Toyota Motor Corporation in Japan and All Over the World

MANAGING THE ORGANIZATION MANAGING THE ORGANIZATION 3 3 MANAGING THE ORGANIZATION Managing the Organization Name of the Student Name of the University Author Note Executive summary The following report has aimed at bringing out the market conditions of Toyota Motor Corporation in Japan and all over the world. Introduction 3 Toyota Motor Corporation – A Historical Overview 4 Corporate strategy and structure of Toyota Motor Corporation 5 Stakeholder information and management 12 Place and value of Toyota in Stock Exchange in the last five years 14 Five Year Competitor analysis

Running head: MANAGING THE ORGANIZATION
Managing the Organization
Name of the Student
Name of the University
Author Note

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Executive summary
The following report has aimed at bringing out the market conditions of Toyota Motor
Corporation in Japan and all over the world. It is one considered one of the most successful and
reputable car companies in the world. It operates in several countries in different continents. The
overview of the organization has been discussed in this report. The hierarchical changes have
been brought out to measure the significance of the success story of Toyota. The environmental
analysis has been done on the company based on both the internal and external business
environments. The different challenges that the company faces in the competitive business
environment have been gone through as well. The ways they can deal with all these challenges
have been recommended. The financial performance of the company has been described through
proper analysis. The financial performance of the company in the last five years has been quite
extraordinary. The initiatives of Toyota in catering to environmental sustainability have been
noted down. The rise of hybrid vehicles by Toyota is found to be one of the most crucial factors
for the growth of the company. Therefore, their commitment to protect the environment is indeed
praiseworthy and this is thir main weapon to deal with challenges in the automotive industry.

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Table of Contents
Introduction......................................................................................................................................3
Toyota Motor Corporation – A Historical Overview......................................................................4
Corporate strategy and structure of Toyota Motor Corporation......................................................5
Stakeholder information and management....................................................................................12
Place and value of Toyota in Stock Exchange in the last five years.............................................14
Five Year Competitor analysis......................................................................................................17
Analysis of the environmental factors...........................................................................................19
Internal environment analysis....................................................................................................19
Value Chain Analysis of Toyota................................................................................................21
External environment analysis...................................................................................................22
Porters 5 Forces Analysis..........................................................................................................22
Pestle Analysis...........................................................................................................................24
Recommendations and Conclusion................................................................................................26
References and Bibliography.........................................................................................................29

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Introduction
The purpose of the following paper is to discuss how the Toyota Motor Corporation
operates its business in the automotive industry. The company is one of the most successful and
reputable companies in their industry. This paper will analyze the business operations of the
company and the problems they face regarding achieving their aims. The automotive industry
has become very much challenging in recent times. Toyota has a sterling reputation for
innovating new environment-friendly cars as a part of its corporate social responsibility. The
company has been regarded as one of the most sustainable car companies in the world for a long
time now. In the recent times, the concept of looking after the environment since the
environment is in great danger indeed. This has become a headache for most companies but
Toyota has set an example in front of the whole world on how to conduct their operations
properly. The environmental analysis of the company will be done in this paper, including the
macro ecological and micro environmental analysis.
The competitor analysis will also be conducted in the paper since it is one of the crucial
aspects to finding out the limitations of Toyota Motor Corporation. The company is an integral
part of the Toyota Group, one of the largest conglomerate company groups in the world. The
stand of the company within Ireland and the European Union will also be described in the paper
as well. Therefore, the growth of the company from the financial aspects will also have to be
called down in this paper as well. The corporate strategy of the company will be analyzed to
identify how Toyota Motor Corporation will cope up with the challenges. It is also very

