Business Strategy Report: Macro Environment Analysis for Toyota

This report provides a comprehensive analysis of Toyota's business strategies. It begins with an introduction to business strategies and their importance, followed by an examination of Toyota's vision, mission, and objectives. The report delves into the impact of the macro environment on Toyota, utilizing PESTEL analysis to assess political, economic, social, technological, environmental, and legal factors. Stakeholder analysis is also conducted to understand the influence of various stakeholders. The report then evaluates Toyota's internal environment, focusing on its strategic capabilities, including VRIO analysis to determine its strengths and weaknesses, and the application of McKinsey's 7S model to assess its organizational effectiveness. The report explores strategies to improve Toyota's competitive edge and market position, including Bowman's strategy clock, hybrid strategy, and diversification. Finally, the report concludes with a strategic management plan for Toyota.

Business strategy unit 32

Table of Contents
Introduction......................................................................................................................................3
P1 : Impact and influencing of macro environment in Toyota....................................................3
M1 : The macro environment to determine and inform strategic management decisions...........6
M2 : Evaluation of internal environment to asses the organisation's internal capabilities ........6
M3 : Strategies to improve competitive edge and market position .........................................10
M4 : Strategic management plan for Toyota ............................................................................12
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................16

Introduction
Business strategies refers to the collection of the all those specific actions and decisions
which is being performed by any company or organisation to attain the business goal. Business
strategies know to be the roadmap for the company through which company can accomplish their
desired goal(Yuan and et.al, 2020). This report focuses on Toyota. Toyota is a Japanese
multinational automotive manufacturer company, who's headquarter is in Japan. Toyota is one
of the largest auto mobile manufacturer company in the world. So this report speaks about the
business strategies of Toyota, mission vision and objectives of the company apart from this
different strategic planning techniques used by the company is also mentioned in this report.
Analysis of macro environment for the company has defined In this report. Besides this, Pestle,
Porter's five forces model, Ans off is defined in this report which help Toyota to attain their
desired goal. Apart from this strategic capabilities, Mckinsey’s 7S model has explained in this
report. Except these VRIO, stakeholder analysis also mentioned in this report. Bowman's
strategy clock, hybrid strategy, diversification has also mentioned in this report.
M1 : The macro environment to determine and inform strategic management decisions.
Macro-environment effective business strategies and their strategies planning. Typically,
it is type of business strategies, showing the direction for developing business and steps will be
tyake for achieve their goals. Strategies management is the collection of ongoing activities along
with the processess that organization need to be used and make their proper evaluation.
Organization have also work with having their align resources and action which must be to be
takens for working with strategies in Toyota.
P1 : Impact and influencing of macro environment in Toyota
Vision:-
Main aims to achieve long term, stable growth within the environment, the local
communities, the global and its stakeholder.
Mission:-
Toyota seeks to create more prosperous society through having automotive
manufacturing.

Objective:-
To gain competitive advantage in market competition along with manufacturing auto
mobile with the best quality and attain more customer satisfaction.
Macro environment means situation that exists in the economy as overall, rather than
having a specific region or sector. It can be also said that macro environment generally includes
some trends such as inflation, employments, gross domestic products, spending, fiscal policy
and monetary (Satalkina and Shpak, 2018). The macro environment is most linked to their
business cycle as opposed to their performance of an individual sector. Macro environment
deals with aggregate production, spending and various price level in an economy that might be
opposed to their individual working markets and industries.
PESTEL analysis:-
This is frameworks in which companies imperative for more organization such as Toyota,
that helps in understand more about market dynamics and try to improve its business
continuously. Here are some analysis as follows:
Political factor:-
Toyota is manufacturing companies across various countries and sells many varieties of
auto mobile products for their customer satisfaction. The political and policies in which they are
working are more important for them in making them developed (Ferguson, 2017). Furthermore,
the companies' relationship with Japan along with their other countries might be very important
for them. Toyota has considered their expanded business in market and for these companies
political factor affected its position for moving towards its plan, so they have decided to scrap
their expansion plan. Due to economy hit organization reduce the demands of cars significantly
and shortages for cash company come towards closing their many businesses.
Economic factors:-
Toyota deals has made their targeted for completing in selling various auto mobiles in
many countries and earn huge amount of profits. Trade war between these can easily lead to
growth in GDP of countries which might be affected to demand of cars. Due to also increase in
oil prices that has become customer more to cheap in purchasing car as well having great fuel
efficiency (Lu, 2020). In recent years Toyota has decided for electric cars sells and
manufacturing them in various parts of countries that can be make hybrid cars.
Social factors:-

