Financial and Economic Literacy for Managers

Running head: FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Financial and Economic Literacy for Managers
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1FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to question 2:......................................................................................................................4
Answer to question 3:......................................................................................................................6
Answer to Question 4:.....................................................................................................................8
Answer to Question 5:...................................................................................................................12
Part a:.........................................................................................................................................12
Part b:.........................................................................................................................................15
Part c:.........................................................................................................................................15
References:....................................................................................................................................16
Appendices:...................................................................................................................................18

2FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Answer to Question 1:
Introduction:
Structure Conduct and Performance Paradigm (SCP) is one of the analytical framework,
which is utilized by the entrepreneurs in order to find out the relation between the market
structure through analyzing the market performance and conducting market research of a said
business entity (Ralston et al. 2015). For better understanding of the same, this report is
considering Toyota, which is one of the largest automobile manufacturer in the world arena.
Through this report, analysis of the chosen firm in terms of the SCP will be conducting in order
to trace the factors that has influenced the business performance and potential to influence the
future endeavors of the same. Additionally, this report will trace the growth strategy of the
Toyota Car Company and globalization of the same.
Incorporating SCP in Toyota Car Company:
Elements of paradigm are Structure, Conduct and Performance that define the public policies of
the firm. Structure is the set of those variables those are potential to affect the behavior of the
business entity under different market condition. Conduct is the way according to which sellers
and buyers behave among themselves, whereas, performance is measured through comparison of
the particular firm’s business performance with the industry in terms of different ratios and
efficiency (Anh et al. 2014). Incorporating the SCP model within the Toyota Car Company, it
can be seen that the chosen firm operates in a highly competitive market, which is oligopoly in
nature. Under the collusive pricing strategy, firms practice predatory pricing policy in order to
achieve maximum possible market share that can generate higher amount of revenue as well as
profit too. Toyota operate in such a market, where it has to compete against a large variety of

3FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
firms which operate under differentiated cost structure and has different electronics, brand
image, fuel efficiency and other variables with the their products. Thus, market where Toyota
operate is highly competitive in nature (Muller 2014). On the other hand, car market has higher
number of operators and low switching cost that allow the buyers to shift from one brand to
another one swiftly. Thus the bargaining power of the buyers is high and then it comes to the
suppliers’ then, moderate population of the same and low forward integration of the suppliers in
the market makes it a weak force in the market (Tamasy 2017). Under the low switching cost and
moderate substitution availability makes the substitution a moderate force in the market.
Growth strategy and globalization:
As it can be seen that is one of the oldest car manufacturer and over the years it has
diversified its business strategy for different region. For instance, European market of Toyota
utilize the merger and acquisition policy so as to acquire the loss making car manufacturing
firms and thus gains higher amount of market share. Depending upon the unique industrial base
of the European region and low efficient productivity it has enhanced the productivity of the firm
(Chen and Midler 2016). In case of US market, Toyota largely focus on the fuel efficient car and
for the Australian market it utilize the mass production principal so as to keep the price of the
final product reasonable. Through maintain Corporate Social Responsibility the firm maintains a
good brand image in different region of the world and through globalization channel the brand
has traded essential technologies in different market that has enabled it to achieve competitive
advantage over the other brands.
Conclusion: