In any business organization there are two different environments, internal and external environment. Both environments are affect the business in their own ways. Internal environment is about preparing and learning how to achieve the objectives of a product in external environment. External environment can be influenced by many factors for example, politically, socially, legally and culturally. External environment can be studies into two parts, general and immediate environment.
Firstly, general environment which involves economic, political, legal, and social. Secondly, immediate environment which involves suppliers, competitors, labour, market, and financial intuitions.“Business activity is a fundamental and universal feature of human existence and yet the concept of business is difficult to define with any degree of precision.”(The Business Environment).The question is how to achieve success in business due to changing external environment. And also focus on how the organization can develop and improve itself in external environment.
Toyota is the seventh largest company in the world and the second largest manufacturer of automaker, with production facilities in 28 nations around the world - and the highest-production facility of any non-domestic automaker in the United States. Toyota is a good example to analyze external environment. It was founded by Kiichiro Toyoda in 1937 from his father's as a development company from Toyota Industrial to Automaker. In 1934, while still a department of Toyota was purly Industrial, it created the first product which called the engine A, within two years, it made the first passenger car which used to be called Toyota AA.
Toyota also owns and Lexus operation and Scion brands and has a majority shareholding stake in Daihatsu and, Hino cars and minority shareholdings in Fuji Heavy Industries, Isuzu Motors, Yamaha Motors, and Mitsubishi Aircraft Corporation. The company includes 522 subsidiaries. There are many factors which leaded Toyota to success in external environment.(www.Toyotland.com)
The economic environment is one of the factors that considerable as a general or contextual environment. It’s the most powerful factor in external environment. Business activity exists in and is affected by the broader macroeconomic environment. Economics is concerned with how societies allocate scarce economic resources to alternative uses and the real costs of the choices that are made.
In 1979 Toyota had difficult times dealing with economic environment in UK because of oil crisis. Automaker sales fell, Toyota had to restructure as a result of car sales drop. The increased cost of energy in the UK’s economy to be specific is another economic factor, though this change is being to be felt all over the globe.
This is affecting Toyota as all automakers’ production depends on energy. Moreover, UK raised its interest rates up to 5.75%, where caused Toyota to have less value than what was estimated. As result, the country’s GDP was relatively high and per capital income was also high enough for these two combinations encourage liquidities among the citizens who realizes the good price for Toyota.( www.europa.eu.) Another factor is the political environment. it’s a worldwide activity which affects every size of business. Political system is structured and processed to reflect underlying social values and philosophies.
The political or regulation of a country affect the business organization. For example, the government may force the amount of salary that the organizations shall pay their employees according to qualification he/she has. This amount its different from one country to another, in business environment there are who would get the benefit and there are who would not get it; however, the government will always benefit from the political environment. The international organizations are more likely to be affected by political of a country. Such as Toyota in Oman, it’s the most successful automaker because according to Oman policy no one else have the right to sale Toyota products in Oman except Toyota Agent, Bahwan.
The social, cultural and demographic environment is another factor that may or may not lead the organization to success. It makes a huge gap in selling the same product in different countries. Because of the differences it’s difficult to seal the product and it’s impassable to get the same amount of profit. For example, cars which U.K purchases from Toyota cannot be used in Oman.
Because of many reasons firstly, in U.K people drive in the right side and in Oman people drive in the right side. Secondly, The lifestyle it’s different for example, in U.K they have more choices to transport from one place to another. They got buses, taxes, subways, and trains. Whereas in Oman, people only got taxes and buses or their personal cars. In U.K most of the people don’t own cars because of its high expenses and the number of demographic so, mostly they use trains and buses.
Toyota automaker is making the cars suitable for each community. The factor that talks about technology called technological environment. Development in technological environment mostly leads the employees to lose their jobs. In the other hand, the profit of organization will increase as a result of cut cost. However, Toyota always try to pursue all the advantage possibilities to keep its employees and to work with environmental technologies as one system by developing and establishing new technologies to enable the environment and economy to bend harmoniously.