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important to know about the shortcomings of the organization to suggest some ways of
recovering against those limitations.
Toyota Motor Corporation – A Historical Overview
As discussed earlier, Toyota Motor Corporation is one of the most famous companies in
Japan and the entire world as well. It is a multinational company in the automotive industry with
its headquarters situated at Aichi in Japan. The corporate structure of the Toyota Company is
beneficial for them to carry out their operations in a proper manner. More than 3 million
employees are working for Toyota all over the world (Toyota.com 2019). As for the financial
aspects, Toyota Motor Corporation was ranked as the sixth largest company in terms of the
revenue generation. This is why the company has gone on to focus on their innovation
perspectives within the automotive industry. The company was founded in the year 1937,
and it has continued its excellent reputation in the world as well (Toyota.com 2019). The
current chairman of the company is Takeshi Uchiyamada.
The company is known for its products like the hybrid electric vehicles, i.e. widely
regarded as one of the most sold product lines. The corporate governance structure and strategy
of the company is also helpful for them to carry out their business activities very smoothly. The
company is also interested in the motorsports, and they have their racing cars in the Formula 1
races. The company has expanded from Japan to regions like Europe, Australia and North
America (Toyota.com 2019). Though they have several competitors all over the world like
Volkswagen, Honda, Nissan, Ferrari, Mercedes, Audi and many more. However, they are still
on the way to chase their dreams by attaining their competitive advantage.

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Corporate strategy and structure of Toyota Motor Corporation
The corporate structure of Toyota will be discussed here. The divisional organizational
structure is being followed in Toyota. The company implemented some changes in the year 2013
and this proved to be very much useful for the welfare of the organization. The product recalls
they have always been a significant issue in the case of Toyota since they provide lots of
diversified products. This was completely the reflection of the safety issues in the organization.
This is why the changes had to be implemented within Toyota (Toyota.com 2019). The strong
hierarchy in Toyota has been centralized, and it is the central focus of the company to give
productive outcomes (Kotler et al. 2015). The corporate organizational structure of the company
was like the spoke-and-wheel structure. This was quite effective for the organization and
transparent relationship between management and employees was very fruitful as well. Still there
were some negative points in the organizational structure of the company as well. All the
decisions of the company had been made by the headquarters of Japan (Ghai and Vivian 2014).
This is why the production units did not have the proper type of communication between them.
So, it was quite essential to change this kind of organizational structure a well. The safety issues
could not be addressed due to these issues. This is why this organizational structure of the
company had to go through the change (Toyota.com 2019). The CEO of the company had also
agreed to implement this change in order to make the system work smoothly.

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Source: (Harrison, Freeman and Abreu 2015).
Apart from that the problem arose regarding the communication between the individual
business units of the organization. This was also a very big problem for the organization indeed.
After implementing the required changes, the company had brought in all the changes that would
make the process work with effectiveness. The new organizational structure of the company will
have all the three essential features of the industry. These are geographic divisions, global
hierarchy and product-based divisions (Toyota.com 2019). The global authority of the company
is still in action although it had been reorganized. However, the business unit chiefs and regional
chiefs have the power of making the decisions. The centralized decision making power has been
reduced as well (Crane, Matten and Spence 2019). The reports of the business units are sent to
Japan, the global headquarters.
The current geographic organizational structure of Toyota Motor Corporation consists of
eight main divisions. These divisions are Europe, North America, Japan, East Asia and Oceania,
Asia and Middle East, Africa, Latin America and Africa (Toyota.com 2019). The regional heads
of the Toyota Motor Corporation are given the responsibilities of judging the market conditions
and improve their product lines. The services of the organizations can also be improved through

