Organizations that function at the local and international level come across various factors that influence their day-to-day operations and these factors can make a difference can be either internal or external. Businesses all over world to remain competitive has to explore both domestic and international markets. Internal factors refer to those issues that are within the control of the business whereas external factors are those factors that are beyond the control of the organization (Reassessing Product Strategy, 2013). Usually the external factors result from the external business environment and are thus referred to as environmental factors. Profit organizations often encounter numerous environmental factors that affect their marketing decisions and strategies. This paper will examine various environmental factors that have affected the global and domestic marketing decisions for Toyota Motor Corporation.
This is a car manufacturing firm based in Japan. The company is the largest motor manufacturer in the world. It runs its operations both at domestic and international levels and thus targets both domestic and international markets. The company has more than three thousand domestic sales centers and over one thousand international sales centers (Reassessing Product Strategy, 2013) In my view, there are various factors that have had great impacts on the marketing strategies of Toyota Motor Corporation. These factors can be largely grouped into economical, socio-cultural, technological, competitive, political and legal factors. In most cases these environmental factors pose great challenges to the normal functioning of business organizations.
Environmental factors also pose threats to the success of businesses. Firms must, therefore, formulate and develop appropriate strategies for tackling these factors. Firstly, social factors refer to demographic features or characteristics and values. Demographic characteristics include such factors as gender differences amongst consumers, cultural differences between communities, consumer perceptions and attitudes as well as cultural diversities. Toyota Motor Corporation has to know the various perceptions that its target consumers have towards its motor vehicles. For example, Toyota Corporation has to determine the tastes and preferences of its consumers in Africa. Buyers in America may prefer four wheel double cabin pickups while buyers in Uganda may prefer single cabin pickups (Reassessing Product Strategy, 2013).
Secondly, economic factors refer to distribution of incomes amongst consumers, buying capability of consumers, availability of economic resources such as raw materials, labor and operational costs. Economic factors often adversely impact the cost of operating the business. For example, when the cost of raw materials is high, the costs of production will also increase and when cheap labor can be acquired, the costs of production may reduce. Toyota Motor Corporation has been struggling with being the cost leader in the motor industry by ensuring that it acquires its factors of production cheaply and thus be able to produce cheap motor vehicles. Similar, it often deploys market penetration pricing strategies to ensure that it attracts a large pool of potential buyers.
According to Fleisher and Bensoussan, marketing today greatly depends on global economic status (2007). When there was a worldwide recession, consumer purchasing power shrunk and consequently fewer sales could be made. Similarly, trade agreements between the company and its suppliers have affected Toyota’s marketing strategies. Due to global economic interdependence, the company has been forced to sell its products in accordance with the prevailing global market situations. When the global demand is low, it has to formulate marketing strategies that aim at stimulating demand and when the global demand is high, the company has to formulate extensive distribution strategies to ensure availability of its products wherever the consumers need them.
Similarly, trade practices and agreements may also affect its marketing decisions; for example, the company may enter into a contract with its distributors that make them the sole agents of the company in specific markets. This would imply that Toyota Motor Corporation may not sell directly to the customers even if the distributor becomes bankrupt, unless the contract is legally terminated. Thirdly, technological factors concern new inventions and innovations that are either science or engineering based.
Toyota Motor Corporation has to produce innovative cars that are capable of meeting consumers’ dynamic wants. Through continuous research and development, the company has been able to manufacture motor vehicles that satisfy various segments of its domestic and international markets. For example, there have been fewer cases of product defects returned to the company by its customers. This has helped in building a good company image. Most consumers view its motor vehicles as reliable and consuming less fuel, hence, economical. The company has to ensure that technologies that it uses in manufacturing its motor vehicle are relevant and consistent with current technological advancements. It should adopt new technologies that would result into increased productivity as well as production of high quality cars. Fourthly, competition refers to the level of competitiveness within the industry.