Contemporary Development in Business and Management

This report discusses the influence of external environment on Toyota and the effectiveness of Toyota's response to disruptive technological innovations.

Contemporary
Development in Business
and Management

Table of Contents
Contemporary Development in Business and Management.........................................................................1
Introduction.................................................................................................................................................3
Task 1..........................................................................................................................................................3
Influence of External environment on Toyota.........................................................................................3
Task 2..........................................................................................................................................................6
Technological disruption and disruptive innovation................................................................................6
Effectiveness of Toyota’s response to disruptive technological innovations...........................................7
Recommendations.....................................................................................................................................11
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13

Introduction
Business development involves processes as well as tasks for development and
implementation of growth opportunities within as well as in between organizations. Basically, it
is a subset of fields’ commerce, business and organizational theories. It denotes long term values
for organization in the form of relationship with market along with customers. It is a
accumulation of initiatives, activities and ideas which aims forward for enhancing overall
business. This report is based on Toyota; it is a sixth largest organization in the world by revenue
and largest automotive manufacturer. It is a Japanese multinational automotive manufacturer
which was founded on August 28, 1937 by Kiichiro Toyoda and is headquartered in Toyota City,
Japan. This report deals with manufacturing of motor vehicles, trailers as well as semi-trailers. It
furnishes overview of external influences along with their significance to organization.
Moreover, it also provides details about technological disruption as well as disruptive innovation
and way in which policies & decision making impacts organization. Effectiveness of response of
organization is also illustrated and enhancement in this.
Task 1
Influence of External environment on Toyota
Toyota is the market leader within sales of hydrogen fuel cell vehicles and hybrid electric
vehicles and it is largest organization to inspire mass market through the adoption of hybrid
methodology within their services. They furnish their services around the world and deals with
financing, banking and leasing with around 3, 70,870 employees. It is a leading player within
automobile with an aim to build better communities for an enhanced society. Influence of the
Toyota on automobile industries cannot be avoided. For this, it is essential that Toyota takes into
consideration external environment by usage of Pestle analysis. By taking into account these
factors, executives of organization can formulate strategies as well as policies for developing
their position within a evolving market. The Pestle analysis has been illustrated below:
Political Factors
Toyota has expanded in different countries for meeting the demands of their existing
customers. Political stability of Government has crucial role within the ways organisation carry
out their operations and sustain in the market. This stability will minimise the pressure on

organisation while they are rendering their operations and will lead to growth. Toyota is carrying
out their manufacturing in all most every country; therefore government of United Kingdom
needs to formulate free trade agreement in between Japan as well as other nations where they are
furnishing their services. This will lead to improvised opportunity in form of market penetration.
Toyota has faced decline in their operations, in 2017 after United States of America government
withdraw from Trans-Pacific partnership trade.
Depending on uncertainties with respect to Brexit Negotiation along with development of
Hung Parliament, the results obtained will lead to huge impact on manufacturing of Toyota UK.
As per Campbell (2017), investments within car industry of UK has declined by £322m which
shows that organisation will cancel any kind of spending after exit from EU. According to Jack
(2019), cars which were manufactured in United Kingdom dropped by around 45% in April 2019
with respect to last year. Around 90% of cars are manufactured by Toyota in United Kingdom. If
EU does not agree upon free trade with United Kingdom then it may lead to increased cost along
with tariffs and decline in efficiency.
Economic factors
In 2008, due to financial crisis car industry has been a leading industry within United
Kingdom. The UK has recorded around 1.3 million exports of car within 2015 which denotes
around 12% of total exports are carried out by auto mobile industry in UK. At present scenario,
Brexit is the major problem as per SMMT (Society of Motor Manufacturers and Traders) for
automobile industry and it will also impact sustainability as well as growth of economy of UK.
Another factor which contributes in economic factors is interest rates, inflation and
economic growth. They have a significant impact within economy of country as demands of
products are dependent on this specific factor. If economy is growing in a faster pace then it will
lead to higher demands of services as well as products but if opposite happens then there will be
decline in needs and requirements of services. This means that market is not able to attract more
number of buyers as well as investors. Free trade which been occurred in between UK and EU
has provided them with great opportunities for development and growth but due to Brexit
referendum as well as uncertainty will create an pessimistic impact on operations of Toyota in
Europe. Due to Brexit referendum, there can be decline within economic conditions of United
Kingdom but with respect t ongoing negotiation between EU and UK, there might be affirmative
impact if single market trade is allowed.