In recent time's customer has become more eco-friendly, and they are also demanding for
eco-friendly cars in their environment which do not have high cost but have efficiency energy.
Environment friendly cars are becoming more in trends in market and from various countries
different customer are demanding for these cars. For the customer perception they think that
could be more safety and use less fuel. Toyota is more famous for Innova cars which is greater
choice for their long trips. It also keeps the price of car low while keeping in the mind the price
conscious customer.
Technological factor:-
In general, it can be said that technology are taking changes place rapidly in environment
and for that companies need to be become more updates for staying them in market. Toyota
thinks that having better brand technology can lead to have success and keep them to stay for
long term (Nurmi and Niemelä, 2018). Basically companies follow Kaizen principle which has
more focused on improving along with that company has launched first Hydrogen cars in the
world.
Environmental factor:-
Recent time sustainability become more important part of strategies and planning by
various companies. Toyota needs to include ecological concerns in its strategic decision-making.
Moreover, provide more environmentally products such as electric cars or having cars with high
fuel efficiency.
Legal factor:-
Toyota has opportunities to grow with more concern of intellectually property rights
because various countries' government works hard towards improving their intellectual property
protection. Hence, the company can exploit more to have opportunities in offering safer and
more satisfaction cars to their customer or exceed consumer laws.
Stakeholder analysis:
This analysis means process of working in system and keep changing potential that might
be related to relevant and other interest parties. Stakeholder analysis is might be part of
stakeholder management. It can be done on regular basis for changing their tracks in stakeholder
over time. Stakeholder can be employee, investor, customer, competitors and so on. Here
stakeholder analysis matrix which evaluate about the strategies of customer and company:
High power, high interest:-

In this Toyota has first priority of having high interest in projects. Companies must give
first importance to their stakeholder such as investor, and they are more important in making
their more developments through which they can easily make huge amount of profits (Saffer,
2019). If companies will get high interest and high power that who have invested their money in
company projects.
High power, low interest:-
Basically this kind of stakeholder have stronger influencing in company and make their
more power with having low interest in products of company. In addition, they also show low
interest that can be lead to have high management for the Toyota in making strong impact in
their company.
Low power, high interest:-
In handling too much of investor sometime companies get confused and that could lead to
have less power. Toyota's need to check and inform them on the regular basis if they are facing
some issues. For this if they are facing than company could be more capable in finding out the
best solution due to having high interest.
Low power, low interest:-
It could be simply more aware about the importance of companies and states about some
relevant information as this investor might not have much power and also have low interest in
Toyota they have invested.
M2 : Evaluation of internal environment to asses the organisation's internal capabilities
Internal environment of any organisation consist different elements such as employees,
managers, corporate culture and also the behaviour of employees, all these factors describes the
internal capabilities.
P2 : Analysis of internal environment and capabilities of the organisation
Strategic capabilities
Strategic capabilities states about all the strength and capabilities of the company with the
help of strategic capabilities Toyota can gain competitive edge in the market. As Toyota is
known for providing innovative products in the market and also focusing on launching electronic
vehicle in the market, by taking help of strategic capabilities company can increase its market
share (Moktadir and et.al, 2020). The major components of strategic capabilities of the

