CHAPTER I

INTRODUCTION

Toyota Motor Corporation (TMC) is a multinational company that produces

cars, trucks, buses and robots, with headquarters in Toyota City, Japan. Toyota is
the largest car manufacturer in Asia and second largest producer.
Toyota is one of the three major Asian car manufacturers competing U.S.
producers on the world market, the other two are Nissan Motors and Honda Motor.
Also the company provides financial services through its subsidiary, Toyota
Financial Services, and works in other fields. Automotive products are sold under
the names Toyota, Scion and Lexus. Toyota owns a majority stake in Daihatsu and
Hino, and 8.7% of Fuji Heavy Industries, manufacturer of Subaru cars.
In 2005, Toyota together with Daihatsu Motor Company produced 8.54
million vehicles, almost 500,000 less than General Motors in that year. In July 2006
Toyota exceeded sales of Ford cars, but the American manufacturer has regained a
month later. Toyota has a significant market share in U.S., Europe and Africa and
is the market leader in Australia.
Toyota has factories all over the world, where produces and assembles
vehicles for local markets. The company has manufacturing or assembly plants in
Japan, USA, Australia, Canada, Indonesia, Poland, South Africa, Turkey, United
Kingdom, France, Brazil, most recently those in Pakistan, India, Argentina, Czech
Republic, Mexico, Malaysia, Thailand, China and Venezuela.
The first Toyota vehicle built outside Japan was a Land Cruiser FJ-251 built
in São Paulo, Brazil, in May of 1959.
The success both on the Japanese market and international market dues to
its desire to make products with a quality. The Japanese believe that nothing is so
good that it can not be improved, so they constantly struggle to increase the quality
of everything they do. This attitude can be expressed by a single word „kaizen”. It means
„continuous improvement” and is the key word which guides them towards perfection.
 CHAPTER II
CONTENTS
A. Economic Environment
Economic Environment refers to the economic factors such as the
economic system and policies, nature of economy of a country, trade cycles,
level and distribution of income which impact the working of business
enterprises (Jain et al. 2006).
Toyota being the world’s number one car maker with a turnover of
over $17 billion in 2008 was hit hard by the economic downturn that started
in autumn of 2008 in the US. The main reason for the impact on Toyota
Motor Corporation was the fall in the consumer spending during the
downturn. The global presence of TMC and also the other division of TMC
such as financial services and biotechnology helped the company to survive
during the economic slowdown. Also the company cut down on many of its
temporary as well as permanent workers and also cut down on car
production as a response to the economic downturn.
The threats to Toyota are mostly related to economic stability. The
economic slowdown and recession has affected the sales of the automobiles
that are manufactured by the company in the Americas and the other parts
of the globe as well. This has significantly impacted the company in the
international market as well. In such situations of economic slowdowns, the
consumers try to save every single penny and buying a new car becomes
almost impossible for the general public (Ezin Articles).

B. Social and Cultural Environment

Social Environment refers to the influence of certain social and
cultural factors on an organization. The factors affecting the social
environment of an organization are usually beyond the control of the
company and may include factors such as attitude of people to work,
religion, caste, etc. (Jain et al. 2006).
1. Social Environment
As a manufacturer of a wide variety of products, including lift
trucks, car air-conditioning compressors, textile machinery, motor vehicles,
and electronic products for use in motor vehicles, the Toyota Industries
Group is making an effort to understand the environmental impact of our
products across their entire life cycle, from the stage of procurement of raw
materials and parts through to product manufacture and on to product
disposal.
The most notable environmental impacts generated by Toyota
Industries’ operations include global warming caused by the use of energy
and greenhouse gases in processes such as casting, emissions from casting,
machining and other processes, the atmospheric impact of chemical
substances used in the painting of motor vehicles, lift trucks and
compressors, and the impact of industrial wastewater on public waterways.
Toyota Industries is continually striving to reduce these kinds of
environmental impacts of its operations.
The Toyota Industries Group will contribute to the compatibility of
environmental conservation and economic growth throughout its wide range
of business activities, including automobile, industrial equipment,
electronics and logistics.
Basic Policies are the following items:
a) The Toyota Industries Group will continue to set challenging targets
aimed at further reducing the environmental impact of its business
activities, listening carefully to voices of its stakeholders such as
customers, and acting in compliance with the letter and spirit of laws
and regulations.
b) The Toyota Industries Group will continuously improve its
environmental management, placing environmental activities among its
highest priorities. In particular, the company will give priority to the
following items.
1) Curb global warming
Aiming to reduce energy consumption and the output of greenhouse
gases through the entire lifecycle of its products, services, and production
activities
2) Use resources more efficiently
Utilizing raw materials, water, and other resources efficiently while
working to reduce, reuse, and recycle waste products
3) Reduce environmental risk factors
Reducing the use and output of substances of concern while
evaluating environmental risk factors at the planning stage of business
activity in order to prevent pollution

