The report attempts to research on the practice of business values and assessing their scope of application in the modern business setting.
There is growing concern regarding the degree to which various companies have been upholding business values in their operations.
Method of investigation
Interviews were conducted on five executive members of each firm for the purpose of drawing more in-depth views regarding the extent to which business values are being upheld in their respective companies. References were are also made to the social reports posted by the particular firms and books.
Description of the two companies
It is a vehicle manufacturing company that is based in Germany with its head office in Wolfsburg (Wiese, 2009). Reports regard it as one of the largest and most advanced car factories in the world. It is a German automaker which began its operations on May 28, 1937. The German Labor Front established the firm. It is the Volkswagen Group's flagship marque. The company operates in the automotive industry in Germany (Kubik, 2011). It avails its automobiles worldwide. For instance, the company owns plants in many countries around the world, which is, assembling and fabricating vehicles for the regional marketplace. They include countries like Malaysia, Portugal, Mexico, Bosnia, China, Indonesia, Herzegovina, Argentina, the US, India, Brazil, Russia, South Africa, Poland, Slovakia, Czech Republic and Spain. Currently, VW captures a massive market share with its core markets being Germany and China.
Toyota Motor Corporation
The vehicle manufacturer is a Japanese firm, and its head offices are found in Toyota, Japan. (Borowski, 2010). It was established in 1937 by Kiichiro Toyoda drawing assistance from Toyota Industries that was owned by his father. The company manufactures vehicles under five different brands which include the Toyota brand, Lexus, Hino, Ranz, and Daihatsu. It runs plants across the globe which produce and muster automobiles for open markets, for instance, Canada, Australia, Indonesia, Colombia, France, South Africa, Japan, Sri Lanka, Poland, India, Turkey, Portugal, the US, Brazil and the UK. Most new markets are Mexico, Argentina, Malaysia, Czech Republic, Thailand, Egypt, Pakistan, China, Egypt, Vietnam, the Philippines, Venezuela, and Russia.
Volkswagen’s social reporting/performance issue
The firm deliberately set out to formulate a strategy to circumvent emissions control with the aim of guaranteeing itself an unfair upper hand over the rivals in 2015. It intended to obtain the world's number one car ratings, principally by the firm's supposedly environmentally friendly vehicles while at was poisoning the planet. VW had developed particular lines of software that can switch the engine from test mode to "dirty mode" and vice versa. The scandal led to the resignation of the chief executive officer, Audi's head of R+D and director of Porsche engine after downplaying the ethical standards of engineering thus suggesting that the Corporate Social Responsibility (CSR) was aware of the malpractice. It is assumed that VW did all it could result in an attempt to cover up for the highly contaminating nature of their diesel engines. It is perceived that the company was making CSR a marketing exercise. The fact that VW cars emitted more than 40 times of the set lawful maximum of nitrogen oxide gas, it still continued with the activity of producing the defective cars and releasing them into market worldwide. The firm resolved that it did not matter whether its brand of cars intoxicated the world as long as doing so made it the world's leading car manufacturer. The VW case presents a stark on the need to reinvent CSR (Sherman, 2016). The scandal highlights the failings of capitalism relating to the system that is blind to the reality of the future and explicit unsustainable future.
Evident differences between the two companies on social, environmental and economic issues addressed in their respective reports.
VW presents its report in an explanatory manner by making things clear and giving valid reasons for them. Toyota Company's report follows a general format that provides a detailed account of its areas of focus.
Regarding the development and production, VW preferably designs a car from the very beginning in a manner that it can be manufactured, driven and one day recycled in a way that enhances environmental protection. The reports state that environmental experts are engaged in the initial design operations to ensure that the cars' entire life cycle achieves the most efficient value concerning climate and health protection and conservation of resources. Toyota seeks to use sustainable materials minimize the utilization of the substance of concern in producing their vehicles (Jeffrey, 2010). The report also addresses the issue of use and recycling. VW has laid out strategies aimed at ensuring that every new car is at least 10 percent more efficient in comparison to its predecessor model. They have also managed reductions of up to 25% of emissions and fuel consumption by offering fuel-economy training courses to their customers meant to achieve sustainable driving. According to Toyota’s North American Environmental, the company has launched Prius Prime that offers the greatest fuel efficiency of all cars.It discusses the issue of protecting nature and species diversity. For instance, it collaborates with Germany’s nature conservation organization in facilitating projects entailing the protection of river and moor landscapes. Toyota has partnered with the Wildlife Habitat Council to bring together government, team members, conservation agencies and team members to preserve habitats and build connected communities. For example, its activities range from safeguarding pollinators to supporting national public Lands Day.
According to VW sustainability report 2015, its market share was on the decline because of the increasingly strict regulations at international level which have contributed to volatility in the sales market and global procurements. In response, the firm intends to on high-growth regions and segments especially in China and India. It also aims at growing in the field of automobile mobile driving and e-mobility by using its new Mobility solution unit as a driving force. Toyota, on the other hand, considers the possibility of being affected by a compilation of market and social trends, technological growth and complicated regulations according to its sustainable management report 2016. The firm has resolved to improve its enterprise strongholds by developing superior cars and supplementing the lives of the locals aimed at transcending customers’ expectations.
