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For analysing macro environment pestle analysis has been performed which helps in evaluating business aspects from several ways:
Political: Toyota Motors is global company that operated their business in around 170 nations. This firm is accountable for a range of government regulations as well as political impacts. It is essential for the company to be aware of global impacts. The political fluctuations of any nation can impact the performance of Toyota Motors. The conflict among China and United Nation has also impacted Toyota. Political stability is essential to create favourable environment for the company to get success in various countries.
Economical: The automobile sector has become very competitive in the recent times. The high level of competitive firms is majorly impacting the revenue of Toyota. This also puts stress on the firm to enhance the research and development investment to stay updated with market innovation and changes (Fuertes et al, 2020). The company needs to perform good to satisfy the pReferences and needs of the customers in the global market. Because of trade war between china and US there is huge decline in the net profits and revenue of Toyota Motors. This also created the issues of financial uncertainty and insecurity that dropped the purchasing power of citizens. The economic recession ultimately influence the sales of the Toyota Motors.
Social: The Company has recalled vehicles because of faulty fuel pumps that costs the firm and also damaged their brand image in the minds of the customers. The global market is changing more rapidly; because of this customers are demanding eco-friendly vehicles. This is an opportunity for Toyota to produce more sustainable vehicles to attract large number of customers (Capobianco et al, 2021). The customers also prefer safety features in the vehicles to reduce the risk of uncertainties. The company has faced major challenge of safety measures that lead to lose the trust and loyalty of customers.
Technological: Toyota has hugely invested in research and development in the automotive industry. This is significant for the company to maintain innovation with various technological advancements. Toyota is the first company to launch hydrogen vehicles in the global market which is the future of automotive industry.
Legal: This factor impacts the automotive sector that limits needs as well as opportunities in the market to grow. The company recalled the faulty cars that outraged customers to file a class-action lawsuit against the firm that harmed their brand reputation the global market.
Environmental: This is essential for the company to maintain sustainability within its business operation globally (Hunger, 2020). Toyota Motors is the well-known business that maintained environmental challenges efficiently. The automobile company also laid out the future environmental plan for year 2050. This includes steps such as optimization of water, recycle sustainable society as well as plant cycle zero carbon emissions. Rules including quality, labour as well as markets to ensure an optimistic impact of the firm’s development. Some legal challenges may also cause the distraction within the external environment of the firm.
SWOT analysis
| Strengths | Weaknesses |
|---|---|
| International presence: The company operates in more than 150 countries, making it a geographically diverse automotive brand. | Dependence on particular markets: The company’s international presence is a benefit, but it also makes the firm vulnerable to economic downturns in specific regions. |
| Brand image: The company is known for quality and reliability. Its global reach allows it to tap into new markets and analyze customer preferences. | Product recalls: The company has faced various product recalls over the years, damaging its brand image and reliability. |
| Lean invention: The company has pioneered lean manufacturing, focusing on waste reduction and efficiency. This approach helps keep costs low while maintaining high-quality vehicles. | High cost structure: The firm's commitment to safety and quality results in a high cost structure compared to some competitors, which can limit pricing flexibility. |
| Technological advancements: The company leads in automobile innovation, particularly in the development of electric and hybrid vehicles. This helps maintain a competitive edge. | |
| Better financial position: The company consistently generates strong revenue and maintains healthy financials, ensuring long-term growth and resilience during economic downturns. |
| Threats | Opportunities |
|---|---|
| Competition: The automobile industry is highly competitive with numerous local and global players. The company must sustain profitability and market share to remain competitive. | Development in electric vehicles: The global shift toward electric vehicles presents an opportunity for the company to leverage its technological expertise and capture market share. |
| Economic downturns: The company is vulnerable to global recessions, which can significantly impact consumer spending on vehicles. | Emerging trends: The company can expand its business while maintaining sustainability to align with evolving consumer preferences. |
| Collaborations and partnerships: Forming strategic partnerships can help the firm gain benefits from new ventures and technological innovations. |
With the global recession looming, major economies like China and the US are experiencing a slowdown. Business Assignment Help The primary challenge for global firms is allocating limited resources effectively. For Toyota Motors, diversifying its product offerings, analyzing its supply chain, and optimizing costs are essential strategies. It is crucial for the company to prioritize innovation, agility, and customer focus to navigate the economic downturn successfully.".
Diversify portfolio: in the times of economic recessions, depending upon single market and product line can put the company in risk (Ku et al, 2020). For example, during the recession Toyota Motors can diversify their product line by launching fuel efficient vehicles to analyse the changing needs of customers as well as safeguard their profits. The company can explore new products into markets to improve resilience in economic turndown for the long term success.
