Lexus: Organizational Strategy Report - Course Name, Semester Details

This report provides a comprehensive strategic analysis of Lexus, the luxury vehicle division of Toyota. It begins with an introduction to organizational strategy and its application to Lexus, emphasizing the company's goals and vision. The report then delves into the macro-environment factors affecting Lexus, utilizing a PESTLE analysis to examine political, economic, social, technological, environmental, and legal factors. Next, it assesses Lexus's industry position using Porter's Five Forces, evaluating the threats of new entrants, bargaining power of suppliers and buyers, the threat of substitutes, and the rivalry among existing competitors. The analysis further explores Lexus's internal resources and capabilities through the VRIO model, assessing value, rarity, imitability, and organization. The report also examines stakeholder perspectives, including social and environmental responsibilities and employee relations. Finally, it highlights the positive and negative aspects of Lexus's strategy, such as its technological advancements and high costs. The report concludes by summarizing the key findings and their implications for Lexus's strategic direction and sustainability in the competitive automotive market.

Organisation
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
Macro-environment factors.........................................................................................................1
Industry position..........................................................................................................................3
Internal resource and capabilities................................................................................................4
Stakeholder perspective..............................................................................................................5
Positive and negative aspect of Lexus........................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Organisational Strategy is a dynamic long term plan that maps out different route
towards realization of a company's goals and vision. Basically it is sum up of all action an
organisation intends to take in achieving long term goals and objectives. In this report
organisation chosen is Lexus, is a luxury vehicle division of Japanese auto maker Toyota. The
Lexus brand is marketed more than 70 countries and territories worldwide and has become
Japan's largest selling premium cars. This report is going to analysis its macro-environment
factors, industry position and its internal resources and capabilities that is need for an
organisation to sustain in competitive marketplace. Moreover, identifying stakeholder
perspective and evaluating strategic situation including both positive and negative aspects of an
organisation.
Macro-environment factors
A macro-environment is a condition that exist in an economy as a whole, rather than in a
particular sector or region. Its major external and uncontrollable factors that influence an
organisation's decision-making and affects its performance and strategies. These factors includes
economic, demographics, legal, political, social conditions, technological changes and natural
forces.
Herein, Lexus is using PESTLE analysis in order to identifying its external and uncontrollable
factors that are affecting its decision-making process, its performance and strategies in order to
sustain in competitive edge of auto-mobile industry.
Political Factor: Political factors are referred to those that impact profitability or chances of
survival of an organisation are quite diverse. Herein, in Lexus political risk vary from sudden
changes in existing political regimes major decision taken by government. Such as
 With low minimum wage Lexus are able to earn higher profits and it increasing higher
chances of survival in competitive marketplace. High level of taxation is demotivating them from maximizing their profits as well as
trade barrier with their trade partner would harm organisation by preventing potential
exports at worldwide.
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Economic factors: Economic factors are those factors that pertain economy of country such as
inflation rate, foreign exchange rate and current stage of economic cycle. The economic factor
that impact Lexus are as follows:
 High level of unemployment in an operating country means greater supply of
employment at lower wage rate, which would lower cost of Lexus. Exchange rate of country Lexus operates would impact its profitability if they are
engaged in international trade. As sustainability of currency is important as it encourages
international investors.
Social factors: Social factors have direct impact on society it encompasses culture, belief,
attitudes and values. The impact of social factor in Lexus are as follows:
 Class distribution is essential among population. Lexus would be unable to promote a
premium product to general public if majority of people are lower class and have to rely
on niche marketing. Lexus need to be careful in differences among markets and target market so that they do
not loss connection of target market's interest and connection.
Technological factors: Technological factors are rapidly impacting price structure and
competitive landscape of an industry in very small duration of time. Technological factors
influencing Lexus are mention below:
 Lexus need to improve or adapt new and advance technologies that would improve or
transform their product's initialization in marketplace. Moreover, Lexus technological innovation would further raise level of profits in future
ensuring sustainable profits over longer period of time.
