HND Business Management: Toyota's Structure and External Factors

This report provides an in-depth analysis of Toyota's organizational structure, functions, and the impact of the macro environment on its business operations. It begins by outlining different types of organizations and their purposes, focusing on Toyota's specific characteristics as a public limited company. The report explores the relationship between various organizational functions, such as marketing, finance, and HR, and their contribution to achieving organizational objectives. It also discusses the advantages and disadvantages of interrelationships between functions and their impact on organizational structure. Furthermore, the report examines the positive and negative influences of the macro environment, using PESTEL analysis to illustrate political, economic, social, technological, environmental, and legal factors. Finally, it identifies Toyota's internal strengths and weaknesses and explains their interrelationship with external macro factors, using SWOT analysis to provide a comprehensive overview of the company's business environment. Desklib offers a wealth of similar solved assignments and past papers for students seeking to enhance their understanding of business management concepts.

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Table of Contents
Introduction.................................................................................................................................................2
Different types and purposes of organizations.............................................................................................2
Size and scope of a range of different types of organizations..................................................................3
Relationship between different organizational functions and their link to organizational objectives and
structure.......................................................................................................................................................4
Advantages and disadvantages of interrelationships between functions and the impact that can have
upon the organizational structure.............................................................................................................4
Positive and negative influence/impact the macro environment has on business operations.......................5
Internal strengths and weaknesses of specific businesses and explain their interrelationship with
external macro factors.............................................................................................................................7
Strengths and weaknesses interrelate with external macro factors...........................................................7
Conclusion...................................................................................................................................................8

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Introduction
Every business organization is formed by the cluster of persons with a common objective to
service the customers. Management usually plays a very important role in the planning,
organization, structure formation for any organization (Shim and Steers, 2012). Toyota is one of
the best automobile companies in the history of the automobile industry and was established in
1937 in Japan. Also, there is a high level of increase in the material cost of the cars but Toyota
organization has been very successful to find out a unique strategy to remain competitive in the
market.
Different types and purposes of organizations
In order to fulfill the requirement of the potential customer, every organization adopts a
transformational procedure to convert required skill and materials towards a purposeful direction.
For any organization, there are some elements like financial, manpower and technique which
decides the success level in this competitive market (Brinkerhoff and Brinkerhoff, 2011). But it
has been seen that the business operation of this organization is being impacted by many
technological alterations and the latest government policies. The choices of the customers are
becoming very vital and so offering the exact match of the customers’ requirement is becoming
more difficult. An automobile industry usually carries two types of competition, direct and
indirect (Spear, Cornforth and Aiken, 2009).
Generally, an organization has five types in the form of private, government, public, charities,
NGOs and co-operatives. The private organization is also known as ownership organization
which is being run by some group or any individual. Private sector further gets divided into sole
dealers, partnership, obliging and limited form. In the case of public sector, the economy is
being directly under the observation of the government assistance (Doherty, Haugh and Lyon,
2014). This kind of organization generally runs their operation for the welfare of their citizens
like National Health Service in England. There are NGOs that maintain their operation not on the
base of profit making but on the base of human welfare just like cancer research in England.

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Toyota organization usually cover altered form of sections in their operation like mission,
resources, persons and management and their business foundation is mainly based on quality
excellence, technical advancement, occupying major market share and then profit-making
because this organization is one of the form of sole traders, which helps them to spread their
business all over the world without any legal issues (Enjolras, 2009). Their worldwide business
operation is being controlled by the top management which is located in their Japan
headquarters. The various departments present in this organization only works for the mission
and vision of the organization which is to form a healthy relationship with their customers as
well as with employees.
Size and scope of a range of different types of organizations
As per the study, it has been found that limited organizations have their legal identities and have
right to buy properties under the name of the organization but the member of the organization do
not share same rights like organization/company (Vaccaro, Jansen, Van Den Bosch and
Volberda, 2012).
Toyota has started their business in 1937 as a public limited company. This organization is
having a shareholding in the form of TYO, NYSE, and LSE. This organization is having $ 1.5
trillion share capital in England. They also offer their organization support share to the common
public in the form of investors. Toyota usually adopts different principles to handle their
business pattern and has also registered itself in the London stock exchange. This stock exchange
strictly observes every action of the organization related to the process of selling shares. Public
limited companies are usually divided into small, large and small enterprises. For any
organization, the scope is directly proportional to the product pattern and their distribution
system (Schilke, 2014).
It has been found that presently organization chose their objectives, goals, and mission related to
the possible improvement in their business operations. Vision on general offers organization a
particular direction which helps the organization to remain sustainable in this dynamic business
environment (Baregheh, Rowley and Sambrook, 2009). Toyota organization believes that there is
mainly three segments of scope in the market which is linked with the dynamic nature,
uncontrollable capability and altered nature of the environment. Hence, this organization has

