Business Environment Report

This report provides a comprehensive analysis of Toyota UK's business environment. It examines various aspects, including different organizational types and their purposes, Toyota's efforts in meeting stakeholder objectives, the impact of fiscal and monetary policies, competition policies, and international trade. The report also delves into the significance of international trade, the impact of global factors and European Union policies on Toyota's operations. The analysis considers market structures, organizational responses to market forces, and the effects of cultural and business environments. The conclusion summarizes the key factors influencing Toyota UK's business environment, highlighting the challenges and opportunities the company faces in the market.

Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Different types of organisation and their purposes................................................................3
1.2 Efforts of Toyota in meeting objectives of stakeholders.......................................................4
1.3 Responsibilities and strategies of Toyota:.............................................................................4
TASK 2............................................................................................................................................5
2.1 Effective allocation of resources by economic systems........................................................5
2.2 Impact of Fiscal and Monetary policy on Toyota..................................................................6
2.3 Impact of competition policies on Toyota.............................................................................6
TASK 3............................................................................................................................................7
TASK 4............................................................................................................................................8
4.1 Significance of international trade.........................................................................................8
4.2 Impact of global factors.........................................................................................................8
4.3 Impact of European Union policies.......................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
2

INTRODUCTION
A company or an organisation that is formed and involved in the production and selling
of goods and services is said to be doing business. This business comprises of the internal and
external environment that together constitutes the business environment. Any changes in any of
the environments causes a great effect on the functioning of the company. The functions and
operations of the company both are affected by these environments. Customers, employees,
demands, policies, etc. are the elements of the business environment. Toyota is an international
manufacturer of automotive. It has been the leading supplier of vehicles since past few years.
The company is the first largest producer and manufacturer of vehicles in the world.
TASK 1
1.1 Different types of organisation and their purposes
Organisation is a group formed for working on an agenda, issue, product or a service.
This group of individuals work for the commercial objective or mission of the company or
organisation. The objectives are devised by the owner of the business organisation. The different
types of organisations in UK are stated below (Bindseil, 2014):
1. Public Sector Company : Owned and governed by the government of the UK. These are
providing generalised services and products to the citizens (NHS- National Health
Services)
2. Private Sector Company: These are owned and governed by individuals or group without
any intervention from the government.
3. Voluntary organisations: Non profit organisations working with an objective of providing
free services without any hope of returns (Cai and Yang, 2014).
4. Franchises: Selling rights of one business to another business in the form of extending a
company's business.
5. Sole traders: Individual traders who are neither governed or owned by any other powerful
organisations.
6. Partnerships: Involves mutual functioning of one or two groups or individuals for one
business. All the profits and losses are shared by the partners according to their share.
3

Toyota is a public sector organisation and works with an well defined objective. Their
main focus is to attract and attain customers with high valued products with best satisfying
experience felt by the customers (Cuevas‐Rodríguez, Cabello‐Medina and Carmona‐Lavado,
2014). Toyota managed to develop its organisation in accordance with the legal structure of UK.
1.2 Efforts of Toyota in meeting objectives of stakeholders
Stakeholders are individuals that have concern or interest in the company. Any
organisation has two types of stakeholders: external and internal. The functioning of an
organisation and its objectives are affected and can affect the stakeholders (David and David,
2016). Toyota has been focusing on developing techniques that are stakeholder oriented. This
management helps in achieving sustainable development and a competitive advantage to the
company in high competition.
Toyota has following stakeholders in its company and it meets their objectives in the
described way(Stakeholder Engagement. 2016):
1. Customers: Providing reliable services with safe and affordable vehicles. Customer
feedbacks, suggestions as well as their complaints are genuinely listened and taken care
by the company (de Jesus and Correia, 2016).
2. Employees: Toyota focuses on creating a workable environment with indulgence of the
employees in leisure activities so that they feel comfortable in their workspace and giving
best outputs.
3. Business Partners: Opportunities are provided to new suppliers and local dealers for
collaborating in Toyota so that the company can attain mutual benefits and develop the
society indirectly.
4. Shareholders: Company's progress and sustainable growth helps in acquiring the
objectives of the shareholders (Forte and Magazzino, 2016).
5. Global and Local Communities: Manufacturing ozone-friendly vehicles without creating
a burden for the environment Toyota develops a good image in the society.
1.3 Responsibilities and strategies of Toyota:
As mentioned before, the stakeholders of Toyota are customers, partners, shareholders,
society and employees. Toyota has following responsibilities towards the stakeholders:
4

