Management Economics LCBB5003: Market Structure Analysis of Toyota

This report provides a comprehensive analysis of Toyota's market structure within the framework of management economics. It begins by describing Toyota as a multinational automotive manufacturer and analyzes its target market, focusing on demographics such as age and income. The report identifies Toyota's shift from operating in a perfect competition market initially to its current position in an oligopoly market, detailing the characteristics of each. It discusses homogeneity of products, the number of buyers and sellers, free entry and exit of firms, market knowledge, and mobility of production factors. The report suggests that Toyota should remain in the oligopoly market due to the high costs associated with differentiating products for other market structures. It also briefly touches on potential government interventions and emphasizes the importance of understanding market dynamics for strategic decision-making. Desklib provides a platform for students to access similar solved assignments and past papers.

MANAGEMENT
ECONOMICS
(Assessment-2)

Table of Contents
INTRODUCTION...........................................................................................................................1
Description of the company........................................................................................................1
Analyse the market......................................................................................................................2
Different market structure...........................................................................................................5
Suggestions for the company operate in a different market structure and the government
interventions................................................................................................................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Economics is the subject matter which emphasis on problem solving and decision-
making within the industry by using specific strategies and concepts in order to make them
understand. Demand and supply are the two important aspect which concern with the flow of
services so that they can contribute in the growth of the industry(McKinnon, 2021). It also helps
the customer to make the better choice by choosing products and services so that they can
enhance their living standards. Toyota is the chosen organisation for their report, t is the
multinational automotive manufacturer which is headquartered is in Toyota city, Aichi, Japan.
The company is founded in 1937 and it is the largest manufacturer n the world. This report will
cover the analysis of the market scenario and their target customers. Moreover, it will identify
the market structure since its inception so that they can understand the growth of the business
and lastly certain ways are suggested the appropriate market structure and the government
interventions would be lesser or greater in the society.
Description of the company
Toyota is the multinational company which is operating their business in auto-mobiles
and the company is founded by Kiichiro Toyoda and established in 1937 as it is one of the
largest auto mobile company in the world which is manufacturing almost about 10 million
vehicles per year. They are offering premium cars to their potential customers in order to be the
market leader across the globe. They are working with the consideration of having higher profits
in order to have better results.
The company now is the part of Toyota Group which is the largest conglomerates in the
world. They also took the advantage of rapidly growing Japanese economy in order to sell their
car in the middle class people. The company is also praised for being a leading company in the
development and sales of more fuel effective and hybrid eclectic cars to their potential
customers.
The reason of being choosing the cars of Toyota is that the company is best known and
this also helps in understanding the needs and demand of the target market by which they can
make the deserving change in their products accordingly. This also helps in having the higher
market growth in relation to the market share of the company.
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Analyse the market
Market is the places where buyer and seller come together in order to make sell or
purchase of their goods and services in order to full fill the needs ad wants of the target market
and company can generate higher profits. There are different market structure which is being
used by various organisations and use them appropriately by establishing good rand image in the
market. Toyota found their market by conducting effective market research so that they can
effectively meet the consumer's demands.
The target market of the company are in the age group of 30-50 years old with the
middle range income people who are looking for the auto mobiles with effective value of money.
It is stated that when the people thinks about the Toyota cars, people think of durability, quality,
reliability, safety and sustainability. They have segmented their market on the basis of
Demographics and segmented their customers on the basis of income, size, occupation, age and
generations.
They have seeks to reach out the the both males and females bit they segmented their
customers on the basis of their income and the education for selling their Prius as they are using
the personal selling, public relations and sales promotion so that they can attract the large group
of potential customers in the market.
Various type of market structure
There are various organisation which is running their business by using different market
structure according to their size of business and the function performed. All the market is being
divided on the basis of number of buyer, competition in the market and the majority of the buyer
for the given goods. This also helps in meting the demand of their potential buyer as they served
the huge competition in the market by using the right strategy in their operations so that they can
perform well in their given field. There are different market structure which are given below:
 Perfect competition market: It is the type of market in which large number of buyer and
seller are present who are free to make their choice any the huge options. There is no
entry and exit of the firms by which new starts firms can come in the market and launch
their new product and also withdraw their business when they are feeling like or facing
looses in their operations(Al Janabi, 2020). They are working on their own principles by
which they can make the better choice in the market and also understand the preferences
of the customer by analysing the needs and wants of the potential customers.
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 Monopoly market: It is the market in which, there is the single seller who is running the
whole market and also fix their prices according to their wish in order to take the market
advantage. Some times, they change their price or apply the price discrimination in the
market as they charge different prices from their customers. They are no having wide
choices of the product due to single seller and have to buy the particular goods at the
given prices. They are offering unique products which is a good approach in order to
sustain in the market for long period of time.
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 Monopolistic market: It is the combination of monopoly an perfect competition as they
are there large number of buyer and seller who are offering differentiated products which
makes them contribute to the higher level of growth. Products and services offered by the
firms are slight change and consumer is having wide choices to take the better choice in
order to have the satisfactory product. They enjoys the market power due to their
differentiated product offered by them.
 Oligopoly market: It is the market structure in which, there are few big seller who are
dominating the market by the small seller as there are numerous barriers in the entry and
their exit for the new start up companies in the large marketplace (Vatiero, 2020). These
