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Business Environment

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To run an organization in an efficient manner, it becomes important for them to analyse the internal as well as external factors so that the situation can be evaluated effectively. There are several factors which highly affects the operations of the business which mainly includes government, consumers, suppliers, shareholders etc. To perform the activities of the company smoothly, they must make sure that the benefits of every stakeholders is been satisfied to their best (Brinkman, Navarro and Harper, 2014). In the present report, the study analysis on the Toyota company is been made. This is an auto-mobile organization which is highly successful in both the Japanese as well as the international market. In this, the discussion about different organization structures are been stated. Further, the fiscal and monetary policies are studied to know its effect on the operations of the company. Moreover, the social and cultural impact on business is been determined. Lastly the effectiveness if international trade and the impact of global factors on the business are been determined in the effective manner.

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There are several types of organizations which can be studied by knowing their purposes and identifying its objectives in the business. Further, they are mainly segregated on the basis of three types of organization like private, public and voluntary. The following are the companies which are been categorises under the above basis:

  • Toyota motor company- It is one of the largest company which is dealing the assembling and selling of auto mobiles to domestic as well as in the international market. They are categorized under the public sector. There main motive is to provide with the latest and latest products to the customers (Coghlan, 2012).
  • Sainsbury PLC- It is one of the leading supermarket giant in UK. It is included under the category of public limited company which is having their main competition with TESCO, ASDA. Their core motive is to serve the customers with the best of the services and its main purpose is to maintain that quality and quantity of products to attract wide range of customers.
  • McDonald- It is one of the largest companies which is included under food industry. They are categorised under the franchising industry. They are having their retail outlets all over the world. Its main objective is to satisfy the needs and requirements of all people of different age-groups. Thus, they make several measures to provide the food for every person.
  • National Health service- It is mainly a public funded health care system which provides with the best of health facilities to the people of UK. The functions and operation of this is taken care of by the government. They provide with the services at free of cost so that they can help the public to the maximum. It is funded through central taxation which enables to provide the services to the public (Craig and Campbell, 2012).
  • Virgin Group Ltd. - It is one of the largest multinational venture which serves with different products like travel, entertainment and lifestyle. It is a privately owned company by Richard Branson. Their main motive is to satisfy the customers by fulfilling their needs and demands to the best. Further, their vision is to render sustainable lifestyle to all the stakeholders of company.


There are several stakeholders which are associated with Toyota company which assist in achieving the targets of the firm in an efficient manner. Further, every stakeholder has its own set of rights and responsibilities and take an active participation in the decision making process of the organization. However, it is important to maintain the interest of all the stakeholders so as to run the business in an efficient manner. Thus the following are the different stakeholders which are associated with the organization:

  • Employee- It is core responsibility of the company to ensure the needs and requirements of every staff member is been satisfied. As every person joins the company for their benefit, so if they are satisfied company can aim their success to a greater extent (Curtis and Samy, 2014). They must give them with fair remuneration and provide them with adequate working environment. Thus, it will assist the organization to attain the objectives and targets effectively.
  • Government- As, Toyota is a public limited company it needs to follow all the rules and regulations determined by the government. Further, under they have to provide the customers with the quality products and minimum price. Moreover being a public company, they have to meet all the needs of customers and provide them with legal and ethical rights.
  • Customers: They are considered as the most important element for the organization as they are the end users of all the services and products rendered by the company. It has to adopt certain measures by providing them good quality service to retain them and earn profits for longer time. Toyota is taking several measures to satisfy the needs of the customers by developing the products as per their requirements and also rendering them effective after sale services which help to retain the customers for a longer time. Further, they have set up various agencies which are handling the customer’s complaints and provide them with the best services to them (Evans, Stonehouse and Campbell, 2012).


Toyota takes several measures such as formulating the strategic plans so as to meet the needs of every stakeholder in the organization. As satisfying them, will ensure the fulfilment of the company's objective in an efficient manner:

  • Social responsibility- It is important for every business to meet the social responsibility as this will have a positive impact on the society. Toyota being an public sector company has stopped using the materials which are causing harm to the environment.
  • Legal responsibility- Toyota practice all the rules and regulations determined by the government in an efficient manner. This help them to protect their business from getting exploited (Gibbon and Sliwa, 2012).
  • Ethical responsibility- There are several ethical responsibility of Toyota towards serving the customers which mainly include providing them with quality products at adequate price. This help them to attract wide range of customers towards their company.
  • Environmental responsibility- It is also important for the company to make sure that the nature is not polluted or harmed because of their unlawful activities. Toyota must ensure that they produce the vehicles which emit less harmful pollutant which can help to make the environment green.



