Toyota Motor Company: External Factors and Strategic Analysis

This report provides a comprehensive analysis of Toyota Motor Company, examining its position within the automotive industry. The report begins with an overview of industry data, highlighting key business aspects, customer relationships, supplier networks, and competitor dynamics. It then employs strategic management tools such as SWOT analysis to identify strengths, weaknesses, opportunities, and threats. PESTLE analysis is used to assess the impact of political, economic, social, technological, legal, and environmental factors on the company. Furthermore, Porter's Five Forces model is applied to evaluate the competitive landscape, including the threat of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and rivalry among existing competitors. The analysis concludes by addressing key issues faced by Toyota, offering a reflection on the experience and providing relevant references.

Toyota Motor Company

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Industry data.................................................................................................................................1
Key business................................................................................................................................2
Customer, Suppliers, Competitor.................................................................................................2
SWOT analysis............................................................................................................................3
Pestle analysis..............................................................................................................................4
Porter five force model................................................................................................................5
Key issues faced by Toyota Motor .............................................................................................7
Conclusion.......................................................................................................................................7
PART 2............................................................................................................................................7
Reflection.........................................................................................................................................7
REFERENCES..............................................................................................................................10

INTRODUCTION
In this modern era, every business wants to stay ahead in the competition and therefore, it
is quite necessary for the company to keep analyse different factors which creates direct impact
upon the company. Therefore, in the same way, current report main aim is to describe all the
macro and micro factor that affect the business reputation. The chosen firm for this report is
Toyota Motor Company which is Japanese multinational firm and consider the sixth largest
company in world. The report is divided into two parts, in 1st part, report will describe industry
data, key business, its customers suppliers, and further describe how the external factor creates
impact upon the business by using model. Then the study uses SWOT analysis model in order to
determine the strength and weaknesses. Lastly report will analysis the competitive position of a
firm by using Porter five force model and also describe some management issues as well. The 2nd
part of the report is based upon reflection which describe the experience.
PART 1
Industry data
The automotive industry contribute the biggest part to raise UK economy such that more
than £82 billion and £20.2 billion value added. Not only this, more than 185000 people are also
directly employed in this sector (UK Automotive, 2019). Moreover, more than 30 manufacturers
also build more than 70 models of vehicles in UK with high skilled workers. In addition to this,
the EU represents that 85% of the UK' passengers car is import and in fact 10 out of 8 passengers
cars are produce in UK, these are further exported as well.
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As per the image, in UK, as per the Society of Motor Manufactures and Traders the
passengers cars sales is increases 1.3% and even year to year the sale if Ford is decreases 2.4%,
Mercedes Benz sales increases 0.8% and on the other side, BMW sales decreases up to 0.4%
(UK-Flash Report, sales volume, 2019). Moreover, from 2008, UK is consider one of the major
centre for engine manufacturing who have skilled employees as well as engineer.
Key business
For Toyota Motor Company, its production is included in Avensis, Corolla and Auris
models. Even in 2016, the company also have an two factories with more than 3500 employees
and thus, it has its global presence as well. Such that currently, the company is operating in
Poland, Portugal, Turkey, UK, some parts in Latin America, Africa, Asia, Ocenia, Middle East,
some Regional Headquarters etc. Therefore, such a strong presence shows that the company has
sustain its brand image at international level and on the other side, it also generate high revenue
and stay in this competition as well (Ngo and et.al., 2016).
Customer, Suppliers, Competitor
Customers: the company adhering the quality and provide quick responses to their
customers diverse needs and ever- changing demands. Therefore, its main target are higher
middle class people and upper class people. Toyota Motor also introduce customer relation
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activities through which it improving the products and provide best work quality by listening
their customers which is the fundamental concept behind it (Law, 2017). Moreover, when Toyota
Motor Co. Ltd and Toyota Motor Sales Co. Ltd merge the entire firm develop ways to enhance
customer satisfaction and through “Voice of the Customer” as an activity, company improve
both customer support as well as deliver the best quality of work too.
Suppliers: As Toyota is one of the second largest car manufactures and it has diverse
suppliers such that in Japan, the firm buys directly from 200 components and for Toyota's
Detroit Plant, Camry Model is the only supplier. Though the company also deals with
infortainment system, therefore, it has Microchip technology as a supplier which also work for
other companies as well (Athukorala and Veeramani, 2019). In addition to this, due to having an
efficient supply chain, Toyota expected one of the profitable car in the world.