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these regional units (Kotler et al. 2015). Thus the entire processes are carried out. The product-
based divisions of the company also give way for the betterment of the situation. There are
mainly four product-based divisions. These divisions are A) Lexus international, B) Unit Center,
C) Toyota no. 1 to conduct operations in Japan, North America and Europe and finally D)
Toyota no 2 to conduct services in all other regions of the world (Toyota.com 2019). The board
of directors supplies all the information to the middle management level, i.e. geographic
organizational structure.
Through the implementation of this new organizational structure, Toyota Motor
Corporation will be able to provide flexible service to its customers. Previously, there were many
problems that the company had faced to carry out their operations due to their organizational
structure (Cheng, Ioannou and Serafeim 2014). The board of directors has been able to shift the
power to their regional heads, and thus they can focus on local conditions in a better way (Kotler
et al. 2015). Through the implementation of this structure and co-operation from the board of
directors, Toyota Motor Corporation will be able to deliver the high quality products to all their
customers.
In this section, the topic of discussion will be the corporate strategies of the company.
Corporate policies are regarded as the most useful ones that help them to attain a competitive
advantage (Harrison, Freeman and Abreu 2015). The corporate strategies have to be
implemented by Toyota Motor Corporation by finding out their strengths and weaknesses in
different countries, including their home country. The organizational activities must be shaped in
a way so they can attain their aims and utilize these strategies to gain a competitive advantage.
The business plans should be made up by the marketing managers so they can implement all
those strategies for the company’s benefit. The business strategy of Toyota Motor Corporation is

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hence regarded as one of the best business strategies in the world, and many other companies in
this industry have tried to adopt some of these strategies for their benefits (Kotler et al. 2015).
The creative talents of the employees are utilized to the full by the managers of Toyota. The
mangers also look for the reduction of waste. This will cut down their operating costs as well
(Eskerod and Jepsen 2016). Apart from that, technology occupies a more significant part of their
corporate strategy.
Source: (Taylor 2014).
The company has always been in creating a huge range of products for its development. Indeed,
this has catered to its product line increase as well. They have shown interest in robotics as well
that has opened a new aspect of technology in front of them (Constantinescu, Mattoo and Ruta
2015). The managers of the organization are very much hard-working, and they always look for
the scopes through which Toyota Motor Corporation can attain the glory by overcoming the
difficulties. The business strategy of the company has made transformations into one of the best

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global leaders in business. The success level of the company had been achieved previously by
the innovation of ‘Jidoka’ and ‘Just in time production’ (Toyota.com 2019). Since then, the
company has been on track to gain organizational success in its real sense. Jidoka had been
innovated and put to use to identify if there is any defect in the transforming from one machine
to another one. The production of their vehicles goes on, and any defective problem is identified
at that time only. This is definitely one of the best processes that will help the organization in the
future as well (Kotler et al. 2015). The mechanism of Just in time production is about keeping all
the car parts ready whenever it is needed.
The global managers of the company believe that there are high scopes always to
improve the quality of their services. The organizational culture of Toyota Motor Corporation is
also very encouraging and friendly atmosphere works as the key for skill development
(Toyota.com 2019). Here the mangers of the company do not act to be stern bosses. On the
contrary, they are the caretakers of the employees in any difficult situation. The managers of the
company understand that it is not only about launching new products. Instead it is about
launching the products that will be perfect according to the quality as well (Kotler et al. 2018).
They have the confidence that they can produce many types of cars, but they are more interested
in producing more quality cars (Allen 2016). Quality is considered as the most important aspect
for them.

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Source: (Chang and Lin 2015).
This mentality of producing cars with quality has always helped them to take care of their
total quality management. The culture of the company relies on fixing their problems and focus
on the best quality at the first attempt only (Kotler et al. 2018). The processes of the company are
completely standardized and this has helped them a lot to achieve the overall growth in the recent
years. All these processes have helped the company to build up the stage for their success. This
has also focused on the improvement of their employees and empowering them properly. This
employee empowerment has contributed to establish a proper organizational culture for the
Toyota Motor Corporation. The managers of the company are quite critical of their performance
in this kind of competitive business environment (Kotler et al. 2018). They have always looked
up to the competition as a factor of improving their skills. The capacities of the organization are
developed, and they take care of the situations under challenging times as well. Organizational
learning is also the main focal point of their corporate strategy as well (Eaton et al. 2016). The
company finds out all their discrepancies and root causes for their failures within a short period
and works with their best efforts to control the problems with their reliable power of decision
making.