Strengthen supply chain: The supply chain has faced major downturns in global recessions. It is essential for Toyota to quickly recognize as well as adapt to supply chain. In today’s ever-evolving world, the company can adapt advanced analytics as well as real-time data. These technological allow the company to mitigate the risk linked with supply chain. Toyota can establish redundant supply, diversify sourcing options as well as foster better relations with their suppliers to protect.
Optimize cost: Within the time of economic uncertainties, it is vital for the company to optimize the cost. Nevertheless, it is vital to strike the balance between cutting costs by lowering expense of product quality as well as customer satisfaction. The company should focus on streamlining its process by reducing waste and improve productivity. The company should encourage open communication with its suppliers to gain benefit agreement that can lower the cost with no compromise of quality (Henry, 2021). Toyota should have the ability to optimize their production procedures as well as negotiate its supplier though recessions.
Secure financial resources: The Company should focus on securing its financial resources to the changes of global recessions. The company can build cash reserves to take advantages to financial risks as it provides safety while fluctuations in revenue streams. This financial safety can facilitate company to maintain its operations during the time of economic stress.
The strategic plan for Toyota Motors is to provide standards for coordinating as well as conducting research, development as well as marketing activities across the automotive sector. This planning helps in improving the growth of new opportunities on the basis of recognition in the vehicle. Toyota needs direction and objectives to work and offer clear path. Strategic planning is a roadmap to get the companies objectives.
Mission: Toyota is a major leader in automotive sector that enhance the live around the globe with the safe as well as most sustainable ways of doing business. The company is committed to innovation, quality as well as maintain sustainability within its operations globally (Morgan and Liker, 2020). The company has faced challenges by engaging the skilled and talent workforce that helped them to get success in global marketplace with increased revenue. Toyota is developing mobility opportunities to make better vehicles.
Long term goals: This includes long term goals that allows company to determine its mission and values. Toyota Motors is planning to eliminate environmental issues in year 2050 that outline company’s long term goals to maintain sustainability within its business operations. The company’s international goal of turning out to be carbon neutral through the vehicle life cycle by year 2050 is to accomplish carbon neutrality (Fatima and Elbanna, 2020). The company is working to find new methods to make an optimistic impact on planet as well as society. The company is also seeking to reduce environmental impact by concentrating on enhancing circularity, water conservation, protecting biodiversity to build future with sustainability.
Short terms goals: These are specific goals that the firm aims to reach in several months or weeks. These short term goals helps the company to accomplish its long term goals. The company is focusing on reducing global average emissions from vehicles by year 2030. The company has also planned to achieve carbon neutrality for carbon emissions at international manufacturing plants by year 2035 (Tomlins et al, 2021). Toyota is also planning to improve water quality impact where water is discharges directly in river. The company has also set goals to establish the recycling system and battery collection globally by year 2030. Toyota is contributing to biodiversity conservation activities in partnering with NGOs and various other parties to maintain sustainability in its operations and increase its revenue.
Evaluation as well as revision: This helps company to revise goals, measure progress as well as evaluate requirements in changes. They also facilitate the company to analyse costs and advantages to proposed goals (Liker, 2021). The use of evaluation within decision making is a significant management method. Toyota’s strategic plan concentrates upon accomplishing continuous improvements, operational excellence as well as innovation in logistic and manufacturing sector. This helps the company to enhance its production processes, enhance quality, reduce waste and improve efficiency by maintaining sustainability within its business operations.
