PESTLE Analysis of Toyota

This document presents an analysis of Toyota's business environment using the PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) framework. It aims to identify key factors influencing the company's operations and decision-making processes. The analysis will provide insights into Toyota's strengths and weaknesses in the global market, enabling managers to formulate effective plans and strategies for gaining a competitive advantage.

Management and Operations

Table of Contents
INTRODUCTION....................................................................................................................... 3
TASK 1....................................................................................................................................... 3
1.1 Introduction to the organisation and its management structure......................................3
1.2.Definition of managers and leaders .............................................................................4
1.3 Difference between Management and Leadership ........................................................4
1.5 Comparison of functions of managers and leaders........................................................6
1.6 Characteristics of a leader and a manager......................................................................6
1.7 Theories of management along with strength and weakness..........................................7
1.8Strengths and Weaknesses of different approaches to leadership ...................................8
1.9 Conclusions on how managers and leaders have made an impact on the organisation...9
TASK 2....................................................................................................................................... 9
2.1 Introduction to Key Operations of Toyota.....................................................................9
2.2 Definition of all Operations and the Roles and Responsibilities of Managers towards these
Functions.......................................................................................................................... 10
2.3 Key Operational Approaches to Operation Management and their Values for Toyota.11
2.4 Evaluation of Impact of External Business Environment Factors on Toyota...............12
2.5 Approaches to Leadership and Management to Improve Operational Efficiencies......15
2.6 Conclusion and Recommendation for future improvements .......................................15
CONCLUSION.......................................................................................................................... 16
REFERENCES.......................................................................................................................... 17

INTRODUCTION
Operations management is defined as an administration of whole business functions and
activities so that the higher efficiency and effectiveness can be received within the firm.
Furthermore, it is a process in which the materials are converted into goods and services. The
organisation is taken for this report is Toyota which was established in the year of 1933 by the
Kiichiro Toyoda. The headquarters of the company is located in Aichi, Japan. This report will
discuss about the characteristics of leaders and managers for handling the business operations in
effective manner. Impact of external factors on the decision-making process of the business firm
along with the improvement in efficiencies so that the business objectives can be achieved by the
firm in allotted time period will also covered in this report.
TASK 1
1.1 Introduction to the organisation and its management structure
Toyota is a multinational company which provides services in automotive sector. The
main functions of the firms are designing, developing, marketing and selling of the motor cars.
According to the report of production department, the company has sold approx. 10 million
vehicles in the year of 2012. which was the highest record in the world. There are more than
3,50,000 employees who are providing their services in the firm (Childe, 2011). The company is
doing their operational activities in 28 nations across the world and sell their vehicles in 150
nations. In current scenario, every firm uses organisational structure so that the functions and
operations can be done in efficient manner even Toyota has also their organisational structure
which is briefly explained as under:
 Global Hierarchy: As the company is rapidly growing in the world but they still uses
the centralise system in their workplace in which regional head and the head of production
department have to provide report to the headquarter that are located in Japan.
 Geographic division: At this time, the management of cited firm has divided their
structure in eight divisions such as Japan, China Asia, Africa, America etc.
 Product-based division: The company is using management structure which is based on
product divisions and these are divided in four parts such as Lexus international, Toyota no.1,
no.2 and unit centre. With the help of these the brand image and product line of the firm are
regularly increasing.

1.2.Definition of managers and leaders
Managers - Manager is the one who has responsibility of controlling and administering
the whole activities of departments and staff members who are working within the firm. The
major responsibility of the manager is to follow the legislations of health and safety.
Leaders - Leader is the person who has knowledge and skills to handle the staff
members. They have a long time experience which is used by them for guiding their team
members so that they perform their duties in right manner.
1.3 Difference between Management and Leadership
Bases Management Leadership
Definition Management is defined as the discipline
in which the workers have to perform
their duties in given structure.
Whereas, this is a quality which is used
for influencing the behaviour of
employees so that desired targets can
be achieved.
Structure Management is used for formal and
organised group only.
Whereas, leadership is used in both
formal and informal groups.
Focus Management have to focus on managing
the work in effective manner.
Leadership is concerned with focusing
on the performance level of their team
members so that the desired task can be
completed in the given time period.
1.4 Comparison of roles of managers and leaders
Roles of Managers
Some roles which are played by the managers in Toyota are given as under:
 Informational role – It is connected with various informations which are provided by
them so that the desired objectives can be achieved in proper manner. Decision-making role – managers have duty to handle the top position of the
organisation so they have responsibility of making decisions so that goals will be
achieved within given time period.