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Source: (Denison, Nieminen and Kotrba 2014).
One of the most entertaining parts of their organizational brilliance is their training and
development methods for employees. Technology implementation has always been one of the
strongest points for Toyota Motor Corporation. They provide exceptional quality training to
enhance the capabilities of their employees (Eaton et al. 2016). The managers of the organization
strongly believe that quality employees will always strive hard to build quality products. These
products will be quite beneficial for them to stay ahead of their competitors (Kotler et al. 2018).
As a part of its corporate culture, Toyota is very much focused on hiring the best people for their
needs. The quality development training will enhance their power to deliver the best products for
the company. Continuous improvement of the service process is also a critical part of their
corporate strategy (Král and Králová 2016). The maintenance of workplace ethics is also
embedded in their culture as well. This opens up the scope for the company in engaging with the
proper value creation. This will also increase the potential opportunities for the company to
engage with different types of operations (Zhikang 2017).

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Stakeholder information and management
The engagement and analysis of the stakeholders in the business propositions of Toyota
are very crucial factors. The success of the organization completely depends on the support they
get from their stakeholders (Kotler et al. 2018). It is essential to address and identify all the
stakeholders of the company. The interests and demands of the organization should be kept in
mind since the stakeholders are the pillars of success for an organization. Toyota Motor
Corporation focuses on its corporate social responsibility as they are one of the most successful
global firms in the world (Helfat 2015). The different stakeholders of the company are
employees, customers, investor groups, surrounding business environment and communities they
serve. So, Toyota has to be very much careful when they will deal with their business operations
within the competitive business industry (Král and Králová 2016).
Source: (Brickley, Smith and Zimmerman 2015).
The employees of Toyota will need the security of jobs, opportunities for their career
developments and fair practices in their workplace. As a part of the corporate social
responsibility strategy, the managers have put an immense priority on their customers as well.

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The company offers the best quality automobiles for their consumers, and they try to keep the
prices at a reasonable rate as well (Helfat 2015). They focus on the innovation of new products
through the mechanisms of the Toyota Way and Toyota Production System (TPS). The
efficiency of their services will be enhanced through this. Toyota has always responded to the
well being of the environmental factors and they will look to make sure that the company can
reduce the carbon footprints (Goetsch and Davis 2014). Otherwise, it will impact profoundly on
environmental sustainability through carbon emissions.
Toyota Motor Corporation will also be recycling of wastes through proper waste
management practices (Gürel and Tat 2017). The business communities of the company are also
interested in keeping a focus on the socio-economic development. Toyota has been successful in
fulfilling the demands of their communities (Helfat 2015). It has been done because of their
various support programs and engagements with the district. The education outreach programs
by the company have helped mostly in spreading education and eradicating literacy (Pettigrew
2014). The initiative was taken by Toyota named Go Safely has been a real instrument to
promote the safe driving capabilities for all the families using their cars (Goetsch and Davis
2014). Apart from that, Meals per Hour program by Toyota Motor Corporation has catered to
donate the food to the Food Bank. These initiatives have supported the communities in positive
ways.

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Source: (Pettigrew 2014).
Place and value of Toyota in Stock Exchange in the last five years
The company Toyota Motor Corporation has been able to gain a better place in the
Global Stock Exchange after the reorganization of its company structure. As the decisions were
made within the organization from the headquarters in a centralized manner, they faced some
losses (Helfat 2015). After this reorganization, Toyota has been able to increase its range of
profit as well. The revenue generation of Toyota has also increased in the last five fiscal years. In
the year 2014, the annual revenue collected by Toyota was around 25000 billion in the Japanese
Yen. In the coming years, revenue rates have increased every year (Strese et al. 2016). In 2015, it
went up to around 27000 billion Japanese Yen. Through this rate of increase, the current annual
revenue of the company is around 30000 billion Japanese Yen.

