Impact of Globalisation on Toyota Motors, Concept of Demand and Supply, Supply Side Policies of UK Government

Running Head: Financial & Economic Literacy
FINANCE AND ECONOMICS

Financial & Economic Literacy 1
Question 1
Introduction...........................................................................................................................................2
Impact of globalisation on Toyota Motors.............................................................................................2
Structure, Conduct and Performance paradigm (SCP)...........................................................................2
Application of SCP by Toyota Car Company...........................................................................................3
Conclusion.............................................................................................................................................3

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Introduction:
Toyota Motor Corporations is a Japanese company that belongs to an automobile industry.
The company has achieved a global leadership in the car manufacturing industry through its
consistent performance. The company has successfully adopted the generic and intensive
strategies towards its growth and development. The major reason behind the leading
performance of the company is its monopolistic operations system since it has already
achieved a dominant position in the market place in the areas of car exportation.
Impact of globalisation on Toyota Motors:
In order to achieve the global leadership in the car manufacturing industry, the company has
adopted the most effective approach called globalisation. The globalisation phenomenon has
allowed the company to take its business to the international boundaries so as to achieve the
core purposes of growth and expansion. In the recent times, Toyota manufactures various
parts of the automobiles and sends such manufactured parts to United States for the purpose
of their assembly (Stearns, 2016).
Structure, Conduct and Performance paradigm (SCP)
Structure, Conduct and Performance paradigm (SCP) is an analytical framework that is used
by an economy to make sound relations among the three factors i.e. market structures, market
conduct and the market performance. The major elements of this theory are structure, conduct
and the performance. Structure is the collection of variables that are found relatively stable
over a period of time and influences the behaviour of sellers and buyers of the market.
Conduct defines the manner in which the buyers and sellers of the market behave amongst
themselves and with each other as well. Performance is measured by comparing the outcomes

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and results of different firms across the entire industry in various terms such as efficiency,
profitability. To measure the firm’s performance, different variables such as quality, quantity,
resource allocation and efficiency can be used.
Application of SCP by Toyota Car Company:
In order to achieve the maximum efficiency, profitability and growth of the business, Toyota
has also adopted the paradigm of structure, conduct and performance. This framework has
allowed the company to study the behaviour of its consumers in the market towards the
desired quality of the products. Generally the firms in the industry adopt the pricing policy of
cost plus profits. However, knowing to the price sensitivity of the consumers, Toyota has
adopted the pricing policy of price – cost = profits. The conduct element has allowed the
company to evaluate the behaviour and sensitivity of the consumers of Toyota brand. This
enables them to perform in the ways that can satisfy its customers in the best possible way.
Globalisation has allowed the company to make use of best technologies in the
manufacturing of its cars products and to utilise the best labour force across the world. Also,
because of globalisation the company has achieved a wide customer base in the international
market (Schifferes, 2007). The performance element of SCP paradigm has allowed the
company and its stakeholders to gauge its financial as well as non financial performance.
Conclusion:
From, the above study on Toyota Motors Corporation, it can be said that globalisation has
majorly contributed to the company’s success across the world. It has not only allowed the
company to reach the international market in search of growth and expansion motives but
also enabled the company to achieve global business leadership in the highly competitive
market.

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Question 2
Introduction...........................................................................................................................................4
Concept of demand and supply.............................................................................................................4
Practical illustrations of demand and supply function...........................................................................5
Opportunity cost to consumer’s demand for normal goods:................................................................7
Conclusion:............................................................................................................................................7
Introduction:
Economists define the term ‘demand’ as the quantity of products or services which the
consumers in market place are willing and able to purchase at the particular price. Supply of
any goods or services in the market is defined by economists as the quantity which the sellers
or providers of such goods or services are willing and able to sell at a particular price.
Consumer behaviour is a phenomenon of how the consumer units at individual level, firm
level or household level change their patterns of consumption of any goods or services to
fulfil their requirements and wants (Bouchaud, Farmer & Lillo, 2008). It primarily refers to
the consumer’s actions in the market and the underlying reasons of such actions.
Concept of demand and supply:
Generally, it is observed that the potential consumers tend to buy more units of a product
when it is available in the market at a low price. Therefore whenever, the price of a normal
good decrease in the market, its demand increases and when the price of such goods increase,
their demand automatically reduces. This phenomenon is called as law of demand in the
market. Generally, sellers are willing to sell their products at higher prices as it offers them
better profitability. In case of normal goods, the price and quantity supplied are positively
correlated as whenever the prices of goods increases, the supply for such goods also increase

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in the market place and when the prices fall, the supply also declines for such goods and
services. This relation between the price and quantity supplied is termed as law of supply.
Practical illustrations of demand and supply function
For example: The price of gasoline product, currently in the market, is £ 2 per gallon and at
this quantity 600 gallons of gasoline are demanded in the market. When the price per gallon
for the gasoline declines, it amounts to increase in quantity demanded for such product as
shown in the table below:
Quantity of Gallons
Demanded Price per gallon
1000.00 £ 1.00
800.00 £ 1.50
600.00 £ 2.00
400.00 £ 2.50
200.00 £ 3.00
0.00 200.00 400.00 600.00 800.00 1000.00
£-
£0.50
£1.00
£1.50
£2.00
£2.50
£3.00
Demand Curve of Gasoline Product
Figure 1: Graphical Representation of Demand Curve