 Role as a time manager: In the case of Toyota, Managers have various kind of roles and
responsibilities which are given by them to their employees and set the targets for every
department and employees so that the desired objectives can be achieved in the given
time period. Hence, it can be said that Managers have all the duties of planning,
organising and controlling the tasks. The managers of Toyota firm are performing their
duties in proper manner due to which the firm is rapidly growing in the marketplace.
Roles of leaders
 Training – They have duty to provide effective and efficient training to the team
members through which the given task will be achieved. Motivation – If the task is hard and team members are unable to perform the task then
leaders have duty to motivate them and divide the complex task into small components
so that the task will be completed in short time period.
 Role as a group leader: The main role of leaders is to provide guidance and supports to
their team members. In the case of Toyota, leaders are working as a bridge in the firm so
that link can be formulated between managers and staff members and they also provide
motivation to their team members so that the desired goals can be achieved in future.
Some roles of managers and leaders in different situations
 Stable Situation: In this kind, company should focus on their plans, policies and rules or
regulations so that the firm can easily recovers from this kind of situations. In the context
of Toyota, the managers still believe in the policies and regulations so that the better
result can be received in future. During the recession, company have also followed the
same polices and regulations due to which the dispute and conflicts of the employees
were easily overcome (Griffin, 2013). In this condition the managers play the role of
proper planning therefore the situation can be easily controlled. Leaders also supports
their team members through motivating them during the task so that the vehicles can be
easily manufactured as per the market trends.
 Moderate Situation: In this type of situation, every organisation wants that the
difficulties or challenges can be easily overcome for this, they have prepared their staff
members so that the firm can easily recovering from this kind of situations. In the case of
Toyota, they focus on the advancement of technologies through which they can provide
best products to their customers. In this, the managers of firm play a crucial role so that

the product can be manufactured by the firm in updated manner. Managers have duty to
provide proper training and development programmes so that employees can easily
understand the present market trends and technologies. On the other hand, Leaders have
to provide tasks to their staff members as per their skills and knowledge so that they can
better perform on the given task.
 Fast Changing Situation: In this time, the competition is rapidly growing in the market
and needs of the customers are changing day by day. For this, every firm has to know the
needs and wants of customers and make products accordingly. In the context of Toyota,
the management of firm believes in providing better products and services to their
customers therefore, they analyse the needs of customers and add features in the products
accordingly, Whereas, the leaders always motivate their team members to adopt changes
in the firm which are regularly implemented by the managers.
1.5 Comparison of functions of managers and leaders
Functions of managers
Managers should set proper targets for each division of the firm through which every
employee of the organisation can understand their duties and desired targets will be achieved in
given time period.
 Managers of Toyota have to make effective plans so that targets can be completed in
desired manner.
 They have duty to provide training programmes to the staff members so that required
skills and strength can be implemented in the staff members. In the context of Toyota,
their managers perform duties in an effective manner so that the firm has maintained a
good brand image in the mind set of customers.
Functions of leaders
 Major function of leaders of Toyota is that, they have to handle all the conflicts and
issues which arises in the workplace so that a healthy environment will be created and
employees will perform their duties with full devotion.
 Leaders have to make proper communication structure and work as a bridge between
employees and managers of firm so that the important kind of information of managers can be
communicated to the employees in proper manner.

1.6 Characteristics of a leader and a manager.
Manager
Managers have to focus on the expected outcomes so that staff members can perform
their duties in right manner. They also measure performance level of their employees so that
weakness or strength can be easily determined and they have all the skills so that they can easily
handles the difficulties which are happens in the workplace.
Characteristics of Leader
Leaders have good communication skills so that they can easily define the roles and
responsibilities to their team members on the basis of their skills and knowledge. They provide
their guidance and supports so that the team members can perform their duties with motivation
level.
1.7 Theories of management along with strength and weakness
Every firm has to face various kind of problems such as recession, crises and many other
small issues. In recent time, the firm has also faced various kind of these kind of difficulties and
from overcoming them, There are some kind of theories which can be used by the managers of
Toyota for handling above situations.
Classical Management theory: According to this theory, the workers expected from the
management that their physical and economical needs can be fulfilled. In the context of Toyota,
their management follows a rapidly changing situation in which they want from their worker to
perform well. They are believing in productivity instead of needs and wants of any staff member
(Khan,2011).
Strength Weakness
It is used for enhancing the productiveness of
organisation so that better position can be
gained in market.
While, it not focuses on the needs and wants of
employees due to which performance level and
motivation of them are reduced.
Behavioural theory along with Strength and management
It emphasizes on maintaining relationship with staff members and also determines the
needs and wants of them. It also provide duty to make effective relations with staff members so
that major conflicts of workplace can be resolved in easy manner.
Strength Weakness