Social factors
It has crucial role with respect to what is being developed and who are the probable or
target customers. This factor comprises of lifestyle, customs and values which define society.
Enhanced customer awareness as well as implications of driving vehicle is very crucial factor
which must be acknowledged through automobile manufacturers. Toyota is addressing this factor
through manufacturing of electric as well as hybrid cars. As there exists wide range of wealth
gap which leads to threat within Toyota’s targeted market as this targeted market is the middle
class. There is an imperative requirement for Toyota for producing reasonable as well as
affordable cars so that middle class people can have their services. This will assist them to have
higher demands and make sure that they are leaders of car manufacturing industry within United
Kingdom.
Technological Factors
For maintaining their status within a leading industry i.e. car manufacturing they have to
make use of technological advancements for development. Toyota is a leading manufacturer and
have exceeded with around 23 hybrid cars in more than countries around the world. With the
enhancement in the usage of mobile technology, there is advantage to modify as well as
modernise their vehicles. Various other car manufacturer organisations like Ford motors, Honda,
GM and Nissan have been evolving in terms of usage through which they can have competitive
edge within market for one other like conventional cars have been changed by electric, hybrid
and solar models.
Legal Factors
The legal policies have crucial role in ways organisation carries their operations.
Government is liable to formulate certain set of policies which firms needs to follow up.
Alterations within laws, regulations and other factors like fluctuations in VAT, political
instability, exchange rates and various others affects the business as well as economy of country.
UK government has customer protection or consumer law which aims at protection of
employment, consumer and labour laws which are liable to dictate the ways in which employees
must be treated in working premises like minimum wage act. By the introduction of consumer
act on October 1, 2015, it is likely that there can be fluctuations within local consumer law.

Along with this, government of UK have to stick with laws formulated by EU for certain
moment of time. As negotiations are carried out among UK and EU with respect to single market
operations, then Toyota will be furnishing their operations in a normal manner.
Environmental influence
All manufacturing organisations of UK are liable to duty of care to the environment while
carrying out their manufacturing as well as production of their goods. Government is given
instructions to car manufacturing industries to produce cars which are environment friendly as
well as minimise the waste which is produced while carrying out their entire processes. This will
not only create affirmative impact on environment but also this will reduce wastage of raw
material for Toyota which might be used in some other activities. This will lead to reduction in
global warming. They need to have strategies by which they can bring eco-friendly vehicles
within market at affordable prices.
Mission of Toyota is to provide effective life style for humans and this can be attained by
development of new technologies and finding out the ways through which it can be done also
minimise emission of carbon dioxide in the air, recycling process and protection of natural
resources which will create a positive impact on overall environment. Toyota has an option for
bringing in fuel efficient as well as environment friendly cars due to reduction in global oil
reserves. This was utilised within production of Toyota Prius that is a Hybrid car and is liable to
both fuel as well as electric. At present around 7 hybrid models are present within UK.
Task 2
Technological disruption and disruptive innovation
Technology is responsible for the ways in which organisation furnish their operations. In
present scenario, there have been continuous technological advancements within automobile
industry. The automobile industry has been reshaped themselves with the usage of evolved
technologies from production of steam engines to electric cars. Along with this, cars are
manufactured with high speed, luxurious as well as well equipped with respect to past vehicles.
Technological disruption refers to enhanced or entire fresh technology which have replaced an
existing technology. It is basically designed to succeed identical technology which already exists
and creates a new industry.

As per Clayton (2013), they have brought term disruptive technology, the technologies
have been separated their new technologies into disruptive and sustainable. Sustaining
technology depends on improvements within existent technologies but they there are certain
problems associated with this like they do not appeals to more audiences and cannot be feasible
within evolving world. On the other hand technological disruption is low-end in which
organisation enters within exiting market and makes use of improvised models so that overall
efficiency can be improvised. Its impact is on low end market as it is not profitable. An example
can be taken to understand this like in 1960’s Toyota brought into the market of North America
Corona model at low end of market but very soon within the market similar models were brought
in by other organisations (such as Nissan, Mazda and Honda) which lead to decrease in profit
margin.
Toyota delivers there services at low margins, this enabled General Motors (manufacturer
of cars) to avoid disruption as they were focusing on quality of products. Toyota brought in
within the market other innovation, Toyota Echo which lead them to attract customers of other
organisations to themselves as quality along with reasonable prices were offered by them. At
present scenario, Toyota is facing disruptive technologies from other manufacturers within
market like Chinese car maker, Kia and Hyundai. When technological disruption exists within
business environment, then this leads to creation of fresh market. Toyota is responsible for
creation of new market through invention of electric cars and hybrid vehicles. Along with this,
there have been disruptive innovations which comprises of hydrogen fuel cars, robotic cars,
hybrid cars and many others. This disruptive innovation has lead to creation of a new market.
Lots of disruptive technologies have been evolved within automobile industry. In the
history, steam engines were used within cars; with a disruption diesel as well as petrol cars were
introduced. At present scenario, there also exists a hybrid vehicle within automobile industry.
This industry is looking forward to other disruption that is solar as well as electric engines.
Totota needs to focus on disruptive innovations so that they can stay ahead from their
competitors and keep the trend of evolution within this industry.
Effectiveness of Toyota’s response to disruptive technological innovations
The ways in which organization takes in disruptions within innovations in technology is
challenging for management of developed organizations. There is a probability that disruption