| Strategies | Meaning | Difference |
| Intended | These are the strategies that the company is willing to execute. These are taken out from strategic plan prepared by the top management team. The major goal of these strategies is to start the planning process to accomplish specific objectives. Toyota Motor’s pricing strategy is to offer value for money to its clients. The firm’s products are priced on the basis of high quality with affordable price. The company also offers various finance options as well as incentives to make their products more accessible to its customers. The company is planning to reduce the negative impact on the environment and planet from its operations. In order to enhance its possibility of realizing intended strategies, Toyota should be very precise and aware of its short and long-term goals. The company should also analyze various external factors to plan according to challenges they might face in achieving business objectives. Favorable market conditions and internal capabilities will help the firm to accomplish its objective with a competitive edge. | Intended strategies assist the company to execute the plans. On the other hand, emergent strategies are implemented by recognizing unexpected outcomes from the implementation of strategy and analyzing to implement these strategies in future plans. Realized strategies are the actual implementation of the strategic plan. |
| Emergent | These strategies are implemented by recognizing uncertain results from the execution of strategies as well as learning to incorporate uncertain results for future plans by implementing bottom-up strategy. The business environment is continuously changing, Toyota requires to be adaptive and flexible to gain advantage from various opportunities. Rigidness in plan highlights that Toyota should continue to proceed with the planned strategies regardless of change in the atmosphere. Nevertheless, various technological advancements, political changes, as well as various other factors can affect the company. | Intended strategy adapts a top-down method in management. However, emergent strategy adopts a bottom-up method of management. On the other hand, realized strategy is a final implementation of the plan. |
| Realised | A realized strategy is a mix of intended and emergent strategies. Realized strategy is actually followed by the firm. This facilitates the company to implement the strategy that is already planned in advance in the strategic plan. | Intended strategy implements a rigid method to operations which reduces its flexibility. Nevertheless, emergent strategy is chosen by many companies because of higher flexibility. On the other hand, realized strategy is an actual outcome of intended and emergent strategies. |
Balance score card
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Balance score card is a strategic planning approach that is used to recognize and enhance various internal operations and their outcomes in business. The balance score card includes measuring of 4 major elements of companies such as business process, learning and growth, customers as well as finance. This approach facilitate Toyota to gain information within a single report and use this information to improve future efficiency. This approach is used by the company to measure and offer feedbacks.
Customer perspective: This is gathered to analyse customer satisfaction with the price, quality as well as availability of products. Consumers give feedback on their satisfaction with purchase. The target market of company includes all segments such as mid 20s from retired people. This includes both females as well as males which depends on the specific car model (Rice, 2022). The company offer quality and reliability to its customers to satisfy their purchase. The company has also invested in its website to enhance the scope of live chats feature that helps them to handle the customer queries and reviews. The company focuses on customer centric culture that allow them to modify their products to satisfy customer’s preferences and demands.
Learning and growth: This element evaluates the firm’s compatibility in terms of training and development of its staff within rapidly changing changes in terms of tools and technologies. This allows company to grow their employees to gain competitive advantage in the global marketplace. With the advancement is technologies it is vital the Toyota to provide employees with learning programs to improve internal capabilities. Toyota is renowned for their problem solving such as Toyota Production system (TPS) that focuses on addressing as well as recognizing issues at all level of organization (Goyal, 2020). This encourage staff at all level to improve their skills and problem solving abilities. The company encourages innovation by empowering employees to implement and suggest changes within process. Company’s pioneered the implementation of hybrid electric cars with the focus on adopting technologies as well as sustainable solutions.
Business processes: This is analysed by evaluating the manufacturing of products. Operational management is analysed to track the delays, gaps, shortages and waste. It is crucial for Toyota to adapt the changes to survive in the competitive market. This key element assist the company to understand the effectiveness and efficiency of internal business procedures as well as sustaining technologies. Toyota’s executives takes time in on-boarding new hire to complete their internal process. The company also set time while introducing new product.
Financial data: This includes income, sales and expenses used by the company to understand financial performance (Hunger, 2020). The financial health of Toyota is crucial for long term success. This include operating income, revenue growth, return on equity as well as other measures. This goals can be accomplished by satisfying the requirements of all parties such as customers, stakeholders as well as suppliers.
Five force analysis analyse the external factors that might affect the company to gain competitive edge.
Competitive rivalry: This is high is automotive sector. This is evident from high investment in marketing and advertisements. The company competes with various competitors that differentiate through electronics, costs, fuel, design, brand reputation and other elements. The company needs to handle the competition by implementing various strategies.
Threat of new entrants: This is high in automotive industry which includes new innovation. This puts stress on Toyota to lower its price strategy and bring innovation within its products. The company should also invest on research and development to analyse the market trends. This will help the company to discourage new players in the market and enhance its profits.
Bargaining power of suppliers: This is low in automotive industry. There are range of suppliers such as electrical, cooling system, braking and fuel supply distributed all across the world (Lali and Chakor, 2023). To ensure an efficiency in supply chain, the company has integrated various vendors. Company’s operation management is designed to maintain its supply chain management measures for improving connections with suppliers to handle their bargaining power.
Threat of substitutes: This affects Toyota’s operations by competing with the products. It is easy for consumers to shift from Toyota to alternative products. The company should focus on being service oriented and understand the preference of its customers to increase the switching cost.
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Bargaining power of buyers: They have high demands to buy the best products available with minimum price available. This puts stress on Toyota’s revenue in long term. The company should focus on building huge customer base that will help them in streamlining production process and sales. The company should also focus on innovating its products and provide discounts to attract large number of customers.
