Strategic Analysis of Toyota Motors: Unit 32 Business Strategy Report

This report provides a comprehensive analysis of Toyota Motors' business strategy, examining its external environment through PESTLE and Porter's Five Forces models. It delves into the internal environment using frameworks like McKinsey's 7S and VRIO analysis to assess organizational capabilities and identify strengths and weaknesses. The report also explores the impact of political, economic, social, technological, legal, and environmental factors on Toyota's operations. Furthermore, it assesses competitive forces and proposes strategic management plans. The analysis encompasses the UK market, considering the company's vision, mission, and objectives, along with critical analyses of the macro and internal environments. The report culminates in a critique and data interpretation, applying environmental and competitive analysis to inform strategic decisions.

Unit 32
Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. External environmental analysis. ..........................................................................................1
M1. Critical analyses of macro environment for determining as well as informing decisions
related to strategic management...................................................................................................4
TASK 2............................................................................................................................................4
P2. Appropriate frameworks for analysing internal environment as well as organisational
capabilities...................................................................................................................................4
M2. Critical analysis of internal environment fro assessing strengths and weaknesses of
business's internal capabilities.....................................................................................................6
TASK 3............................................................................................................................................7
P3. Applying Porter's five forces model......................................................................................7
M3. Appropriate strategies to improve edge of competition together with market position.......8
TASK 4............................................................................................................................................8
P4. Theories and concept for devising strategic planning...........................................................8
M4. Strategic management plan................................................................................................10
D1. Critiques and data interpretation with application of environment as well as competitive
analysis.......................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCE.................................................................................................................................14

INTRODUCTION
Business strategy is working plan that organisational managers prepares to compete
successfully, optimise financial performance, prioritising objectives and accomplishing visions
with their business model (Alghazi, Shen and Fosso Wamba, 2017). It creates vision and
provides guidance to the entire organisation. Effective business strategy creates success
measures, drives decisions and gives direction to all the members of business. In addition, it also
helps an entity to decide where resources and efforts should be best spent. The present report is
prepared by considering Toyota Motors which is global automotive manufacturer having few
plants in United Kingdom. The report covers impacts that macro environment have on entity,
organisation's internal along with external capabilities. It also evaluates competitive forces along
with application of model of Porter's five forces. At last, various frameworks are applied together
with producing strategic management plan.
TASK 1
P1. External environmental analysis.
Organisational profile: Toyota Motor manufacturing (UK) is a manufacturing company
that operates business in United Kingdom. It was established in December 1989 for the purpose
of manufacturing auto mobile or cars. This is a large organisation that employs around 3000
employees. Its headquarter is situated in Burnaston, Derbyshire England. This manufactures
luxury cars with electric and hybrid features (Toyota Motors. 2019). The vision of Toyota
Motors is “To be the most successful and respected car company in United Kingdom”. The
mission statement is “To attract and attain customers with high valued products that can satisfy
the customers.” The objective of Toyota Motors is to attain the long term goals by harmonising
environment with global economy and the communities.
Macro Environment: This environment is related with economic condition of business
environment which states the some factors that cannot be control and influences decision
making. The strategic planning is uses by Toyota Motors to analysing the elements which can
impacts the businesses. It involves PESTLE analysis which helps to formulate strong strategies
to deal with negative impacts. PESTLE analysis of Toyota Motors are as defined:
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PESTLE Framework - This framework is used to analyse the environment which can
impact on large business. The political system of UK is fair and stable. PESTLE Analysis in
context to Toyota Motors are as defined:
Political - This refers as ways and political system which intervenes in a country consider
as political factor. It contains judiciary independence, taxation policy, political stability,
government regulation etc. which decided by government and impacting on business.
Positive impacts – Toyota Motors is operating business in Auto mobile sector in more
than dozen countries by following the foreign trade regulation and taxation. No changes in
foreign trade regulation and decrease in taxation rates due to change in political system impacts
positively Toyota Motors as it can increase the business activities as well as profitability.
Negative impacts- Toyota fears a no deal Brexit that affected negatively such as halt
production at Burnaston for an unforeseeable length of time. The reason behind this the plant is
heavily dependent on components which are imported from the European Union. It became very
difficult to deal with Brexit as it has to withdraw the its store who are situated in EU.
