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Toyota Company Pestel Analysis

Autor:   •  December 14, 2018  •  Case Study  •  3,548 Words (15 Pages)  •  206 Views

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Automobile industry (Car)

Automobile industry has been one of the fastest growing industry in the world and is epitomized by Henry Ford. It plays a crucial role within the improvement of the worldwide economy because of its high revenue and expanding market to meet customer demand. The car industry makes a difference to cultivate financial improvement of the nation; in this manner thus, it is broadly recognized as a major financial segment. In today global market, safety and eco-consciousness become a major issue to tackle in automobile industry. Some of the safety concern has been addressed by technology, which is the use of handphone while driving. Because of the hazard that could occurs, the new technological concept has allowed company to expand their innovation as such car has Bluetooth that will connect to the phone, which allows consumer to answer or initiate calls. Looking ahead, one of the trends in automobile industry is “driverless car” which use the combinations of cameras, radar, sensors and etc. to travel to designated place without a human operator, and “electric vehicle” which is powered by battery or a fuel cell. Looking back, where in the past cars are mainly used to transport people from one place to another, while looking ahead, cars will be more sophisticated, stylish, advance and it is not simply just to transport people from one place to another but it will be luxurious big-ticket item.

Background of TOYOTA

Toyota Company is one of the largest automobile company. The headquarter located in Japan, with factories all over the world, assembling or manufacturing cars for local market. Toyota owns Lexus and Scion and has a majority stake in Daihatsu and Hino Motors, with 522 subsidiaries. It was found by Kiichiro Toyoda in 1937. It was renamed in year 1936, and has its own logo where the three ovals have their own meanings. The two perpendicular ovals symbolize a mutual relationship of trust between customer and the brand. The bigger oval symbolizes an advance expansion of Toyota's technology and boundless opportunities ahead. Toyota owns Lexus and Scion and has a majority stake in Daihatsu and Hino Motors, with 522 subsidiaries. The company produced with a reputation of high-quality and top-grade workmanship. This reputation was later put on the line, when safety issues which lead to a massive recall of the vehicles in the entire automobile industry of the world. Situation turn bad when management communication failed to boost confidence of the general public on the way management have responded to the crisis.


Toyota is one of the world’s leading car manufacturers and is the third largest in the world. With more than 300,000 workers working in the company, and produces cars that being utilized in the whole world (Haseeb, 2017). Self-driving technology has been creating a lot of enthusiasm and many companies like Toyota, Ford, Renault Nissan, BMW and others are heavily investing in this category to eagerly lay their hands on the prize. Besides, competition is also major factors and with increased customer interest in electric vehicle will also affect car manufactures. Toyota need to address the opportunities and threats in PESTLE analysis in order for them to have the continues dominance in the automobile market.


Political factors have kept developing in significance with globalization. Whether the environment of a nation is feasible for business, it depends heavily on the level of political soundness there. Political stability means peaceful and calm environment for business. A nation with political havoc will result in business disruptions and it will affect the supply chain and distribution network. Free Trade agreement (FTA) present opportunities for Toyota involving Japan and other nations for improved market penetration. On top of that, government support of ecofriendly products is an opportunity for the company to make strides its products to fulfill or surpass the desires. The state where there's political stability will be more buyer to the buy the most recent cars. In other terms the more stable and calm a state will be, the better the way of life of the individuals will be and the more chances of the good sales of cars will be. This can be seen in Europe where political turmoil in the recent year has affected the business, whereas in Asia, the environment has remained moderately steady which has a positive impact on the businesses’ profits and revenues. In this dimension, political external factors would lead to opportunities for the business.


The relationship between financial components and market conditions is well known. The better the financial components globally, the better the condition of the world market. Especially, the Asian nations where they are leading in this regard. Many vehicle manufacturers are targeting on this region for higher profits and fast growth. The better the economic situations would mean higher the level of employment which subsequently lead to higher purchasing power of the buyer. With higher dispensable income, people would likely to buy big ticket items and leading a better sales and profit for brand like Toyota. Toyota has the opportunities to grow their business with largest economies; the US, as US dollar is stronger then Japanese Yen. Additionally, the quick growth of developing nations presents the opportunity for the company to improve on their revenue based on the market. In this dimension, US strong dollars and developing countries would lead to opportunities for the business.


The social and cultural forces can be the main factors which affect the sales of international brands as market is made of smaller markets where social and cultural factors can become barriers (Pratap, 2017). Social trends of changing preferences to hybrid and electric vehicle has increased, due to buyer awareness and concern over environmental implications. Toyota has responded by introducing to the market a hybrid vehicle “Toyota Prius”. An accumulation of global sales that reached 8.9 million units as of 2016 (Toyota, 2016). Nevertheless, Toyota must aware of the widening wealth gap which it could be threaten to the sales of Toyota due to declining of middle class as they are the main source of Toyota. In this dimension, there is opportunities as there is an increasing trend for hybrid and electric vehicle, however, Toyota the economic disparities can be a major threat for the business.


Automobile industry is completely based on technology, pertaining to the new market trend, technology has made the expansion convenience and many great opportunities to explore. Toyota rely on technology heavily and is the leading company when it comes to research and development for alternative fuel. Buyers as well like to purchase from technologically innovative brands. Cars that have low fuel consumptions and are environmentally friendly will have a higher popularity as compared. In this 21th century, technology has developed vital in promoting as well as where social media is being utilized to connect with the customers. Toyota could use opportunity to improves its e-commerce. On top of that Toyota could also improves and enhance its mobile apps to increase customer engagement and loyalty. However, firms must address the threat of cybercrimes, including corporate cyber-espionage (FERGUSON, 2017). This dimension, advancement in technology and the use of e-commerce could lead to opportunities for Toyota but they have to aware of the threat of cybercrimes.


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