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Source: (Ahmady, Mehrpour and Nikooravesh 2016).
This proves that the organization has been making good profits in the recent times.
Toyota has been focusing more on improving their luxury brand car Lexus. In the year 2014, the
introduction of Lexus took place in the NX compact crossover SUV in Japan (Strese et al. 2016).
Then on the company has been making improvements in their marketing perspectives and this
have impacted on their overall financial performance as well (Helfat 2015). However, there has
been a decline of the numbers of vehicles produced by Toyota Motor Corporation. In the year
2014, the number of cars produced by Toyota was 9032 (Taylor 2014). On the contrary, the
figure has dropped down to 8985 in the year 2019. Still, Toyota has been able to use their ethical
perspectives to provide good quality cars to its customers (Helfat 2015). The numbers might
have declined due to the repetitive numbers of car calls. Toyota has also taken part in the car-
sharing experiment held at Grenoble in France in the year 2014. This campaign went on for three
years (Pettigrew 2014).

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Source: (Goetsch and Davis 2014).
The percentage of car sales has always remained very strong in Japan. In the future,
Toyota would like to invest more money in implementing the latest and advanced technology.
They have aimed at innovation in the field of making the conventional engines (Ahmady,
Mehrpour and Nikooravesh 2016). They are looking to provide the highly fuel efficient gasoline
engines that will be performed very well in terms of its thermal efficiency. Therefore, Toyota has
been very much successful as their new hybrid engines have been a great success. Apart from
that, their sales rates would also go up in a fantastic manner (Helfat 2015). They might reach the
annual growth with 35000 billion Japanese Yen in the next two years. Toyota also might look to
expand its core business in many ways as well. In the last five years, the sale of their hybrid cars
has gone on to at least 10 million (Pettigrew 2014). This has enabled them to gain massive
profits, indeed. Toyota has gained vast margins of profit in Japan with around 16,625,300 billion
Japanese Yen. After that, they have been able to make profits in North America and Asia. They
have gained revenue around 10,817,200 from Asia in the yar 2019 (Bloomfield 2017).

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Source: (Bloomfield 2017).
Five Year Competitor analysis
Toyota operates in a very highly competitive business environment. In the last few years,
several companies have proved to be their competitors by their efficiency and extreme quality of
their vehicles. This has been challenging for Toyota to deal with these car companies. Toyota has
invested a considerable amount of money on market research and studying the market structure
of the countries they are doing business. This is why they can provide a diversified product
portfolio in front of their customers (Bloomfield 2017). These various products include SUVs,
4WDs, hybrid cars, green vehicles and others. The production of Toyota sums up to 10 million
every year (Ahmady, Mehrpour and Nikooravesh 2016). The sharp image of Toyota helps them
to gain more public attention than their competitor companies like Mercedes Benz, Ford, Audi,
BMW, Honda and others (Cao et al. 2015).

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Mercedes Benz is one of the most luxurious brand names in the automotive industry.
There are strong links for this company with numerous celebrities. This company works as a part
of the Daimler AG. The diversified products of this company are buses, Lorries, luxury cars and
coaches (Bloomfield 2017). They focus on the continuous innovation process, along with
quality. They produce their vehicles with the use of technology. The quality of their products is
fantastic, and they prove to be a severe competitor to Toyota.
Source: (Winnubst 2017).
Another international competitor based in Germany for Toyota is Bayerische Motoren
Werke (BMW) (Ravanfar 2015). Their car sales have gone up in the last five years. They have
delivered 103,080 electric vehicles to their customers along with 2,463,526 automobiles. As per
the statistics, BMW is considered as the 12th car company in the world. BMW produces around
three brands. These are BMW, Mini and Rolls-Royce (Bloomfield 2017). The performance
models of these vehicles are regarded as quite efficient in the automotive industry.