c) The Toyota Industries Group will aim to foster greater communication

and teamwork within a wide range of partnerships, including those with
customers and suppliers, in order to promote sustainable management
of the environment. In addition, the Toyota Industries Group will act as
an upstanding corporate citizen, taking an active part in the planning of
activities that contribute to various regional communities as well as to
our global society.

2. Cultural Environment
a) Supporting Invention Clubs for Boys and Girls* to Help Youth
Education
To help foster the healthy education of our youth, Toyota
Industries utilizes a variety of means to support invention clubs for
boys and girls in Kariya, Obu, Takahama, Handa, Anjo, and
Hekinan, where our plants are located. For example, we provide
donations to the Obu Invention Club for Boys and Girls to assist with
administrative expenses, as well as providing financial assistance,
volunteer helpers (Toyota Industries employees), and the loan of
buses for the various events organized by the Club. The Kariya
 Invention Club for Boys is operated by the Toyota Institute of
Physics and Chemistry, which is supported by Toyota Industries and
ten other companies in the Toyota Group.
b) Contributing to the Development and Promotion of Amateur Sports
Toyota Industries continues to contribute to the development
and promotion of sports activities through donations to and
sponsorship of sports promotion organizations and sports meets that
are mainly in the local area. The Kariya Club, a local rugby club team
consisting primarily of former members of the Toyota Industries
Rugby Team, runs a rugby school for local children at the Toyota
Industries Rugby Ground every year.
c) Participation in Program for School Teacher Training at Private-
Sector Companies
In this program, teachers from elementary, junior high, and
senior high schools are invited to attend training during the school
summer holidays to increase their awareness of industry and
corporate activities by experiencing them for themselves. 88
companies around Japan participate in the program. From August 23
to 25, Toyota Industries welcomed four teachers from the Takacho
Board of Education in Hyogo Prefecture and helped them to increase
their understanding of issues such as health and safety education,
environmental conservation activities, and personnel and human
resources development systems.
d) Participating in the Management of the Toyota Commemorative
Museum of Industry and Technology
The Toyota Commemorative Museum of Industry and
Technology was jointly founded by 13 companies of the Toyota
Group. The museum utilizes the building of the former Toyoda
Automatic Weaving Co., which has been designated as an important
building of the cityscape by Nagoya City.
 Its purpose is to increase the understanding of young people
about the “spirit of being studious and creative”, and the importance
and wonder of “making things”. Since January 2007, the museum has
put a steam engine, which was the driving force of the industrial
modernization, on permanent exhibition. Toyota Industries provides
the museum with personnel, funds for covering management costs
and exhibits, and also participates in its management.