 Economic: Company must attain sustainable competitive advantage and contribute
sufficiently to the economy of the country.
 Legal: Toyota must always manufacture and produce those products and services that are
in guidance of law. Legal allegations will be troublesome for the company.
 Ethical: Although private organisations work with one single motive of earning
maximum profit but it is the ethical responsibility of Toyota to do what is right and avoid
unethical practises that can divert the consumers or other stakeholders.
 Discretionary: Despite of the company's individual achievements it must focus on
contributing towards the community as well as the environment. They must work with a
responsibility of improving quality of life in the country (Galí and Gertler, 2010).
Toyota manufactures vehicles that do not cause harm to the environment as well indulges
in various social activities that are organised in the name of the Toyota foundation. The company
focuses in enriching the lives of social groups that are underprivileged or backward in the
community (Galí, 2015). Activities like traffic awareness, safety standards are conducted with
mutual and cooperative efforts.
TASK 2
2.1 Effective allocation of resources by economic systems
Economic systems are mediums that are used by the government for effective and proper
distribution of resources. This distribution is performed for controlling several factors like
production, labour, capital, informational resources, etc. There are four types of economic
systems described as:
1. Capitalism: In this system, sole production and management of anything is under the
control of the owner. The government just have to look after the internal and external
security factors of the country (Gogas and Pragidis, 2015).
2. Socialism : The systems where means of production is owned and managed by the state
fall in this category. Here, activities are planned economically for social benefit of the
citizens.
3. Communism: The system where activities and production is controlled and managed by
Central state authority with some restrictions on the ownership of personal property.
5

4. Mixed Economy/ Government and Private sector: This economic system is combination
of socialism and capitalism. Private sector is encouraged to operate side by side with
existing public sector (Ingenbleek and van der Lans, 2013).
Since, Toyota is a private sector company, it falls in the capitalism economic system but
on the same hand it gets influenced by the activities of the Mixed and social systems. The
company's strategies must be in such a manner that they work for the welfare of community and
the organisation simultaneously.
2.2 Impact of Fiscal and Monetary policy on Toyota
UK is the fifth largest economy in the world with about 4% contribution to world GDP. It
is the second largest economy in Europe. UK has been growing wider with 0.5% increase in its
GDP(The UK economy at a glance). It has also been stated as 9th largest economy in terms of
PPP(Purchasing Power Parity) in the world. UK's fiscal and monetary policy have following
impact on the working and activities of Toyota.
1. Fiscal Policy impact: Fiscal policy is used to influence economic activities in the country
by bringing changes in the taxation and government expenditures. This policy is a must
for preventing or curing inflation. It is a beneficial step for Toyota to fight inflation.
2. Monetary Policy impact: This policy is devised to control the macro variables of an
economy basically inflation. Bank of England manages this policy. Any changes in the
interest rates can trigger inflation which means Toyota's internal functioning will suffer.
2.3 Impact of competition policies on Toyota
The competition policy in UK was devised to overcome the monopoly of industries and
safeguard the consumers from the miseries of the companies. The Competition Act 1998 and The
Enterprise Act 2002 were major revolutions that changed the whole perspective of UK's market.
These were the sources of the competition policy.
This policy regulates the pricing, demands and nature of competition in the market.
Toyota was benefited by these regulations at the time of its establishment in UK. The Enterprise
Act helped solve bankruptcy issues. The company's financial status improved and stability was
achieved. Toyota also got a chance to introduce its high tech cars and automotive that were not
available before in the market. The competition policy also harmonised and created peaceful
trade situations in UK and other European nations (Kerzner, 2013).
6