Organization change is crucial for Toyota to survive in the rising competition in the global market. The major issue is leaders struggle to engage as well as motivate its employees with the change procedures. Toyota by clearly recognizing the change scope can focus on their efforts, reduce challenges and ensure implementation of process to adopt change efficiently. Global economic development is retracting in the past few years. The company needs to invest in large scale change to distinguish them in the global market. Toyota faced decline in sales and profits during the period of global recessions. In times of global recessions, Toyota face immense stress to cut cost and maintain revenue. During recession, this requires company to male strategic plan and understand financial analysis.
Cost reduction is vital for success of the company. Toyota should focus on reducing supply chain cost, this will help them to improve profitability, bottom line and gain competitive advantage. Cost realization also assist the company to enhance their effectiveness, operation optimization and customer satisfaction. This helps Toyota to manage risk associated with supply chain disturbance from global recessions (Fuertes et al, 2020). Toyota by reducing cost can build agility and resilience that help them to respond on uncertain events. The company can collaborate with suppliers to reduce costs by enhancing communication, recognizing areas of improvements and sharing information. This will help the company to streamline its operations, reduce waste as well as optimize supply chain. Transportation costs can be major expense in supply chain. Toyota by transportation optimization can reduce cost by enhancing delivery time as well as customer satisfaction.
The automotive sector is driven by few nations. Countries including China, Japan, India, US are the major stakeholders of Toyota. Any global recessions is countries can majorly impact the overall sector that slower the growth of company. During recession, different economic indicators including customer spending, employment rate, industrial production, business investment tends to decline. The company should focus on continuous improvements within its product designs and customer services to gain competitive edge in the global market. The company should invest in research and development to analyse the knowledge of market trends and shifts in customers’ preferences and trends (Bulturbayevich, 2021). This will help Toyota to modify its offering effectively with the changing situations. The company has emphasize the significance of future uncertainties. The company should also focus on diversifying its products portfolio according to the preferences of customers that will help the company to face uncertain events.
Due to global recession in various countries leads to changes in regulatory policies within each country that can harm the operations of the companies. This includes set of process, policies, technologies and controls that the company needs to comply with both local and international standards to grow their market share. The company should regularly analyse the rules and policies of countries on the basis of their market expansion. This will help Toyota to analyse new standards and norms of each country.
Technology is rapidly rising in automotive sector with the global recessions taking place worldwide. Advancement in customer preferences and artificial intelligence is giving emphasize on develop autonomous vehicles. The use of AI and machine learning is at growing demand from the companies. The company should also use data analytics to optimize their business operations to improve customer experience. This will help to guide self-driving vehicles, handle fleets as well as help customers for improving safety (Toyota, 2023). The company should also focus on sustainability by investing green initiatives including hydrogen and biofuels to reduce the negative impact from carbon footprints. Artificial intelligence makes Toyota cost effective, efficiency as well as safe. Self-driving vehicles are growing the automobile sector. Human machine system that makes the vehicles most interactive to experience safety.
This plays a crucial role in retaining and attracting talent. Values and cultures allows the companies to make a place to work efficiently. Company making decisions, implement new process and confront challenges that needs to change in culture. Cost cutting measures in global recessions can harm the talent and culture within Toyota. This large scale change can also bring uncertainty with employees and organisational culture. Toyota should focus on building better culture can engage and attract employees to gain competitive edge in the global market. It is significant for Toyota to make sure that employees and all stakeholder should have clear information of change process and goals for smooth working. The company should take time to explain the requirement of change by engaging employees in open communication to raise their concerns. It is significant for Toyota to prepare budget and resources allocation to meet the demand of uncertain events and changes within the operations. The company should also provide training & development to its employees that will help them to adapt change efficiently.
This is strategy of growth and expansion followed by the companies. This includes introducing new products in the market that assist company to identify new opportunities, increase sales, expand market and enhance profits. During global recessions, this strategy helps the company to meet unforeseen changes in the market. The company needs to extensive market research while diversifying their products in the market. This can be opted by company to establish strong brand image in the minds of the customers. The company can also collaborate with other similar automotive companies to expand their products in new markets to increase its market share and sales. This also helps the company to face challenges of global uncertainties with diversified portfolio. This is a risk reducing strategy that includes products, locations, services and markets Toyota’s business portfolio. This also helps the company to limit the influence of market changes and revenue. Toyota by adopting this strategy can accomplish high margins. The company should also focus on new innovation and technologies to attract large number of customers. Toyota by maintain sustainability within its new product line can gain trust and loyalty among customers and improve their diversification strategy in the global market.
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