It helps the staff members of firm in getting
opportunity of promotion in their position.
All members can't be treated in equal manner
so it can encourage those employees for
making conflicts in the workplace.
System theory of management
This theory of management states that managers of organisation have to make an open
system in the workplace so that given task will be performed in systematic manner. some
strength and weaknesses of this theory are given below:
Strength Weakness
It encourage the employees to perform better
so that the profitability and productivity of
firm can be enhanced.
It does not gave any kind of specific
management theory to the managers due to
which the productivity of employees will be
reduced.
1.8Strengths and Weaknesses of different approaches to leadership
Situational Leadership : This theory includes quality of leaders in which they have to
adopt changes so that the firm can easily achieve the goals. In the context of Toyota, Leaders
adopt this theory as per the working experience of the employee. The leaders have to adopt
changes according to situations and take necessary actions so that the employees can perform
their duties in well manner.
Strength Weaknesses
This theory motivate the employees because it
assists the managers in decision-making.
This approach can't be used for long time
period. According to this theory, workers
perform their duties as per the current
situations.
This theory emphasizes on clearly define the
roles and responsibilities to the employees.
As this theory is based on the current situations
due to which the conflicts can be increased due
to confusion in the staff members.
Contingency leadership: It emphasizes on the both importance such as personality of
leaders and the situations in which they perform their duties. In the workplace of Toyota, there

are two type of leaders such as first one is task oriented and the other play supportive role
within the firm. So that, it can be said that leaders always help the firms in handling the above
situations and also provide better outcomes in the allotted time period.
Strength Weaknesses
This theory have no need of effective
performance of employees in whole situation.
It provides more difficulty to the leaders when
they select such kind of theory or approach.
It provides effective paths to the leaders so
that future growth can easily achieved by the
firm.
It is also called reactive because it can't supports
the organisation in many situations which makes
challenges some time for the managers.
System Leadership: It is an another theory which enables the leaders to develop some
situations through which the employees can enhance their efficiency level (Luo,2012). It also
assists the leaders in overcome the issues and conflicts which arises in the situations.
Strength Weaknesses
By using this theory, leaders understand the
complexity of environment and makes an
effectively structure in workplace so that, the
goals can be achieved in allotted time period.
This theory is very complicated in nature
because it includes various parameters which
makes confusion in the team members that
impacts on their working behaviour in adverse
manner.
Analysis – From the above theories of leadership, Leaders can adopt systematic leadership
approach in their workplace through which employees of firm will be aware from their roles and
responsibilities. With the help of this, leaders of Toyota will be able in enhancing the
productivity and profitability of organisation. This theory will also directs them in taking support
of their team members in decision-making so that effective decisions will be made which will
helpful in betterment of firm.
1.9 Conclusions on how managers and leaders have made an impact on the organisation
Thus, it have been concluded from the above tasks that the theories and approaches of
leadership and management provide different outcomes when they make changes in the
organisational structure. The decision-making of the management is performed as per the
requirements of the firm. If leaders and managers perform their duties with cooperation and