can take a firm to greater heights and might destroy their business completely. Apart from this,
disruptions may take years to take place like technological innovations such as robot maids,
flying cars, etc. looks threatening. It has been observed that both of them lead to wastage of
money as well as time. Therefore, it is essential for management to ensure the uncertain
transitions from one technology to other. Toyota has established them as a initiator for
environmental friendly technology but they are still working hard to bring in the market more
eco friendly and sustainable vehicles. Toyota have formulated environmental challenge for 2050
to attain a zero impact on environment and deliver affirmative environmental benefits. Along
with this other automobile manufacturers are also working to bring in new innovation in their
products for an example Audi has a console which can replaced as well as removed just like a
tablet. BMW is making use of ultrasonic technologies for prediction for finding out a space
within a parking area and it will be released in around 2030. Along with this, there will be
flexible side panels; car can be turned into a playhouse, information sensitive applications and
social media. These are some of disruptive innovations which organizations are planning to bring
in within certain moment of time.
On October 2016, Toyota had made announcement with respect to launch of robot named
Kirobo Mini which will be able to fit into cup holder of car and will carry out interactions with
drivers while they are on a long distance journey so that they can be alert as well as awake.
Robot will be of 4 inches approximately 10 cm tall who will be able to maintain eye contact
when sat on a cup holder and gives the signal when conversation will be carried out with a driver
as per management of Toyota. Along with this, there will also be a cuddly accomplice who is
always hands-on for heart-touching communication, even though it seems to be made of a ‘not-
very-cuddly plastic’ and unlikely to be able to move you with its eloquence skills. There will be
a built-in camera within a robot which will allow them to track the faces of individuals as well as
identify their emotions, along with the ways in which conversation is carried out depending on
mood of the driver. The purpose of Kirobo is keep driver engaged within long car journey, it will
enable them to understand and talk about general topics such as their likes, dislikes, etc. Even
Kirobo robot can give feedback to driver on the basis of way in which individual is driving a car.
Automobile manufacturers like General Motors, Audi, Mercedes Benz, Jaguar Land
Rover and many others have brought in the developed autonomous cars. For an instance General
Motors has manufactured Firebird which is self driven car. Toyota is making investment of

around $ 1 billion into the self-driving cars as well as robotics within few years with an aim to
improvise quality of life by providing continuous assistance. Kirobo is not similar to C-3PO (unit
protocol build to communicate with organics) but it is a response to way in which Toyota is
responding to digital disruption by taking into consideration artificial intelligence and robotics
within their cars.
Variations within weather conditions as well as climate is caused through pollution as
well as greenhouse gases within atmosphere that has brought in the exhaust fumes which has
became a major threat for life. Along with this, a basis of petroleum which is the main source for
vehicles is limitless. To address these problems Toyota is engaged in carrying out research and
development for broad range of eco-friendly cars. By production of eco-cars, Toyota aims at
widening the usage as well as improvises their contribution within protection of environment.
The evolutions within technology and worldwide expansion of organisations have
brought in ecological hazards. With respect to this, Toyota’s R&D department is working on
environmental technologies so that they can bring in innovations within market without harming
environment for addressing the ecological hazards. They are working for attaining higher
proficiency in terms of fuel within diesel vehicles, hybrid and gasoline vehicles. They are also
involved in promotion of alternative to gasoline such as hydrogen, electricity, etc. and vehicles
are altered for making use of these substitutes. Toyota believes in embracing eco-cars worldwide
so that they can have effectual contribution within protection of environment. For this Toyota is
preserving energy, adapting to fuel diversification along with manufacturing of eco-friendly
vehicles that will meet the demands of customers without creating negative impact on
environment.
Toyota is working on hybrid vehicles for matching the lifestyles of customers in diverse
conditions in unlike regions. For this, they have assembled a wide-ranging line-up, from
passenger vehicles to commercial vehicles. In January 2017, Toyota has attained sales around 10
million of hybrid vehicles worldwide. They will be contributing in environment protection by the
global adoption of hybrid vehicles. Management of Toyota is also trying to find out an approach
for fuel diversification. Each fuel substitute have certain positive and negatives. In addition to
this, policies associated with energy also vary from region and country. Toyota is engaged
diverse development activities as disruptive energy is becoming apparent. They have brought a
hydrogen fuel cell vehicle Mirai which emits water and is sold in California in 2017. Along with