Economic - The economic environment of UK is market oriented and is automobile
industry is expected to attain $1.5 trillion dollars within coming years. This is comprises with
nation's economy like fiscal policies, interest rate, dynamic market, fluctuation in domestic and
local market, inflation rate etc (Alizadeh and Sipe, 2015). Its impacts on business organisation
are as defined:
Positive impacts -Toyota Motors are dealing in auto mobile by taking loans from banks
and institution. Decrease in interest rate impacting positively on business organisation as it can
take loan more by paying less interest amount which helps to increase the productivity of cars.
Negative impacts – As business are depend on finance which need to arrange from
various institution. Increase in interest rate decrease the production level of Toyota Motors as it
has to pay more interest amount on loan amount which limits the production of new cars models.
Social - This refers as those factors which are related with society that involves beliefs,
values, population attitude etc. Within UK, social conditions are favourable with the company
context. The key area of social factor mainly consider education level, social awareness,
demographic trend, income level of people, savings, demand and needs etc. that are impacting
businesses such as:
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Positive impacts - Toyota is addressing the population attitude and income level of
people which has certain impacts as increase in Volume of sale of such organisation. Moreover,
Aging population is also affecting the business which increase the productivity.
Negative impacts - Toyota is greatly impacted badly by changing needs and attitudes of
consumer which change the insights and interest of customers towards other organisation. As
resulted decrease in sale volume of Cars.
Technological – The environment of technology in UK is fast disrupting due to changes
within the technological aspects. This is disrupting factor in Auto Mobile sector in UK which is
pertaining new technology such as artificial intelligence, machines, Fin tech services and others
which are affecting the business such as:
Positive impacts – This factor is an opportunity for Toyota such as it mainly focus on
hybrid and electric cars by using technology. As management are having high skills which helps
to focus speed and safety features which interrupts customers towards organisation and create
demand of products.
Negative impacts – It impacts negatively on business organisation such as to research
and develop the new technology by management, huge investments are required to continue the
business activities resulting low productivity and profitability.
Legal - This factor governs range of legislation and laws are important to operations in
business market (Chang and Tsai 2016). In UK, legislations like securities law, transparency
within judicial practices and man y more that are mandatory to be followed by all entities.
Different types of laws are imposed by UK government such as Anti trust law, discrimination
law, employment, health and safety and consumer protection law which are affecting the
Toyota's business such as:
Positive impacts – Data protection, health and safety and employment laws are followed
by Toyota which gives an opportunity to enter in business market and retain the employees for
long period which strengthen the productivity of organisation and employees.
Negative impacts – In case of not providing safety and equal wages to employees creates
conflicts between employees which can affect the production level of organisation negatively.
Employees do not work properly and can leave the organisation which can be critical situation
for organisation.
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Environmental - This factor states different norms of environmental standards that can
impacts on profitability of Toyota Motors in UK market. It involves weather, laws relating to
environmental pollution, waste management and recycling which impacts as:
Positive impacts – Different environmental regulations are followed by Toyota's
management which are mandatory to run a business. It helps to deal with difficulties and run a
business effectively. Moreover, it recycling the wastage which processed to keep clean
environment.
Negative impacts – Not repairing machines, Carbon emission effect and increases in
pollution can impacts negatively as sale of organisation reduces due to not focusing on
environmental factor.
Porter's diamond model – This model is used by business organisation to analyse the
external competitive environment that helps to run a business successfully. This also states that
some business organisation are more beneficial than other in particular region. Toyota Motors is
using such model to get advantages by running its business that are as defined:
Factor condition – This factor states the condition of business industry. Such as Toyota
Motors is competitive industry which manufacture the sports cars in competitive business
environment that helps to take competitive advantages.
Demand condition – This factor states the demand of product which are expecting by
consumers. Such as the manager of Toyota Motors understand the the demand of people and
manufacture that kind of cars which fulfil their desire. This helps to get the advantages of
business in competitive environment.
Related and Supporting industries – It has been seen that there are many related
organisation and suppliers who provide raw material to producers. Toyota Motors are focusing
on such factor and buy raw material from suppliers which helps to get more advantages in
business environment.
M1. Critical analyses of macro environment for determining as well as informing decisions
related to strategic management.