Competitors: As the automobile industry have tough competition and in the same way,
Toyota also face good competition from their rivals such that it has 10 competitors i.e. Ford,
Hyundai Motor, Volkswagen, Nissan, Tesla, Mazda Motor, SOA and Crysler Honda and
General Motors.
SWOT analysis
SWOT analysis is the strategic management tool that helps to determine the strength,
weaknesses, opportunity and threat. For Toyota Motor, its strength and weaknesses are as
mention below:
Strength: It has the strong human resource who help to grow the company bigger and it
has around 350000 skilled human resource around the world. Further the company has
innovative organizational culture and it also set an example of good management system as well
(Wang and et.al., 2017). Toyota has a strong brand image and also use advance technology such
that it recently uses hi-fi technology which help to introduce hybrid cars and even its green
vehicle technology of Toyota also adorned customers at global level.
Weaknesses: Toyota is completely depend upon suppliers which is consider as a
weakness. Further the company also faces the negative publicity because in last few years,
Toyota's different vehicles tarnished its brand an even its financial performance also decline. On
the other side, it does not have a strong presence in emerging market which is also consider as a
weaknesses.
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Opportunity: For Toyota, establish its unit at developing nation consider as an
opportunity because demand of cars is high. Further, its green vehicle technology also gain
popularity in market and as a result, it provide an opportunity to get high revenue form this
innovation (Zhikang, 2017). As people are more concern for environment and if company start
producing the same will help to sustain the brand image at international level.
Threat: The biggest threat of the firm is its high competitor in the market and as the cost
of raw material is increasing and it directly increase the cost of end product too which is another
threat (Chen and et.al., 2015). Moreover, exchange threat is also leads to lower down the profit
and as a result, company's financial performance also decreases.
Pestle analysis
In order to determine the external factor, the company uses PESTLE analysis and for that
the firm uses this strategic model which is as mention below:
Political Factor: This factor deals with the factor such that political stability of the
country and policies introduce by the government. Further, if more flexible the trade agreement
are the more success and sale will generate that creates positive impact upon firm. On the other
side, the government also force automobile industry to innovate eco- friendly cars and that is
why, Toyota start working on this and as a result, it will help to generate best revenue sources.
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Illustration 1: PESTLE analysis
(Source: PESTLE analysis , 2018)

Economical Factor: It deals with the inflation rate, currency exchange rate and as the
firm establish its unit at different country, therefore, it faces issues. Such that if the inflation rate
is increases which means that customer are not spend high amount for purchasing the product
and as a result, it lower down the profitability (Pestle analysis, 2018). On the other side, if the
country have better economic status, then it will help to provide the chances of growth and also
generate different revenue sources too. Thus, the growth of world economy is consider a thing of
great concern for Toyota.
Social Factor: It is the belief of people and as there is a increase awareness and concern
about the environmental implication of driving a vehicle which is consider an important
tendency for the Toyota (Sharma and Aggarwal, 2019). Therefore, the quote firm also tries to
address the issue by focusing on electric and hybrid car. As people are different choices and
beliefs and therefore, it is quite necessary for the firm to use some innovative ideas in order to
meet the demand of customers.
Technological Factor: Technology is consider a boom for the Automobile industries and
even the rise trend of E- commerce is also consider the good trend for Toyota. Moreover, the
company also uses advance technology such that it shifts towards the mobility company in which
entire operation is based upon operations that helps to lead a company towards expansion and
also raise its overall brand image as well (Kumar and Maqbool, 2018).
Legal Factor: It deals with the laws and regulations by the company and when the firm
is expanding in other country, it is quite necessary to follow all the laws such that Employment
law, Company law and Minimum wages that helps in brand recognition. Moreover, Toyota is
also been producing the stuff by complying with all laws and regulation so that it will help to
sustain the brand image at international level.
Environmental Factor: Sudden climate Change is consider an opportunity for Toyota
and even the firm continuously uses its innovative ideas and also bring new technology with
relation to environment (Safari, Farhang and Rajabzadehyazdi, 2016). The company also
introduce green vehicle technology that helps to minimize the environment pollution and sustain
brand image as well.