Economic system refers to the means by which the government and countries distributes their resources and the trade goods and services to the customers. Further, there are several types of economic system that attempt to allocate the resources effectively in the business are:

  • Free market- In this structure, there is very little or no involvement of government as the resources are allocates only after considering the market structure efficiently. Further, the prices of the products are determined by the organization freely as no other factor influence their pricing decisions (Gössling and, 2011). As Toyota falls under this category, they are free to allocate their resources and can take the decisions on making prices without considering any other factor by the forces of demand supply.
  • Mixed economy- In this, both government and private business have a great impact in allocating the resources in an efficient manner. In this all the decisions are made with the due consent of both the parties. Further, they highly considers the market structure and accordingly make the plans of the economic system for the company.
  • Command economy- It is an economy in which the activities are controlled and operated by some of the ruling bodies. This structure is been followed in China. In this, the price and supply are been regulated by the government and not by the market forces. There core motive is to allocate the resources like labour, capita and natural resources in an efficient manner (Keillor, 2013).


The fiscal as well as the monetary policies are formulated with the aim of fulfilling the financial capability of the organization. Fiscal policy refers to when the government is required to manage their expenditures over the incomes and influence the whole economy. Thus the government will take the decision regarding the spending and the taxation policies. In the situation when the government ants to stimulate the growth of the economy, they will enhance the spending for goods and services. On the other hand, if the economy is growing at a higher speed than the government will put several taxes and decrease the spending. This will directly decrease the overall demand of the economy (Kusluvan and, 2010). Thus it can have positive as well as negative impact on Toyota company as when the demand will increase, the company cam sell their products on a large scale and earn more and more profit but at the time but when the government increases the value of taxes than the demand goes down as people are not willing to spend high money on purchasing the vehicles.

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Monetary policy includes the usage of interest rate and the other monetary tools which have a high influence on the consumer spending and aggregate demand. The government changes the interest rate at which the company can take the loan. Further, in this case also it can have positive effect when the interest rates are nominal for the repayment of the loan. At this time, Toyota company can make huge expenditure which can benefit it in the long run. This have a high impact on determining the pricing policies of the company. Thus, the firm is need to maintain all its creditors by paying them the due amount and also business is supposed to decrease the number of employee to maintain the balance (Conner, 2010).


Now days every firm of various industries are facing high competition in the market. This is because of the reason that for a single commodity there are several sellers which are providing in different brands. In case of Toyota also, there are several other competitors like Hyundai, Honda, etc. which are selling similar products in the market. Thus, the company needs to make the strategies accordingly so that they can attract wide range of customers. Further, government of UK has made different regulatory authorities that directly impact the business operations (Page, 2011). Thus the company needs to adopt the Competition Act 1998 along with the Enterprise Act 2002 which will assist them to identify and deal with the restrictive business practices and attain a competitive edge in the market. Moreover, it also becomes necessary for them to check all the quality standards of the products and make sure that the products are given at adequate prices. Businesses need to take proper care of such issues and cooperate with regulatory authorities by following the rules and regulations.



The behaviour and functioning of the business is highly affected by the industry in which it is being included. They also have a great impact on the pricing strategies adopted by the company. Toyota company is influenced by the market function as it has a impact on the overall performance of the organization. The following are the different types of markets which assist the company to make the decisions regarding the pricing:

Perfect competition- In this no single organization can rule the whole market as there are large number companies which are serving with the similar products with their own name. The customer is having wide choices to select a single product. Toyota is also included in this as there are many competitors for the company. Thus, it need to make the pricing strategy in an efficient manner as it may affect the sales volume of the company (Sodhi and Tang, 2012).

Monopoly competition- In this market, there is a single or less number of sellers for a certain product but there are wide number customers for buying the products. It has an advantage for the firm as it is the only player for serving number of customers. In this, the pricing strategy also becomes easy as they can charge the price as per their preference.


Market Forces:

Factors which affect the market of a product or service directly or indirectly, that is, it can be the price or demand or the availability of it.

Market Forces identified in UK:

Supposingly a company is dealing in UK then the market forces which impacts the company directly or indirectly can be Government policies, Supply and Demand force, etc. Now, talking about one of the market force which is Government.

A slight change in the policies of government will impact the dealings of company on a large scale. For example if we talk about the fiscal and monetary policy, then the increase or decrease in the interest rates government can slow down or speed up the growth of the company. Also the investment flow gets changes according to the interest rates.

Now, we all know that demand is inversely related to the price and supply is directly related to price of a product or service. If the price of a product goes high which can be due to many other factors, then demand for the same decreases but the supply will increase in the same scenario.

Market Forces impact on TOYOTA:

Government can levy taxes on the fuels. Also government can make develop new technology. Imposing more taxes may loose the interest of the investors and vice- versa the case is, tax and duties exemption will attract more investors. Political culture decides the government policies. Implementation of which depends on the stability of the country. Also the demand and supply of raw materials will decide the availability of the product or service.

Response to market forces:

If the government is levying taxes on the fuels especially on carbon-based fuels, then the reaction to it is TOYOTA came up with hybrid gasoline-electric vehicles which are one of its kind so as to get exemption in taxes for bringing up with new technology.


Toyota being a Japan based MNC is a worlds market leader in sales of hybrid electric leader since now wants to capture the market of UK therefore PESTEL Analysis would help to analyse external factors relevant to UK market and their impact on Toyota.

