Toyota: an Example of “Good” Corporate Governance

1883 Words Apr 27th, 2008 8 Pages

Corporations the world over have been publicly criticized for improving their firm’s bottom line at any moral or social cost. Ethics essentially “refers to the issues of right, wrong, fairness and justice.” Clearly, examples such as Enron, WorldCom, and even Conrad Black tested society’s views on sound ethical business and the link to what society sees as “good” governance practices. Although the controversies involve issues matched in variety only by the types of companies, they all virtually involve some form of abuse of stakeholders trust. These cases are not representative of the entire spectrum of today’s business environment; in fact, there are a number of companies whose competitive advantages are based on
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Naturally, these companies do not have Toyota as their sole customer, suppliers have begun selling these environmentally friendly products to various related companies. In turn they have begun requiring more environmentally friendly products from their own suppliers, thus Toyota’s ethical and sound business decision to protect the environment has had an effect on the entire automotive supply chain.
Toyota’s relationship with suppliers has influenced them to reduce the environmental impact of their own companies. Considering the revenue to be generated from a contract with Toyota, certain suppliers found it financially beneficial or even necessary to comply with these environmentally friendly requirements of being a Toyota supplier. Finally, these environmentally friendly initiatives set a trend for the industry now attempting to close in on the considerable advantage enjoyed by Toyota. Competitors are now attempting to develop technologies in conjunction with their own suppliers that will benefit them and the natural environment in the long term. In addition, the American government (among others) has recently raised the minimum fuel efficiency requirements of all vehicles sold in the USA , further increasing Toyota’s competitive advantage as the large majority of their vehicles already exceed those requirements. Toyota was able to utilize both their relationships of trust and their economic power to bring about a positive
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