Every business organisation are running their business by focusing on external factors
which can impacts positively and negatively on business organisation. It helps to defined the
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situation of business in competitive market. Toyota Motors is biggest firm in auto mobile sector
that manufacture different models of cars by analysing all factors (Cortimiglia, Ghezzi and
Frank, 2016). The management of Toyota Motors prepares strategies to deal with difficulties
which helps to maintain the profitability. Political regulation in UK are changed by government
that can impacts negatively as not easy to follow new regulation. Increase in population and
decrease in interest rate affected business positively. Similarly, by using new technology in
Toyota Motors management can capture high brand image and market share by increasing sale
volume. Business can impacted negatively in case of not following legal and environmental
factors which can reduce the productivity and profitability.
TASK 2
P2. Appropriate frameworks for analysing internal environment as well as organisational
capabilities.
Internal environment: It comprises of factors that exists within organisational
boundaries. Managers of Toyota Motors uses McKinsey's framework to analyse internal
environment.
McKinsey's 7S model: The another model that is used by Toyota Motors for analysing
its internal environment. The model includes:
Strategy: To execute activities in well organised or systematic ways, it is significant for
making suitable strategy. Authorities of Toyota motors focuses on product development strategy
to launch cars of distinct variations for achieving competitive edge.
Structure: The amalgamation of corporate hierarchy which describes that aspects in
which activities and interrelated with functions. Functional structure is adopted at Toyota Motors
in which groups executes tasks according to similar roles.
Systems: Decision making, workflow addition to procedures that makes the operations at
standard height. At Toyota Motors, more focus are made by managers on marketing systems
together with technological system.
Style: The styles to lead business addition to influencing corporate culture. At Toyota
Motors, Leaders uses democratic leadership style so that they can properly supervise employees
for their development aspects.
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Staff: The assets of company are staff members. Toyota Motors have competent along
with productive staff that contributes hugely for organisational development.
Shared values: Accepted standards with norms which influences attitude of people are
termed to shared values. At the premises of Toyota Motors, administrative posses various shared
values as they compensate and reward people which influences them, more to work with
effectiveness.
Skills: These are the capabilities that are within manpower of institution. The Toyota
motors have skill set such as critical thinking skills, technological skills, presentation skills
within their staff members which helps in achieving objectives as per the set strategies.
VRIO analysis: One of the business analysis framework that helps in evaluating business
resources along with finding competitive benefits. Strategic planner of Toyota Motors used the
model for uncovering and protecting its key capabilities with resources which provides them
advantages for long term sustainability. The capabilities of selected institution are as analysed:
Resources or
capabilities
Valuable Rare Imitable Organised
Model designs ✔ ✘ ✘ ✘
Networking ✔ ✔ ✘ ✘
Resources ✔ ✔ ✔ ✘
Manpower ✔ ✔ ✔ ✔
Valuable: It defines that whether capabilities adds values through enabling business to
exploit opportunities addition to defend against threats. When the answer is in yes, then
capability is considered as valuable (Kono, 2016). The valuable resources that Toyota Motors
have are model designs, networking, resources and manpower. These all plays essential role in
running activities with executing operations in set manner. The model designs of Toyota Motors
are very attractive as well as unique which influences customers to make purchase. The
networking with other companies is also strong that helps in buying vehicle components easily.
Similarly, company also has highly competent manpower that performs their tasks in such
manner that results in positive results.
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Rare: Capabilities that are only acquired by one entity are considered as rare. The rare
capabilities provides temporary competitive advantage. The elements that are rare for distinct
firms are networking, manpower as well as resources. The strategies that business uses to build
network are rare for others that helps Toyota Motors to effective networking system. Selected
entity uses various strategies to retain their manpower and initiate plans for managing key
resources in proper manner.
Imitable: The capabilities that other companies cannot copy or imitate falls under such
category. The resources that Toyota Motors have are unique or distinct in nature that rivals fails
to copy. For conducting activities of business, wide type of resources are required to get better
outcomes. At same time, the manpower of the company can perform activities in all dynamic
circumstances to achieve the targets.
Organised: the aspects wherein all organisational components are arranged in efficient
was to meet business objectives are part of such category (Kueng and Yang, 2017). The
resources of Toyota Motors are the one that are not properly organised as there is huge
competition level in UK market. The activities to manage manpower are properly organised as to
motivate employees fro working hard so that they can design and manufacture best cars with
adopting changes within technology together with operations.
M2. Critical analysis of internal environment fro assessing strengths and weaknesses of
business's internal capabilities.