TASK 3
3.1 Impact of market structure and conditions
Market structure is based on the organisational characteristics of market. There are four
types of market structure : Monopoly, Perfect competition, Oligopoly and Monopolistic. The
actual situational conditions of a market define what kind of structure the market has (Kubasek,
Brennan and Browne, 2016). If Toyota is facing a monopoly market that it is the only seller of
auto-mobiles in UK, this means there is no competition and the company will be sole decider of
whatever prices it has to charge. Decisions won't be affected as there is no competition.
While considering Perfect Competition market structure, Toyota has to make decisions
regarding the activities and business operations by considering the situations and strategies that
competitors have produced. The company cannot blindly take business decisions without
comparing (Mattsson, 2016). Oligopoly market structure comprises of small number of
competitors running their businesses collectively to control majority market share.
3.2 Organisational responses shaped by market forces
The factors that influence certain factors in the product cycle are identified as market
forces. These factors are price, availability and demand of products. UK market although being
established gets affected by these two forces that is price and demand. Toyota can be in two
situations when facing these market forces that is there is a negative and a positive impact. For
example, if the company has surplus supply of products but the demands are declining, The
organisation has to respond by declining the prices of the products. This is a bad situation for the
company as less profits will be earned (Mellahi and Frynas, 2015).
For example, if the company has less or ample supply but great demand then the market
forces are having a positive influence on Toyota. Organisation's response to such conditions will
be rising prices as customers require the product, they will purchase it even in high prices.
3.3 Effect of cultural and business environment
The cultural environment in an organisation like Toyota consists of the atmospheric air
that is created between the employees and the executives. The social balance and respect for the
values and beliefs of employees creates faith of the employee towards the company. Secure
atmosphere builds up (Tarí, Heras-Saizarbitoria and Dick, 2014). Work culture and employee
satisfaction will always be profitable for Toyota. Ethics, attitudes and opinions of the employees
7

towards their workplace must never be ignored. Any sort of negative impact that is cultural
differences can ruin the company's overall performance.
Business environment is consists of factors like political, demographical, technological,
social, economical, etc. Changes in any of the environmental factors changes the whole strategy
and the decision making of the company (Welford, 2013). Toyota must encourage good cultural
acceptance amongst the employees. Strategies must be developed in accordance with the
changing business environments that is Toyota must develop strategies that are shielded by
political reforms or changes in the economical policies like taxation, interest or trade restrictions
(Corporate Governance. 2016).
TASK 4
4.1 Significance of international trade
International trade is the transaction of resources, products and services across two or
more countries, borders or territories. This type of trade is important as it contributes to GDP and
develops international relations which can be beneficial at the time of crisis. Toyota UK is itself
an example of international trade. The company was based in Japan but has one of its extension
in UK.
1. Significance of establishment of Toyota UK is understood by the increase in the
economic status of the auto-mobile sector in UK.
2. Although there were local manufacturers of vehicles earlier but Toyota built up a
platform for the consumers to explore better products at same price range.
3. The company experienced lower production costs and due to international trade a brand
reputation was set up.
4. International trade also helped UK in many other types and qualities of raw materials
other than those in country's jurisdiction.
5. Toyota took an advantage of its opportunity for expanding business overseas.
4.2 Impact of global factors
Globalization is a phenomena that takes place when local businesses emerge to become
huge multinationals and operate on the international scale (Wetherly and Otter, 2014). Over few
years globalisation has taken place on a massive scale. All major companies in UK have emerged
8

in the International market. Globalisation has been driven by factors like technology, politics,
market, cost and competition.
Toyota UK's business underwent globalisation with the influence of two major drivers
that is technological an political.
1. Technological Driver: Digitalisation and internet were major technological reforms that
changed the perspective of a buyer. Nowadays physical stores are not the only media for
purchasing, buyers can focus on online shopping also. Toyota UK focused on effective
technological developments and came up with smart cars. This gave them an edge over
competition.
2. Political Drivers: Toyota UK received liberty in rules and government policies with the
competition policy in action. With lowered taxes and better foreign investments attracted
more investments in the company. The government also relaxed some of the trading
restrictions which gave the company a chance to expand its trade over the boundaries
(Zailani and et. al., 2012).
4.3 Impact of European Union policies
Collaboration with European Union (EU) UK's business structures became more
organised and legalised as all the business activities were under the scrutiny of EU. Toyota UK is
also under the legislation of EU and received license for trading easily in other countries of EU.
Certain policies like Cultural policies, Regional policies, Military policies or Space policies are
examples of the EU trade policy that have to be followed by the companies (Zhu, Sarkis and
Lai, 2013).
Toyota UK's business had great influence because of the policies of EU. All activities
like spending, taxation, export- import, subsidies, etc. were controlled by the national authorities
as well as the EU. The company could easily introduce its products to the other countries of the
union but any exploitation of the liberties given would lead to the black listing (David and
David, 2016). Which means Toyota UK would have to suffer losses in trade internationally and
will face a boycott from the EU nations. Overall impact of the European Union policies is
positive and supportive.
9