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adopted a dynamic nature while considering the changing demand of their customers along with
the society in which they are operating.
Relationship between different organizational functions and their link to organizational
objectives and structure
The growth of the organization is totally dependent on the different department like IT, finance,
customer support, production, marketing, and human resources. But on the base of core functions
marketing department play a very important role in forming a relation with the market to fulfill
the requirement of the customer. In case of Toyota, this department helps in generating the
necessary information from the customers in order to develop a new product which can support
lifecycle process of the product (Zheng, Yang, and McLean, 2010). This organization is able to
capture its market share on a global level only because of its strong distribution system by which
allows them to provide quality service to their customers. In England, the demand for Toyota
cars are increasing day by day and is offering the necessary profit margin from the UK market
which is essential for the growth of this organization. This organization has always taken the first
initiative to market the safe driving with consumption of health product or anti-smoking
promotion through their statements (Crossan and Apaydin, 2010).
Financial functions connect the resources of Toyota with the expenditure that is spending on the
business operation. This function offers the standing position of the organization in the market
and control all the aspects related to the cash flow actions (Provan and Kenis, 2008). HR
department takes care of the rules and regulations that are connected to the business and also
carry other important functions like job design, employee retention, recruitment, training and
development and laws related to employment. It can be easy observed in their statement that in
future they are going to lead the automobile industry with their three important elements such as
manpower, technique and material management.
Advantages and disadvantages of interrelationships between functions and the impact that
can have upon the organizational structure
Advantage of interrelationships between these function in Toyota is that it offers the necessary
internal platform which helps the organization to carry out the healthy competition within the
department in cooperative environment which helps the organization to keep on learning new

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techniques and approaches that can ensure the future growth (De Groot, Alkemade, Braat, Hein,
and Willemen, 2010). But in some cases these inner competition result in weakening of bonds
between these functions and can lower down the moral or confident of the employees which
belong to particular department because due to competition there is enough possibility that one
department will not coordinate with other departments in order to gain an advantage over other
but this will affect the production of the organization.
Hence, Toyota organization usually carries a corporative mission which seems valuable for all
the department and required proper coordination from all the departments of the organization in
order to complete the particular mission (Jansen, Tempelaar, Van den Bosch and Volberda,
2009). For this, a detailed strategic action plan is being formed by high-level executives who are
capable enough to face any kind of situation in the market.
Positive and negative influence/impact the macro environment has on business operations
The macro business environment has mainly two types of impact either negative or positive on
any business operation and PESTEL analysis will be helpfull in explaining both negative and
positive impact.
Political
As Toyota organization has seen many political borders related to development and expansion of
the business and has faced both problems as well as opportunities like free trade policies, support
from the government and stability related to major markets (Agbim, Oriarewo, and Zever, 2014).
In some case, many countries have seen Toyota as a threat to their local car manufacturing
companies and have not given permission to carry their operation on their land. Example, India
is seeing Chinese automakers as a threat to their companies and has restricted their entrance
through the joint venture.
Economic
Macro environment has provided Toyota an opportunity to advance their export business from
Japan by decreasing the value of Yen as compared to US dollar, increase the growth of UK
economy and quick growth of countries which are in the growing stage. But at the same time,
this economic stability is also offering other organization to grow which is lowering down the

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profit margin. One of the examples is that China is becoming more stable economically; this will
also attract the other competitor from all over the world to enter in the same market, which has
lower down the profit share of Toyota.
Social
The interest of the common public towards the environment safety is offering a great opportunity
to the Toyota organization to promote their hybrid cars and electric operated cars but at the same
time, these new products are also impacting the middle-class customer base which is attached
with the fuel cars and has lowered their sales in some countries.
Technological
The growing demand for e-commerce, use of mobile trends has offered many opportunities to
this organization to expand their capability. It also offers the opportunity to sale the company's
product with the help of third-party service (Vrontis and Pavlou, 2008). The rising spare part
application will help the customer to book the part online and receive the delivery on time. But at
the same time rise in cybercrimes has developed a threat environment for these organization
which is operating through e-commerce strategies.
Environmental
Unpredicted climate change, dropping down a level of reserved oil has motivated this
organization to develop more eco-friendly cars which will take care of the environment. As the
demand of these eco-friendly cars is not increasing due to rejection from the middle-class
population which has impacted their sustainability in the business market. One of the examples is
that developing countries like Nigeria have not enough capability to pay a high price for these
hybrid cars and are not ready to leave their fuel operated cars.
Legal factors
Refining intellectual property law is offering the opportunity to Toyota organization to reduce
their concerns related to laws which are connected to the intellectual property. But at the same

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time growing complex environmental laws has impacted the sales of the organization by creating
restrictions in some specific markets. In addition, complex consumer laws are also negatively
impact the sales of the company.
Internal strengths and weaknesses of specific businesses and explain their interrelationship
with external macro factors
Strength of Toyota
One of the biggest strength of this organization is that it is able to maintain its position at the top
of the best car manufacturing companies in the world. The SWOT analysis will basically help in
identifying factors which can strengthen the growth of the organization. The main strength of
Toyota is that it is able to maintain a strong image in the market and have the required ability to
adopt any kind of rapid change (Zivkovic, 2012). This organization has the strongest distribution
network in the world as compared to other organizations.
Weakness of Toyota
The observed weaknesses which have been seen in this organization are that this organization
works on the particular hierarchical process and there is a kind of secrecy in their culture.
Another weakness which has been seen in this organization in recent years is the recalling of
their products from the market which has created a negative impact on the brand image of the
organization.
Strengths and weaknesses interrelate with external macro factors
Strength
The Strong point of Toyota is mainly founded on the financial as well as technical tendencies.
Such aspect from SWOT exploration recognizes all the planned features which an enterprise can
utilize in relations of development in their business (Coman and Ronen, 2009). For Toyota
important opportunities are increasing demand for cars, growing interest in electric cars along
with fuel economy vehicles and the economic stability in the developing countries.

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Weakness
Threats are mainly connected with the competitive circumstantial. For an organization like
Toyota, the major threats are the existence of the evolution of the marketplace with low-cost
challengers and other threat is a speedy revolution inside their current challenges.
Conclusion
In this world of competition, if an organization really wants to remain sustainable, it has to
follow the strategy of continuous improvement in their business operation and must understand
the changing demand of the customers on a global platform in order to gain a competitive
advantage on other companies which are functioning in the same market.

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