Toyota Motor Corporation's Expansion into Sweden: A Business Report

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Business Organisations and Environments in a Global
Context
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Executive Summary
The report has the discussion on the overview of the selected firm and the host country. The
analytical tools have been utilised such as PESTLE framework and Porter’s five forces to assess
the environment of the chosen country that has been selected by Toyota to make expansion
through FDI method. The important aspects of the organisation have been provided as well as the
key features of Sweden have been discussed such as its advancement in technology,
neighbouring regions, and major industries that contribute in enhancing its economy. The data
has been provided for giving evidence on the economical aspects of the region as well.
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Table of Contents
1. Introduction..................................................................................................................................4
2. Background information on selected organisation......................................................................5
3. Background information on business environment in Sweden:..................................................7
4. Analysis of the business scenario..............................................................................................11
5. Conclusion.................................................................................................................................18
Reference List................................................................................................................................19
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1. Introduction
In the global context, the environment of the regions where the organisation has activities can
affect the latter. The external as well as the internal environment can affect the organisation such
as legal, social, technological, employees, customers, and such.
The present report will have an argument on the allocated company that is Toyota Motors
Corporation, which is making expansion in Sweden. The expansion will be through using the
method of foreign direct investment (FDI). Some analytical tools will be used such as Porter’s
five forces, PESTLE analysis, and supply-demand scheme to assess possibilities of expansion of
the Toyota Motors in the selected country.
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2. Background information on selected organisation
Toyota is a public limited company that has been established in the year 1937 by Kiichiro
Toyoda. This falls in the automobile industry and is headquartered in Toyota, Japan. However, it
serves the countries all over the world (global.toyota, 2019). This organisation has the legal form
of Multinational Corporation. There is range of services and goods provided by this company
such as manufacturing of ships, industrial vehicles, aircraft, sale and leasing as well as repairing
of transportation machinery and other apparatus. It also trades space machinery, its parts, and
apparatus. It has operations in the international or foreign regions as well. There is 51 overseas
location of this company that manufacture the products that have been mentioned above. The
products manufactured by this firm are sold in more than 170 countries worldwide
(global.toyota, 2019). It has a market share of 5.2% in the Europe in the first quarter as reported
in the year 2019 (newsroom.toyota.eu, 2019). The major competitors of the firm are BMW,
Mercedes Benz, Honda, Ford, Tesla, Nissan, Audi, General Motors, Volkswagen, and Suzuki.
At present, Takeshi Uchiyamada is the chairperson of the company and Akio Toyoda is the
president. It also provides services such as financial, leasing, and banking to the customers. It has
the value per share of 7,176 JPY as per 2019. Its revenue or sales as reported in the Europe have
been 994,060 units that have increased by 25,983 units. Around 1,029,797,080.36 currency
Euros have been increased in the profit as per the report of 2019. It employs 370,870 workers all
over the globe (global.toyota, 2019). This has been increased from 364,445 employees in the
year 2017 (fortune.com, 2018). The company has 606 subsidiaries as per the report of 2018
(toyota-global.com, 2018). As per the report of 2018, it has been one of the largest companies
worldwide as per its revenue structure. It is the first manufacturer of automobiles that produces
above ten million automobiles every year since the year 2012, in which it has produced 200
million vehicles.
As per the report of 2014, Toyota has been the largest company by market capitalisation in Japan
as well as in revenue. This firm has been the market leader in selling the electric vehicles that are
hybrid in nature. It is also the leader in production of the vehicles incorporated with hydrogen
fuel cell. The management of the operations of the company follows the lean manufacturing
method as well as the production process of just in time (strategosinc.com, 2019). It has formed
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the company’s principles under the headings of continuous improvement and respect for people.
Its five-year plan has been a step forward in development of strategies to have positive impact on
environment. Through the method of reduction and recycling, it has modified the designing,
development, sale, and production processes. As per the report generated in 2018, the firm has
invested four billion dollars in Artificial Intelligence research institute and robotics to make safer
vehicles. It has collaborated with Cogobuy, a Chinese technology company to manufacture
Smart Car Ecosystem to turn the firm into intelligence-oriented.
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3. Background information on business environment in Sweden:
Sweden is one of the countries in European continent. Stockholm is the capital city of the
country. This region is a constitutional monarchy as well as parliamentary democracy. This
unitary state is divided into 21 countries as well as 290 municipalities. This country has
renowned authors such as Harry Martinson, Austin Strindberg, and others. The well-known
painters of this country are Carl Larsson as well as Anders Zorn while the famous sculptors are
Carl Milles and Tobias Sergel. The cinema industry has revolutionised the gender equality
during the 1960s and 1970s. The public sector of this region is divided into local authorities and
State as well as local Municipalities. The King is the head of the state but its monarchy role is
limited to representative and ceremonial functions (sweden.se, 2015). It lacks the political power.