Further, Toyota is working to develop environmentally-friendly and advanced technologies that utilize IT to enhance the pleasure and safety of automaker. The level of environmental technology attained by car manufacturers will prove to be a major factor determining their competitiveness in the market. Accordingly, Toyota's development in this field is great toward establishing Toyota's technology as an effective benchmark for the rest of the industry. (www. toyota.co.jp/en/ir/reports)
Immediate or operational environment is the other form of the external environment which engage three factors. Resources and resource markets are the first factor. It’s the main aim of any business is to produce goods and services that people want. Any production cannot take a place without resources such as, people, technology and natural resources. Any international organization cannot use the all their resources in all its branch chain. Toyota try to get all kind of resource to succeed in external environment. For example, Toyota has Technological Institute around the world for customer service development. Second factor of the immediate environment is customers.
Toyota spend a lot of time and money to attractive the customers by advertisements in media. furthermore, that techniques which Toyota used in marketing allowed it to improve from an independent Japanese company to a world class corporation. Through the company 's active, flexible, and well-planned marketing strategies, Toyota is able to attract consumers to like its products all over the world with variety choices. Last factor is Competitors.
There are many automaker in the world. As a customer he/she would like to purchase the cheaper and the suitable in his/her community. In Oman Toyota is well known competitors. For example, Toyota cars in Oman are the best cars because of the following points. It has more demand compared with an American cars. Also American cars need cold weather which Oman haven’t. Toyota cars is cheaper and live longer. American cars just live up to 5 years, while Toyota car live to 10 years. In general, Toyota in Oman has the best offer and solution to be the best in the marketing. However, to stay on top of successes in external environment it’s not easy as to successes.
The organization business should have something different from others. Should be able to develop and improvement as the external environment changing. For most of the businesses in the corporate world face some difficulties on development in external environment. Business organization studies the factors which would be affected by it in external environment to overcome the difficulties.
Training and experience can provide the managers to make the right decision to find solutions. Training can from manager to have the necessary skills and knowledge in order to combat the issues in external environment. Toyota Institute (TI) is an organization dedicated to promote the achievement of the Toyota way at overseas partners through the training of Toyota employees.
The TI conducts core training with partners globally on work methods (problem solving and management expertise) so Toyota personnel round the world can put the share Toyota way in to practice. (www .toyota.co.jp/en/csr/relationship/employees.html) For example, Competition is the major threat facing Toyota in UK. With the large number of companies in UK and all producing good quality cars, the company can easily be thrown out of a market or forced to sell at low prices in order to fit in the market.
Economic dynamics are also major threats in the production process of Toyota in UK because the poor performance of the economy dictates that the cost of production might be high and selling price might be low. The U.K’s current fuel crisis is also a possible threat to Toyota in UK. If the fuel price goes very high, then the demand for vehicles would droop because people will not be willing to purchase cars if fueling is very expensive. Recently, Toyota started to produce cars that work by fuel cells.
According to reports By 2014 fuel cell cars will be a commercial reality, and by 2020 over 2.8 million fuel cell-powered cars and trucks will b sold. About 37 percent of those vehicles will be sold in Western Europe, 36 percent in the Asia-Pacific region, and 25 percent in North America. The research group predicts that the emerging market of fuel cell vehicles will generate $23.9 billion in annual revenues by 2020.( www.news.cnet.com/greentech) In the end, external environment have different customer with different needs. Business organization must come up with ways on how to satisfy these special needs.
Toyota Motor Corporation uses different strategies to keep its market up-scaled. The success of its marketing strategies was further provided by the awards of recognition received by the company in related to its 2004 promotion project that they launched it with other organizations. Toyota is the best automaker in external environment because of the way they develop and value people. Toyota's history has been filled with challenges. Based on the Toyota Earth Charter, we are working to produce cars that are friendly to both people and the earth. (www2.toyota.co.jp/en/tech/environment)
- The business environment by Lan Worthington and Chris Britton/pg 4.
- www.toyoland.com/toyota/plants.html visited on Saturday, , March 13 at 07:45 pm.
- www.europa.eu /Global competition and the European Automobile Industry visited on Monday, , March 15 at 09:30 pm.
- www.toyota.co.jp/en/ir/reports visited on Tuesday, , March 16 at 03:15 pm .
- www.toyota.co.jp/en/csr/relationship/employees.html visited on Thursday, March 25at 01:30 am.
- www.news.cnet.com/greentech visited on Saturday, , April 3 at 05:00 pm.
- www2.toyota.co.jp/en/tech/environment visited on Tuesday, March 13 at 10:40 am.