Business Strategy Report: Toyota's Macro Environment and SWOT Analysis

This report provides a comprehensive analysis of Toyota's business strategy, examining the impact and influence of the macro environment on its operations. It delves into various external factors, including political, economic, social, technological, environmental, and legal aspects, and how they affect Toyota's decision-making and market performance. The report also employs Porter's Five Forces model to assess the competitive landscape and identifies potential threats and opportunities. Furthermore, it conducts a SWOT analysis to evaluate Toyota's internal factors, such as strengths, weaknesses, opportunities, and threats, providing insights into its competitive advantages and areas for improvement. The analysis covers the company's hybrid vehicle market, supply chain, and market expansion strategies.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1 .................................................................................................................................................1
P1 Impact and influence of macro environment on Toyota ........................................................1
M1 Analysis of macro environment factors ................................................................................3
P2 Internal factors of environment .............................................................................................3
M2 Evaluation of strength and weakness of Toyota ..................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business strategy refer to setting up a long term plan for the future. It is used for
determining goals and objectives of the company (Akter sand et. al., 2016). Strategic planning
helps in enhancing productivity and growth in business.
Study will be based upon Toyota company. It is a Japanese auto mobile manufacturer
who's headquarter is located at Toyota City , Japan and founded by Kiichiro Toyoda. It is leading
brand in selling hybrid vehicles.
Report emphasizes on impact and influence of macro environment on business strategy
and internal factors that affect functioning of business.
LO1
P1 Impact and influence of macro environment on Toyota
Macro environment factors refers to external approach that will affect business operations
of Toyota. These factors are not controlled and hence influence decision making in the company.
This include different factors such as political, social, environmental, economical, technological
and legal factors.
Political factors
These factors include political stability, corruption, tax policy labour laws etc. As Toyota
is manufacturing cars so the most important factor that affect functioning of company is trade
agreement at global level. If country's political stability is not good then it will have an impact on
operations of Toyota and people are not able to purchase its car. Changes in tax policy also affect
proper functioning as Toyota is selling its product in different countries that become barrier in
the future. People are not able to afford its car because of imposing of more tax on products this
will lead to decrease its sale and growth in the economy (Whittle sand Myrick, 2016). There are
different factors such as penetration that will have greater impact on prices of Toyota cars. In
some countries there are restrictions regarding selling heavy products so that impact business for
the company as it is not able to expand its business in such countries.
Economic factors
Toyota is operating in US also so price of dollar is high as compared to currency of
Japan i.e. Yen. Due to changes in exchange rates business of Toyota fall down as people are not
purchasing its product due to heavy changes in currency. It also impacts export and import from
other countries due to changes in rates so market gets down and company have to bear loss. At
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the time of inflation prices are very high that will impact purchasing power of consumer and
sales of Toyota will decrease. As there are no export and import that will affect business more as
there are no sales and people are not willing to buy cars at high price that will affect operations
of Toyota (Fritsche and Pigneur, 2020). Prices of fuel is also increasing that impact purchasing
power that will create difference among various segments.
Social Factors
This influences by culture that is followed in particular country that affect functioning of
Toyota. Different country is having different beliefs, norms and culture that is being followed in
countries. Norms will differ as there are different people working from various geographical
location so that affect Toyota's operation. People are interested in buying product of Toyota as
they are not having trust on this brand so it leads to create difference in selling product to people.
Word of mouth also impact selling of product as if one consumer is buying product and not
satisfied with it quality then it told to other consumers that it is not good so that will impact sales
of company's product (Higgins, Omer and Phillips, 2015). This is becoming threat for
companies in selling product into existing market. Disparities between country impact business
very much as there are less opportunities of growth in the future.
Technological factors
Changing in technology lead to bring more opportunities for companies but on other hand
it will impact company's operation as adopting new technology lead to increase operational cost
of Toyota. E-commerce is rising in market very much that affect functioning of company that
will lead to create different perspective in the company. Changing technology will lead to
increase operation activity that bring changes in working of company. Establishing business in
new country and adopting technology of that country create problem or manufacturing as
expenditure increase and that will cost a lot to Toyota (Schaltegger, Hansen and Lüdeke-Freund,
2016). For doing work on new technology employees given training so that they will work
effectively and efficiently but impact on company's cost is incurred while providing training to
employees.
