Unit 1 Business Assignment - Toyota

Unit 1 Business Assignment-Toyota

Program

Diploma in Business

Unit Number and Title

Unit 1 Business Assignment Toyota

QFC Level

Level 5

Introduction

Business environment can be defined as the addition of numerous factors which are responsible for the
success and failure of business organization. These various factors involve internal and external factors
of business operations. This Business Toyota Assignment studies the understanding of organizational
purpose of business, behaviour of market environment, significance of external factors and nature of
national business environment with respect to global car manufacturer Toyota.

Unit 1 Business Assignment Toyota Assignment

Task 1

1.1 Types of organization and their purposes

An organization can be defined as the unit of people or group of people working together to achieve
collective goals. There are various types of organizations involved in business activities; they can be
divided as primary, secondary and tertiary sectors. Services, sales, ownerships, ownerships, etc. are the
different purposes of organizations. Organizations working in different sectors have different purposes,
for example, agriculture, mining, fishing, etc. are the activities associated with primary sector. Secondary
sector include automobile production, textile production, etc. and the tertiary sector include
entertainment, tourism, media, etc. In United Kingdom (UK), different types of organizations are
working with different purposes (Arthur&Sheffrin, 2003). The four types of organizations in the UK are
as follows:

Government– There are various organizations that are owned by government. The legal entity such as
state-owned entity, state-owned company, government-owned corporation, publicly owned
corporation, etc. are created by government. For example, National Health Service (NHS, England),
National Nuclear Laboratory, etc. are government owned entities in UK

Charities- A charitable organization is non-profit organization that works for welfare of the society.
There are different legal definitions of charitable organizations that vary according ot the country. In UK,
the charitable organizations are exempted from taxation such as value added tax, income tax and capital
gains tax. The advancement of education, religion, art, heritage and science, prevention of poverty, ill
health, helps of those in disability, financial hardship, etc. are the purposes of charities. For example,
Cancer Research UK, TEARFUND, etc. are charities working in UK.

Co-operatives – A cooperative is an organization that is controlled and owned by people who use its
products and services. The purpose of cooperative will be established by its members. Retailer’s
cooperative, Consumer cooperatives, worker cooperative, etc. are the different types of cooperative.
For example, MidcountiesCo-operative Society is one of the cooperatives in UK.

Private limited – It is a type of organization that has following purposes such as maximize profit margins,
generating highest possible revenue, increasing market share through sales maximization and to survive
in competitive market. It is a company owned by private individuals and have limited liability on its
directors and shareholders (Sawyer, 2004).

Toyota Motor Corporation which is a Japanese company and has engaged in the design, manufacture,
assembly and sales of passenger cars, commercial vehicles, related accessories and parts. It is private
limited company and working in multinational locations. The Business environment of toyota's main
purpose is to generate maximum revenue.

1.2 Objectives of different stakeholders of Toyota.

Stakeholders – The individuals or group of people who are affected by the organization’s objectives,
policies and actions are the stakeholders. Stakeholders are basically individuals or group of people who
own a share in business. Stakeholders can affect the business, be affected by business and both affected
the business and affected by business. Direct and indirect stakeholders are the two major groups of
stakeholders in business organizations. Employees, customers, owners and shareholders are the direct
stakeholders that directly impact the business (Peloza& Shang, 2011). Government, trade unions,
competitors, etc. are indirect stakeholders that do not affect the business directly. Hence the list of
stakeholders is:

Employees

Customers

Managers & Owners

Government

Communities

Trade unions

Toyota motor cooperation has also developed various strategies to meet the objectives of its
stakeholders. Company’s brand image, financial strength and human resource capabilities are affected
by stakeholders. Toyota has recognized the significance of stakeholders and to address the interests of
various stakeholders, the company maintains corporate social responsibility activities. Maintaining a
strong position in global automobile market, Toyota continues to satisfy the interests of relevant
stakeholders. Toyota’s attempts to meet the objectives of various stakeholders can be explained further
as:

Owners – These are the major stakeholders for the Toyota and have interest in business profitability.
Toyota addresses the objectives of these stakeholders through focus on global business strength.
Owners are involved in day-to-day business activities of Toyota.

