Business Environment Report: PESTEL and SWOT Analysis of Toyota Motors

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[BUSINESS AND BUSINESS ENVIRONMENT]

INTRODUCTION
A business environment consists of several numbers of factors that affect the overall
functioning of the organization. These factors can provide ample opportunity for achieving
growth and success (Day, and Reynolds, 2011). There are different types of business
organization. The purpose of this assignment is to provide insight on the scope and structure of
various organizations as well as throws light on the objective of various organizations. It will
also explain the interrelationship between various functions and organizational objectives. The
assignment also helps to assess the positive and negative impact of the macro environment
aspect upon the business operations and objectives (Mora, 2016).
The report reflects the purpose, scope and structure of NHS Trust, Toyota and Oxfam. It
delineates the different organizational function and establishes the relationship with different
structures. The second part of the report conducts PESTEL and SWOT analysis of Toyota so as to
establish the relationship of strength and weakness with the external macro factors (Ling,
2017).

LO1
This part will focus on different types of business organization; Public, Private and Voluntary
sectors and also provide insight with respect to their size, scope and structure.
P1
A business organization
refers to an entity that
carries out its functions for
the purpose of meeting
customer needs (Omar et
al., 2011). These
organizations are in
different forms that
includes; sole
proprietorship, partnership, cooperative society or any other forms. There are three basic types
of business organizations are; public, private and voluntary sector. Each of these businesses
differs in terms of size and operations. The organization runs their business activities in order to
achieve established goals and objectives. Besides this, the organization also frames strategies
and policies that will help them in achieving sustainable growth in the market (Everett, 2014).
Public Sector
It generally consists of the organizations that are owned by the government. They work for the
sole motive of social welfare (Mills and Smith, 2011). The organization does not have any
intentions to earn profit and thereby improve their quality of service so as to provide their
helping hand to the citizens of the country. The most common examples of such organizations
are – statutory corporation, police station, a government school and such other institution.

For example- An NHS trust is a public sector organization that provides health services at
affordable rates in England. The trust takes care of different aspects of health care of the
residents. The basic objective of the trust is to provide proper treatment and best care to the
millions of people in the UK (Mills and Smith, 2011).
Private Sector
This sector makes a significant contribution to GDP of the economy. It consists of individuals or
organization in the form of a partnership, sole proprietorship or any other form of corporations.
The Top level management in the organization is required to outline their strategic policies and
tactics that will help in satisfying the unfulfilled needs of the prospective customers.
For Example- Toyota is a multinational manufacturing company dealing in the automobile
sector. The company use a lean production system in order to manufacture a car and ensures
the maintenance of quality at an affordable price. The company deals in automobiles, luxury
vehicles, commercial vehicles and other engines. It employs over more than 370000 employees
across the globe. The company generates a net income of ¥1,985,587 million in the year 2019
(Omar et al., 2011).
Voluntary sector
These are called non-profit organizations that operate their business with the major aim of
serving society (Mills and Smith, 2011). It generally consists of charitable institutions, trust,
clubs and other organization that receives funding from the government grants. These
organizations donate their money for a charitable purpose and serving for meeting the
exclusive needs of the society (Ling, 2017).
For example- Oxfam is a popular charitable trust in the UK and it is an association of 20
institutions that solely work for the purpose of eradicating global poverty and also took
initiative so as to bring the movement for change. Moreover, the trust frames the strategies so

as to tackle the root cause of poverty and also provide various innovative ways so as to help the
crisis people to rebuild their lives (Fatema, 2017).
P2 & M1
Microenterprise Small enterprise Medium Enterprise Large enterprise
These are the small
business that can be
found anywhere in
the surroundings.
They are generally in
the form of ice cream
parlours, coffee
shops and other
Kirana stores. The
individuals require
minimal capital so as
to start the business
and hire less than 10
employees for the
effective functioning
of the business
organization.
Thereby, small
businesses make a
significant
contribution to the
GDP of the UK
economy (Pearson,
2017).
These are small
business enterprises.
The organizations
operate their business
by employing over a
small number of
workers to carry out
the business functions
(Jackson, 2012). They
are generally in the
form of a sole
proprietorship,
partnership or
corporations. The
small enterprises are
limited in size and
enjoy independence
in ownership.
These are the kind of
organization that
employs more than
50 people but less
than 250 (Day, and
Reynolds, 2011). They
earn normal profits by
achieving steady
growth in the
business. Thus, the
medium enterprise
frames strategic
policies for earning
revenues and
effectively competing
with the competitors
in the market.
A business
organization is said to
be a large enterprise
if they employ over at
least 5000 people and
earns an annual
turnover of more
than 1.5 million Euros
(Fatema, 2017). They
generally follow a
hierarchical structure
and thereby fix the
roles and
responsibility of
individuals in the
organization. They
frame the strategic
policies in order to
maintain their market
standings.