Environmental Factors
These include changing in weather, environment of country that affect functioning of the
company. Changes in climate of country will affect manufacturing car in that country. Oil that is
used in manufacturing car got damaged after so that will impact on manufacturing of Toyota and
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there may problem occur due to wastage of oil that impact from climate change. There are
various factors that affect climatic condition and create problem for Toyota to work in the
country. This affect working of company that bring changes in business operations and help in
gaining various aspects as working environment impact different perspective that will bring
efficiency in doing work for the future. Weather also impact working of company's operation
that lead to create various perspective that is being followed in the company.
Legal factors
Changes in governmental rules and regulation affect functioning of product in the country
that lead to bring different perspective. Toyota is manufacturing car so chemical is being used
while doing colour to cars so in some countries it is restricted for doing business outside country
so that it will not affect health of people who are residing nearby areas (Adner, 2017). It is
important for Toyota to follow rules and regulation of that country so that it enhance business in
that country. There are different perspective that taken into consideration for setting up business
in a particular country. This is having greater impact on operations as government policies is
implemented on company that create various problem in the future.
Porter's Five Force model
This is another framework that influence business operations in the organization by
gaining competitive advantage in the market.
Threat of new entrant
Competitors are the biggest threat for Toyota as it help in enhancing different perspective
for the future. As Toyota is dealing in auto mobiles so many new entrants are there in the market
that become threat for the company. Different company is adopting their own strategies that help
in providing different perspective for the future. New entrant bring new technologies in the
market that will increase operational cost of Toyota by adopting that technology.
Bargaining power of suppliers
There are many suppliers in the marketplace that will be providing competition in the
market and enhance availability of resources. Toyota is purchasing raw material from different
suppliers so they will change their supplier as those who is giving at cheaper rates Toyota is
buying from that supplier.
Threat of substitute product
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There are many substitute of Toyota that create competition in the marketplace. This
bring effectiveness in business and help in analysing substitute product as consumers are shifted
to another product that create more competition for Toyota. As other companies that are selling
auto mobile is the biggest threat for Toyota to sell its product into the market. They are using
different strategies for selling its product into the market and bringing effectiveness for the
future.
Rivalry among existing competitors
There are various rivalry entry in the marketplace that create more competition for
Toyota that will affect strategy of Toyota for selling product in the market. They create intense
competition and providing various services in business. Rivalry companies are creating
competition as for Toyota BMW, Honda, Tesla bring new technology in the market and that will
become threat for the company.
Bargaining power of buyer
Buyer is having high bargaining power in Toyota as by providing different perspective in
the future course of action. By innovating new product into the market that create different
perspective in increasing larger share in the market. As Toyota will be providing different
changes in its product that will be affected by strategies that is being followed in the company.
M1 Analysis of macro environment factors
These factors are having a greater impact on Toyota's operational activity. Political
factors affect free trade agreement from outside countries that will affect operations and
manufacturing unit in the company. Due to changes in exchange rates impact foreign trade from
other countries and it leads to huge disruption for the future. Culture and norms also affect
functioning of company and sometimes affected by beliefs that is being followed in company.
Adoption of new technology increase operational cost in Toyota and various environmental
factors also affect its working following with rules and regulation of that particular country.
P2 Internal factors of environment
Swot analysis refers to internal factors that affect working of company in the future.
These include strength, weakness, opportunity and Threats.
Strength
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The biggest strength of Toyota is the first company that manufacture hybrid cars for the
first time worldwide (Prajogo, 2016). It is also first to adopt total quality management concept in
its company that bring efficiency and effectiveness in manufacturing process. It is known as an
innovator of hybrid vehicles and introducing new product in the market. It is safe to environment
also that will not create any damage to environment. It is having high revenue and provide large
output in the market. It offers large model that help in satisfying needs and wants of consumer. It
is also known for its brand in the marketplace and focus on research and development that create
more opportunities in the future. Strong supply chain management system help in distributing
more product to consumers and building network from different consumers that will be
beneficial for the future (Saebi and Foss, 2015). It is leading brand worldwide that sells vehicle
and has named in the market as it is using advanced features in its vehicle that help in increasing
growth for the future.