Employees – Toyota gives important to its employees and considers them as most important
stakeholders. Toyota meets its employee’s objectives through satisfactory salaries, allowances and
career development programs for advancing employees. For example, various training courses to career
paths and On-the-job Development (OJD) program has adopted by Toyota.

Customers – These are significant stakeholders that impact the growth and development of Toyota.
Toyota has addressed the objectives of these stakeholders by providing high quality automobiles and
services with reasonable pricing. Increased demand of vehicles and higher revenue of the company
suggests that Toyota has successfully met the objectives of customers as stakeholder.

Government – Toyota has regular discussions with government at various operational locations and
perform its operational activities in comply with governmental rules and regulations. Toyota has fulfilled
the objectives of government by paying corporate tax on a regular basis and obeys all the rules and
regulations developed by the government of UK.
Communities – As stakeholders, communities interest is their socioeconomic development. Various
support and community development has been organized by Toyota toaddress the objectives of
communities. For example, In UK Toyota has organized support programs for science and technology
education (Sustainability data book, 2016).

1.3 Responsibilities of TOYOTA and the strategies employed to meet expectations of different
stakeholders

Toyota has worked with various stakeholders such as employees, government, communities, customers,
etc. Toyota’s corporate social responsibility activities have deals with various stakeholders and play a
vital role to meet the responsibilities of various stakeholders. The various responsibilities of Toyota that
has identified on its stakeholders are:

Economic responsibilities

Legal responsibilities

Ethical responsibilities

Environmental responsibilities

Management responsibilities

Strategies to meet these responsibilities

Economic responsibilities –Toyota is one of leading automotive company and it has committed to
provide economic benefits to the stakeholders. Toyota’s responsibility is to produce goods and services
and maximize profit for its owners and other stakeholders (COLLINS, 2010).

Legal responsibilities – Organizations are expected to fulfil their economic goals within legal framework.
Toyota has followed governmental rules and regulations and developed strategies to support
automotive manufacturing industry in UK

Ethical responsibilities – Respecting the rights of stakeholders and less to their problems are ethical
responsibilities of business organizations. Toyota has managed effective business strategies and always
pays attention to the problems of stakeholders.

Environmental responsibilities – Toyota, through its corporate social responsibility address various
environmental related problems. The company has fulfilled environmental responsibilities through
Toyota Environmental Activities program and the company has also donated automobiles and funds for
environmental conservation (Werther& Chandler, 2010).
Task 2

2.1 Economic system and influence on TOYOTA

Economic system refers to the means by countries and governments distribute services and resources
and trade goods. Distribution networks, production, organizing labour, etc. are the various steps and
processes involved in economic systems. In the development and growth of any organization, economic
system plays important role. As Toyota is Japanese company, economic system in Japan is different as
compared to other countries where Toyota has developed its operational activities. Therefore different
types of economic system haveaffectedthe progress of Toyota also. But Toyota has developed certain
strategies to deal with various economic system adopted by countries worldwide. Before starting any
business activities Toyota has analysed the whole economic system and governmental rules and
regulations that affects its operational activities. The different types of economic system can be
described as:

Mixed economy – This type of economies are the mixture of both public and private ownerships.
Organizations can develop their business but need to comply on governmental policies. In a mixed
economy, organizations have authority to develop their own business strategy but also need to follow
labour regulation, consumer regulation, taxation policy, etc. decided by government. In order to allocate
resources mixed economy is very effective because both government and organizations are equally
involved (Schiller, 2011).

In UK, mixed economy system is used which benefits the automobile manufacturing facilities of Toyota
also. In mixed economic system allocation of resources can be done effectively so Toyota get support
from UK government to establish a manufacturing operation in UK. Toyota has established tow
manufacturing plant in UK and also gives employment to number of people. So mixed economy system
in UK has benefitted both Toyota and local citizens of UK

Free market economic system – In this type of economy system, the control of government is low and
private sector has high control. Free market develops opportunities for organizations to produce new
products and services. Organizations do not depend on government agencies and provides services and
products when public needs. In free market economy, the main objective of any company is to make
profit and sometimes organization avoid certain laws impose by government to achieve goals and
objectives.