VW reportedly outlined the framework of increasing the competence of their workforce to compete favorably with its rivals in the industry (Andreas, 2017). It decided to conduct online, and classroom courses on the topics of compliance, in general, were especially combating corruption. For instance, it is mandatory for all new employees to complete the online training module on the code of conduct (Lussier, 2012). Toyota has embarked on practices meant to improve labor condition that would lead to its prosperity by providing workers with opportunities aimed at achieving social contribution and self-actualization through their input.
Strengths and weaknesses of the reports’ approaches
Strengths: the reports provided by the companies have used sustainability indexes. The plan offers an easy way of evaluating environmental, social and economic issues relating to the firms (Scherer, 2008). They also use a collaborative approach that advocates for team reporting who have some social media experience.
Weaknesses: they do not use the interactive method that allows people who cannot fit in situations of ongoing events of the company to comment on material produced from such incidents.
Explanation on the differences between industries and countries
Technology: VW used an advanced technology in manufacturing the diesel engines (Erjavec, 2015). For example, it has adopted technology that can change the motor from test mode to "dirty mode." Technology prompted the exposure of the malpractice by putting the report in the public domain which has access to different tools, techniques, and approaches.
Market Maturity: the market for automobiles in the US is grown regarding quality and specification thus could easily discover the counterfeit concept of the diesel-fueled cars. The US authorities resolved to sue VW about it.
Regulatory: the two companies have different regulation frameworks regarding their social responsibilities which also vary from country to another in the larger market.
Assessment of approaches adopted by the companies on social accounting corresponding to criteria of Zadek et al.’s (1997).
Social accounting involves activities which have implications on businesses (Arora, 2012).The principles include evolution, disclosure, inclusivity, completeness, external verification, comparability, continuous improvement and management policies and systems (Crane, 2016). Both companies have utilized the Global Reporting Initiative (GRI) scheme to prepare their reports. VW has comprehensively adopted three principles in their reporting, that is, inclusivity, management policies and systems and continuous improvement. For instance, it has structured ways of engaging all key players in their operations. It also presents policies and systems which govern the company and strategic plans aimed at sparking continuous improvement.
Toyota Company's social reporting features comparability, management policies, and systems, continuous improvement and inclusivity (Holland, 2014). For example, it offers comparison reports on management approach of its current and previous social, environmental and economic issues. There are some principles which have not been fully met such as completeness, evolution and external verification.
The extent to which the social reports reflect the companies’ values
VW’s expedition statement focuses on providing appealing and invulnerable vehicles that participate in the infrequently active markets (Finn, 2016). To some level, the firm has managed to achieve this in several ways. For instance, it outlines management approach of creating safe and environmentally friendly vehicles. It also reports on its wide range of cars which have made it one of the largest manufacturer of automobiles in the world.
Toyota: its guiding principles include respecting the customers and culture of every nation and contributing to the social and economic development, creating and developing advanced technologies to provide unique products and commitment to offering safe and clean products among others (Miroshnik, 2014). The firm has remarkably adhered to the majority of the principles (Evans, 2008). For instance, it is engaged in various community development initiatives, launched Mirai car model that emits only water vapor hence friendly to the environment through its advanced technology.
Reflection on group’s discussions
Through panel discussions, we had discovered the importance of comprehensive social reporting framework which I have confirmed to be true in my assessment report. The points of agreement with other group members include; firms should be held accountable for their social reporting shortcomings and the need to structure simple ways of presenting them (Pohl, 2010). We disagreed on whether the two companies should or not merge their social reporting into a common platform.
Firms in the automotive industry have been faced with major challenges in upholding the required business values in conducting their respective activities. For instance, the growing desire to capture large market shares. Such difficulties have forced some of them to disregard the set business virtues as discussed in this report. Therefore, there is the need for firms operating in the automotive industry to adopt a viable framework that supports ethical business practices.
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Arora, M. N. (2012). A textbook of cost and management accounting. New Delhi: Vikas Publishing House PVT LTD.
Borowski, A. (2010). Report on the Toyota Company. Munchen: GRIN Verlag GmbH.
Crane, A. &. (2016). Business Ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford: Oxford University Press.
Erjavec, J. &. (2015). Automotive technology: A system approach. Cengage Learning.
Evans, J. R. (2008). Managing for quality and performance excellence. Thomson/South-Western.
Finn, F. &. (2016). Organizational Crisis Communication: A multivocal Approach. SAGE.
Holland, R. L. (2014). Managing Strategic Design. Basingstoke: Palgrave Macmillan.
Jeffrey, U. J. (2010). Sustainability Accounting and Accountability. Routledge.
Kubik, J. (2011). Analysis and evaluation of selected resources of Volkswagen in Germany and respect of the Indian minicar market and the role of Suzuki as a Joint Venture prospect. Munchen: GRIN Verlag GmbH.
Lussier, R. N. (2012). Management Fundamentals: Concepts, Applications, Skill development. Mason, Ohio: South-Western.
Miroshnik, V. &. (2014). Corporate culture in multinational companies: A Japanese perspective. Houndmills: Palgrave Macmillan.
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Sherman, L. (2016). If you're in a dogfight, become a cat!: Strategies for long-term growth. New York: Columbia University Press.
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