C. Political and Legal Environment

Toyota Industries perceives compliance to be observing laws and
regulations in addition to respecting local culture and customs in a manner
that is in tune with the changing times. The Corporate Code of Conduct
Committee plays a central role in strengthening the company’s systems and
mechanisms, stipulating conduct guidelines, and making every effort to
ensure that all employees are informed through education and
enlightenment activities. Toyota Industries is also tackling the issue of
enhancing compliance at domestic and overseas affiliates. In addition, the
Purchasing Department carries out compliance checks of our business
partners.
The Corporate Code of Conduct Committee is in charge of
controlling the group’s overall corporate activities regarding compliance
and responses to crises. Consisting of Directors, as well as Managing
Officers and Corporate Auditors, the Committee meets at appropriate times
to confirm the status of any important incidents that may have occurred,
along with the countermeasures and responses that were adopted. They then
draw on these outcomes when deliberating the matters to be dealt with in
the coming fiscal year.
Under the aegis of the Corporate Code of Conduct Committee, the
company designated a number of departments as legal compliance
departments to provide thorough instructions to other divisions and
departments on legal compliance, while the company as a whole is currently
undertaking further efforts to strengthen our compliance system. The
company also established the Compliance Subcommittee and the Data
Security Subcommittee. These Subcommittees are comprised of Chairmen
who are nominated from among the directors and members of relevant
divisions and departments, and meet each month to consider concrete
measures aimed at boosting compliance based on individual action plans.
The Audit Office and designated legal compliance departments cooperate
in supervising the compliance of individual divisions, departments, and
affiliates at home and overseas.
To ensure thorough compliance with the spirit and the letter of the
law, eleven departments in our Corporate Center, including the Legal
Department, serve as designated legal compliance departments that work to
ensure compliance with relevant laws and regulations throughout the
company. The individual departments draw up activity plans each fiscal
year and maintain their familiarity with new legislation and revisions of
laws and regulations. They also consider responses to revisions of existing
mechanisms, streamline rules and manuals, ensure that the entire company
is well-informed through in-house education programs, and confirm and
direct compliance in related departments through compliance audits. The
Corporate Code of Conduct Committee monitors these activities and, where
necessary, puts forward proposals to the President in order to reinforce
them.
D. The Strategies Used to Cope The Environment
Strategies used by Toyota in order to get success on selected markets
to develop business and to impose on these markets are strategies most,
created by Japanese specialists. The strategy that generally based both
Toyota companies and most Japanese companies is KAIZEN strategy which
means continuous improvement and the impact that it has on the level of
product quality. ”KAIZEN” is an integrative strategy, which means a cross-
functional strategy that appoints the gradual improvement, management and
continuous business activities and the parameters of quality, productivity
and competitiveness, with direct involvement of all staff.
The product strategy of Toyota is based on high quality, on
developing new innovative technologies, focusing on further research,
creativity, but also hard work. Toyota is a world leader in research and
development of advanced automotive technologies. Toyota develops
intelligent responses to the challenges of the automotive industry today,
while assuming responsibility for future generations.
Regarding the problem of pollutant emissions, Toyota explores
simultaneously a variety of solutions for designing less polluting vehicles
as well. Toyota has committed to develop hybrid systems as a basic factor
in manufacturing clean technology cars, combining different sources of
power. It has made significant progress in designing engines that use
alternative energy sources. One of the most promising approach is
combining two different sources of energy in a single system with the
potential to use both. This solution is known as hybrid technology and is the
most promising way to achieve Toyota’s green machine. Search for
innovative solutions is based on new technological concepts of this
company. Unconventional ideas need a way of expression, and future
technologies has to be tested in terms of daily life. Therefore, Toyota
develops concepts such as the Fine-N engine powered by a fuel cell or
CS&S roadster powered by a Hybrid Synergy Drive system
The fabrication technology of engines is one of the most valuable
property of Toyota. Toyota’s performance range of engines and advanced
design reflects the high standards set by engineers. Toyota’s engines are
designed for comfort and performance, while constantly aiming to reduce
emissions and optimal fuel consumption. So, today, Toyota may offer its
clients the following advantages: gasoline engines with advanced
technology, variable rate control valves VV-i and VVT-i, D-4D common
rail turbocharged engine - now available in D-CAT variant to equip
Avensis, unique hybrid propulsion system Synergy Drive.
Safety is a priority for Toyota. Advanced steering systems, brakes,
suspension and traction control help keep control of the car. Each is
designed with a Toyota extreme care in terms of safety, using advanced
computer simulations and crash tests. Body and chassis are designed to
absorb energy from impact and provide a maximum occupant protection,
besides SRS (Supplementary Restraint System) airbags protection system
they used.
Toyota made over time many innovations and improvement in active
and passive safety. From the first active suspension system in the world in
1991, to the marketing of Stability Control System Vehicle in 1995, and to
the first curtain airbag launched in 1998, Toyota has aimed to improve the
security and technology benefits that it offers to its clients. It can be said
that Toyota’s main strategy is the total control of the quality using the „zero
defects”, continuous improvement of its products.
Toyota makes independent studies on consumer needs, getting the
vote of confidence on their part. Also, this is reinforced by the exceptional
results of Toyota vehicles in Euro NCAP safety tests. Consumers trust
Toyota cars and feel safe in their wheels.This trust is the result of the highest
standards of quality which Toyota designes and produces its cars. The
Japanese have turned their attention to markets with significant growth
potential. In Europe car manufacturers have invested substantial amounts to
build production plants, research centers and design workshops.
Toyota designers from three continents are exploring ideas, visions
and desires in order to design advanced machines and new technologies
bringing more quality of life. Toyota opened in 1954 in Tokyo, Japan, Head
Office Technical Centre, which was the center of design activities, planning,
designing, production of prototypes and evaluation of vehicles. It was
responsible for all fields, including planning, designing and evaluating
vehicles. In addition, the center is also in charge of security technologies,
energy conservation and environmental protection. In 1973, in Newport
Beach, California Toyota opened the design center Calty Design Research,
Inc..
Toyota Europe Design Development is opened in 2000 and is located
in Nice, France. The company created the European Laboratory for Design
ED for a better understanding of local influences and preferences of current
and potential clients. Here, the team has developed successful models Yaris,
Corolla, Corolla Verso, Avensis and Land Cruiser.
The company experts were quickly realize that local production of
vehicles and exporting them to different countries is not as profitable
business as their installation even in areas of marketing. Very rapid conquest
of significant market share in the EU is a direct result of rapid adaptation to
the specifics of each area and complying with regulations without trying to
avoid or modify them (a characteristic of U.S. firms).
Also, a major component in Toyota’s strategy is to build more
research and design centers in the proximity of production facilities. These
bring specific items of the areas regarding the design and amenities.
Unexpected success of the Japanese led to the exportation of vehicles
produced in Europe to other markets of the world.
This is the strategy that Toyota has adopted to penetrate foreign
markets worldwide. ”Think global, act local” is the slogan that guides the
company on the global market. Toyota has adopted the strategy of direct
investments on the growing and stable markets, as we have demonstrated,
and it fully managed.
 CHAPTER III
CONCLUSION

