Toyota: an Example of “Good” Corporate Governance

It's difficult not to be cynical about how “big business” treats the subject of ethics in today's world. In many corporations, where the

It's difficult not to be cynical about how “big business” treats the subject of ethics in today's world. In many corporations, where the

What is ethically responsible management? How can a corporation, given its economic mission, be managed with appropriate attention to ethical concerns? These are central questions in the field of business ethics. There are two approaches to answering such questions. The first one is Milton Friedman’s shareholder theory of management and the second one is Edwards Freeman’s “Stakeholder” theory of management, two different views about the purpose and aims of a business.

It is easy to understand Solomon’s argument that unethical practices destroy the business and its key people. This has been proven by so many companies, such as Enron case, whose scandals have been unveiled to the public and the people who used to amass great wealth out of unethical practices are now behind bars. Even if they get out of prison, it will be difficult to imagine how they can recover from the negative image that the public already has on them.

In today’s 21st century, it takes good ethics for every company to strive competitively to maintain as the best top competitor in their industries; and has its provocations of smart goal as to how successfully they anticipate their business to function, when it comes to finances, attracting and recruiting employees, begin an admirable corporation to citizens, and while showing customers and employees love, courteous, and appreciation. Companies forestall unethical behavior of bad reputation to uphold the organization values. These atrocious speculations can permanently cause decreased revenues and will degrade the company name, sometimes irreparably damaged.

The corporate world has an unfavorable view of itself by being selfish, evil, and against the average American. Companies market themselves and their products in certain ways that makes them and their products appealing to everyone and if not everyone then a certain group of people. Every company has a mission to follow and values to go by, but some companies lack ethics and morals. In this paper I am going to talk about one company that engages in ethical behavior and another that doesn’t.

Business ethics since the beginning of this decade has been slowly eroding; if we are to believe what we see and hear in the media. Several times a day, one can view some derogatory piece of information concerning a business. However, it must also be considered that these companies are contributing to that stigma. There have been a variety of companies and individuals who have figured prominently in the media concerning their unethical behavior.

Enron was named the most admired company for six years in a row, and it was widely considered one of the best companies to work for by Fortune magazine. Enron shocked the world, and it's stockholders when it was revealed at the end of 2001 that the company’s “reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud”. (Enron, 2011, para. 1) Enron maximized it’s long-run profits for itself, but not within the limits of the law. Enron disregarded it’s social responsibility to it’s stackholders when the company only strive for it’s maximized profits, and didn’t strive

Enron’s ride is quite a phenomenon: from a regional gas pipeline trader to the largest energy trader in the world, and then back down the hill into bankruptcy and disgrace. As a matter of fact, it took Enron 16 years to go from about $10 billion of assets to $65 billion of assets, and 24 days to go bankruptcy. Enron is also one of the most celebrated business ethics cases in the century. There are so many things that went wrong within the organization, from all personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.), and organizational (world-class culture) perspectives. This paper will focus on the business ethics issues at Enron that were raised from the documentation Enron: The Smartest Guys

It is only during moral lapses and corporate scandals that interest groups and the broader public ask themselves the fundamental ethical questions, who are the managers of the organization and were they acting with the ethical guidelines. For a long time, the issue of ethics was largely ignored, with organizations focusing on profit maximization. However, this has changed, and much attention is now focused on ethics management by researchers and leaders. The issue of ethics has arisen at a time when public trust on corporate governance is low, and the legitimacy of leadership is being questioned. Leaders are expected to be the source of moral development and ethical guidance to their employees.

Widely known as the champion of the energy industry, Enron is suddenly faced with a corporate crisis in the form of a scandal. This scandal involves not only Enron’s accounting practices but also its corporate governance and culture (Lawrence & Weber, 2008). This report will recommend some potential strategies for Enron to move forward from the scandal. To do this, we must incorporate stakeholder theory, which “argues that corporations serve a broad public purpose; to create value for society” (Lawrence & Weber, 2014, p 6.). This means that Enron must take responsibility for the scandal it created and take actions to regain its stakeholders’ confidence. To accomplish this, we will first identify and analyze Enron’s primary

Business Industry has witnessed the outcomes of bad moral decisions taken by business leaders. Enron’s story is only one example of corporate scandals and cases of bad moral decisions, which has not only shaken the public trust in corporations, but also affected the bank accounts of investors and employees. Before the bankruptcy of Enron; it was included in one of the fortune 500 companies after its fraudulent accounting case the share went down to $1 (Enron scandal, 2010; PBS, 2002; Godwin, 2006; Godwin, 2008).

The natural environment such as our main natural resource for fueling our vehicles, oil, has aided in the increased sales of the Toyota Prius. Since gas prices increased in 2008, a fuel efficient car such as the Prius is economically and environmentally friendly. Toyota created the hybrid that “combines a gas engine with an electric motor” using less gas than the usual sedan. (Kotler & Armstrong, Principles of Marketing, 2010)

The overwhelming facts point to a shady underworld of self-dealing and opportunistic exploitation of the poor and working class, which was until recently, well hidden from the commoner. The executives of WorldCom and Enron provide real world examples of unethical business practices, where the desire to make money for their shareholders transcended into an addiction to greed and self-dealing that were displayed by their, “excessive pay, perks, and golden parachutes”(Carson 392) at the expense of all stakeholders. All is not lost, there are corporations that pride themselves in their sound business model and commitment to ethical business practices. Such companies as Eaton Corporation, and Weyerhaeuser, who according to Ethisphere.com, a business ethics watchdog, are among the “2010 World`s most ethical companies.” (Ethisphere)

Unfortunately, scandals like Enron are not isolated incidents and the last decade has offered Americans a disheartening perspective with comparable scandals like that of WorldCom and Tyco, Sunbeam, Global Crossing and many more. Companies have a concrete responsibility not just to their investors but to society as a whole to have practices which deter corporate greed and looting and which actively and effectively work to prevent such things from happening. This