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.. 1 Triple bottom line -287 ….

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2 Triple bottom line in Toyota……..

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……………………………. 4Corporate social responsibility ………………………………………………………………….. 6Financial analysis of Toyota …………………………………………………………………….. 9Conclusion …………………………………………………………………………………………… 10 3.04.05.0References …………………………………………………………… Error! Bookmark not defined. i List of tables Table 1.1 Triple bottom line, Source: (Wilson, 2015) …………………………………………….. 2 List of figures Figure 2.1 Corporate governance structure of Toyota, Source: (Toyota, 2014) …………4Figure 3.1 CSR stances, Source: (Johnson et al, 2013) ………………………………………… 6Figure 3.2 Positioning the CSR policy, Source: (Toyota, 2014)……………………………….7 ii 1.0 Introduction Contemporary businesses have a tendency towards implementing triple bottom lineand corporate social responsibility (CSR) with having many beneficial purposes.Consequently, in the first part of this report the concept of triple bottom line will be discussedwhile evaluating the triple bottom line activities in Toyota. Secondly, the notion of corporategovernance will critically be demonstrated and it will be related to Toyota. Afterwards, CSRwill be defined using relevant literature and CSR of Toyota will be evaluated. Finally, thefinancial performance of Toyota will be analysed. 1 1.1 Triple bottom line -287 Traditionally, businesses consider the “bottom line” as revenues and expenses of thecompany which focuses only upon the financial aspect (Meadows et al., 1972; Durieu,2003). However, with time social justice supporters and environmentalists attempt to bring awider definition about bottom line which is supportive to assess organisations’ performancein a larger perspective (Wilson, 2015; Kristensen, 2002). Consequently, the concept of triplebottom line (TBL) is introduced and it is a term that represents sustainability of a companywhich consists of three components: financial, social and environmental (Elkington, 1994,1997; Wiese et al., 2012). Further, criteria which are considered under TBL are shown intable 1.1. Moreover, TBL is beneficial to gain sustainable long term competitive advantage(De Giovanni, 2012). However, practicing TBL and resolving the challenges for sustainabilitycannot be faced alone by corporations which certainly require the involvement of allstakeholders (Trudel & Cotte, 2009; Durieu, 2003). Table 1.1 Triple bottom line, Source: (Wilson, 2015) TBL Criteria Finance Financial performance, Market presence, Indirect financial impacts,Procurement practices Social Labour practices, Occupational health and safety, Human rights, Childlabour, Local communities, Product responsibility, Customer health andsafety Environmental Materials, Energy, Water, Biodiversity, Emissions, Effluents and waste,Products and services, Compliance, Transport, Supplier, Environmentalassessment, Environmental grievancemechanisms 1.2 Triple bottom line in Toyota Under social aspect Toyota attempts to enhance harmony among people and societiesthrough listening to customers and communities. Moreover, they invest large capital on Ractivities to ensure the traffic safety of customers thus, superior accident prevention andcollision safety features are provided with vehicles. Meanwhile, by implementing monozukuri(conscientious manufacturing) in the operations process, Toyota focuses to create asustainable society. Furthermore, one of Toyota’s key social objectives is human resourcedevelopment and through it they try to secure the employees’ right to develop professional 2 and personal life. Additionally, Toyota maintains a strong health and safety charter toeliminate accidents especially in the manufacturing process while providing spiritual supportfor their employees. Moving on, Toyota focuses on environmental stability through producing environmentalfriendly cars such as hybrid cars. Meanwhile, they newly engage with biotech, renewableenergy and afforestation practices to maintain environmental stability. Moreover, Toyotaimplements lean manufacturing in the operational process in order to minimize waste.Afterwards financial focus of Toyota will be discussed in the section 4.0. Moving on,corporate governance will be demonstrated in the next section. 3 2.0 Corporate Governance Corporate governance is broadly referred to the relations, processes and mechanismsby which businesses are directed and controlled (L’Huillier, 2014; Brennan & Solomon,2008). Furthermore, the distribution of responsibilities and rights among diverse participantsof the business and comprising rules and its procedures in making corporate decisions isidentified by governance principals and structures (Hill & Jones, 1992; Bonnafous-Boucher,2005). However, corporate governance incurs extra cost to the organisation while makingconflicts and resisting to change within the organisation (Cohen, Krishnamoorthy & Wright,2002; Brennan & Solomon, 2008). Nevertheless, effective corporate governance enhancesthe quality of the decision making process and ultimately it leads to sustainable competitiveadvantage (L’Huillier, 2014; Hill & Jones, 1992). Moving on, corporate governance structureof Toyota is shown in figure 2.1Figure 2.1 Corporate governance structure of Toyota, Source: (Toyota, 2014) 4 Current governance structure of Toyota was introduced in April 2011, and in 2013,further structural changes were implemented which was compromised with lesser layers tofacilitate more swift management decision-making. Moreover, through corporate governanceToyota attempts to effectively achieve their global vision while enhancing managementtransparency, compliance, accountability and corporate social responsibility (CSR). Hence, itis noticeable that Toyota has a major consideration on CSR and it will be discussed in thenext section. 