Toyota Motor Corporation: Environment and Social Impacts on Operations

The report evaluates the performance of Toyota Motor Corporation and the impact of its production system on the environment and society. It focuses on the annual report and the various newspaper and articles about the company and its production system to identify whether the company is following any policy or event to manage the lifestyle and surroundings around the area where the production houses and the office of the company has been established.

Running Head: Accounting and Financial Management
1
Project Report: Accounting and Financial Management

Accounting and Financial Management
2
Executive Summary
The report focuses on the Toyota motor corporation. The various financial and non
financial factors of the company have been studied in the report to evaluate the performance
of the business and the impact of the production system of the company on the environment
and society. It focuses on the annual report and the various newspaper and articles about the
company and its production system to identify that whether the company is following any
policy or the event to manage the lifestyle and surroundings around the area where the
production houses and the office of the company has been established.

Accounting and Financial Management
3
Contents
Part A................................................................................................................................4
Introduction...................................................................................................................4
Environment and social impacts on Toyota’s operations.............................................4
Positive impact..........................................................................................................4
Negative impact........................................................................................................5
Four key GRI disclosure...............................................................................................5
Comparison of BMW and Toyota................................................................................7
Benefits to the shareholders due to the GRI compliances............................................7
Conclusion....................................................................................................................8
Part B................................................................................................................................9
Part C..............................................................................................................................11
References.......................................................................................................................14
Appendix.........................................................................................................................15

Accounting and Financial Management
4
Part A:
Introduction:
Toyota Motor Corporation is a Japanese company which operates its services and
hold its production houses at various countries. The main operations of the business are to
manufacture and retail the motor vehicles and the commercial vehicles. Company has come
into the market in the year of 1937. Headquarter of the company is in Japan. Toyota motors
have also started operating in the financial industry. Mainly, the area of operations of the
company is Asia, Europe, Japan and American market (Reuters, 2018). Mainly 50 production
houses are held by the company and the customers of the company are in 170 countries.
Toyota motors have been in the second rank in context to produce the highest number
of cars. In the market of Japan, it is the largest company in context with the revenue and
market capitalization. Around 3,64,445 employees are working with the company.
Environment and social impacts on Toyota’s operations:
Each of the company is part of the society and thus it becomes important for them to
identify and evaluate all the related factors of the society and must launch new events and
programs on regular basis to improve the society level and does not harm the environment at
huge level. The production houses and especially the manufacturing of the electric products,
automobiles etc affect the environment at huge level. The main motto of Toyota is to carry
out the activities and operations in such a way that the environment could be affected at lower
level or not affect at all. The company keeps two factors always in mind. One is to take care
about the environment and other is to improve the society level. The company has disclosed
about the environment and the social events in the sustainability report and has disclosed all
the compliance of GRI disclosure in order to improve the environment level in the society.
Positive impact:
Because of the events and the activities of the Toyota motors corporations, following
positive changes have taken place in the environment performance and the society welfare:
 Company has launched various events as well as suitable initiatives have been taken
by the company in order to protect the environment and the forest. The

Accounting and Financial Management
5
ToyotoShirakawa-Go-Eco-Institute of the company focuses on the forest and plant
while various other programs have also bee launched by the company in various
countries to improve the society and environment performance.
 Toyota Motor Corporation has launched various events and programmes for the
human resources management and the welfare of the society in order to improve the
overall performance and living standards of the society (Toyota global, 2017).
 The cleaning program has been focused mainly be the company to resolve the health
issues and reduce the pollution from the environment.
 The company has also promoted the local music, dance and food to attract the society
and develop the social welfare programs.
Negative impact:
Along with the positive impact on the society and environment, few negative impacts
have also been seen. Few of them are as follows:
 The company has produced huge number of vehicles. Due to which the natural
resources of the society have been lowered a well as the production process has
affected the environment at great level.
 The cars and other vehicles required fuel to run. The huge number of cars on the road
is improving the prices of fuel and the lack of fuel is also taking place.
 Breathing issues, global warming, increased level of pollution, lack of diesel and
petrol etc are the some of the issues which has taken place in the society because of
the production process and huge number of cars on the road.
The positive and negative impact of Toyota Motor Corporation explains that the
production process and huge number of cars on the road has affected the society and
environment at great level but the company has lunched various events and programs to
reduce the level of negative impact.
Four key GRI disclosure:
GRI is an independent organization which helps the government and the companies to
understand the impacts and issues of the human right, climates changes, pollution etc. It has
launched a framework which is required to be followed by the company. It evaluates that how