coordination, then they can easily achieve best outcomes in future with the help of this they will
easily remove the negative impacts from the firm. It also motivates the employees due to which
they provide their best performance for achieving the present objectives of firm. It has been
recommended that Leaders and managers of organisation should make an effective structure of
communication in the workplace so that employees will be aware regarding their duties and
perform on the given task in better manner.
TASK 2
2.1 Introduction to Key Operations of Toyota
Definition of operations management – It can be considered as an essential part of any
organisation which provides assistance to management in controlling supervision and regulating
the production process. It also helps the management in reducing the cost of product so that the
business operations can be performed in the given systematic manner.
Key operations can be defined as the main activities of a firm which are carried out by
them for achieving the revenue and profitability. In addition to this, operations are also called
activities which have to perform by the firm for producing the high quality products so that the
needs and wants of customers can be fulfilled in easy manner. As Toyota is rapidly growing firm
in the market because it performs its business operations successfully at global level for this,
they have created various departments in their workplace such as distribution and control
system, quality management, layout design etc.
2.2 Definition of all Operations and the Roles and Responsibilities of Managers towards these
Functions
The operations of Toyota along with roles and responsibilities of managers are given as
under
Designing Goods and Services:
This kind of operation is related with designing of products of Toyota. It also adds the
new features in new products if any requirement has identified. This function is performed by
the Research and development department of firm (Steurer,2012). Roles and responsibility of
managers for this operations are given as under:

 It provides obligations to the managers to identify the resources are managed effectively
or ineffectively by the departments.
 Ensuring that design team adopt and make effective use of the products provided. It gave obligations upon the management for monitoring and regulating the production
department so that better outcomes can be received in future.
Control and Distribution System:
This is also an important function of the Toyota which has responsibilities for controlling
and regulating the production department so that proper distribution of the products and services
can be possible through which the demand and needs of market will also fulfilled. The roles and
duties for this activity are given as under:
 It provides responsibility to the managers for monitoring the distribution process of
goods through which the equal distribution can be done. It also provides responsibility to the managers to deliver the products at right place and
right time.
Quality Management:
This operation is related with managing the quality of goods so that the products and
services can be provided in proper quality to the customers. For this, roles and responsibilities of
managers are as follows:
 Examine the quality of products through which they can able in delivering goods at
proper quality.
 Organising training and development programmes to their employees so that quality
products can be manufactured and supplied in the market (Karnani,2011).
2.3 Key Operational Approaches to Operation Management and their Values for Toyota
There are some effective approaches of operations management which can be used by the
managers of Toyota are given as under:
Total Quality Management:
It emphasizes on the overall improvement in quality of products and services which are
provided by the Toyota and improvements are also created through taking feedbacks from the
clients and users. By using this approach, company can able in making products which fulfil the
needs of customers the importance of this approach are given as under:
 Customer Satisfaction:

The main objective of the firm is to improve the quality of products and services which
can be possible by using this approach. With the help of this, the satisfaction level of customer
will have increased which is achieved by them by using goods of Toyota. Process Control:
It also helps the production department in monitoring and supervising the whole process
of production department due to which the improvement will easily implemented in the process
and quality of goods and services will be delivered in the market.
Six Sigma:
In this process, some tools and techniques are included through which the defects can be
removed and time will be saved. This process includes measurement of the product,
improvement and validation of the activities. The value of this process for Toyota are given as
under:
 Saves Time:
By using this approach, the production department will be able in producing goods
within given time period which automatically remove the unessential activities from the
production process.
 Reduction of Defects:
By adopting such approach, The managers of cited firm can easily identify the defects and errors
which are occurring in the process of production and removing them accordingly.
Business objectives – It is an expectation of managers which have decided by them to
achieve. It also involves a proper time frame and resource so that goals or objectives can be
achieved in proper manner. For example- Managers of Toyota have decided to provide better
quality of products in the market so that competitive advantage can be gained in proper manner.
For achieving this objective in allotted time period, Managers have adopted lean manufacturing
system in the production department so that quality products can be delivered in the marketplace
Importance of operations management in achievement of business objectives –
Operations management plays very crucial role in the achievement of desired goals and
objectives of a firm. It provides helps to managers to define proper roles and responsibilities to
the staff members so that employees can perform their duties and resources of firm will be
utilised in proper manner. With the help of this, managers can easily measure the performance

level of their employees and provide training to the lower performers of firm so that operational
efficiencies of firm will be improved in a short time period.
2.4 Evaluation of Impact of External Business Environment Factors on Toyota
There are various external macro-environmental factors which influences the business
operations of Toyota. For identifying these factors, Management of Toyota have to conduct a
PEST analysis which is given as under:
Illustration 1: PEST analysis of Toyota
(Source: PEST analysis of Toyota, 2017)
 Political Factors:
These factors are connected with the political situations of a nation. As Toyota is a
multinational firm which performs their business functions across the world. The changes in the
policies of government has influences the business operations of Toyota (Lund-Thomsen, 2011).
For example- the Australian government passes a commission which targeted the large foreign
industries. Due to this reason, the management of Toyota has decided to stop their business
operations in Australia in the year of 2017.
 Economical Factors:
These factors comprise of inflation rate, Exchange rates of money etc. These factors provide
positive and negative impact on the business operations of Toyota. For example, the fall of
Japanese currency will have negatively influenced the revenue and profitability of firm.