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Ford is another competitor that has come up to be a challenge for Toyota in th last five
years. They have come up with their reputation as one of the best innovators. The headquarters
of Ford is located at Michigan in the United States (Sheth, Deshpande and Kardani 2014). They
produce automotive vehicles for commercial purpose aiming at the satisfaction of the customers
(Chang and Lin 2015). They have also focused on the reduction of carbon emission within the
environment. This is also a challenge for Toyota to deal with this since they have implemented
the R&D technology on their vehicles (Grochla and Szyperski 2018). It will help them to
improve the quality of their fuel efficiency, make the vehicles safer and cater to the demands of
their customers.
Nissan is another potential challenge for Toyota in the automobile industry. Nissan is the
largest producers of electric vehicles, and they have three brands (Ravanfar 2015). These brands
are Nissan, Datsun and Infiniti. They sell around 25,000 electric cars every year. This is their
strongest product in the market and Toyota has the aim of outshining this business performance
in the future. Nissan operates in around 191 countries, and they employ approximately 160,000
people. Nissan has developed the right amount of money on Research and Development (R&D)
technology (Sheth, Deshpande and Kardani 2014). Nissan also sells motorboats, pontoons,
cleaning boats and other marine products. So, this kind of diversified product portfolio will put
Toyota under challenge.
Analysis of the environmental factors
Internal environment analysis
Strengths

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 The human resource of the company is powerful, and the investment returns in the human
resources are stable indeed. The employees of the company are very much efficient and
skilful as well (Sheth, Deshpande and Kardani 2014).
 Toyota Motor Corporation has a powerful brand image around the world. The quality
convinces people of cars under the brand name of Toyota (Körner et al. 2015).
 The operating system of the company is powerful, and they are well reputed for their
transparent organizational culture (Winnubst 2017).
 The diversified product portfolio of the company is hybrid. They produce electric cars,
hybrid cars and many others. Their customers like these cars all over the world.
 The global supply chain of Toyota Motor Corporation is indeed very useful (Grochla and
Szyperski 2018). They have their manufacturing factories, many branch companies and
global outlets all around the world.
Weaknesses
 There are numerous suppliers of Toyota across the world. They have to depend on these
suppliers to get their works done (Benzer et al. 2017).
 Toyota has to face the challenge of negative publicity because of recalls for their large
vehicles. The rates of recalls are even higher in Toyota than others (Winnubst 2017).
 Toyota has successfully implemented the green vehicle technology, but they have not
been able to get a hold on the markets where this technology could be implemented
properly (Winnubst 2017).
 Apart from Lexus and Toyota, no other brand of Toyota Motor Corporation has been able
to gain positive brand recognition (Denison, Nieminen and Kotrba 2014).

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Opportunities
 People in several developing nations are very excited to buy cars. So, Toyota can expand
into developing countries of Asia, Europe and North America.
 Toyota has inclined its services for the safety of the environment. Numerous people think
to save the environment (Winnubst 2017). Perhaps this is the best time to make the
environment-friendly green vehicle technology of Toyota famous.
 The innovation of this green vehicle technology should be spread further, and this will
call for the overall focus of the Toyota Motor Corporation (Ravanfar 2015).
Threats
 The automotive industry has become very much competitive in recent times. There are
several competitors for Toyota in the market (Benzer et al. 2017). They have to confront
with substantial brand names like Hyundai, Ford, Mercedes, Volkswagen and others.
 The price of the raw materials is getting higher, and it has affected the production costs of
cars and its parts as well (Van Wart and Denhardt 2019). This is why it can be seen as a
negative aspect or challenge for the entire system.
 The exchange rate is also seen as a challenge for the organization. The revenue
generation is made but in foreign currency like dollar, pound, euro and others. When this
revenue is converted into yen (Japanese currency), Toyota realizes that they are running
in a lower margin of profit (Denison, Nieminen and Kotrba 2014).
Value Chain Analysis of Toyota
Inbound Logistics – The supply chain of the Toyota Company is very large in size. Materials
are received by the company from hundreds and thousands of suppliers, all of whom are located