types of companies highly depended on each other as the competitors higher the prices
then the other firms have to make change in their product and services so that they can
sustain in the market for long period of time. They are having the certain barrier as the
firms are having are having huge funds and capital in order to use innovative and advance
technology.
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Different market structure
In history, they company have faced huge competition due to which they can not be the
market leader in the initial stage so they were operating their business in the perfect competition
as there were large number of buyer and seller who are offering same product and meeting the
integrated demand of the target market. But with as they analysed the market and understand the
emerging change then they use the innovative and advanced technology in order to meet the
huge competition in the large market. Thus the company is operating their business in oligopoly
market but in their initial times they were operating in perfect competition market and the
characteristics are explained as follows:
 Homogeneity of the product: It is the main attribute of this market which is offering
identical product in its design, usage and nature. Such products can be substituted with
order product due to large number of buyer and seller present in the market. The main
factors which helps the consumer to make better choice is prices as according to the
purchasing of the consumer the buyer can have the better product according to the willing
power in the market. In context to Toyota, they were facing huge competition due to
large number of buyer and seller offering homogeneous products.
 Large number of buyer and seller: It is known that the competitions is being served
among the large number of buyer and seller who are offering homogeneous products.
There is no individual buyer who are offering particular products and having full control
over the market. As emerging demands of the market make the better choice of their
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potential customers which make them better in order to have the competitive advantage
in the market which leads to generate higher profits and revenue. Every company is
emphasising on offering unique product in order to grab their potential buyers.
 Free Entry and Exit of firms: In this type of market the firms are free to move to any
market according to their sustainability and growth so that they can become the market
leader and serve huge competition. New business start-ups can launch their product in the
market and generate higher profits but at the same time, if they are facing looses in their
operations so that they can leave the industry according to their convince. This also helps
in having the huge competition by which they can sustain in the market for long period of
time and helps every organisation to take right decision which helps them for the
motivation and the higher profits of the company.
 Perfect Knowledge of market: Now a days, buyer and seller are becoming more
advance and using the social media platform in order to have effectiveness in their
operations so that they can effectively achieve the higher targets in the market. Buyers
are well aware about the current trends of the market and the upcoming product so that
they make their purchase accordingly(Ghouri And et. al., 2020). On other hand, seller are
also well aware about the innovative and the advanced technology by which they can
have the unique products in the marketplace.
 Perfect mobility of the factors of production and goods: It is the aspect which is
related to the factors of production such as man, material, machine, money so that all the
business can ensure the effective running of their operations in their target market.
Company can hire the talented employees who can effective contribute to the profitability
of the venture. Employees are also free to move to any organisation where they are
getting satisfactory job role as per their preferences.
 Independent relationship between buyers and sellers: It is the factor which is related
to the consumer and the seller who are having in order to meet the change in their
products so that they can effectively meet the huge competition in the market. When the
firm changes the prices of their products and services then the competitors have to change
their pricing strategy in order to sustain in the target market. Individuals are not bound to
by the particular product as they can make the better choice out of many options in the
market.
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Suggestions for the company operate in a different market structure and the government
interventions.
There are different market structure which is being formed by the business but the
company is operating their business in oligopoly market as there are few big firms in this market
and they are dominated by the small firms. They are effectively meeting the needs and wants of
their potential customers. As the organisation incurring huge expenses in offering the quality
product which can have the better products in to their potential buyers. If they try to change their
market structure the they required more funds in order to manufacture differentiated products.
Thus, the company must must in the oligopoly market as they can have the better choice in the
market which can leads to have the higher profitability to the company. If they wants to enter in
the perfect competition market then they lower down their brand value due to large number of
seller offering identical products. If they wants to enter in the monopoly market then they needs
to offer unique product which is not available in the market thus, it create hurdle in the
marketplace.
Government interventions are the certain rules and regulations that is being by the
government so that they can ensure all the business activities to be run in an lawful manner. They
are also emphasizing on the decision-making and the problem solving so that they can eliminates
the inequalities from the workplace and also ensure the higher working standards within the
industries. They also set the rules for the firms so that they eliminate the monopoly or the price
discrimination from the market. When there is higher tax rate on the product then the companies
can leads to increase the overall cost of the company and this can leads to have the imbalance the
overall budget of the general public.
When concerning for the society, it is said that government do not change huge taxes so
that firms do not increase the prices of their product in the large market. As the government also
emphasising on conducting the various market campaign so that they can contribute to the
welfare of the society and also having various benefits to them.
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CONCLUSION
It is concluded from the above report that demand and supply are the two wheels of the
company which are ensuring the easy flow of goods and services in the large market and
generating higher profits to the economy. There are various market structure such as perfect
competitions, monopolistic market and oligopoly market. The company is operating their
business in the oligopoly market as there are few big firms offering unique product but a the time
of inception, the company was dealing their business in the perfect competition market due to
huge competition faced by the company and also having large number of buyer an seller offering
identical product and there is no barrier for the entry and the exist of the firms so new start-ups
company can enter in the market with easy approach. Lastly, It is suggested that company must
stay in the same market structure so that they can effectively reach to their desired goal and also
having the higher profits and there must be less interventions of the government so that they can
not change huge tax on the products and services which could leads to maintain the overall price
of the goods to their general public.
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REFERENCES
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