  • Political:- The United Kingdom is relatively fair and public plays a major role on workings therefore Toyota can easily grab the opportunity of public support as it offers consumer based products which are highly efficient. Also the government is politically stable therefore not much changes are awaited or expected and policies need not be amended frequently however there are hidden corruptions involved which may highly affect Toyota while getting approvals for various licences. Also Brexit needs to be analysed before entering into UK as it will act as a game changer.
  • Economical : UK is always a free and welcoming country for Foreign Direct Investments which throws a opportunity towards Toyota also UK pound is a strong currency in Global Market which will ripe benefits to the company as well.
  • Social: Since UK provides cheap labour which is a good news for Toyota to explore the market and also UK supports high standards of Living which directly affects the promotion of products offered by Toyota .
  • Technological : UK is favourable towards quality innovation skills and Toyota is known for its innovative features in the products therefore it acts a stimulator to Toyota and further there is plenty of internal competition to stimulate growth and development.
  • Legal : UK accepts compulsory International Court of Justice jurisdictions but with certain amendments thereto therefore Legal Department of Toyota need not worry much about the legal issues in UK. Also equality is considered of much importance.
  • Environmental : UK government is focussing on sustainable and eco friendly growth of Wildlife ,marine biodiversity and to keep water and air clean therefore Toyota should strictly abide by rules and regulations of UK government and contribute and support environment friendly ways and manners to adapt to its environment.



International trade refers to the exchange of capital, services and goods across all over the world. This help in achieving a significant share in the GDP. Toyota is a globally recognized company which is serving its products to different countries and have attained a position in the auto-mobile industry. This has helped it to attain the competitive edge over the other brands. They are recognized by its quality and the innovations which they develop on the regular basis (Sparks, 2011). Further, with the global presence of Toyota in the market it has helped to increase the level of GDP of the country. The major advantage of international trade is that it assist in utilizing the resources to the optimum level, importing the goods which cannot be produced in the domestic market etc. Thus with number of benefits there are several disadvantages also which includes the loss of local jobs and high level of dependency on other countries. Thus, the company needs to develop their strategies which can help them to attain them to develop their products which are somehow different from others and becomes aid to attract wide range of customers towards their products. They must come up with new innovations and technologies which can make them cover the domestic as well as the global market (Yu and Ramanathan, 2012).


Globalisation: Globalisation focusses on converting world into a global village thereby integrating markets , cultures , industries and policy making around the world through interchanging world views, ideas and another aspects of culture which develop influence of organisation on international scale.

Identification of two drivers to globalisation: On a time line World has been on a gradual pace towards globalisation which leads to exchange of ideas trade and culture freely. Some of the factors influencing such a phenomenon are a follows:-

  1. Technological Advancements: Invention is mother of necessity. Various evolution of technology including emails and transformation in communication paved the way people can interact with each other across the globe without any geographical limitations (Sparks, 2011).
  2. Differential Costs and Global Scope Economies : The eradication of belief that single market is enough for supporting competitive advantage is now erased away and global markets are accessed by organisation for higher market share and increased profitability and this is at heart of Globalisation.

Global factors which affect or could affect TOYOTA UK businesses

  1. Custom Tariff and Taxes: In case of importing goods from countries excluding European Union taxes are calculated on CIF basis which implies cost insurance and freight payable. So therefore Toyota should consider this policy and pricing should be based on such factor to avoid excessive taxation.
  2. Exchange Rates: Since UK is one of the strongest currencies of the world foreign exchange exposure is minimum when dealing with UK therfore Toyota should ensure net positions after imports and exports should be beneficial to Toyota considering all the relevant factors.


European Unions has formulated several rules and regulations which need to be followed by the companies which are selling their products in the UK market. This becomes clear for Toyota that they have to mould their activities as per the policies and regulations of EU. The following are some of the policies determined by EU which have a high impact on Toyota:

  • Taxation policy: This policy ensures that every company must pay taxes which is been collected by the government for the development of the country as a whole (Thrane and Farstad, 2011). Thus, Toyota needs to pay the taxes for selling their goods in the UK market.
  • International policy: In this policy, the government encourages with the exports so that more and more goods are been exported in different countries. This will help to earn high amount of revenue by promoting trade and commerce in the country.
  • Employment policy: This policy is made by the government to give employment to maximum number of people. Thus for this they increases with the number of jobs so that the unemployment rate can be decreased (Weidenfeld, Butler and Williams, 2011).
  • Labour movement policy: This policy aims to ensure that their is free movement of labour or workforce within the economy and also make provisions for the safeguard of them against discrimination in respect of employment, remuneration etc.


From the above report it can be concluded that it is very important for Toyota to organize an analysis for internal as well as external environment so as to know the exact situation of the market. The impact of competition policy and other mechanisms on different activities of business are been determined which help the business to formulate new strategies. Further, it has been found that company is to maintain its pricing decision and quality of product to have more customers. Lastly, it has also been seen that the global factors can assist the company to attain a higher position in the market.

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