The Business Environment Of Toyota Cars Marketing Essay

The Business Environment Of Toyota Cars Marketing Essay Business strategy can be achieved by observing both internal and external environment factors of the organisation (Kotler, 2003). SWOT and PESTLE are tools to find out the position, status and the future of the business and its strategy, and the factors of macro environment highlights the present and future problems which may an organisation can suffer (Morrison, 2006). Environmental audit/scanning has been defines by Pilbeam Corbridge, (2002) The process through which managers as the organisation strategists use different tools and perception to constantly gather and feedback information about the environment to inform decision maker. Moreover it has been describes that environmental scanning is linked with the performance of organisation because through environmental scanning the company will be in a position to get direction for the future present and may for future(Thomas et al, 1993). Below are the main factors which effect the environment of an organisation. The writer has analysed these factors in the Toyota and studied their mission, strategies and customer service which reflect that in automobile industry as Toyota is world leading company in providing maximum best customer service, quality in products and maximum satisfaction to each and every customer. The writer feel that there is a proper coordination of work and its seems to be a strong culture in the line of company suppliers, staff, customers, competitors, and other company stake holders like partners and investors. External Factors/Macro Environment: Ireland et al, (2008) described external environment as general environment. Political, economic, social and demographic, technological, global are those forces which effects strategy of an organisation. These forces help to scan the business environment (Morrison, 2006). Environmental scanning is tool for monitoring and evaluating forces which effect organisation long term goal and its strategy. Micro environment can impact on companies internal factors for business process such as employee and customer satisfaction. Therefore new strategy of an organisation needs to be defined according to new macro environmental changes which come from Pestle forces. Impact of Economic Factors on Business Strategy: Both external and internal factors affect the environment of the business in all aspects. According to case study below are some economic forces which effect Toyota business worldwide: Economic Growth: If the ability of a country increases in the line of economic stability it mean the country has ability to increase high product because there is a high demand. Economic growth also reflect high purchasing power of the consumers that is why the economic growth has double impact on the economics of the country one side the manufacturer and producer has to produce more because the chance of high profit as it reflect there is a demand. If economic growth and development goes down in the country where Toyota is operating their services then it will affect Toyota in term of sales and production (Economic Notes, 2007). For example 1995 Toyota started small plant in southwest Indiana and within 10 years its growth and production increases to double (Kaelble, (2007). Business is affected by the economic situations, on-going recession which is unpredictable in the United Kingdom and worldwide as many companies have suffered. In the beginning 2010 Toyota was also affected by recession, and the company has to cut down its costs and slow down many operations which brought Toyota in loss (Krish, 2009). Inflation Rate: Inflation is a condition of increasing prices. It effects economy of country badly and distort consumers behaviour towards products. High rate of inflation increase stress for organisation future plans and living standards of people (LasanthaW, 2010). According to report inflation rate in United Kingdom Increased to 4% and this increase will bring instability in every business. Business costs will rise for the products which have been outsourcing (BBC, 2011). For Toyota through inflation, menu costs, services costs and other costs will rise. Therefore, the business environment internally and externally has to demonstrate properly in the line of new pricing strategy. Exchange rates: As Toyota is world largest company and operating in different countries and as operating a business at international level the exchange rate is another factor in economic conditions that have effected on the business strategy of Toyota. As currency rates differs due to economic condition of the country and world business depends on US economy. Toyota management needs to keep an eye on the exchange rate in order to get the cheap but high quality products and material to serve their customers (Sloman and Sutcliffe, 2004). Globalisation: Globalisation is fast growing impact in world as Levitt, (1983) said all companies have to learn in the global world by understanding national, international and regional differences and have to develop product and service according to new shifts which are exists in the global economy. In Levitt research it has been highlight that all the changes in this world are due to new paradigm and phenomenon of globalisation. Morrison, (2006) states that demographic change in the world has brought world together on one platform as one large market and this happens because of globalisation. Skill Level of Work Force: The unemployment rate is that rate determined by the structural and frictional forces in the economy which cannot be reduced by raising aggregate demand Pearce, 1989, p. 296(Goliath, 2008). The economy of country will be more productive if the education level of people living in that country is high. If the people of the country are educated, they can develop new industries and technologies. Education is key factor to economic survival. It can pioneer new areas for jobs. Companies always need new skills thats the reason every company train its staff for future investment (Coughlan, 2004). Impact of Social Factors on New