company is strategic purpose, values, mission, vision, goals. Action planning etc. by working on
this company can earn competitive advantage.
VRIO analysis of Toyota
Vrio analysis stands for Value, rare, limitability and organisation. The main motive of
Toyota behind VRIO analysis is to determine the strength and weaknesses(VRIO Analysis,
2017).
Value
Value speaks about the resources and capabilities of Toyota. Do Toyota has such
valuable resource who can respond positively in the inverse condition of the company so the
answer will be Yes. Toyota has the best resource which can help the company to design,
manufacture and sell unique segments of car which will make Toyota different in the market.
Apart from this, financial resources of the company is also valuable. Toyota has used its
resources in appropriate way to make cars so that the rich and middle class people of the society
can easily afford them.
Rare
The methodology used by Toyota is rare, this is the reason of Toyota which makes the
company different from its competitors. As Toyota is a multinational company so the supply
chain of Toyota is large and hard to imitate by competitors because the company has invested
huge capital to build such network(Nandonde, 2019). Besides this the employees are also a rare
resource of the company as Toyota hires those people who are highly qualified and skills along
with this Toyota spends ample of money in providing training and education to its employees so
the company can accomplish its desired goal.
Imitable
The financial, Human resources are imitable of Toyota apart from this the patent of the
company is not imitable by the competitors as the company is using their patent in appropriate
way. Apart from this the employees of the company can get imitated by the competitor if the
offer handsome salary package to them.
Organisation
The supply chain of the company is properly organised by the company and company is
using in appropriate way. Besides this all the resources of the company is properly organised and
managed.

Resources
&
Capabilities
Valuable Rare Costly to imitate Capabilities of
exploiting
Competitive
performanc
e
Supply chain Yes Yes Yes Yes Yes
Employees Yes No No Yes Yes
Patent Yes Yes Yes Yes Yes
Financial
and human
resources
Yes Yes Yes Yes Yes
Mckinsey’s 7s model of Toyota
It is one of the strategic tool which Toyota uses in their company to manage its regular
performance.
Strategy
The overall strategy implicated by Toyota, has clearly communicated to its employees so
that they can work as per the strategies and help the company to reach at their desired goals. All
the strategy made by Toyota, they consider their competitors also in them so that they can launch
better products in the market (Razmi and et.al, 2020). As the demands of the customer is also
changing so the company has to make changes in their strategy as per the market trend and
choices of customers.
Structure
Toyota follows an organisational hierarchy so that all the employees get equal chance of
getting promoted. This will boost confidence of the employees and they will feel more secure in
the organisation. Toyota focuses on teamwork therefore they give team task to the employees so
that they can communicate with each other and it will reduce conflicts in the company.
System

Toyota follows well-demarcated system and divided in different departments such as
Human resource management, finance department, R&D etc so the company can produce quality
products.
Style
Toyota follows democratic leadership stylers which helps the company to attain the
business goal and vision of the company (Indartono and et.al, 2017). Besides these, employees
can also feel free to share their ideas, views and opinions in the company.
Shared values
Toyota follows some values and norms which enhance the creativity, transparency and
honesty among the employees and all the activities take place in the organisation by following
rules and standards.
Staff
Being one of the iconic company in the market Toyota don't want to compromise with its
staff and they want qualified and top talent in their company, and also hire large number of
employees of different countries.
Skill
As Toyota focuses to hire skilled employees but even though it provides training and
development to its employees so that they can match the new strategies of the company.
Value chain analysis of Toyota
Toyota is known for its wonderful production and supply chain, and it has managed the
value chain properly.
Primary activities
Inbound logistics
Toyota has managed its inbound logistics properly because it receives equipment, tools
and parts from thousands of suppliers who are from different countries (Rosales, and et.al,
2017). So the company holds worldwide network and managing the network properly.
Outbound logistics
The company has lots of distribution centres and warehouses around the glob and apart
from this it ships different tools and parts from different countries so the outbound logistics of
the company is well managed.
Operations

