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Company Context

Discuss about the Toyota Motors Corporation Business Environment.

Toyota Motors Corporation is a multinational company manufacturing automobiles. The company has it headquarters in Japan. The company produces automobiles for the world market with subsidiaries and business unit spread in various part of the world. Toyota Motors is a leading brand in the automobile industry for the past over 75years. The company has a strong brand in the market that has been established over the years (TOYOTA, 2016).

As the company grows and seeks stability, is faced with both micro and macro environments factors. These factors determine how effective the company is able to operate to meet it organizational goals (Abdin, 2013). The micro environment factors exist within the organization and are easily manageable. The company is able use the internal mechanism to influence action and attain desirable outcome. The macro environment factors are not within the organization and influence the business from outside. The business environment factors are critical and require informed decision by the organization’s management to enable the business operations (Warner, 2010). Toyota being a global business is faced by a critical business environment that presents both opportunities and threats to it operations.  Therefore, it important for the organization to understand the external business environment regularly to keep growing, stable and dominating the automobile market.

This paper identifies the economic, political, technological and social cultural environment that Toyota Motors operate in as well as the critical issues that influence the effectiveness of decisions carried by the business. The paper also interprets from a strategic perspective the implication of the business decisions made in the key business activities.

The company was started in 1937 by Toyoda in Japan. It headquartered in Toyota. The company is publically traded with key owners being Toyota Industries, Nippon Life and Denso. The company is chief executive officer is Akio Toyoda. The corporation has three divisions and 547 subsidies throughout the World. It has 346,219employees who operate in different part of the world (TOYOTA, 2016).

Toyota Global has a vision of producing products that are innovative, high quality and have respect to the environment. This is to be attained through production of reliable cars and sustainable development to the communities by enriching lives in the world through safest products (TOYOTA, 2016).

This refers to the factors that relates to governments of globe. Different countries and regions have different regulations that govern businesses. Political environment is composed of the political stability, trade agreements, government supports and product legislations (Blair and Hitchcock, 2001). All these factors affect the Toyota global operations and the company has to incorporate them in decision making. These factors determine the markets to supply, when to supply, standards and shapes future products of the company.

Business Environment

Political stability in the global market presents the company with an opportunity to supply more. It enables market growth of the company. On the other side, the political instability threatens the company’s growth and dominance. Free trade agreements established by government present an opportunity to the company. For instance, the continued trade agreement by Japan and other countries favours the growth of the company. When government supports innovations especially in the automobile industry, they enable the company to advance and produce better products. Government investments on eco-friendly automobiles gives Toyota motors an advantage by enabling the company produce environment friendly products that meet the world environment expectations.

From a strategic perspective, favorable political environmental factors present an opportunity to the company to produce more and grow markets in the global market. Unfavorable political environmental factors threatens the business operations and therefore the management should make informed decisions to utilize opportunities and minimize pitfalls of threats

This refers to economic performance of the global economics. The economic trends of the globe influence company’s performance in terms of sales and returns. Economic environment is composed of exchange rates, inflation, income, unemployment rate, access to credit and globalization of the economy (Hamilton and Webster, 2009).

These factors influence how the Toyota Motors price it products and investment to different products. A change in the Yen in respect to US Dollar necessitates a change in decision by the Toyota Company. Depreciating of the Yen in respect to US Dollar presents an opportunity for Toyota Company to sell more in the global market. General growth of the world economy presents an opportunity for growth of the Toyota Corporation. When consumers’ disposable increase their purchasing power increase and they are able to buy more of company’s products. When the economy is at boom, the company enjoys massive sells and predict to this tend enables the company to make a decision to produce more to cater for increased demand. For instance the company produced more than 10 million cars in 2012 to become the first Company to produce such many cars in a year.

Favorable economic environment provides the Company with an opportunity for expansion. A good forecast of the global economy will enable the company to make informed decisions on the amount of automobiles to produce. While us the recession of the global company enables the company to formulate strategies to survive to avoid collapse of the business. For instance, Toyota Motors was able to survive the 2009 economic recession while other companies in the industry suffered threats to collapse.

Political Environment

Toyota Motors Corporation being in a technological driven industry becomes a critical factor to consider when making decisions. Technological environment is made up of the competitors’ technologies, new trend in the industry, safety technologies, e-commerce and new ideas from government and learning institutions.

