The recent problems experienced by Toyota Motor Corporation, as indicated in thi

Question

The recent problems experienced by Toyota Motor Corporation, as indicated in this week’s web article, indicate how important it is to identify and control business risks, even for highly reputable companies. There has been considerable speculation in the business press as to whether Toyota acted quickly enough in recalling vehicles, which some estimates place at 8 million worldwide. Elsewhere, reports suggested 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 has been issued to tell regulators about the problem. Other analysts 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.

**Identify one stakeholder who was positively or negatively affected by the problems experienced by Toyota.

What role does effective corporate governance play in reducing the likelihood that companies will experience the types of problems faced by Toyota?

Explanation / Answer

Shareholders of the comapany get afftected due to loss brand image, get reduced their share in the market and also get reduce of their profits due to closing down of some plants.

Corporate Governance is the system of rules, regulations, procedures and processes by which a company is directed and controlled. This System should balance the interest of different stakeholders like Sahreholders, creditors, suppliers, customers, government, society etc. Every one in the organisation shold follow these rules. Corporate governance mainly emphasise on Transperancy, Accountability and Efficiency of Corporate affairs, . The comapany should disclose every thing to the stakeholers, so that stakeholders are informed about company decisions, so that they can decide their course of action . The Management should also be made accountable for all types of losses and also for inefficiency in any area. The wrongdoers are severly punished for their negligence. So, that we can put check on different corporate abuses like mis use of public funds etc. The recent scams like Panama and earlier ENRON scam in India is due to lack of Corporate Governance

Corporate governance mainly provide a frame work for attaning company's objectives and also can be used as a measruement of management performance. Corporate governance certainly reduce this type of problems faced by toyota, Hence, corporates should follow the principle of Corporate governance

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