LO2
P3
The organizational structure of Toyota Motors decides the distribution of the various functional
area of the business. The business structure helps in exercising effective control over the
business and managing the business functions effectively. Moreover, it is essential to good
rapport and relationship amongst various organizational functions for the purpose of achieving
good coordination and effective reporting. The grouping of various functions of the
organization must be done on the basis of specialization (Pearson, 2017).
The interrelationship between various functions of Toyota Motor will help in managing the
business as well as analyzing the performance with respect to each department. The main
motive of Toyota Motors is to increase market value and maximize profitability. This can be
achieved by effectively distributing the role of accounting, marketing and other related
functions.
Finance department
This department plays an important role in effectively managing the funds of the business. The
finance manager at Toyota motors is required to invest in positive NPV opportunities project
and thereby establish coordination with all other departments.
Human resource department
The function of HRM is an important aspect of every business that needs to needs to effectively
address for managing the human resource at Toyota Motors (Omar et al., 2011). This
department is responsible to effectively coordinate the activities of Hiring, recruiting, training
and other necessary compliances so as to improve overall organizational performance.

Operation department
The operation manager is Toyota is responsible to oversee the production activities and thereby
ensuring the quality production of the car. Moreover, he is required so as to plan, organize and
coordinate various resources required to carry out production activities without any
interruptions.
Marketing Department
The role of the marketing manager is very significant in determining the sales and promotional
tactics so as to increase the sales in the potential market. Furthermore, the department will be
responsible for improving the brand image in the eyes of potential customers (Mora, 2016).

M2
Advantages
 Specialization
The interrelationship between different organizational function can help in achieving
specialization by each department (Mills and Smith, 2011). The manager of the Toyota
group is required to encourage each department so as to achieve their specific goals in
an effective way.
 Effective control
The interrelationship between various functions can help in exercising good controls
over various departments. This also helps in managing the balance between authority
and responsibility (Ling, 2017).
 Efficiency
The effective coordination between various functional departments can help in
improving efficiency as each of the department is specialized in their own particular
area.
 Economy
The economy can be achieved by making effective utilization of resources and thereby
preventing the wastage across various departmental functions.
 Expansion
The functional provides a way of expanding the business of Toyota across the globe. It
also facilitates in entering the new market area for further expansion (Jackson, 2012).
Disadvantages
 Confusions

There may come some confusion with respect to the authority and responsibility of each
department. Such confusions can create complexity in managing the different functions
of various departments across Toyota Motors (Ho, 2012).
 Lack of coordination
The lack of coordination between various functions of departments can impact the
overall functioning of the organization and performance.
 Difficulty in fixing responsibility
It may be difficult to allocate the responsibility within the existing organizational
structure due to multiple authorities assigned to the same individuals.
 Conflict
The interdepartmental conflicts may tend to hamper the overall organizational
performance.
 Costly
The cost of implementing organizational structure is very high and cannot be afforded
by all organization (Ho, 2012).
 The difference in Individual interest
There may arise differences in the various perspective and thoughts of an individual
working across different departments of Toyota. It is important to effectively address
such organizational differences in an effective and efficient manner (Fatema, 2017).
Organizational structure with respect to Toyota

Toyota follows a divisional organizational structure so as to manage business operations all over
the globe (Durge, 2016). The company has a strong centralized global hierarchy and has
increased the decision making the power of the regional manager and other business units
head. Henceforth, Toyota decisions making the process has become less centralized.
Also, the organizational culture enables the company to respond to regional market conditions
and speedy address of all the issues in order to provide higher quality products to the potential
customers in the market (Everett, 2014).
Figure: organizational structure of Toyota
Source: Day, and Reynolds, 2011

Organizational structure – NHS
NHS is a well know organization in England that aims to provide better care and treatment for
the patients of the UK (Day, and Reynolds, 2011). The NHS board intends to increase the
democratic inputs into strategic decisions so as to further ensure the health and well-being
services. The structured working system of the NHS as follows:
Figure – Organizational working structure of NHS
Source: Allen, 2013
Organizational structure with respect to Oxfam