5 3.0 Corporate social responsibility During economic crisis, when equity and consumer markets experienced the loss ofcredibility of companies’ effectiveness, its managers faced the dispute in improving thecompany’s image while repossessing trust through the development of attractiveorganizational distinctiveness (Mar? ?n & Ruiz, 2007). As a result, companies started focusingon CSR (Cho, Michelon, Patten & Roberts, 2015; Hopkins, 2005). The demonstration ofactivities including social and environmental anxiety in organisational operations along withthe connections with its stakeholders towards the organisation’s sustainability can bereferred as CSR (Carroll, 1999; Patten & Zhao, 2014). However, CSR projects bring massivecost to the organisations (Carroll, 1999; Mar? ?n & Ruiz, 2007), yet organisations consider onCSR since they have various stances to implement CSR (Johnson, Whittington, Angwin,Regner, Scholes & Pyle, 2013) which are shown in figure 3.1. Figure 3.1 CSR stances, Source: (Johnson et al, 2013) During the last decade many companies in various industries have allocated hugeamounts in developing and practising CSR which are reliable in advancing intangiblecharacteristics such as trust, brand image and reputation (McDonald & Rundle-Thiele, 2008;Hopkins, 2005). Moreover, CSR is implemented by companies to attain long-term financialsuccess and meet shareholders’ expectations (Johnson et al, 2013). However, somecompanies focus on social welfare through CSR rather than financial gains (Ghobadian,Gallear & Hopkins, 2007; Hopkins, 2005). 6 Toyota has mainly focused on CSR through their global vision which is “aiming toachieve sustainable growth and to bring smiles” (Toyota, 2014, p.3) and corporategovernance structure. Further, a key strategy of Toyota to achieve sustainable growth isimplementing CSR activities. Moreover, they position a CSR policy (refer figure 3.2) which is”contribute to sustainable development” to properly manage CSR. Figure 3.2 Positioning the CSR policy, Source: (Toyota, 2014) Toyota establishes guiding principles under CSR policy which are; “Honor the language and spirit of the law of every nation and undertake open and fairbusiness activities to be a good corporate citizen of the world” (Toyota, 2014, p. 36). “Respect the culture and customs of every nation and contribute to economic andsocial development through corporate activities in their respective communities”(Toyota, 2014, p. 36). “Dedicate our business to providing clean and safe products and to enhancing thequality of life everywhere through all of our activities” (Toyota, 2014, p. 36). “Create and develop advanced technologies and provide outstanding products andservices that fulfill the needs of customers worldwide” (Toyota, 2014, p. 36). “Foster a corporate culture that enhances both individual creativity and the value ofteamwork, while honoring mutual trust and respect between labor and management” 7 (Toyota, 2014, p. 36). “Pursue growth through harmony with the global community via innovative management” (Toyota, 2014, p. 36). “Work with business partners in research and manufacture to achieve stable, long- term growth and mutual benefits, while keeping ourselves open to new partnerships”(Toyota, 2014, p. 36). Through Toyota’s guiding principles, it is observable that Toyota’s CSR stance is maintaining the welfare of internal and external stakeholders while keeping a strongrelationship with them rather than gaining financial benefits. However, Toyota does not focuson charity activities through their CSR principles. Nevertheless, Toyota is not involving inmarketing their CSR activities in order to develop brand image. Moving on, the financialperformance of Toyota will be discussed in the next section. 8 4.0 Financial analysis of Toyota Primarily, Toyota is based on four markets which are Japan (26%), North America(28%), Asia (18%) and Europe (9%). In 2014, Toyota gained highest sales revenues fromJapan: 33.2 percent and North America: 30.9 percent. Moreover, Toyota was able toincrease their vehicles sales volume by 16.2 percent in 2014 compared to year 2013.Further, their post tax profit was drastically grown by 89.5 percent in 2014 than the previousyear. Subsequently, this significant profitability was achieved through various strategies suchas expanding the product portfolio, increasing the after sales services, providing salesincentives and price discounts and reducing the warranty claims cost by developing qualitylevels. Meanwhile, Toyota was able to control material cost through keeping favourablerelationships with suppliers and it directly impacted on their profitability. Furthermore, Toyotafocused more on effectively using six-sigma technique to eliminate defects. Consequently,they were able to reduce warranty cost through better utilization of six-sigma technique.Similarly, Toyota maintained the lean manufacturing in a more efficient way to mitigate wasteand it supported them to reduce wastage cost. However, R expenses were increased by12.8 percent in 2014, since they aimed customer satisfaction through quality and safetyproducts. In 2014, return on equity of Toyota was 13.7 percent which was increased by 62percent than year 2013. Meanwhile, return on assets was increased by 41 percent thanprevious year and these ratios indicate that the company has increased its managementefficiency (Atrill & McLaney, 2001). Moreover, Toyota’s current ratio and quick ratio wererespectively 1:4.8 and 1:3.55 which show a slight decrease than year 2013, yet both ratiosare better than the recommended level, hence the company’s favourable liquidity position isreflected through these two ratios (Atrill & McLaney, 2001). Furthermore, Toyota is a lowgeared company which possessed 32.4 percent long term debt ratio in 2014 and it indicatesthe better financial stability of the company, thus shareholders’ funds are secured within thebusiness (Atrill & McLaney, 2001). However, when analyzing the financial performance of Toyota through its annualreport, it is observable that they have only shown about their strengths yet, there is no anydisclosure regarding their weaknesses. Furthermore, although in the annual report they havediscussed about risk factors of the company, they have not deeply demonstrated the impactof risk factors on financial stability. Nevertheless, it is noticeable that Toyota is open andhonest in financial reporting and they have not exaggerated a false picture regarding thecompany. 9 5.0 Conclusion After analysing regarding Toyota, it can be concluded that they maintain a strong position oftriple bottom line and CSR. Firstly, the notion of triple bottom line was discussed usingtheoretical background and further, triple bottom line activities in Toyota were evaluated.Secondly, corporate governance of Toyota was discussed while underpinning with literature.Moreover, the concept of CSR was defined while evaluating CSR consideration of Toyota.Finally, the financial position of Toyota was analysed using its annual report. 10 

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