survey for at least once every two years.
In 2013, Toyota Australia (2013, p. 35) just weathered 350 compulsory redundancies in its manufacturing operation and 20 compulsory redundancies in its security function, which was implemented in April 2012 under its transformation strategy. It resulted to a turnover rate of 16 percent for fiscal year 2012/13.
In the aftermath, the key challenge was to connect with the retained workforce. It received an employee satisfaction rating of 77.1 percent at a participation rate of 97 percent, slightly below its target rating of 80 percent (Toyota Australia, 2013, p. 39). Despite the setback, the organization recovered through effective employee engagement, supported by formal communications structures already in place (Toyota Australia, 2013, p. 36). These structures were of multiple forms and primarily regular team meetings: daily pre-start production meetings; monthly briefing sessions attended by all employees from all shops; quarterly directors’ address; and quarterly employee focus groups. A mailbox was also in place to receive employee feedback and questions via email. Annually, the President and CEO makes presentation before the whole company.
Moreover, its workforce profile showed an average age of 43.62 years and 13 years in average service (Toyota Australia, 2013, p. 36). Despite its equal opportunity and diversity policy, its gender diversity was 16.27 percent (560/3441), a rather low (imbalanced) diversity rate but consistent with the traditionally male-dominated automotive industry. Perhaps, female workers tend not to apply for work in this industry. However, its ethnic diversity was very high in terms of the number of ethnic groups represented with more than 70 nationalities on payroll (Toyota Australia, 2013, p. 37).
With regards to basic salary differences by gender, Toyota Australia generally had a slightly higher midlevel salaries, ranging from 1 percent (Level 2) to 6 percent (Level 4) (Toyota Australia, 2013, p. 37). Level 1 salary has 13 percent disparity in favor of male non-award employees, while Level 6 salary favors female employees by 4 percent. The entry level difference could reflect skill differences of newly hired employees, which tends to level out at higher functional levels. Interestingly, the level 6 difference indicated the absence of a glass ceiling for female employees, thus, showing an overall successfully implemented equal employment opportunity policy.
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