Free market system is also good for Toyota. The company can develop strategies and earn huge profits
in free market system. The automobile manufacturing market has developed at rapid rate and there are
various companies that established their manufacturing plant because of free market economy system.
2.2 Effect of monetary and fiscal policy of UK on Toyota

Fiscal policy – This policy can be explained as the ways through which government can adjust its tax
rates and spending levels to monitor the nation’s economy. Fiscal policy determines central and local
government spending, Public Sector Net Borrowing (PSNB) and Public Sector Net Cash Requirement
(PSNCR).

Monetary policy – It can be described as the process through central bank, currency board or other
regulatory committee determines the rate of growth of money supply which affects the interest rates.
The objectives of monetary policy are to lower unemployment, maintain exchange rates with other
currencies (Afonso& Sousa, 2012).

The United Kingdom’s economy is considered as fifth largest national economy in the world measured
by gross domestic product (GDP) and it is comprised of 4 per cent of world GDP. In UK the service sector
has dominated the economy and contributes to near about 78 per cent of GDP. The British economy is
mainly impacted by oil and gas production and by the end of year 2014, the growth of UK is very good
and rate of unemployment was decreased.

Impacts of fiscal and monetary:Fiscal policy affects the collective demand through changes in
government spending and taxation. Employment and household incomeare influenced by taxation and
government policies. On the other hand money supply in the UK economy is impacted by monetary
policy which affects inflation rate and interest rates. Desire to make quality products are the reason of
Toyota’s success both on international and Japanese market. The fiscal and monetary policy has impact
Toyota’s business activities. When government increases corporate taxation then Toyota revenue has
affected. The increase or decrease in interest rates in UK has impacted financial stability of Toyota (Hall,
2012).

2.3 Effect of competition policy and other regulatory mechanism on Toyota

Competition policy– UK competition policy can be defined as the ways by which government promote
competition in the market and developed competitiveness of UK business within the European Union
single market. The main of competition policy is to ensure:

Effective price competition between suppliers

Widening consumer choice

Development of technology innovation to increase efficiency (Rubalcaba, et. al., 2010)

Impact of competition policy on Toyota activities

The government of UK has developed competition policy for the efficient working of markets. As Toyota
is engaged in automobile sector and there are also other competitors in the market which give tough
competition but with competitive policy other companies do not exploit their monopoly power by
charging high or low prices. Competition policy aims to provide fair competition in market for all
companies, Toyota UK has worked successfully because of competition policy. UK government wants to
develop the manufacturing sector so the government has encouraged Toyota to develop more
operational activities. The UK wants that Toyota would give employment to local community and helps
to raise the standard of living in the remote areas (Damro, 2012).

Task 3

3.1 Market structure determine the pricing and output decision

Market structure can be defined as the characteristics which move the buying behaviour in the market
and change interaction of business. These characteristics can be the product type, conditions for entry
or exit, transparency, quantity and volume of sales. There different types of market structures such as
monopoly, oligopoly, perfect competition, monopolistic competition and duopoly market structure. The
two types off market structure are explained below:

Perfect competition- Perfect competitive market denotes no influence over the prizing in the market by
any participant. There is no barrier to entry for buyer or seller and the information has a free flow. The
buyers and sellers both seek to increase their profit margins and have free access to the market entry
and leaving. The information regarding the products such as quality, quantity and availability is available
to everyone. These types of market structure can be observed in agricultural trades of wheat and corn.
There are a large number of buyer and sellers and product is homogeneous with no price taker.

Monopolistic competition- The monopolistic competition is the marketing structure which produces
differentiated products. In other words the producer changes the product slightly in order to maximise
their profit. For example retail sector which has similar product but not a perfectly substitutable
product. The monopolistic competition provides independent decision making and free entry and exit
for the long run of business. The buyers and sellers have all the relevant information regarding the
products and the differentiation creates a diversified product range.

The market structure is responsible for the pricing in business organization and its output decision. The
pricing and output decisions are based over the competitiveness of the market. If the market is highly
competitive in nature then the pricing and output decisions are governed by production capacity and
market traits. While in a less competitive market the pricing and output decisions are based over the
business organization itself (Wetherlyand Otter, 2008).