Porter five force model
In order to determine the company's competitive position, Porter five force model is used
and this is as mention below:
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Threat of New Entrant (low): The company faces low threat of new entrants and it is so
because it require high amount of investment regarding capital and access to distribution
channels. Further, Toyota has its global presence and as a result, the company is vastly benefit
from economies of scale and as result, it leads to stay competitive in the market. Moreover, the
company has to follow different government policies which require strict licensing and some
legal requirement too before starting new business (Ahmadinia and Karim, 2016). Therefore,
Toyota faces low threat of new entrant.
Bargaining power of Suppliers (Moderate): It is so because the quoted firm have great
number of suppliers for its various parts and even the supplier switching cost for the auto- maker
is depend upon the type of suppliers as well as the nature of the product which Is delivered. As
the quoted firm uses just in time and lead production method as a key operational approaches,
suppliers are also located closely to manufacturing unit and as a result, they have greater
bargaining power.
Bargaining power of Buyers (high): the company have high bargaining power o buyers
because it is operate in different countries. Even the product differentiation within the industry is
also high that means that the buyers are not easily find the alternative firm who produce the
particular product (Li, 2018). But Toyota tackle the issues easily such that it mainly focus on the
innovation and differentiation in order to attract more buyers. For customers, product uniqueness
and quality is important and that is why, Toyota attract large number of customers as well.
Threat from its substitute (low): the quoted firm have high range of suppliers but
Toyota operates in automobile industry and it have very few substitute. Therefore, it means that
company has to provide high quality of products but they are expensive too, but customer did not
switch towards another firm because of having low threat of substitute . But Toyota also tackle
this situation by focusing on high quality of products and at lower price as compared to its rivals
and as a result, it enhance the base of customers too.
Rivalry among the existing player (high): The industry faces high competition form its
rivals such that it has number of competitors and most of them are large in size such that Honda,
Suzuki, Ford, Volkswagen, BMW etc. But Toyota maintain the leadership position at global
market especially in the terms of sales (Majid, 2017). On the other side, due to having brand
image and best quality of offered products, the company also tackle the rivalry among the
existing firm and easily attract wide range of customers too.
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Key issues faced by Toyota Motor
There are different key issues which the firm is currently faces some of them are as
mention:
 The sales of Toyota is sometimes decline and this is due to high competition in market
such that, there is a tough competition in Automobile industry and as a result, its high
pricing policy force customers to shift towards another brand.
 Moreover, the company is Asian auto maker but it is unable to stay ahead in the Chinese
market and as a result, the managers of the firm faces issues related to its brand
recognition.
 On the other side, the management also faces issues related to environment because with
the increasing awareness of environment at global level, a delay in Toyota's ability to
deliver the best eco- friendly vehicles consider some restrict or its future growth option.
 In addition to this, the company's manager also faces issues related to sudden change in
the government policy and also increase demand of advance technology (Nazir and
Shavarebi, 2019). Though it has skilled workforce, but still due to low availability of
resources, company did not easily uses advance technology in its working area.
Conclusion
By summing up above report it has been concluded that Toyota has its business unit at
different level and also consider the sixth largest firm as per its revenue generated yearly.
Moreover, the report also concluded that it has good customer base and have suppliers at
international level too. In addition to this, to determine company's strength, report concluded
through swot analysis that it has high skilled workforce and uses innovative ideas to lead a
business towards success. Further, using Pestle analysis, study concluded different external
factor that affect the business overall operations. Lastly, using Porter five force model, report
concluded its competitive position and evaluated some key issues as well.
PART 2
Reflection
The entire journey while researching on this topic is quite good because I learn so many
new thing. Such that I enhance my research skill because before that I did not know much about
the automobile industry and a particular company even. Through Internet resources, I enhance
my knowledge and come to know that automobile industry contribute the biggest share for the
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growth of the economy and even Toyota also consider second largest car manufacturer as it sold
more than six million car in 2019 as per secondary resources. Moreover, I also feel so excited
when I start this project but on the same side, I was nervous too because of having not enough
knowledge related to this industry. During this journey, I feel that I use ICT and as a result, I
enhance my knowledge relate to IT as well as communication.
As while, doing the project, I faces lots of issues and even my research is also not up to
the mark. But step by step I understand the concept and try to meet the actual criteria. Whenever
I face any issue, I try to find solution and even If I did not get any solution, I consult the same
with my colleagues and, they provide range of answers. Therefore, it develop team working
ability in me and I also realize hat working in a group will help to present range of views that
directly leads to variety of solutions.