The small forces which are controlled through managers and exists within institutional
boundaries are renowned as internal environment. The internal environment is composition of
certain of factors which have strong ability to influence business decisions. VRIO model depicts
capabilities which are earned by Toyota Motors. Few of them are manpower, networking, model
designs and resources. The innovative organisational culture and capability for growing
emphasis towards green vehicles are some of the strength of selected institution. In contrary, low
presence in emerging market, weak financial performance and existence of diverse rivals are its
weaknesses.
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TASK 3
P3. Applying Porter's five forces model.
Tool which is primarily designed for analysing competition within industry or market is
named to Porters-five-forces model. The developer of the model is Michael Eugene Porter who
determined various forces which are related with a firm and affects business potentiality to serve
the market and make profits (Lee and Lee, 2016). The strategic planner of Toyota Motors
applies the model to gain wide knowledge about rivalry extent within pertaining corporate sector.
The objective behind using the framework is to analysing together with determining competitive
position that selected firm has within automotive industry. The forces are as follows:
Suppliers bargaining power: Suppliers are the one who provides labours, raw materials,
services and components to the firm. Within automobile industry, the suppliers supply vehicle
components, equipments and information that is required to product final automobile component.
The force describes the powers that vendors posses while negotiating prices with the firms so to
deliver the required components or raw materials. It has been analysed that the level of such
force is low in automobile industry due to presence of huge suppliers. Toyota Motors is global
automobile manufacturer that illustrates that the company has made relationships with several
vendors top procure materials for manufacturing stylish cars as well as other automobile with
high quality. Hence, if on supplier raises costs then company switches to various supplier easily.
New entrant threat: When new firms enters inside the market where primary
organisation is working creates threats for the company. Within automobile sector, it is very
difficult for new institutions to enter easily as huge capitals are required by the new entrants to
make their position. This depicts that Toyota Motors has low threats in context to new entrants.
Competitive rivalry: It describes the competitive extent which is prevailing within
boundaries of any industry. Competitors offers similar products at reasonable low prices within
the market. In relation to automobile industry, various top notch institutions exists which
executes their strategies for acquiring huge par of market shares within UK. Competitive entities
of Toyota Motors are Tesla, Bentley Motors, Volkswagen and Ford. It implies that the force has
high ratio for Toyota Motors that can impact of its sustainability within the industry.
Threat of substitute: Substitutes are those commodities that are secondary from the
original ones and have same ability to satisfy the demands of audiences (Macarthy, 2018).
Threat of substitute that is low or high, all depends on business and their valuable products.
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There is high threat of availability of substitutes for Toyota Motors as various manufacturers
exists in automobile sector that offers automatic, tailor made vehicles as well as AI driven. The
another substitute against vehicles of Toyota motors is public transport that is run by UK's
government authorities for eliminating harmful environmental impacts related to pollution as
well as vehicle omission.
Buyers bargaining power: All industries run to meet requirements of buyers. With such
force, customers bargaining powers are determined that they posses while negotiating with entity
in context to prices of valuables that are offered in market by the firm. As automobile sector has
endless clients that provides buyers huge bargaining power. The customers of Toyota Motors,
have huge powers to force the company to reduce the prices at some extent. In addition, the
switching cost of customers is low that threatens for substitution for Toyota Motors.
According to above discussion, one can say that by implementing Porter's five force,
Toyota Motors gains advantages of gauging competition level, properly dealing with practices of
suppliers and effectively planning for upcoming trends. In contrary, by using the model,
company faces disadvantages of ignoring factors that are residing in present scenario in the
external surroundings. Furthermore, to implementation of this model is limited because of
limited positive points which makes the sector fit.
M3. Appropriate strategies to improve edge of competition together with market position
As per the outcomes of the above discussed model, it is said that Strategic planning
manager of Toyota Motors needs to more emphasise towards substitutes which are available
within automobile market (Madsen and Walker, 2015). For this, marketers of selected business
are required to execute extensive together with continuous market research for identifying key
trends together with innovative technologies emerging in the automotive industry. It will benefit
the firm to launch differentiated as well as stylish car models with innovative designs to enhance
their market position along with edge of competition.
TASK 4
P4. Theories and concept for devising strategic planning
Strategic directions are termed to actions which business takes for achieving objective of
organisational strategy. For analysing huge strategic directions which are available with business
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