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Economic. For much of the developed world, and increasingly for the
developing world, Toyota Company is a pillar company in auto mobile business,
a flag of economic progress. Without Toyota Company in automotive industry,
it is impossible to develop an efficient steel business, a plastic industry or a
glass sector other central foundations of economic progress. The Toyota
Company has been a core company, a unique economic phenomenon, which has
dominated the twentieth century (2007). However, the automobile industry
including the Toyota Company now suffers from a series of structural schisms
and has become riddled with contradictions and economic discontinuities. For
the capital markets and the finance sector, it has lost a lot of its significance, as a
result of ever declining profits and stagnant sales. The proliferation of products
means that it has become hopelessly wasteful of economic resources. While all
these and more sound like a very gloomy assessment of such a vast economic
phenomenon, the industry is not in the end despondent. A different future is
possible for the industry, a highly desirable one.
Environmental. Other than the vehicles themselves, and the roads and
fuel needed to run them; the business is intricately tied to the manufacture of a
wide range of components and the extraction of precious raw materials.
Indirectly, it brings people road congestion, too many fatalities and a wave of
other environmental troubles. The effect to the Toyota Company is that they
needed to establish R&D centres to take advantage of research infrastructure
and human capital, so that they can develop vehicle products locally to satisfy
the requirements of the environmental and safety regulations more effectively.
Another
Lastly, Japan has limited space and is not suitable for some
businesses of Toyota. Some of Toyota's activities need bigger places
to operate, so it has to operate in other countries. For example,
Toyota controls two businesses in Australia. Toyota Motor Corporation
Australia Limited controls production and sales of automobiles, parts,
and industrial vehicles. Australian Afforestation Pty Limited,
however, operates afforestation activities handling raw materials for
paper making which is needed for the automobile production.19
Political factors
Toyota Motor Corporation is the world's third largest automaker,
offering a full range of models mini vehicles to large trucks. Global
sales of its Toyota and Lexus brands combined with those of Daihatsu
principles.
Technological factors
In addition to physical and societal factors faced by Toyota, the
company is also faced with competitive and technological factors
which
affect the smooth running operations of the company.
Porter's approach to industry analysis
Michel Porter, an authority on competitive strategy, contends that a
corporation is most concerned with intensify of competition within its
industry. The level of this intensity is determined by basic
competitive forces. "The collective strength of these forces", he
contends, "determines the ultimate profit potential in the industry,
where profit potential in the industry, where profit potential is
measured in terms of long run return on investment capital". In
carefully scanning its industry, the corporation must assess the
importance to its success of each of the 5 forces, those are as
follows: threat of new entrants, rivalry among existing firms, and
threat of substitute products or services, bargaining power of buyers,
bargaining power of suppliers. The strong each of these forces, the
more limited companies are in their ability to raise prices and earn
greater profits. A high force can be regarded as a threat because it
is likely to reduce profits. A low force in contrast, can be viewed as
an opportunity because it may allow the company to earn profits. In
the short run, these forces act as constraints as a company's
activities. In the long run, however, it may be possible for a
5) Mitsubishi.
6) Suzuki.
Ford, BMW & Jaguar already has secured market position in the
British
market environment, therefore their threat is made all the greater as
they now have knowledge of the British market system and are
building
their customer and loyalty base. On the other hand Toyota is trying to
adopt the market share in Europe. Toyota as a multinational
enterprise
has already launched its product to the online market and is currently
mature stage of online product cycle.
However Toyota's online venture is in mature stage besides this they
are always aware of what the potential threats to its business are.
More established online car manufacturing company, who have
already
identified and possibly combated the risks to their market share may
gain a competitive edge here, like rival Ford.
In a price sensitive and competitive industry achieving profits where
prices are nailed down, low cost production is particularly difficult,
especially if there is elasticity of demand, the loyalty of the
customer may not be gained or retained unless cost incentives and
quality assurance are customary. The purpose of online sales
facilities is to boost more sales and gain profit.