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across various parts of the world. Inbound logistics is something that is handled by the company
with the greatest degree of efficiency and it has an international network of warehouses and
distribution centers that receives the various parts and materials from the suppliers (Benzer et al.
2017).
Outbound Logistics – Thousands of supplies and materials are shipped by the Toyota Company
from its wide network of distribution centers and warehouses on a daily basis. The Toyota
warehouse in Belgium in Europe is its largest distribution center. It is from here that materials
and parts are shipped by the company to its centers in other parts of Europe every single day
(Hogan and Coote 2014).
Operations – The operations of the Toyota Company are conducted in each and every part of the
world with the company being headquartered in the country of Japan. Customers of the company
are served by the large scale distribution network of Toyota (Van Wart and Denhardt 2019.
Marketing and Sales – It is important to remember that a company like Toyota is one that
makes use of traditional as well as present day forms of marketing and advertise in order to
promote its products quite effectively. The website of the company as well as the social media
pages of Toyota like Facebook, Twitter and Instagram are used quite extensively for the
promotion of its products. Motor shows and car races are events that are utilized by the Toyota
Company for the promotion of its products as well (Van Wart and Denhardt 2019).
External environment analysis
Porters 5 Forces Analysis
Competitive Rivalry – Toyota is a company that needs to deal with strong and competitive
forces. Most automotive firms tend to be quite aggressive in their approach to each other

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especially when competing in areas such as marketing and innovation. Toyota is also seen to
compete with firms of a diverse range, most of which tend to differentiate through electronics,
cost, style, fuel efficiency, brand image as well as various other types of variables. The threat of
competitive rivalry is quite high for Toyota and it needs to come up with comprehensive
strategies in order to deal with such rivalry suitably (Hogan and Coote 2014).
Bargaining Power of Customers – The bargaining power of customers is high for a company
like Toyota. What contributes to the bargaining power of customers is the low switching costs
that allow for customers to change over to other rival firms at no additional costs, the high
quality of information that is made available on websites of rival companies giving Toyota
customers the understandings that there are other options they can exercise and moderate
substitute availability which means that there are plenty of substitutes for Toyota cars in the
market (Brickly, Smith and Zimmerman 2015).
Bargaining Power of Suppliers – The bargaining power of suppliers is low for a company like
Toyota. This is largely because of the fact that there steady and considerate flow of suppliers that
creates the moderate force that in turn has a positive impact on the business operations of
Toyota. The bargaining power of suppliers is something that theoretically tends to be high when
there are few suppliers available at hand. It is also important to remember that suppliers lack the
forward integration as well as knowledge and even access to the type of materials that are made
use of by a company such as Toyota for its production and manufacturing work (Brickly, Smith
and Zimmerman 2015).
Threat of Substitution – Low switching costs, as discussed above implies that customers can
switch over to similar products made available by rival companies and which also means that

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there are plenty of substitutes for the products manufactured by Toyota in the market. Examples
include bicycles, public transport as well as various other forms of transport. As a consequence,
the threat of substitution for a company such as Toyota is high. It is easy for rival companies and
manufacturers to put up substitutes of the Toyota products, which customers can then make use
of a price that is lower than the prices offered by Toyota (Driskill 2018).
Threat of New Entry – The threat of new entry is also quite high for a company like Toyota.
This is because there are many companies in the world today in the global automotive industry,
that manufacture vehicles that are as good as if not better than the ones offered by Toyota and
there is plenty of scope and opportunity for new such companies to emerge onto the scene, given
the high demand for bikes, cars and bicycles in every part of the world (Driskill 2018).
Pestle Analysis
Political
Toyota Motor Corporation operates in several countries in various continents. The
decisions made by the governments affect the business operations of the company in multiple
ways (Van Wart and Denhardt 2019). The process of Brexit by the United Kingdom from the
European Union had hampered the business operations of Toyota in a big way.
Economic
The development of the organization depends mainly on the economic conditions of the
countries they are operating in. The changes in the HR policies have been quite impactful
because of several economic conditions in the host countries. The current market conditions have
been quite distressful for the recessions and economic inflations. Like many other companies,
they had to cut down their costs as well (Brickley, Smith and Zimmerman 2015). The HR