Accounting and Financial Management
6
the companies are managing the society welfare and the environment place. It deals with the
companies to disclose their strategies, activities, stakeholder practices, reporting process,
events and programs etc in the annual report or the sustainability report. The main key GRI
disclosure which has been followed by Toyota Motors is as follows:
Products and services:
Products and services of an organization must be disclosed along with their brief in
the annual report of the business. In case of Toyota Motor Corporation, it has been found that
the company has disclosed about all of the products along with their brief description for the
stakeholders of the business to develop their understanding and interest in the business
(Wagner, 2011).
Energy:
Energy is one of the natural resources which must be used by the business in an
efficient way. To reduce the uses of energy and enhance the environment level in the society,
Toyota Motor Corporation has launched new energy efficient cars. The company has offered
different segment in the energy efficiency cars so that the customers could chose it according
to their wish. The company has disclosed the brief about the product and their efficiency level
in the annual report for the stakeholders of the business to develop their understanding and
interest in the business.
Emission, Effluents and waste:
Wastage and emission of an organization must be treated and reuse it properly in
order to not to affect the environment. In case of Toyota Motor Corporation, it has been
found that the company is using the waste again to reduce the impact on the environment and
all the details have been disclosed by the company in the annual report of the company (Jose
& Lee, 2007).
Customer health and safety:
Health and safety of the customers is one of the crucial element and the factor which
must be evaluated and focused by the business in an effective way. In case of Toyota Motor
Corporation, it has been found that the company has launched various programs and offering
the special services to the customers to reduce the level of any hazards. The company is
offering the quality products along with the various safety products such as air bags etc. The

Accounting and Financial Management
7
company has disclosed the brief about the services in the annual report for the stakeholders of
the business to develop their understanding and interest in the business.
The report of the company explains that the GRI disclosures have been done by the
company in an efficient way in order to develop the understanding attractiveness among the
shareholders of the business.
Comparison of BMW and Toyota:
The main competitors company of Toyota is BMW. The comparison has been done
among both the companies to identify the depth and quality of environment performance. The
comparison is as follows:
Carbon disclosure project:
Both of the companies have been awarded as a grade in order to their carbon
disclosure project.
Promote sustainable societies:
Both of the companies have been awarded as AA grade in order to promote the
sustainable societies.
Best environment car:
The car “prime plus” of Toyota has been awarded as the best environment car.
However, the car of BMW got the second position.
Initiatives:
Toyota motors have taken various initiatives such as electric cars, campaign for the
traffic safety, rainforest restoration etc. On the other hand, the BMW has taken the initiate for
fast energy station, various disease etc (Global reporting, 2016).
Co2 emission:
The Co2 emission process of Toyota is better as the new cars are concentrating on the
less Co2. The BMW is following the similar strategies to manage the environment
performance (Global reporting, 2016).
It expresses that the environmental performance of Toyota motors is enough
competitive in the market.

Accounting and Financial Management
8
Benefits to the shareholders due to the GRI compliances:
The GRI is an independent organization which mainly works in the market to offer a
framework to the companies and the government which must be followed by the business and
disclose all the relate information about the business to the shareholders and other
stakeholders of the business (Sherman, 2011). The GRI compliances make it easy for the
stakeholders to identify and evaluate the performance of the business in context with the
society and the environment.
It creates a sense of responsibility among the companies which leads them towards
better management of the society and the environment position. The disclosure of the GRI
compliances assures the stakeholders of the business that all the related information has been
disclosed by the business (Greenbiz, 2016). In case of Toyota motors, the framework has
been followed by the company which has helped the company in better goodwill and
attractiveness among the shareholders of the business.
Conclusion:
To conclude, Toyota has managed and planned better place for the society and the
environment. The initiates of the company are for the welfare of the society and the GRI
disclosure has lead to the business towards better goodwill and attractiveness among the
shareholders of the business.

Accounting and Financial Management
9
Part B:
a) The ongoing cost for the “Smart car” of the company is as follows:
Cost Amount
(in $
'000)
Raw Materials for car $1,500
Labour Cost $1,000
Spare parts $750
Gasoline $750
Engine material $1,000
Other variable cost $900
Fixed cost $4,000
b) From the above table of the cost, it has been estimated that the $ 5900 is the variable
cost of the business and rest $ 4000 is the fixed cost of the business. The raw material,
labour, spare parts, gasoline, engine and other variable cost are directly related to the
production process of the business while $ 4000 is the fixed cost which would
definitely occurred in the business even in case of 0 production units.
c) Break even analysis is a production tool which is used by the businesses to identify
the minimum production unit where the business would be able to cover all the
associated cost (Dingwerth & Eichinger, 2010). It is necessarily recognized by the
companies in order to make better strategies for the margin of safety of the business.
d) Balance scorecard:
Balanced Score Card: Smart Car Production
Financial
Objectives Measures Initiatives
the sales and profit
growth
Lead: % change the
sales
Identify the changes
in the sales in %.
Lag: % growth
Customer
Objective Measures Initiatives
Improve the loyalty
and demand of the
customers
Lead: evaluate
demand and offer
products
accordingly
company must
launch new products
on regular basis

Accounting and Financial Management
10
Lag: the substitute
products
Internal Business Process
Objective Measures Initiatives
human resources
management and
improvement in
internal process
Lead: identify the
demotivated factors
the company should
launch new training
programs for the
employees (Toyota
global, 2017)Lag: effect of
changes in the
operations
Learning and Growth
Objective Measures Initiatives
Advanced technology Lead: identify the
better technology
Company is required
to adopt the
technology after
comforting the
employees.
Lag: Identify the
right people
(Greenbiz, 2016)
The above measurement for smart car in the balanced scorecard has been chosen
because of their relevancy and the competitive level of the business in the market.