A. Conclusion

Toyota Motor Corporation being one of the leading companies in

the automobile manufacturing industry has dealt with several challenges
over the past few years. These challenges which were mainly related to
technical issues in the manufacturing of cars resulted in recalls of the
manufactured automobiles from the market and impacted the reputation of
this leading company. Since the company is highly customer centric, TMC
spent huge amounts in order to resolve the problems in the automobile that
were already sold out to customers and also provided timely updates to all
its customers. The company also made sure that the cause of the issue was
analyzed deeply and that it was fixed so that such issues can be prevented
in the future and the company is able to retain its position of being the global
market leader in the automobile industry.

B. Recommendations

Toyota Motor Corporation should implement more stringent in-

house quality checks on the production of all of its automobiles. This would
help in detecting any technical faults in the manufactured automobiles while
the product is still within the company and has not been sold out to
customers. By implementing more severe quality checks, the company can
save on huge costs involved in recalls and detection of problems and most
importantly, it will help Toyota Motor Corporation to retain its position of
being the market leader at all times.
 REFERENCE

Toyota Social And Environmental Report 2007

Funaru, Mihaela. TOYOTA’S BUSINESS STRATEGIES IN INTERNATIONAL

MARKETS. Brasov: University of Braşov Faculty of Economics and
Business Administration, 2009.

https://en.wikipedia.org/wiki/Toyota_Group

https://www.ukessays.com/essays/marketing/factors-influencing-the-business-
environment-of-toyota-marketing-essay.php