CONCLUSION
The report discloses the important features of a business environment. From national
influence to international influence and globalisation all the aspects have been depicted for
Toyota UK. Any business when set up has to face certain challenges in the market. These
challenges are due to local market structure as well as the economic structure of the country. The
type of economic system depends on the type of organisation a business belongs. These factors
are to be considered by the company for gaining its understanding of the business environment.
The report evaluates the complete factors affecting and influencing the business environment of
Toyota UK.
10

REFERENCES
Books and Journals
Bindseil, U., 2014. Monetary Policy Operations and the Financial System. Oxford University
Press.
Cai, S. and Yang, Z., 2014. On the relationship between business environment and competitive
priorities: The role of performance frontiers. International Journal of Production
Economics. 151. pp.131-145.
Cuevas‐Rodríguez, G., Cabello‐Medina, C. and Carmona‐Lavado, A., 2014. Internal and
external social capital for radical product innovation: do they always work well together?.
British Journal of Management. 25(2). pp.266-284.
David, F. and David, F. R., 2016. Strategic Management: A Competitive Advantage Approach.
Concepts and Cases.
de Jesus, S. C. and Correia, M. F., 2016. Active fiscal policy and macroeconomic stability.
Journal of Economic Studies. 43(5). pp.749 – 762.
Forte, F. and Magazzino, C., 2016. Fiscal policies in EMU countries: strategies and empirical
evidence. Journal of International Trade Law and Policy. 15(1). pp.67 – 98.
Galí, J. and Gertler, M., 2010. International Dimensions of Monetary Policy
Galí, J., 2015. Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New
Keynesian Framework and Its Applications. Princeton University Press.
Gogas, P. and Pragidis, I., 2015. Are there asymmetries in fiscal policy shocks?. Journal of
Economic Studies. 42(2). pp.303 – 321.
Ingenbleek, M.T. P. and van der Lans, A. I., 2013. Relating price strategies and price‐setting
practices. European Journal of Marketing. 47(1/2). pp.27 – 48.
Kerzner, H. R., 2013. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Kubasek, N. K., Brennan, B. A. and Browne, M. N., 2016. The legal environment of business: A
critical thinking approach. Pearson.
Mattsson, L., 2016. Bridging gaps between policies for sustainable markets and market practices.
IMP Journal. 10(2). pp.339 – 356.
Mellahi, K. and Frynas, G., 2015. Global strategic management. Oxford University Press.
National Bureau of Economic Research Conference Report. University of Chicago Press.
Tarí, J. J., Heras-Saizarbitoria, I. and Dick, G., 2014. Internal and external drivers for quality
certification in the service industry: Do they have different impacts on success?. Service
Business. 8(2). pp.337-354.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Wetherly, P. and Otter, D., 2014. The business environment: themes and issues in a globalizing
world. Oxford University Press.

Zailani, S. M. H. and et. al., 2012. The impact of external institutional drivers and internal
strategy on environmental performance. International Journal of Operations & Production
Management. 32(6). pp.721-745.
Zhu, Q., Sarkis, J. and Lai, K. H., 2013. Institutional-based antecedents and performance
outcomes of internal and external green supply chain management practices. Journal of
Purchasing and Supply Management. 19(2). pp.106-117.
Online
Corporate Governance. 2016. [Online]. Available Through:
<http://www.toyota-global.com/sustainability/csr/governance/>. [Accessed on 6th
December,2016].
Stakeholder Engagement. 2016. [Online]. Available Through:
<http://www.toyota-global.com/sustainability/society/stakeholder/>. [Accessed on 6th
December,2016].
The UK economy at a glance. 2016. [Online]. Available Through:
<https://ig.ft.com/sites/numbers/economies/uk>. [Accessed on 6th December,2016].
12