this, they have brought in Well to Wheel CO2 which is an inclusive measure for emission of
carbon dioxide which will take into consideration the entire energy which is used by production
as well as extraction stages of initial energy sources by the vehicle in use.
Toyota looks at hybrid technology as a core and engages them in production of wide
range of development which includes plug-in hybrid, fuel cell and electric vehicles. They are
focusing on hybrid technology for next generation eco-cars. Toyota is developing Toyota Prius
which will be a complete electric car. In past, Toyota Prius was brought in as a complete hybrid
as a response to disruptive innovation. The efficiency of response of disruptive innovation of
Toyota can be seen through figures of sales. There is reduction within number of sales from 2009
to 2013 in Europe as there are conventional players within market who have moved towards low
cost as well as being more premium. Within 2015 and 2014, Toyota has lead to recover their
sales by introduction of two new models. But, they also did not create an affirmative influence as
they were not able to grow in faster pace as compared to the market. They are losing their market
shares and have been dropped 4% for the first time in the year 2009. They almost lost their title
of Asian brand in Europe to Nisan which was behind them by sales of 2.500.
In 2013, Toyota has brought in their new generation compact hatchback Auris which was
followed by a station wagon. This was the first hybrid model station wagon. The SUV and
RAV4 midsized crossover was altered by making use of modernised features in 2013. This
assisted them to regain their declining number of sales and match the level other competitor
Honda CR-V which has taken over RAV4 in 2012 and early 2013. In late 2011, Toyota has
redesigned their best-selling car Yaris whose sales was steady which lead to introduction of
hybrid version. This has taken up a rate near about 25% of total sales which have been incurred.
Within Europe, Yaris is one of the most successful; Asian car with over 3 million enhaced sales
from its introduction in 1999.
Toyota is working with Nippon Telegraph & Telephone and Microsoft for handling
digitalisation within their cars. An agreement has been signed among them for connecting car
with technology. The agreement occurred with an aim to improvise the telematics, data analysis
and data security within all Toyota cars. This team up will lead to high effectiveness as both
Toyota and NTT are looking forward to have maximum data from customers as cars have
became more connected. Microsoft have consent and given patent license to Toyota for using the
services provided Azure Cloud Technology. This will be devised for connecting the cars with

internet services thorugh which digitalisation process can be improvised. For this Toyota has
made a investment of around $ 1billion to their research institute. The mass market is open for
technology as well as price offered by autonomous vehicles with respect to what is taking them
back are regulators as it becomes difficult to re-think with respect to traffic laws, insurance as
well as safety.
Recommendations
From Pestle analysis as well as technological disruption and innovation, it has been
analysed that there exists various factors which are responsible for creating an impact on
operations of Toyota. There have been a lots of alterations within automotive industries within
last few years and for Toyota to be a leading car manufacturer needs to ensure that they have
effective strategies which will take time as well as money for training as well as development of
employees. The significance of team building and team work for formulation of essential goals
and objectives on the daily basis and make sure that they are attained. Toyota needs to identify
opportunities as well as threats from macro-environment. The executives along with
management need to build up policies and strategies for supporting the growth and stability of
business. They need to have a affirmative work culture by which they can attain continuous
improvements. With respect to this, Toyota can make use of Task culture by which teams can
focus on project they are working on. Along with this, the continuous improvement must
comprise of all the employees ranging from top to bottom employees so that effectiveness of
entire organisation can be enhanced. For this, they can make use of middle managers as agents
through which change can be derived. The reason behind this is that they act as middle men in
between junior workers as well as top management.
Due to the continuous evolving technologies, there is a strong impact on automobile
industry. It is necessary for Toyota to implement the technological advancements which will be
beneficial for them with respect to methods of production and ways in which cars are
manufactured. There is a gap in between manufacturing of electric cars and announcements with
respect to ban on diesel & petrol cars in United Kingdom by 2040, Toyota UK must penetrate the
production of electric cars as in market there exists very less competitors who produce these cars.
Toyota governs the hybrid cars within market so they have an opportunity to bring more efficient
as well as effective cars for development by usage of modern technologies.

Conclusion
From above report, it can be concluded that, there exists broad factors which creates a
strong impact on working of automobile vehicles. These factors are analysed by usage of Pestle
analysis. Organisation needs to follow these factors so that their operations are not affected by
this. Along with this, there must be continuous enhancement within operations and activities
carried out by organsiation with respect to technology so that they can gain profitability. This
will also lead to increase their number of customers, productivity as well as profitability. As
technology is evolving, management needs to make sure that they have there products which are
technologically advanced.

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Online
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