Business strategy: Same as economic factors business is affected by social factors below are some highlighted factors: Population Growth: Morrison, (2006) states that population is not still, it keeps on changing all the time. These changes are in form of increase or decrease in death, birth or migration rate. These demographic changes have long term effect on society and businesses. According to U.S Census Bureau, 2010 population in the world is increasing dramatically by report population in next 30 years will go up to approximately 3 billion. This demographic change affect the business market and every business try to move to the place where growth rate and buying power is high. E.g. in china population growth rate is high and every business starts from there. Attitude: Attitude is the important factor in customer service industry. Attitude and behaviour are those social factors which help organisation to improve its customer service. Attitude affects all the areas of business like customers, staff, suppliers and investors. If having positive attitude customer want to spend money on product and vice versa. But in the 21st century economic conditions should be taken along with positive attitude to perform well in market (Makin, 2009). Location: Location is one of the important social factors in business. Before starting business companies take surveys to analyse the focus of customers in that area. Main purpose of these surveys is to identify the right product for right area. For instance a report published by Kaelble, S (2007) in Indiana business magazine that how Toyota moved forward within ten years when it set up its plants in southwest Indiana. Culture: Culture has great impact on any business as it refers to the values, norms, and beliefs adopted over a period of time through mutual interaction and the history (Morrison, 2006).Impact of cultural globalisation effect the business as due to cultural difference between England and United States Toyota is selling left hand drive cars while in England is right hand (Levitt 1983). Strategy for Business Effectiveness of Toyota: All the above factors play a major role in determine the competitiveness of an organisation. The ability of an organisation is to forecast the business environment and drafting alternative plans for business growth and stability is important. If the history of Toyota will be taken into account company has done well in its career of production and quality but in past few years Toyota has got many problems in its manufacturing system and lost billions of dollars. Based on their policy of Customer First and sustaining the position Toyota came up with a strategy to recall its cars to give their customers extra care. According to report published by newspaper Toyota recalled its millions of cars because of defects in their manufacturing and decided to give their money back to the customer, for not telling their customer of these defects in the vehicles. Though it has affected company economically but Toyota has gained loyalty of his customer (www.bbc.co.uk). So, Toyota strategy has significant impact on social behaviour of the customer in the line of future demands. Report published by BBC on July (2009) Apart from that Toyota had done great for its future plans; company is manufacturing eco-friendly hybrid cars and achieving great efficiency. Company believes that eco-cars can have a positive impact on the environment only if they are widely used. According to company statement: TMC will continue to improve the fuel efficiency of its conventional combustion-engine cars, which account for the majority of its sales, while raising performance ,reducing costs and expanding the companys product lineup(Costea, 2010). Therefore the eco-friendly strategy is basically the co-corporate social responsibility. this type of strategy increasing company awareness as according to research in USA and Australia 84% consumers demanding the goods if the company responding the positively to the environment, then they said we buy the products. So, eco-friendly cars of Toyota are diverting attention of consumers socially. In North America Toyota has strategy of increase product sale by targeting young customers. Consumers has loyalty about the brand and company has got great reputation in term of quality and low prices thats why in 2002 one-fourth of its profit was gained from North America. Toyota has best manufacturing facility and great relations with their suppliers. Moreover company is losing money in Europe but their new strategy is to manufacture more cars on regional scale and compete in formula one race. According to Rugman and Collinson, (2006) Toyota is a mainly efficient and competent company at outsourcing for production and with other suppliers by enjoying friendly and long term relationship. Toyota has made sustainable mobility and environmental leadership core principles of its business strategy for future growth. As part of this strategy, Toyota is pursuing a broad range of technologies, each representing a step forward in reducing the environmental impact of automobiles. Alternative fuel sources, such as bio fuels, will play key role and these cars made to lower down environmental damage and co2 emission (www.toyota.eu). That is why Toyota brand is also diverting attention of market because of its quality and reputations. These factors help Toyota to boost their economy socially in future sales. Writer thinks that the interesting thing in Toyota is to know about the secret of its success in the market. According to Morgan Liker (2006) hard work, educated staff and their motivational teamwork within specific process are the key success factors of Toyota. This process is so called sociotechnical system (STS), was introduces in 1970 and 1980. STS describe itself as the secret behind the success of an organisation is to know about social and technical factor and their impact on external environment. Companys production system is also developed from STS which bring company in that position that it can achieve its external goals like social, economic and technological goals (Rodrick, D.2007).