Toyota is operating worldwide and to mange its day to day operations they have to
manage their distribution network globally for that company has established different centres and
warehouses in various countries. So that they can deliver the goods to the customers in a specific
duration.
Marketing and sales
Being a global brand, Toyota has to face tough competition in vehicles. For that,
company spend ample of money on its marketing and promotional activities to grab the market
share and hold the interest of customers in the company (Cleberg, 2019). Apart from this, the
company remain active on its social media platform.
Technology
Toyota focuses on bringing innovation in the vehicles for that company uses high and
modern technology, thus Toyota has made huge investment in the development of technology
and R&D as well.
Infrastructure
Toyota is known for its infrastructure not only ion Japan but in other countries as well
where the company has its offices. As it is dominating brand so the company has to focus on its
infrastructure.
Procurement
Toyota gets its raw material, tools and equipments around the world so the procurement
of the company must be effective.
M3 : Strategies to improve competitive edge and market position
To gain a competitive edge, Toyota can enhance its marketing and promotional activities
so that more people will come to know about the products of Toyota apart from this, company
can take help of social media also it can establish deeper realtionship with the customers so that
they do not switch.
P3. Porter's five forces model for Toyota
Competitive Rivalry
The competitive rivalry for Toyota is high as the company has to face stiff competitions
the automotive companies stay aggressive towards each other (Varelas and et.al 2017).
Bargaining power of buyers

Customers have high bargaining power for Toyota as they directly impacts the sales,
revenue and profitability of the company and they can easily switch if they found smilier product
at low cost.
Bargaining power of Suppliers
As the company purchase raw material from different suppliers around the world and the
company wants the best raw- material so the bargaining power of suppliers is also high.
Threats of new entrants
Toyota don't have threat from new entrants as the company has invested huge capital to
develop the business throughout the world and has extensive market share, besides this, company
has huge supply network which is net to impossible for new entrance to establish such network.
Threat of substitute products
Toyota has threat from substitute products as Nissan, Hyundai, Ford etc. are dealing inn
the similar products and providing vehicles at low prices to grab the potential customers of
Toyota.
Ans-off matrix for Toyota
Market penetration
This strategy is being used by the business to get growth in the market for their existing
products. To provide growth to existing products Toyota can enhance their investment in
marketing and promotion (Dawes, 2018). To increase the sales company can decrease its prices
of vehicles so that it can gain a higher market penetration. Apart from this company can supply
chain to enhance the sales. To decrease the prices of final product, Toyota can decrease the
operational cost as well.
Market development
In this, Toyota can introduce the existing products in the new market. Before launching
the products in the new market Toyota can invest in research and development to recognise the
possible market, consumer buying pattern, trends and choices of costumers. Toyota can expand
in geographic regions or in international market. But to gain growth, Toyota has to educate the
customer about the benefits of their product.
Product development
Toyota can develop a new product in the existing market, for that company can make
modifications as per the need of the customer and market trend as well. To develop new product

Toyota can go for strategic partnership so that Toyota can development new product with limited
fund and resources. Company can introduce new quality product in the market, this will increase
new customer segment for the company.
Diversification
As the name implies, in diversification Toyota can bring new product in the new market.
Toyota can choose vertical diversification, in which the company can introduce new range of
products in the existing categories of products. In this Toyota can bring innovation in the existing
product to gain the interest of customers (Loredana, 2017). Apart from this company can go for
Horizontal diversification, in which Toyota can offer totally new product in the new market to
create new potential customers. Another way to diversify is merger and acquisition, Toyota can
get a merger with its competitor in a particular country where Toyota wants to expand.
M4 : Strategic management plan for Toyota
Strategic management plan is a tool which speaks about the goal, purpose, priorities and
objectives of the company.
Strategic plan of Toyota
Purpose
The purpose of Toyota is to develop market for existing products, with the help of market
development company can enhance sales and revenue which will also helps the company to
increase profit. Market development will increase the name and brand of the company in the new
market and also company will earn new potential customer. Market development can be on
regional level or on international level it depends on the research and development of Toyota.
Objective To increase electric vehicle sales up to 60% at the end of 2021
Pestle analysis
Political Factor
Government is also supporting the initiation going on by Toyota to launch electric
vehicle and government also contributing in this initiation of Toyota. As the motive of electric
vehicle is to save the environment and provide some unique and different vehicle to the
customer. To support this initiative government also reduces tax on the purchase of this

