Executive Summary
The report investigates the case of misconduct at the Hino Motors company. Due to the violation of code of conducts, nearly 116.000 trucks were made with engines that do not match the needed emission text and fuel consumption certification. As the result, the Toyota company suffers major reputational and financial losses. The paper analyses the case through value-based management theory and provides several alternative solutions for the case of misconduct.
Introduction
The corporation whose ethical misbehavior is defined in this study is Hino Motors. Hino Motors, a truck division of Toyota, recently acknowledged falsifying diesel engine performance information. If enterprises of that size continue to participate in such activity and cannot indeed reduce emissions, it will be considerably more complicated with new barriers in place. According to the Australian Automobile Association, also known as AAA, Hino needs to return the automaker environmental cheating controversy to the forefront. This scandal underlines the laboratory-based testing regime’s incapacity to catch such misbehavior. It again demonstrates why consumers want an inspecting officer who can thoroughly inspect automobiles entering the Australian market (Hino, 2022). The report investigates the ethical dilemma involved in the scenario and evaluates possible resolutions of the issue by analyzing the case from the value-based management perspective.
Summary of Scenario
Hino, a Japanese truck manufacturer, has halted sales of numerous models after admitting to “misconduct” in its fuel emissions tests, reigniting calls in Japan for whoever wins the upcoming leadership contest to toughen the vehicle-testing regime (Evans, 2022). Hino Motors confirmed that it manipulated fuel economy findings in two industrial-strength engines and misrepresented engine performance measurements in its emissions durability testing (Evans, 2022). The company discovered that a muffler used to filter harmful emissions into nitrogen and water was swapped during an adsorption test for emissions effectiveness in one engine. The test has proceeded with the new exhaust. This change was made in the wake of discovering that outflows execution would decay over the long haul and that the motor may not fulfill the administrative emanations guidelines.
Hino has additionally affirmed through outflow strength retesting that this motor might surpass administrative emanations guidelines throughout the vehicle’s entire valuable life. Hino conceded that fuel stream rate values were changed during fuel utilization testing for two of its uncompromising motors “to cause it to seem invaluable comparable to efficiency” (Evans, 2022). This caused a changed worth that was superior to the real worth to be shown on the fuel utilization meter, the organization said. And keeping in mind that it has not distinguished unfortunate behavior corresponding to a fourth motor, Hino said the mileage of its light obligation motor might likewise not meet its accounted for efficiency. Hino has apologized “for the burden and worry” to its clients (Evans, 2022). There are nearly 116,000 trucks that were sold in Japan after 2016 with engine certificates that provide false information. Therefore, Toyota has lost 16% of share value and the rates continue to drop (TransportTalk, 2022). Hence, the falsification of emission test data and fuel economy performance of the engine has led to the loss of credibility and reputation of Hino Motors and Toyota.
Description of Value-Based Management
Generally, a value is something of worth to a person or a group of people who share common interests. Guiso, Sapienza, and Zingales (2015) suggest that values are the basis of the organizational culture which seeks to influence social control among team members of a company. Hence, values are part of an organization’s culture that dictates the beliefs held by members of a group and guides their behavior internally and externally. Following the company’s code of ethics is mandatory for all group members since it maintains law and order of the group just as the laws in a nation. Therefore, it is crucial to include core values in a code of ethics for all team members to see and decide to follow.
Personal values of leaders are important in shaping performance excellence, and while traits can be naturally occurring, learning is significant in leadership. The ‘innate’ aspect of leadership can be witnessed in the case of charismatic leaders including the politicians who can attain the support of their followers through speeches that inspire people into action. In essence, the core values of an organization should be in the company’s code of conduct. Values are the basis of the organizational culture that guides the behavior of team members. All values have significant impacts on the organization, and violating any of them guarantees consequences, because it may negatively affect the whole group.
Analysis
The misconduct that occurred in Hino Motors is unacceptable by any means. Value-based management theory does not approve of the falsification of certification and performance data as well. Hino Motors is a part of the Toyota Corporation, and therefore adheres to its set of values and operational frameworks. One of the things that Toyota is famous for is its approach to quality commitment and achieving efficiency with its lean production and total quality management, 5S, and recent Industry 4.0. Each of these frameworks imposes and represents a certain set of values that is important to Toyota and its Divisions such as Hino Motors.
For instance, one of the key components of Industry 4.0 is business which is the existence of communication between companies, suppliers, factories, logistics, customers, and resources. The configuration is optimized concurrently based on the status and requirements of all the segments that are part of the network. 5S is considered as one of the steps in continuous improvement and ensures that there is an improvement not just in a company but also in regard to safety standards in the environment and thus a better environment (Morgan & Liker, 2020). Finally, total quality management values were violated as Hino Motors overlooked the quality of engines at the production stage, logistics and supply, and certification conduction. Therefore, when analyzed from a value-based management perspective, the misconduct of Hino Motors represents the lack of adherence to the company’s values. There are several alternative solutions that could help avoid such issues in the future, which are based on the value-management approach.
Identification of 3 Alternative Solutions
One of the solutions would be developing a corporate culture, where the code of ethics is adhered to strictly. Since the code of ethics seeks to ensure order in an organization, violating it would lead to consequences such as being fired for non-compliant employees. Besides, Guiso et al. (2015) believe that the impact of including the company’s values in the code of ethics is that they reduce the tendency of employees to engage in morally hazardous behaviors. Moral hazard adversely affects the company through huge losses or damage to the corporate brand of the company.
Another alternative solution to the misconduct is using the data from the investigation to identify the weakest sectors of production and certification and create more value drivers. In the case of Hino Motors, such value drivers may include hiring more high-skilled employees and investing in the research and development department to develop performance control and certification practices that are strictly regulated and hard to cheat.
Finally, the value driver that can prevent such issues from happening again can be developed in the sphere of technology. Data science, as well as artificial intelligence, can provide a digital solution to the case of years-long falsification of the data and certification results. Hence, the management of Hino Motors should invest in developing or buying, and implementing the technology that enhances the integrity and security of the certification and production processes in the company.
Recommendations
There are no simple solutions to the issue of long-lasting misconduct with such an adverse impact on the company. Therefore, the strategy that is applied in Hino Motors and Toyota currently is justified, as a thorough investigation must be conducted to track all the causes and effects of the violation. As the data is gathered and analyzed, the management of the company can develop possible strategies to fix the identified issues. The change in the company may be complex and broad, therefore it is challenging to cover all issues with only one approach, as utilizing insights from different theories shows better results.
Conclusion
In conclusion, Hino Motors company is undergoing changes after the misconduct. Although the investigation is still ongoing, certain insights could be applied to the case according to the value-based theory. The loss of the share value is associated with poor practices in the company, which means that the highest price of shares cannot be guaranteed by quality. Hence, creating a stronger corporate culture to promote its core values as well as creating more advanced value drivers would create an opportunity for improvement in Hino Motors.
References
Evans, J. (2022). Truck maker Hino admits to cheating emissions and fuel economy tests. ABC News. Web.
Hino. (2022). Hino motors introduction. Web.
Guiso, L., Sapienza, P., & Zingales, L. (2015). The value of corporate culture. Journal of Financial Economics, 117(1), 60-76. Web.
Morgan, J. M., & Liker, J. K. (2020). The Toyota product development system: integrating people, process, and technology. Productivity Press.
TransportTalk. (2022). Hino Motors reports engine certification ‘misconduct’. Web.