In addition to this, through the entire project, I overcome my fear such that earlier I feel
so shy to talk with others but this project help me to get rid from it. I also start making decision
by myself and though, I also faces some issues related to research and IT but I usually find
different solutions and as a result, I develop problem solving skills, that will also help me in my
future projects as well as career too. As the entire project is based upon the models and theories
and as a result I also learn the same such that, for determining the strength and weaknesses,
SWOT analysis is used. On the other side, for identify some external factor, I uses PESTLE
analysis because these are the strategic management tool that helps to determine which micro
and macro factor affect the business in negative as well as positive way.
Not only this, I also used Porter Five force model in order to determine Toyota's
competitive position. Therefore, these all tool and models help me to enhance my knowledge and
as a result, it will also help me in my future as well. Therefore, the entire journey of my project is
so good and I also learn different facts and exact figures such that I raise my numeracy skills.
Overall, these competent also help me to develop future projects with good presentation as well.
Beside this, I also learn how to work with others because in my class, whenever I face any
problem, I contact to other student and they provide a range of solution which help me to
complete the project in better way and as a result, in return of this I also did the same. On the
other side, I also faces some issues related to presentation because I did not know the standard
format to present but, I take help of my friend and they assist me to identify and learn the
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standard format. As a result, I also learn this skill, thus, it shows that working with others is more
beneficial rather than doing work individual.
Therefore, I also learn that my overall experience with regard to this project is so good
because I learn and enhance my current knowledge which will be further used in my future as
well. Moreover, while working with others, I also enhance my communication skill i.e. both
verbal and written. Hence it clearly reflect that the journey assist me to grab more future
opportunities and completed the work in more better way. Hence, I further evaluated that this is
my first project related to models and automobile industry because earlier I did not work on this.
So I want to present the same by putting lots of efforts and the same I did also. A deep internet
research help me to complete the project in best way and even it is like by others as well. At that
time I feel so happy and appreciated by others as well.
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REFERENCES
Books and Journals
Ahmadinia, H. and Karim, M., 2016. Competitive intelligence: a case study on Qoros
automotive manufacturing. Journal of Intelligence Studies in Business, 6(2), pp.52-65.
Athukorala, P. C. and Veeramani, C., 2019. From Import Substitution to Integration into Global
Production Networks: The Case of the Indian Automobile Industry. Asian Development
Review.36(2). pp.72-99.
Chen, J. and et.al., 2015. CSR Development Index for the Automotive Industry (2012).
In Research Report on Corporate Social Responsibility of China (pp. 187-200). Springer,
Berlin, Heidelberg.
Kumar, G. and Maqbool, J., 2018. Financial technology in the automobile industry.
Law, C. M., 2017. Restructuring the global automobile industry. Routledge.
Li, Z., 2018. Business Network Positioning Analysis of Toyota. American Journal of Industrial
and Business Management.8(07). p.1693.
Majid, A., 2017. Financial Statement Analysis 2012-2016: Toyota Indus Motor Comapny.
Nazir, N. M. and Shavarebi, K., 2019. A review of global automotive industry’s competitive
strategies. World Journal of Science, Technology and Sustainable Development.
Ngo, H. V. and et.al., 2016. The Role of Supply Chain Integration in achieving competitive
advantage: A study of UK Automobile Manufacturers.
Safari, N., Farhang, M. and Rajabzadehyazdi, E., 2016. The study on the competitive status of
construction companies based on Michael Porter's five competitive forces (Case study:
Armeno Project Development and Management Company). European Online Journal of
Natural and Social Sciences: Proceedings.5(3 (s)). pp.pp-72.
Sharma, S. A. and Aggarwal, A., 2019. Aspects of marketing strategy impacting the commercial
vehicle industry–A critical review of literature.
Wang, X. and et.al., 2017. Strategic choices of China’s new energy vehicle industry: An analysis
based on ANP and SWOT. Energies.10(4). p.537.
Zhikang, L., 2017. Research on Development Strategy of Automobile Reverse Logistics Based
on SWOT Analysis. Procedia engineering. 174. pp.324-330.
Online
Pestle analysis. 2018. [Online]. Available through: <http://marketingdawn.com/pestle-analysis-
of-toyota/>.
UK Automotive. 2019. [Online]. Available through:
<https://www.smmt.co.uk/industry-topics/uk-automotive/>.
UK-Flash Report, sales volume. 2019. [Online]. Available through:
<https://www.marklines.com/en/statistics/flash_sales/salesfig_uk_2019>.
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