Weakness
Its biggest weakness is manufacturing many products at a point of time will lead to suffer
from financial problem that will have greater impact on performance of the company. It is not
having a good presence of company in the emerging market that affect its operation in the future
course of action. In Asian market Toyota is having weaker position that affect various aspect in
the company. There is less flexibility in the market that affect business operations. There is less
arrangement of safety in its product that will lead to disrupt technological changes in its product.
Opportunities
Expansion of market into different countries lead to bring more opportunities in the
future. Through this brand image also enhance and that increase growth in the company. As it is
manufacturing hybrid cars that is pollution free so it can also manufacture hybrid bikes that help
in gaining more market share (Dyllick and Muff, 2016). This helps in saving environment form
pollution and health of people. Manufacturing product that help in satisfying needs and wants of
consumer is an opportunity for Toyota as if consumer needs are fulfilled that will help in gaining
larger share in the marketplace. It is also an opportunity for Toyota to focus on countries that are
developing on regular basis and impact on different operations of company.
Threats
It is not using any standard that will affect its operation in the company that is threat for it
Another threat is related to cost of raw material that is used in manufacturing product so it
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sometimes leads to disruption of product in Toyota (SWOT Templates for Small Businesses,
2019). Competitors are the biggest threat for every company that will not be able to survive in
the country for long term. Changes in exchange rates impact operations of Toyota as it is not
able to do foreign trade with other countries. Its manufacturing plant are located in different
countries so due natural calamity that affect manufacturing process and sometimes lead to less
productivity. Health and safety of people is the biggest issue that will need to affect their health
so it is considered while manufacturing product in the country. Price fluctuation also lead to
disrupt technology that is used in Toyota for manufacturing product (Joyce and Paquin, 2016).
Due to shortage of skilled labour its working at global level affected and less growth in the
economy. Availability of local distributors in the market is also threat for Toyota to sell product
in local market. Regular supply is not there of innovative product that will impact various
functions of company in the future. Increase in pay scale of workers affect functioning of
company through different perspective that create problem for the future course of action.
Technological changes by other competitors affect business operations in market.
VRIO Framework
This framework help is providing different aspect that will be useful for business in the
future. This stands for value, rarity, imitability and organization. This is providing different
aspect in the company for the purpose of enhancing business.
Value:- This is providing different aspect to Toyota as utilizing requirements that are needed for
manufacturing product into the company. This lead to bring effectiveness in business and
providing value to business activities that help in bringing more opportunities for employees in
Toyota.
Rarity:- Resources that will be providing into business gaining different changes in business.
Rare availability of resources will lead to affect productivity of Toyota. as Toyota is providing
unique product to consumers that help in attracting more towards the company.
Inimitable:- Product cannot be copied from other sources as original product have to be
manufactured by Toyota in providing different aspect for the future.
Organization:- This framework is providing different perspective for gaining challenges that
lead to create internal framework in business. Toyota also have to provide different product that
help in providing various perspective for the future.
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M2 Evaluation of strength and weakness of Toyota
Toyota is the biggest manufacturer of auto mobile in the nationwide. It is adopting
different technological changes in company for making its operational activity smooth and
effective that helps in growth for the future. Its financial position is also strong as it is leading
manufacture of car in the country. Extensive use of technology will also lead to improve
efficiency of company (Evans and et. al., 2017). Its weakness is its presence in emerging market
is slow that affect different perspective of company. Diversification in product help in increasing
market share in other countries lead to bring more opportunities for it. Health and safety of
people is also an important perspective that need to be taken into consideration and fluctuation of
prices laed to decrease sales of the company.
CONCLUSION
From above study it can be said that external and internal factors both affect functioning
of company in the marketplace. Political factors include instability as in this condition it will not
be able to grow in the country. Beliefs and norms also impact various aspect of company and
may lead to create problem do that affect its market share. Due to less foreign trade lead to
impact exchanging of currency of different countries that will lead to create problem for the
company. Therefore, these are having greater impact on company's operation that will bring
effectiveness future.
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REFERENCES
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Joyce, A. and Paquin, R.L., 2016. The triple layered business model canvas: A tool to design
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Schaltegger, S., Hansen, E.G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
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Whittle, R. and Myrick, C.B., 2016. Enterprise business architecture: The formal link between
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Online
SWOT Templates for Small Businesses.2019.[Online]. Available through :
<https://www.businessnewsdaily.com/6989-free-swot-templates.html>.
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