Five months before the new 2002 Lexus ES hit showroom floors, the company's U.S. engineers sent a
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In years to come, thousands of Lexus buyers would discover firsthand that the vehicle's transmission problems, which caused it to hesitate when motorists hit the gas, or lurch forward unintentionally, were far from fixed. The 2002-2006 ES models would become the target of lawsuits, federal safety investigations and hundreds of consumer complaints, including claims of 49 injuries.
In an August 15, 2005, memo explaining the company’s position, a staff attorney wrote: "The objective will be to limit the number of vehicles to be serviced to those owners who complain and to limit the per-vehicle cost."
In 2010, Toyota was fined a record $16.4 million for delays in notifying federal safety officials about defects that could lead to sudden acceleration. The reaction of a Toyota spokesperson was: "Given the concerns raised by some customers about this drivability issue, we did not meet the very high customer satisfaction standards we set for ourselves. However, we fully stand behind the engineering and production quality of the vehicle, as well as our after-sale customer service and technical support."
Evaluate Toyota’s actions from a corporate governance perspective. How would you characterize the ethical culture at Toyota at least with respect to the Lexus incident? Can you draw any parallels between the Toyota experience and how Ford handled the matter with the Pinto?
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Related Book For
Ethical Obligations and Decision Making in Accounting Text and Cases
ISBN: 978-0077862213
3rd edition
Authors: Steven Mintz, Roselyn Morris
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