Technological environment influences the new trends in the market. They shift consumers’ preferences (Worthington and Britton, 2006). New technologies disrupt the existing technologies making it absolute. Safety technologies necessitate quick adoption by the company to keep and attract potentials customers. E-commerce provides an avenue and new form of doing business online. This technology has widened the market for Toyota Company by enabling more customer reach. The competitors’ technology shapes the new modification of the company’s automobile. It enables the company to do timing of it new inventions and innovations in order to compete effectively in the market. New ideas from government and learning institutions provide platforms to enhance efficiency in the industry. They project the future and enable the business to make informed decisions for the company’s success in the future.

New technologies present opportunities for the Company to produce more and reach new customers. Adapting technological advancements enables the company to take advantage of the booming market. Therefore it critical for Toyota Motors Company to strategically analyze technological factors to avoid market/product failure as it grows across the world

This refers to change in peoples’ way of life that influence change in the business operations. It includes population growth, education, lifestyle, attitude change and wealth patterns in the society.

Increasing population represent an increase in demand for automobiles (Hamilton and Webster, 2009). More individuals will require vehicles therefore an opportunity for Toyota Company. A change in lifestyle is demanding for hybrid cars. Customers are in need of classic and good models to fit their lifestyle. A change in attitude to be more environmental conscious is increasing demand for electric cars. This is necessitating the company to start producing more electric cars to satisfy this growing demand. The negative impact that is occurring to the globe society of wealth gap widening is likely for affect the sales of Toyota. This is because the company depends mostly on middle class society as their major target group.

Both change in lifestyle and attitude present an opportunity to the company to produce more products that satisfy their need. Widening gap of wealth in the global society threatens the business operations of Toyota Company since the middle class are the main customers. Therefore it important for Toyota managers to make informed decisions incorporating these social cultural factors to ensure the stability and growth of the company. 

Conclusion

From the discussion above, it can be seen that the company has no control over the external business environment. These business environment factors occur independently and affect the current and future operations of the company. Understanding the business environment enables an organization to prepare and be able to cope with the situation by utilizing an opportunity or minimizing the effects of a threat. The implication of the external environment cannot be assumed for it can lead to market failure and invalid projections/forecasts for the company. The company should take every business environment factor and formulate a strategy to overcome it. Therefore, we can summarize that analyzing the business environment is an important part of the company’s management to making informed decisions that are crucial for business growth and stability.

References

Abdin, J. (2013). Influential Factors of International Business and International Business Environment in Bangladesh. SSRN Electronic Journal.

Blair, A. and Hitchcock, D. (2001). Environment and business. London: Routledge.

Ferguson, E. (2015). Toyota Pestel/Pestle Analysis & Recommendations - Panmore Institute. [online] Panmore Institute. Available at: https://panmore.com/toyota-pestel-pestle-analysis-recommendations [Accessed 25 Oct. 2016].

Hamilton, L. and Webster, P. (2009). The international business environment. New York: Oxford University Press.

Kaplan, K. (2008). Toyota motors ahead. Nature, 456(7221), pp.542-542.

Kinra, A. and Kotzab, H. (2008). Understanding And Measuring Macro-Institutional Complexity Of Logistics Systems Environment. Journal of Business Logistics, 29(1), pp.327-346.

Lansiluoto, A. (2007). Suitability of self-organising maps for analysing a macro-environment an empirical field survey. IJBIS, 2(2), p.149.

Mindtools.com. (2016). PEST Analysis: Identifying Big Picture Opportunities and Threats. [online] Available at: https://www.mindtools.com/pages/article/newTMC_09.htm [Accessed 25 Oct. 2016].

TOYOTA, C. (2016). Toyota Global Site | Company Profile. [online] Toyota Motor Corporation Global Website. Available at: https://www.toyota-global.com/company/profile/ [Accessed 25 Oct. 2016].

Van Wormer, K., Besthorn, F. and Keefe, T. (2007). Human behavior and the social environment, macro level. Oxford: Oxford University Press.

Warner, A. (2010). Strategic analysis and choice. New York: Business Expert Press.

Worthington, I. and Britton, C. (2006). The business environment. Harlow: Financial Times Prentice Hall.

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My Assignment Help. (2018). Toyota Motors Corporation Business Environment. Retrieved from https://myassignmenthelp.com/free-samples/toyota-motors-corporation-business-environment.

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My Assignment Help (2018) Toyota Motors Corporation Business Environment [Online]. Available from: https://myassignmenthelp.com/free-samples/toyota-motors-corporation-business-environment
[Accessed 19 July 2024].

My Assignment Help. 'Toyota Motors Corporation Business Environment' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/toyota-motors-corporation-business-environment> accessed 19 July 2024.

My Assignment Help. Toyota Motors Corporation Business Environment [Internet]. My Assignment Help. 2018 [cited 19 July 2024]. Available from: https://myassignmenthelp.com/free-samples/toyota-motors-corporation-business-environment.

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