3.2 Market forces shaping organizations response

Market forces are the effects which causes change in the price of goods and services on the basis of
supply and demand in the market. The price of goods and services are inversely proportional to demand
in the market. So, if the demand of a product is increased, the prices will relatively increase and if the
demand of the product is decreased, then the price of the product decreases subsequently. There are
number of market force factors which can alter the pricing such as demand & supply, price elasticity,
porter’s five forces and price decisions. The two types of market forces are explained below:

Supply and Demand- Supply and demand is the price determination model in business economics. It
emphasis it’s concentration over the quantity of product for supply and quantity of demand in the
market. The supply and demand force is concluded over the competitiveness of the market. This means
that the economic equilibrium of price and quantity can be achieved with the quantity of goods and the
want of the good in the market.

Price decision- The price decision can be explained as, it is the measure of establishing the price of a
product. The pricing decision is done with covering all the initial cost of manufacturing with profit
margins. It can be decreased with lowering the input cost or the production cost of goods and services.
A review system is present in the price decision where the market demands, cost dynamics and
competition is reflected to alter the pricing. Also, the price decision assures sales for the business
organization. The pricing decision has internal factors which influence pricing such as market share,
market profit, returns on investment and marketing objectives. And the external factors affecting pricing
decisions are government regulations, customer expectations, elasticity of demand and competitiveness
(Worthingtonand Britton, 2009).

The impact of market forces over the business of Toyota can be explained with porter’s five force
analysis explained below:

Competitive rivalries of Toyota (Stronger force): Toyota is in automobile manufacturing and deals with
lot of competition on a global level. Thus competition is a strong force which depicts the pricing strategy
of the products and services of the company.

Customers have bargaining power (strong force): The customers are the king in any market and Toyota
is directly based over the influence of buying behaviour of its customers. If the pricing of the product will
not suit its customers they can move over to any other company. Thus company needs to provide
information to their consumers regarding the products and services to target its customers.

Suppliers have bargaining power (Weak force): The suppliers of the company have a moderate
population and the high availability of suppliers in automobile industry led the bargaining power of
supplier as a weaker force as compared to other forces.

Substitute product in market (Moderate force): Toyota has a strong brand value and a specific target
audience, company can rely over them. But there are chances of changing business environment with
shifting of consumers towards substitute products as well. Thus, it is a moderate market force over
Toyota.

New entry of competition (Weak force): Toyota has achieved its organizational success to a limit that it
has a competitive edge in the market. Thus, in a car manufacturing industry new entrants pose weak
threat to a global car manufacturer like Toyota (Donaldson and Farquhar, 2012).

3.3 Business and cultural environment or business organization

The business and cultural environment of Toyota can be explained with the environmental analysis of
the company. The environmental analysis of Toyota can be explained with the following PESTLE analysis:

POLITICAL

ECONOMICAL

SOCIAL

TECHNOLOGICAL

LEGAL

ENVIRONMENTAL

Political stability
Free trade agreements

Eco-friendly products have governmental support

Currency difference between Yen and dollar

Gradual growth in mixed economy

Rapid increase in demand in UK

Hybrid cars are favoured

Electric cars have public interest

Rise in use of mobile tech

E-commerce market increased

Intellectual property laws are improving

Complex consumer laws

Increase in environmental laws

Climate change increases hybrid cars

Task 4
4.1 Discuss the significance of international trade to TOYOTA UK business.

International trade can be explained as the exchange of products, services and goods across the
international borders. In most cases the manufacturing of the goods takes place in another country and
it is consumed or sold in another country thus completing the entire process of international trade.
International trade is very significant for any country and company for their business and Toyota is no
exception in that. Toyota has annual revenue of more than 230 billion USD and 75 percent of that
revenue comes from international markets for Toyota. Their home market that is Japan is already a
saturated market in terms of automobiles and there is stiff competition among players like Honda,
Toyota, Suzuki etc making the market very stiff and little room for maneuvering. International markets
and trading is the only available market for Toyota where it can grow and adapt itself with the changing
needs of markets.