electronic vehicle. Apart from this government has make the processes easy to gain the license
to run such electric vehicle.
Economic factor
As the craze among people for electric cars are increasing with the passage of time there
for it is impaction the overall economy of the country(Nandonde, 2019). The market of electric
vehicle is also growing and in upcoming years but now the sale of electric cars are increasing but
not meeting the expected target of the company, but once it gains popularity it will hit the
economy positively.
Social factor
Electronic vehicles impacting the society in positive way as it is reducing air pollution,
noise pollution and travelling cost thus it is being liked by the society as it is beneficial for them.
Even the driving style in such cars is also not changed and simile to the old once so the people
don't have to waste money to learn new driving style for this cars.
Technological factor
Electric cars are fully base on technology. Advanced and modern technology has been
used in making such car. The model and infrastructure of the car is also technologically
advanced. Apart from this it is time saving vehicle as well.
Environmental factors
Electric vehicles are made to consider the environment as it is eco-friendly and don't
pollute the environment as well. Electric vehicle has potential to reduce the air and noise
pollution. As this vehicle has become a need specially of those areas which are highly polluted.
Legal factors
Electric vehicles of Toyota has to face legal issues in different countries before launching
such car they have to take license from the government to run such cars in their country, apart
from this in many countries it has a low that the electric cars has to keep fast aid box for the sake
of customers.
P4. Application of theories, concepts, models and strategic plan for Toyota
Porter's generic strategies
Cost leadership
Toyota follows cost leadership style to gain the competitive edge. To survive in the
market Toyota is working to reduce its prices of vehicle by charging less price than competitors,

Toyota can gain customer base from this strategy because customer want good product at cheap
prices specially in vehicles they don't want to spend high amount.
Differentiation strategy
Differentiation means making the product different and attractive then competitors. For
that Toyota is conducting research in the market besides this company is trying to offer high
quality goods to the customer.
Focus strategy
Toyota follows this strategy as the company understands the dynamics of the market and
new choices and taste of the customer, with the help of focus strategy, Toyota wants to deliver
some extra and unique feature to customers in the niche market (Bruijl, 2018). The focus strategy
of company is to provide “something extra”, this could be reduction in cost or any kind of
discount given by the company to the customers.
Bowman's Strategic clock
Low price and low value added
This is not so competitive for Toyota as the customer want to enjoy low prices offered by
the company, this focuses on bargaining strategy.
Low price
Company focuses on cost minimisation to survive in the market. The profit margin on the
products are also low(Bowman's Strategic Clock Strategic Positioning., 2020). The main reason
behind charging low prices from the customer is that company wants to build new loyal
customers.
Hybrid
In this company try to deliver quality product at cheap prices to the customers. The
motive is to provide value added combination to customers. Toyota is focusing on this segment,
for those customers who want quality products at affordable prices.
Differentiation
Company tries to provide high quality product for that Toyota has to do strong
promotional activities to grab the loyal customers. As Toyota works on globally and in different
countries people have different choices and taste for company is working on the quality.
Focused differentiation

In this company sells its products at high price but the quality of the products is also
remained high. In this segment company charges high prices for high quality product.
Risk High margin
This is known to be the very risky positioning, if the customer is buying high price
product company will gain immense profit but when customer stops buying such product
company may face huge loss.
Monopoly
If the monopoly exist in the market, so the consumer will have no choice they have to
buy the products offer by the company whether they are taking high cost or low because
monopolist can take whatever price they want.
Loss of market share
It refers to those situations where company charges high prices from the competitors by
doing so company losses its market share (Echchakoui, 2018). It is known to be the end stage of
the company because when the company charges high prices customer started switching to other
products.
CONCLUSION
From the above report it had been concluded that while making proper business strategies
of the company might be maintained, and they can also avoid some strategies for taking
upcoming advantages. Macro environment can be had impact and influenced that could be
defined by using PESTEL analysis as formed in internal and external environment of companies.
Hence, report also mentioned the impact of internal environment capabilities along with this
porter-five-forces for giving more ideas in developing through market sector. Furthermore,
different forms of strategies direction that could help organization for working in long term
goals.

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