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). However, as early as mid-20th, Bowen had already written about the concept of CSR in his 1953 seminal work, Social Responsibilities of the Businessman (New York: Harper & Row) (cf. Bowie, 2012, p. 5; Garriga and Mele, 2004, p. 51).
Moreover, the issue of ethics provided the original locus in the decades of CSR debates. It started from the fundamental concept of the business or corporation as a free enterprise, which is privately owned and must serve the interests of its private owners. Thus, 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 insuring 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 spend or use corporate resources on activities not directly related to generating profits for the business owners. It is from this point of view that the debate on the ethics of CSR launched itself, which resulted to myriad of concepts in attempts to justify spending for the community or the environment without violating the fiduciary obligation of any corporate executives. And obligations, like responsibilities and duties, should be something that people are required to do (Fryer, 2015, p. 2).
The growing debate both to clarify the role of businesses to society led to the formulation of such concepts as corporate citizenship, which defined four responsibilities of businesses (economic, legal, ethical, and philanthropic responsibilities) (Bowie, 2012, p. 6). Expectedly, Friedman cannot agree to obligations that are not within the law or the ordinary ethical customs. Thus, the controversy continues and it will continue until the issue of fiduciary responsibility to the shareholders is satisfactorily resolved. And resolving that conceptual quandary is a challenging matter to do.
Nevertheless, the shift continued from the ethical obligations to the shareholders to the corporation’s responsibility to give back to the community, which eventually institutionalized the term ‘corporate shareholder responsibility’. However, the proliferation of different thoughts on CSR did not help resolve the controversy. Votaw anticipated the growing voices of CSR way back in late twentieth century when he noted that CSR means differently to different people (Garriga and Mele, 2004, p. 51-52).
Garriga and Mele (2004, p. 52-53) attempted to group these myriad CSR concepts into four groups of theories: (1) the instrumental theories, which understands profit making as the sole CSR; (2) the political theories, which asserts the social power of corporation and its consequent social duties; (3) the integrative theories, which proposed that corporations must integrate “social demands” to their business activities as its existence depends upon the society; and (4) ethical theories, which insists that the relationship between the corporation and society is ethical in nature so that the corporation must accept social responsibilities as an ethical duty.
The objectives of instrumental theories are three-fold: (1) maximize shareholder value, often measured by the market share price; (2) achieve competitive advantage, assumed to produce profits in the long-term; and (3) cause-related marketing, which use cause-related activities to promote corporate products and services (Garriga and Mele, 2004, p. 53).
In the political theories of CSR, there are two major theories: corporate constitutionalism, which believes corporate social power precedes corporate responsibilities (‘social power equation principle’) and will disappear if unused responsibly in society (‘iron law of responsibility’); and corporate citizenship, which imputes citizenship to the corporation and, thus, its consequent responsibility to other citizens in society (Garriga and Mele, 2004, p. 56-57).
Integrative theories rest on the propositions of the integrative social contract theory, which reads an implicit contract between the corporation and society, implying an indirect obligation to society (Garriga and Mele, 2004, p. 56). These theories include issue management, public responsibility principle, stakeholder management, and corporate social performance.
Meanwhile, ethical theories attempts to resurrect the traditional concept of business ethics into the CSR debate, generating such concepts as normative stakeholder theory, universal rights, sustainable development, and the common good approach (Garriga and Mele, 2004, p. 60-62).
In a sense, the CSR concept has returned from its roots in ethics. However, the debate will evidently continue in the future.
References
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Toyota. (2014) Annual Report. Tokyo, Japan: Toyota Motors Corporation.
