Toyota Motor Corporation conducts both domestic and global marketing with 51 overseas manufacturing companies in 26 countries and regions. Toyota’s vehicles are sold in more than 170 countries and regions (Toyota, 2010).
This paper will identify the environmental factors that affect global and domestic marketing decisions and address how they relate to the marketing decisions by analyzing the influence of global economic interdependence and the effect of trade practices and agreements, examining the importance of demographics and physical infrastructure, analyzing the influence of cultural differences, and examine the importance of social responsibility and ethics versus legal obligations.
Further insight to Toyota’s marketing decisions can be understood by analyzing the effect of political systems and the influence of international relations, analyzing the influence of the Foreign Corrupt Practices Act of 1977, as well as the influence of local, national, and international legislation, and the explination of the effect of technology. Toyota’s global economic interdependence is essential to maximizing sales revenues by focusing on both purchasing vehicle parts and materials from specific countries and increasing market share in each country and region in which they do business.
Toyota must also consider the targeting of specific groups and classes of people within a country because those groups may be dependent on the success of Toyota. For instance, the U.S. federal government has given out federal automaker loans that are helping minority business in the U.S. remain open and viable. If the automakers fail, suppliers and workers fail (Michigan Cronicle, 2008).
The effect of trade practices and agreements plays a large role in Toyota’s strategies and operations within the boundaries of the countries. For example, Toyota must consider different tariffs, taxes, trade barriers and agreements when pricing and developing marketing strategies for China compared to India compared to the United States. To address the recent quality issues and safety concerns Toyota established a Special Committee for Global Quality (Toyota, 2010) which had to be further separated into Regional Quality Task Force divisions for North America, Europe, China, Japan, and more.
The demographics and physical infrastructure of a country participate largely in the makeup of the magnetism to Toyota and the decision of how to structure the company’s presence and open manufacturing plants. Toyota has the ability to create jobs in an industrialized country whose manufacturing infrastructure is in place by opening production plants. In addition, in countries where their economy may be in the process of becoming industrialized, Toyota may grow with the automobile industry within the country as they move away from needed so much of the finished product imported.
Another demographic consideration is the income distribution of the households. To this end Toyota is transforming to an evolutionary business model that recognizes and shifts focus to emerging markets and developing countries such as China’s immense market and India’s high-growth market. Understanding the cultural differences and backgrounds of the country is vital in assuring the marketing strategy is effective and not offensive or taboo.
Consideration must be taken familiarize with the business culture for negotiations and agreements as well as the variations in the publics perception. In some countries it is a way of doing business to structure kickbacks while in other countries it is illegal and unethical. Being aware of the suttle differences of the culture and the laws can mean the difference between success and failure. In Toyota’s 2010 Annual Report, the company projects operating losses due to both the economic downturn and the partially due to the unfavorable recall incidents in the United States. These incidents largely bring to the forefront the importance of social responsibility and ethics versus legal obligations.
The image marketing strategies give to a company is of great importance to the success of the company. If the image is tarnished by the perception the company isn’t ethical or cares about the people, then that success is gone with the customers. As of May 2010 this year, Toyota has recalled 2.3 million vehicles for sticking pedal problems, 5.4 million vehicles for floor mat entrapment modifications and 147,500 Prius and Lexus models for anti-lock brace system updates (Toyota, 2010).
From a social responsibility and ethics point of view, Toyota has a duty to fix the vehicles and perform the recall even though it would tarnish their safety and reliability image. From a legal obligation viewpoint, they must disclose the problem, the scope of the problem, and face the damage it causes. Even to the point where the executives had to attend congressional hearings on the issue. Bringing everything back to the marketing message, Toyota in their 2010 Annual Report is refocusing their marketing message to be “Reforging Bonds of Trust”, and “Contributing to Society through the Production of Safe and Reliable Vehicles” (Toyota, 2010).
The effect of political systems and the influence of international relations is a piece of the puzzle Toyota must consider when deciding to enter into a foreign country to do business. The considerations range from repressed countries whos governments have a high threat of taking over a profitable corporation within their boundaries to being welcomed to open business within their boundaries due to previous unrelated government relationships.
Welcoming governments can open doors for Toyota to expand within their country and this is a major reason Toyota finds themselves in 26 different countries. The Foreign Corrupt Practices Act (FCPA) of 1977 poses a unique delimma for Toyota which is not a U.S. based company but falls under the FCPA which prohibits foreign companies listed on US capital markets from paying bribes to foreign officials to obtain business (Norton, 2006). This forces Toyota into following the FCPA whether they would consider bribery or not.
There are countries where bribery is considered ethical and a common business practice. Toyota’s business expansion and marketing is influenced by this international legislation. For Toyota, technology is a blessing that has helped develop state of the art facilities, raise the barrier of entry, increase customer relations, and expand training programs. Technology doesn’t have many downsides for an organization of this size except for cost of implimenting new systems, correcting defective computer parts in sold cars, and disclosing company information.
For example, unless a potential customer were to look online at Toyota’s website, they would not know Toyota had another recall August 26, 2010 involving approximately 1.13 million 2005-2008 Model Year Toyota Corolla and Corolla Matrix vehicles sold in the United States to address some Engine Control Modules (ECM) that may have been improperly manufactured. In conclusion, marketing in a global economy is getting more and more complex as the trade increases and countries evolve from one industrial structure to the next.
The dynamics of changing laws, regulations, legislation, government policy, trade agreements, cultural evolution, technological advancement, and environmental issues continue to change and leave Toyota in an ever evolving strategy of marketing. Currently, that marketing strategy is to reaffirm principles byproviding safe, high-quality vehicles at affordable prices, the starting point for growth (Toyota, 2010). References
Annual Report 2010. (2010). Toyota. Retreived September 30, 2010, from http://www.toyota.co.jp/en/ir/library/annual/index.html Norton, P. (2006). The Foreign Corrupt Practices Act Dilemma. China Business Review, 33(6), 22. Retrieved from MasterFILE Premier database. Rainbow/PUSH addresses $1.2 trillion auto industry. (2008, November 19). Michigan Chronicle,p. A1,A4. Retrieved September 30, 2010, from Ethnic NewsWatch (ENW). (Document ID: 1617976701). Toyota Announces Voluntary Safety Recall on Certain Toyota Corolla and Corolla Matrix Models. (2010, Aug 26). Lexus, Toyota.
Retrieved September 30, 2010, from http://pressroom.toyota.com/pr/tms/toyota/toyota-consumer-safety-advisory-102572.aspx Toyota Passes 3 Million Milestone in Implementing Recall Remedies. (2010, May 4). Lexus, Toyota. Retrieved September 30, 2010, from http://pressroom.toyota.com/pr/tms/toyota-passes-3-million-milestone-157989.aspx