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policies of the company have been changed because of the issues like disposable income, growth
of GDP, rates of inflation and other factors (Driskill 2018). Things like staff relocation, layoffs,
recruitment policies and other factors have suffered setbacks as well.
Sociological
The activities of the Toyota Motor Corporation are included in the society, and it has
involved millions of people both directly and indirectly. The employees and marketing experts of
the company will have to understand the customer behaviors, ethical issues within the business
and other factors (Brickley, Smith and Zimmerman 2015). Despite the car recalls, Toyota has
always been able to act ethically and convince the customers to buy their cars. The regional
heads have acknowledged the cultural differences, and they have employed people from a similar
region so the work culture ca be very useful from every situation.
Technological
The use of technology has been an integral part of their innovation process. Toyota has to
implement the technology to achieve the greatness they have always been famous for (Hogan
and Coote 2014). The improvement in information and communication, technology
replacements, research funding, and finally making a higher amount of investments in the
technology are given most priority as well (Alvesson and Sveningsson 2015). Toyota also
provides all its employees with the best training to embrace the latest technological
advancements. Therefore, some changes have also been administered in this scenario (Brickley,
Smith and Zimmerman 2015). These are functional flexibility and numerical flexibility.
Environmental

26MANAGING THE ORGANIZATION
Environmental sustainability and caring for the environment have always been the biggest
inspiration for Toyota Motor Corporation. They have introduced green vehicle technology that
has catered to save the environment. They spend around $1.1 million every hour so they can
prevent the negative impact of the carbon footprints within the society. They also encourage all
their employees for energy conservation. This is how they will be able to regulate their customer
values indeed (Hogan and Coote 2014). The organizational learning for employees includes the
safety for the environment.
Legal
Toyota Motor Corporation should always abide by all the legislations of the home
country, and probable future legislation will have to be considered in this context. The managers
are also liable to work ethically and maintaining all the employment laws as well (Alvesson and
Sveningsson 2015). The company has its responsibilities in securing its position in different
countries through consumer protection and taxation laws, intellectual property laws and
intellectual regulations. These laws must be taken care of by the company, so they do not involve
in any future problems.
Recommendations and Conclusion
Some essential ways of improving business practices can be recommended for Toyota
Motor Corporation.
 Managers should engage in proper training for employees all around the world. It can be
arranged by the regional heads and carried out by the local experts.
 Toyota must realize that their market is expanding all over the world very rapidly. So,
they should not measure their profits by the number of cars being sold. They should

27MANAGING THE ORGANIZATION
consider the retention of their customers since they have numerous potential competitors
in the industry. They should focus more on the quality of their vehicles.
 Toyota must focus on the production of more hybrid cars, indeed. This will one of their
positive points to get the hold of their market share over their competitors. Keeping the
economic factor in the notice, Toyota must produce more hybrid cars. It is because of the
increasing price of oil. The average price of a Toyota vehicle is 28, 771 USD because of
the high price of fuel. Fuel efficient cars can certainly make the Toyota vehicles more
cost effective for customers (Van Wart and Denhardt 2019).
 Toyota is a giant in the Asian automotive industry. So, they can aim at getting more
customers in the Asian continent. As of the year of 2017, the company had produced as
many as 24 million units for the production of motor vehicles (Van Wart and Denhardt
2019).
 In the Asian market, Toyota can opt to bring into using more fuel-efficient vehicles
indeed.
 The use of technology can be implemented in a better manner to increase the overall
efficiency of the company.
On a concluding note, it can be said that the company Toyota Motor Corporation is one of
the most successful and reputable companies in the global automobile industry. They have
implemented technological innovations in the industry and this has been one of their most
significant positive points. Toyota is a worldwide leader in their industry, and they have
innovated many new hybrid and electric vehicles to protect their industry. The company has
contributed to the growth of this industry through its use of advanced technology. The
completion in the automotive sector is huge nowadays, and they have always been on the

28MANAGING THE ORGANIZATION
forefront of inventions. They have also focused on keeping the environment safe. The brand
image of Toyota is the main reason for its significant success in this industry. In this scenario,
they must be very calculative in dealing with their challenges in this industry so they can provide
better services and products to their customers. Toyota is also engaged in the corporate social
responsibility for the development of its brand image.

29MANAGING THE ORGANIZATION
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