Environmental factors: Environmental factors have become important due to increasing
scarcity of raw materials, population target and doing business in an ethical manner set by
governments. Environmental factors impacting of Lexus are:
 Weather conditions may significantly impact ability of Lexus to manage transportation of
both resources and finished products. Renewable energy may be inexpensive but Lexus often receives support from
government and also from customer base who are willing to pay premium price for its
product.
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Legal factors: Legal factors include health and safety, equal opportunities, consumer rights,
product labelling and product safety. Impact of legal factor on Lexus are:
 Implementing proper rules and regulation may be expensive but Lexus has to engage
themselves towards social and ethical responsibilities towards its employees and general
people.
 Lexus are treating their employees fairly and giving equal opportunities regardless of
gender, age, religion or ethnicity.
Thus, from PESTLE analysis Lexus can examine external factors that are hampering in
decision-making, its performance, profitability and sustainability in competitive marketplace.
Industry position
Position of a particular firm in a dealing industry is essential in order to secure
competitive advantage by establishing value chain leadership along with technological
differentiation. Herein, Lexus are adopting Porter's five forces in order to know its know is
position in an competitive marketplace.
Threat of new entrants: Luxury car industry is protected by significant barriers to entry.
Reputation of brand of brand is extremely important to customers and it become difficult for
challengers to match prestige of brands with decades history. Moreover, another formidable
barrier to enter in this marketplace is huge investment in order to set up manufacturing facilities
and invest in R&D. Thus, Lexus are enjoying their huge market share in auto-mobile industry as
they have very few chances of new competitors in competitive marketplace.
Bargaining power of suppliers: In luxury car segment suppliers are less,as it requires
exclusive materials and manufacturing parts of high quality which only a smaller number of
suppliers are able to deliver. It makes Lexus in switching cost for luxury cars than those of mass
manufacturers. Thus, from this Lexus has create preserve an image of excellence and prestige
that can restrict ability to purchase parts from firms located in emerging countries.
Bargaining power of buyers: Customer's have substantial power mainly because of
large variety of luxury brands and product to chose from presence of substitutes. As market
offers customer's many different brands of cars and model with widely differing performance,
quality, appearance, pricing and additional features. Herein, Lexus are premium car makers they
need to improve continuously quality in order not to fail high expectation of customers. Lexus,
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bargaining power of customer's are low as they have many substitute to luxury cars. Moreover,
customer's may choose from wide range of transportation devices instead of luxury cars to move.
Threat of substitute: Luxury cars fulfil basically two needs for customer's such as
providing mean of transportation and asserting privileged status of an individual. The most
obvious and substitute of Lexus premium cars are mid luxury cars or high end cars from ultra-
luxury cars such as Audi and BMW. Herein. High end brands can exert additional pressure in
introducing same car models with lower than usual price or special discount to allure customer's
with lower income than their traditional customer base.
Rivalry among existing competitors: Rivalry between companies is rather instance
especially between global leaders of luxury car. Lexus have too many rivalry in auto-mobile
sector. Moreover, the competition has extended from advance marketers to emerging markets
where each companies hope to get privileged foothold to take advantage of future growth of
middle class group of people. In addition to this presence of significant sunk cost is a barrier to
exit which includes even companies to loss to stay in marketplace. Hence, it increase the degree
of competition in industry.
From the above discussion it has been clear that Lexus market share is positive in nature.
Such as they have less rivalry among competitors in competitive industry of auto-mobile. Thus,
market position of Lexus is competitive and have a quite position in marketplace of auto-mobile
industry.
Internal resource and capabilities
Internal resources and capabilities of firm can be know from VIRO Model. It is business
analysis framework tool used to analyse the internal resources and capabilities of a firm. Herein,
Lexus are using this model to accurately access the internal resources of a business, its
competitive advantages potential and possibilities of improvement of its resources within
relevant business areas. Its best resource is innovation with technology.
Value: In this model value indicates resources that bring value can be source of
competitive advantage. Herein, Lexus strive to deliver best luxury cars with superior comfort
and economic design, it also provides a seamless driving experiences to a person and cars are
more innovative and technology rich. Eventually, it creates value for both customer as well as
organisation. As they are thinking in an unconventional way as with adoption of surprising and
valuable new usage of innovation with technologies as continuous inspiration for constant
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innovation. Such as creating value in life a person by have such a luxury car that suits personality
and royal status of an individual in a society.