Accounting and Financial Management
11
Part C:
a) Breakeven point:
Sales mix Cost
40%
$
17.31
28%
$
5.31
31%
$
10.85
Weighted Average CM per
Unit 33.48
Composite BEP
Fixed cost 445,000.00
Weighted Average CM per Unit 33.48
BEP units 13,293
Sales mix 40% 28% 31%
Break even units 13,293 13,293 13,293
Product units at BEP 5,377 3,734 4,182
(Appendix)
b) After tax profit:
Calculation of after tax
profit
Blue Tooth Head
Set
Demisting
mirrors
Self Cleaning
Mats
Expected units 2057 2660 2414
Sales $
180,000.00
$ 125,000.00 $
140,000.00
Less:
Labour cost $
32,914.29
$ 31,914.89 $
24,137.93
Material cost $
57,600.00
$ 41,223.40 $
31,379.31
Variable overhead $
1,440.00
$ 1,595.74 $
1,206.90
Fixed cost $ $ 165,978.39 $

Accounting and Financial Management
12
128,381.91 150,639.70
Total cost $
220,336.20
$ 240,712.43 $
207,363.84
Net profit/Loss -$
40,336.20
-$ 115,712.43 -$
67,363.84
Tax rate 30% 30% 30%
NPAT -$
28,235.34
-$ 80,998.70 -$
47,154.68
c) Memorandum:

Accounting and Financial Management
13
To: Sales team
From: Financial Analyst
Date: 15th Sept 2018
Subject: Production units and annual profits of the business
Dear,
The calculations have been done on the company’s daily production and it has been found
that the company is required to improve the production units. Because the current units of the
company are lower than the breakeven units which means the company is not even able to
make the enough revenue to cover the associated cost of the production. If the production
units can’t be increased by the company than company is required to take other initiates such
as company could make the changes into the sales mix or the fixed cost to reduce the number
of break even units. At that level, the cost of the business would be overcome.

Accounting and Financial Management
14
References:
Dingwerth, K., & Eichinger, M. (2010). Tamed transparency: How information disclosure
under the global reporting initiative fails to empower. Global Environmental
Politics, 10(3), 74-96.
Globalreporting. (2016). Global marketing strategy of BMW. Retrieved from:
https://globalmarketingprofessor.com/global-marketing-strategy-of-bmw/
Globalreporting. (2016). GRI AND SUSTAINABILITY REPORTING. Retrieved from:
https://www.globalreporting.org/information/sustainability-reporting/Pages/gri-
standards.aspx.
Greenbiz. (2016). BMW and Toyota Create Most 'Sustainable Value,' Report Finds; GM, Fiat
AmongLaggers. Retrieved from: https://www.greenbiz.com/news/2009/11/02/bmw-
and-toyota-create-most-sustainable-value-gm-fiat-lag
Jose, A., & Lee, S. M. (2007). Environmental reporting of global corporations: A content
analysis based on website disclosures. Journal of Business Ethics, 72(4), 307-321.
Reuters. (2018). Toyota Motor Corp (TM). Retrieved from:
https://www.reuters.com/finance/stocks/companyProfile/TM
Sherman, W. R. (2011). Sustainable mobility: a look at the automotive industry. Journal of
Business and Economics Research, 9(10), 47-64.
Toyota global, (2017).Making Ever-better Cars and Human Resource Development: The
Forces That Power Sustainable Growth. Retrieved from:
https://www.toyota.com/usa/environment/
Wagner, W. E. (2011). Imagining corporate sustainability as a public good rather than a
corporate bad. Wake Forest L. Rev., 46, 561.

Accounting and Financial Management
15
Appendix:
Calculation of Break Even Point
BEP (in units) Fixed cost / Contribution
Blue Tooth Head Set
Demisting
mirrors
Self Cleaning
Mats
Sales 87.5 47 58
Materials 28.00 15.5 13.00
Labour 16.00 12.00 10.00
Overhead 0.70 0.60 0.50
Total variable cost 44.70 28.10 23.50
Contribution 42.80 18.90 34.50
Equipment depreciation
$
225,000.00
Rent
$
80,000.00
Marketing
$
120,000.00
Other
$
20,000.00
Total Fixed cost
$
445,000.00
Sales mix Cost
40%
$
17.31
28%
$
5.31
31%
$
10.85
Weighted Average CM per
Unit 33.48
Composite BEP
Fixed cost 445,000.00
Weighted Average CM per Unit 33.48
BEP units 13,293
Sales mix 40% 28% 31%

Accounting and Financial Management
16
Break even units 13,293 13,293 13,293
Product units at BEP 5,377 3,734 4,182