In markets like UK Toyota has a strong presence and a significant revenue share because UK is a
developed and industrialized market with a healthy demand for its product round the year. UK is not
just a single market for Toyota but it is a portal for their entry into entire European Union market
because UK has the infrastructure and ability to handle large imports and exports and also acting as a
financial capital of the western world. Thus presence in UK is very significant for Toyota as it gives them
control over the entire EU market.

Presence of companies like Toyota in UK has its positive and negative impact on local businesses of UK.
Toyota UK is responsible for sales, marketing and services of all Toyota vehicles and Lexus vehicle and it
is generating more than 20000 jobs in UK directly and indirectly. They are making a contribution to the
local economy by paying taxes for their business and generating various auxiliary services needed but in
the longer run they are hampering the ability of local business to cater to the automobile needs of their
population and being a MNC company would eventually take out their profits to their head offices from
regional centres like UK (Schuster & Keith, 2004),

4.2 Analyse the impact of global factors on TOYOTA UK business.

The term Globalization represents union of the entire world’s culture. Thus globalization has led to the
integration of the world views be it in terms of goods and services or be it the geographical shift of the
production poles in order to satisfy the needs and wants of the customers. The meeting of marketing
ideas, products, services, consumer behaviour is one aspect of globalization other aspect is that it is
creating an ever increase in the difference of income between the rich and the poor worldwide.
Transition and globalization has got a major impact on the global economy (Cannella, 2010). Rapid
progression in the transition and full contribution in the global economy enables countries around the
world to grab new opportunities and garner its benefits.
Technological development in field of IT and IT enabled services is one of the biggest drivers of
globalization because it is ensuring a real time communication and connectivity between different work
centres around the world and ensuring that business can be managed from remote locations as well.
Services have the problem that they cannot be stored and they need to be consumed at the same time
when they are produced and this can be done using IT services. Now services can be generated in a low
cost country of world and it can be consumed anywhere in world.

Second driver of globalization is the development of supply chain management and logistics
management. A global supply chain management is connected with the entire business world to develop
their procurement procedure and distribution strategy. A global supply chain model is adopted by many
organizations or large and midsize who are looking for a competitive presence in market. Benefits
associated with global supply chain management are cost effectiveness and a reliable supply chain
which will ultimately give the organization a sustainable competitive organization and dominance in
market because of having an advantageous feature in the operational process of the company. Both IT
services and Supply chain can make an impact on Toyota’s business operations. Supply chain can ensure
that manufacturing can be done in locations where it is feasible for company and then ship them to the
markets like UK. on the other hand IT can ensure that all activities of the company well-coordinated.

4.3 Evaluate the impact of policies of the European Union on TOYOTA UK business.

European Union is politico economic union of 28 members of the state which are primarily located in
Europe. EU is formed with the logic of developing a unity between different member states of European
region and creating a harmonious environment by opening borders for each other and maintaining same
level of taxation and adopting similar currency for exchange (Stank, et al. 2011).

Toyota UK as a business has a huge impact because of European Union and its policies. One of the
biggest advantages of having EU union for the entire 28 countries is the fact that they have similar
business regulations, norms and policies for companies with headquarters outside Europe. This way
Toyota would not have to develop different business policies for each market of Europe. Country wise
markets are small in Europe and it is not worthwhile for a company like Toyota to cater to each of them
individually, however making an entire EU provides a huge business market for the company and helps
them gain the required business growth. No difference in taxes and levy in the neighbouring countries
also reduce the competition from companies operating in different markets.
European Union as a market has much stringent emission norms called EU emission norms which are
very tough for companies like Toyota to follow in every market. Some of the countries which are a part
of EU like Greece do not have the required infrastructure and economic strength to support the
requirements of EU fully and companies have to follow the rules in these markets which are not ideally
suited and required for them. For example the emission norms, minimal wages and work hours related
norms which are applicable Denmark considering its general climate cannot be same as that of required
in Greece but being a part of EU makes them all follow the same norms (Jamal, 2003).

Conclusion

It is concluded that this assignment has focused on the organizational purpose of business and also
analyse the various stakeholders of Toyota and its strategies to meet the objectives of different
stakeholders. The assignment explained behaviour of organizations in their market environment and
also assess the importance of global factors that shape the national business activities. The report has
presented different strategies used by business organization and the main focus of report on case study
of Toyota.

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