Rarity: Resources and capabilities are unique and obtained by few firms. Herein, Lexus
are creating rarity of their technology that is used in manufacturing of their luxury cars. They are
coming up with innovation of technology that bring rarity in their product and services. This
resource and capabilities leads to competitive parity in auto-mobile industry.
Imitability: Imitability indicates that some resources of a firm and its capabilities can be
imitated by other firms. Herein, Lexus are using huge cost of innovation and technologies in
manufacturing their luxury car models. So if any other organisation are engaged it copying its
innovation with technology then they will not be successful in adopting. Eventually, Lexus are
more concern about their resources as this resources are strength of their organisation.
Organisation: Resources and capabilities do not create advantage for a company if a
company is not organised in a way to adequately exploit these resources and capture value from
them. Herein, Lexus are exploiting proper organisation components that control system and
compensation policies which help them in acquiring resources that creates value, rarity and
imitability of resources that creates a sustainable competitive advantage.
With help of VRIO model, all four attributes of a internal resources and capabilities will
help Lexus to have a distinctive competence that can be used as a sources of sustainable
competitive advantage.
Stakeholder perspective
Successful relationship with stakeholder are essential to a company's success. Though it
is a hard work for an organisation as it need to build trust among stakeholder. The perspective of
Lexus stakeholder are as follows:
Social and environmental responsibilities: An organisation need to ensure that decision
taken by them in operating their business should not harm society and environment. Herein,
Lexus are using such innovation and technologies and other resources that do not harm society.
They continuously monitor their decision and ensuring that public interest is always first and
foremost before profit.
Employees: Employees are valuable asset of an organisation. Without efficient and
effective employee and staff member an organisation cannot attain its goals and objective in an
appropriate manner. Herein, Lexus are treating their employees fairly without any
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discrimination, welcoming their suggestion involve in decision making and conduct employment
engagement activities. Thus, in this Lexus are able to become successful in competitive market
of auto-mobile industry.
The above mention are perspective of stakeholder that help Lexus in attaining
sustainability in competitive marketplace as well help in achieving its goals and objectives in
effective manner.
Positive and negative aspect of Lexus
Positive aspect: Lexus have various positive aspect of their luxury car such as they are using
various advancements of technologies that do not harm society and environment. Moreover they
are providing luxury cars to their customer's which creates value in their life as well as help in
maintaining their status in society. Herein, Lexus strive to deliver best luxury cars with superior
comfort and economic design, it also provides a seamless driving experiences to a person and
cars are more innovative and technology rich.
Negative aspect: Lexus are one of highest seller of luxury car. It do have negative aspect such as
it huge cost general people cannot think to buy it. Herein, Lexus should come up with certain car
models which are less expensive with innovation and technologies in order to attain market
share. Moreover, they are able to provide benefit to general people.
CONCLUSION
From the above discussion it has been concluded that macro environmental factors help
Lexus to its political, environmental, economical, social and technological factors that are
impacting on their decision making process. With the help of Porter's five force analysis they are
able know their industry position in competitive marketplace of auto-mobile industry. Moreover,
they are able to maintain positive perspective of their stakeholder that enable them to maintain
their sustainability in competitive market as well as able to maintain its goals and objectives in
an appropriate manner.
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REFERENCES
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Routledge.
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results? Institutionalising BPM governance within organisations. Business Process
Management Journal.22(1).pp.173-195.
Piercy, N., 2014. Marketing Organisation (RLE Marketing). Routledge.
Sierra‐García, L., Zorio‐Grima, A. and García‐Benau, M. A., 2015. Stakeholder engagement,
corporate social responsibility and integrated reporting: An exploratory study.
Corporate Social Responsibility and Environmental Management.22(5). pp.286-304.
Wagner, M. and Meyer, T. M., 2014. Which issues do parties emphasise? Salience strategies and
party organisation in multiparty systems. West European Politics.37(5).pp.1019-1045.
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