Finance in a Global Perspective - Toyota Motor Corporation

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Business Risks

Based on the analysis of Toyota’s financial report, our team identified the business risks concerning its operations are mainly as follows: Foreign exchange risk, Quality control management and Sales control.

Analysis of its sales results of Toyota by the destination has shown a decrease in sales in Japan of 211,716 units and in Asia of 119,433 units. A decline in unit sales of this nature should be paid special attention to. Although it’s consolidated sales results shows an increase compared to its last years results, the last quarter of sales for the year shows a greater decrease in sales as compared to the results of its third quarter. If proper controls were not placed over its sales, an adverse sales result in its operations would be expected.Despite the number of times that Toyota has faced recall problems, which should have been controlled the first time, it recalled its vehicles. The recent recall problem can be seen to be related to the same issue that it had recalled 7.5 million vehicles globally in 2012 for repairs as with the issue which its currently recalling 6.5 billion of its vehicles. Poor controls over the quality of its products can be blamed for this persistent issue its now facing and this can negatively affects its business results as well as its financial condition.

Management Controls

Our audit used professional Toyota has appointed a chief risk manager in their different individual regions, to enable them monitor risk related to its business, environment and all operations on a daily basis. This would ensure that an risk or possible threats in its operations can be prevented or detected in timely manner without disruptions to its core operations.