Problems experienced by Toyota Motor Corporation beginning in 2010 with accelerator pedals sticking and brakes malfunctioning in some of its vehicle models illustrate how important it is to identify and control business risks, even for highly reputable companies. Among other things, Toyota was criticized for not acting quickly enough in implementing recalls, which ac- cording to some estimates involve 14 million vehicles worldwide. Also, reports suggest that Toyota did not tell federal regulators in Canada about a possible problem with the accelerator pedal when the company first learned of the issue. Instead Toyota waited until after the recall notice had been issued to inform regulators about the problem. Some have suggested that Toyota’s rapid growth in worldwide production and sales compromised its focus on maintaining high standards of quality. In response to the crisis, Toyota temporarily closed some plants in Britain and France as a result of lower demand because of the recalls. The company also offered significant discounts to win back lost customers in North America. In December 2012, Toyota announced that it will pay over $1 billion to settle hundreds of lawsuits related to the accelerator problems.
1. Identify stakeholders that were probably negatively affected by the problems experienced by Toyota.
2. What role does effective corporate governance play in reducing the likelihood that companies will experience the types of problems faced by Toyota?

  • CreatedJuly 08, 2015
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