Sweden’s neighbouring countries are Denmark, Finland, and Norway. The population size of the
country is around 10,272,518 as per recorded in the year 2019 (scb.se, 2019).
Figure 1: GDP of Sweden
(Source: imf.org, 2019)
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Its GDP is 563 billion dollars and ranks 23rd in the world (imf.org, 2019). The country’s per
capita GDP is 54,135 dollars and ranks in the 11th position as per this criterion (imf.org, 2019).
Its GDP growth has been 2.7% as per the report of 2016. Some of the most significant sectors
that contribute to the nation’s economy are motor vehicles industry, telecommunications,
industrial machines, pharmaceuticals, chemical goods, forestry, precision equipment, iron, steel,
and appliances and goods of home. The engineering sector contributes to around 50% of the
exports and agriculture adds to 2% of total employment and GDP of the country. The technology
sector accounts for 9.9% of economy. The Swedish Government makes expenditures of around
3.5% of the economic rate on the R&D (nationmaster.com, 2019).
Figure 2: Unemployment in Sweden
(Source: scb.se, 2019)
Sweden’s unemployment rate as per the report of 2018 has been 6.26%. In unemployment
criterion, the rate of unemployed men is more than women that is 6.4% and 6.3% respectively as
in the year 2019 (scb.se, 2019). In the month of March 2019, it has been 6.38% approximately as
illustrated in the figure provided below:
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Figure 3: Unemployment rate in first quarter, 2019
(Source: ceicdata.com, 2019)
Figure 4: Number of employed person in Sweden
(Source: scb.se, 2019)
The country’s employment rate has been 68.5% as recorded in the year 2019. The rate of
employed men is higher than that of women that is 70.7% and 66.3% respectively (scb.se, 2019).
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Figure 5: Inflation in Sweden
(Source: scb.se, 2019)
Its inflation rate is 1.9% in the month of April as well as its interest rate is -0.25% in 2019
(scb.se, 2019). The inflation rate has been decreased from 2.2% in the year 2018.
The country’ banking sector is divided into foreign banks, cooperative banks, commercial banks,
and savings bank. The commercial bank of the Sweden holds market share of around 66% of
deposit market (fessud.eu, 2019).
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4. Analysis of the business scenario
PESTLE analysis
Elements Factors Analysis of Toyota Motors
Political The country councils of the
country have the role of
administering public transport
(skl.se, 2019).
Its low-income inequality is
higher than countries such as
Denmark and Japan that is at
0.25% (hdr.undp.org, 2019).
Toyota will be affected by the
country council’s
administration, as the latter
would control its activities in
Sweden.
Toyota Motors will be
benefitted by the low-income
inequality, as there is high
living standard of the people
that can induce the sales of the
vehicles manufactured by the
organisation.
Economic The economic growth rate of
Sweden has been reduced
from 2.1% to 1.4% in two
months as per the report of
July 2019
(tradingeconomics.com,
2019).
The unemployment rate has
been increased from 6.26% to
6.66% from 2018 to 2019’s
second quarter (ceicdata.com,
2019).
The reduction in growth rate of
economy of Sweden can affect
the business of Toyota
negatively. This is because the
buying capacity of the native
people has been decreased.
The unemployment rate of
Sweden can affect the growth
and sales of the goods of
Toyota in negative way as it
the lack of employment facility
in the country would affect the
buying power and economic
condition of the native people.
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Thus, the company would not
be able to make sakes and earn
more profit.
Social People of the country
promote renewable energy in
the context of transportation
vehicles. They use renewable
energy and substitute for fuels
in the automobiles
(export.gov, 2019).
People of the country prefer
buying the vehicles that are
well established in the region.
Toyota would be affected by
the sustainability factor of the
country, as it has to use
effective technology in
manufacturing vehicles that
will reduce the emission of
harmful gases.
This factor can affect the
growth of the sales of the
Toyota, as there are
competitors such as Volvo
Cars, Volvo Group, and Scania
that are preferred by the naive
people (export.gov, 2019).
Technology Technological advancement
has created electric vehicles
that are environment friendly.
In the year 2018, 28332
registrations have been made
for the same that shows that
electric vehicles are in
demand (export.gov, 2019).
The companies for
advertising their products use
technologies nowadays.
Toyota will be affected
positively by the technological
factor as it manufactures
electric vehicles. This will
affect the purchasing decision
of the consumers and increase
the sales.
Toyota can assist the help of
social media to promote the
corporation.
Legal As per the “Employment
Protection Act 1982” of
Sweden, the organisation of
The act of employment
protection would affect the
Toyota Company in Sweden as
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