 Social Factors:
It includes various elements such as culture, nature, taste and preferences of customers.
As Toyota is an automotive industry so they have to face various challenges from the society
such as pollution, environment friendly vehicles etc. Hence, the management of Toyota have to
focus on making electric and hybrid cars (Oberholzer-Gee,2012). By this, they will overcome
such kind of negative influences.
 Technological Factors:
These factors are related with advancement of technology which influences the business
operations of firm. In the context of Toyota, there are various factors which influencing
negatively on the business operations such as rising of e-commerce, online websites. By
considering these factors, the management can grab the opportunities of improving their
products, spare parts etc.
Corporate social responsibility : It is an important concept of management which encourages
the managers to make interrelations with social and environmental factors so that economical
and social benefits can be provided by the firm to the society. It also influences on the operations
of firm so that managers have duty to consider these factor essentially so that better decisions
can be made. It also provides guidance to the managers to make effective quality of products and
reduce the cost of product so that products and services of firm can be provided to customers in
affordable prices.
Some Major benefits of CSR which can gained by the firm, environment and society are
given as below:
Environmental Society Organisation
With the help of this,
managers of organisation will
be able in recycling the waste
of Toyota in proper manner
which will be advantageous to
the environment.
It encourages the managers to
contribute some donation in
charitable trusts which will
helpful for them in
maintaining good image of
organisation in mindset of
customers.
When cost of product will be
reduced then managers will be
able in providing good
products in affordable prices at
the marketplace which will be
beneficial for the firm in
enhancing their productivity
and profitability.

Values- Managers of cited firm believes in the value of firm which encourages them in
making good image of firm in front of their customers. It also gave better ideas to the managers
so that goals will be achieved in the allotted time period.
Ethics –Managers of Toyota when following ethics and principles will help them to gave
proper direction to their employees which restrict them not to indulge in any illegal activities.
The stakeholders of Toyota and their expectations are:
1. Shareholders expected from the Toyota to get better returns of their invested money
2. Government expectations from the company are that the firm should pay tax duties on
the regular basis.
3. Suppliers expected from the company that the managers should demand more quantity of
raw material from them so that better interrelationship can be created with organisation.
4. Customers are expected from the firm that they should consider the quality and cost of
products so that their needs and wants will be fulfil in a short time period.
2.5 Approaches to Leadership and Management to Improve Operational Efficiencies
The managers of Toyota can use the Decision theory approach for improving their
operational efficiencies
The description of this approach is as under:
Scientific Management Theory:
It is a theory which says that the work should be done in simplest or best manner so that
the productivity of firm can be increased. In the context of Toyota, the managers have to identify
the situations and make changes accordingly so that the employees can perform their task in easy
manner.
For this, an approach of leadership can be used by the managers of Toyota which is given
as under:
Transformational Theory of Leadership: It is an approach which helps the managers
in identifying the requirements of every employee who are working in the firm. As the managers
of Toyota follows the moderate technology in which they have to provide help to their worker so

that their personal and professional goals can be achieved. By doing this, the motivation level of
employees are also enhanced due to which the operational efficiency of firm is easily achieved.
2.6 Conclusion and Recommendation for future improvements
As per the above task, it can be said that the management of business operation is very
important because it helps the firm in achieving success and growth in the market. For this
purpose, a large number of leadership and management approaches are used by the managers of
firm. Furthermore, approaches and principles are also used by the management for enhancing the
efficiency of the firm.
CONCLUSION
It has been concluded from the above report that operations management is an important
part for providing growth and success to the firm. It also assists the managers for increasing the
efficiency level of the business operations so that the firm can gets profitability in future.
Different kind of approaches of operations management are also used for improving the
efficiency of operations which helps the firm in achieving competitive advantage in the global
markets. It has been recommended to the managers of firm that they should make focus on
macro-environmental factors which can provide negative impact on the business operations and
decision-making of firm. With the help of this, they will be able in formulating effective plans
and strategies for firm which will be beneficial for them in gaining competitive advantage.

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