Assignments 2

Assignments # 2
05/05/2020
Marks: 10
Assignment Topic Group wise:
To conduct the external environmental analysis (PESTEL) and find out the
opportunities and threats for the organization allocated to you
Modus Operandi:
1. Red carefully and understand Chapter, The External Assessment.
2. Carefully analyze what different trends are going on in the industry you are
concerned with?
3. Now identify different opportunities and threats posed by these trends to the
organization assigned to you
4. Process the information and develop a report.
5. Use the table given below
6. Email me the report document by11/05/2020.
7. There will be negative marking on late submissions.
Factors Trends Opportunities Treats

Sociocultural
Economical
Political/Legal
Technological
Competitors
https://notesmatic.com/toyota-pestel-analysis/
PESTEL ANALYSIS OF TOYOTA MOTORS

The automotive brands globally are dealing with so many pressures while trying to operate
profitably. While the end of economic recession has led to rising sales and profits, there are
other factors too affecting the automobile industry. Self-driving technology is already creating
lots of excitement and Toyota, like Ford and others is investing heavily in this area to lay its
hands first on the prize. Global economy, politics and several other factors affect the business
of Toyota. The Japan based company is now overtaken by Volkswagen as the biggest car maker
in the world. Apart from these things, competition is also a significant factor and the increased
interest of customers in EVs is also affecting vehicle makers. However, this will be an area of
opportunities for Toyota. Here is a PESTEL analysis that evaluates the effect of various forces on
the business and profits of Toyota.
Political:
Political factors have kept growing in importance with globalization. Whether the environment
of a country is good for business or not depends a lot on the level of political stability there. It
depends upon the government and its policies that how well the international brands will be
able to do business in a country. Political stability means a calm environment suitable for
business. Countries that are in a state of political turmoil are not as suitable. Political havoc can
result in business disruption and disruption of the supply chain and distribution network.
Government policies and red tape too have an influence on a business’ profits. Business friendly
environment requires friendly policy environment. The political turmoil in Europe during the
recent years has affected the business environment there. In Asia, the environment has
remained relatively stable and that has had a positive effect on the businesses’ revenues and
profits.
Economic:
The relationship between economic factors and market conditions is well known. The better the
economic conditions globally, the better the situation of the world market. The economic
recession is now past and the world economy is growing fast. Particularly, the Asian region is
leading in this regard. Most of the vehicle makers are focusing on this region for faster growth
and higher profits. The situation is not even globally, as some countries are still trying to
emerge from the economic slowdown. Economic situations affect the condition of employment
in any country. Better economic situation means higher level of employment which in turn
means higher purchasing power of the customers. Higher the purchasing power of the people,
the better will be sales and profits of the global brands like Toyota. Better economic activity
also means higher dispensable income for people, which means people will feel more inclined
to make big ticket purchases. The level of economic activity has an important effect on
business in any given market. However, to withstand the effect of economic forces, brands like
Toyota and Ford have focused on building small cars that come for lower prices.
Social:
Social and cultural forces and trends have a major impact on the sales of international brands.
The global market is made of smaller markets where social and cultural factors can become
barriers. It is why brands focus on localization to connect with local customers in regional
markets. Social trends like changing preferences etc also have a direct impact on the business
of the brands. Now-a-days, environment friendly and electrical vehicles are getting more and
more popular. Their sales have increased fast over the past few years. It is heard that Toyota is
planning to jump into mass production of electric vehicles by 2020. It has already produced a
hybrid vehicle Prius. “Toyota hybrid vehicles’ cumulative global sales have reached 8.90 million
units as of March 31, 2016 since the sales launch of the Prius—the world’s first mass-produced
hybrid passenger vehicle— in December 1997” Toyota Global Sustainability Report, 2016).
Technological:
Technology has kept growing important in every area of business in the 21st century.
Businesses are using IT everywhere to grow their business and to manage it better. The
automobile industry is completely based on technology. The better a brand’s technology, the
higher are its sales. From passengers’ safety to the rider’s convenience, everywhere technology
plays a very important role and affects a brand’s popularity. Brands like Toyota cannot do
without investing heavily in technology. Consumers too like to buy from technologically
innovative brands. Cars that are low on fuel consumption and environmental impact are
considered better and have grown in popularity. Technology has grown important in marketing
too where social media is being used to connect with the customers and to engage them.
Environmental:
Environmental concerns are now all the more important for brands and customers alike.
Customers are looking for brands that are more environment friendly. Such brands have higher
popularity and a better image. Governments are also supporting such brands and encouraging
those which have managed their environmental impact better than others. Sustainability has
become a part of business strategy. All the big brands including Toyota are investing in
sustainability. Toyota has achieved several important milestones in environmental area. From
winning a reward for its fuel cell vehicle Mirai to emission reduction, Toyota has excelled in
several areas and continues to make efforts to raise its contribution in environmental
protection. It is also cooperating with environmental agencies for protection of threatened
species. “While the world is trying to move toward “below 2°C” scenario, Toyota has, under the
“New Vehicle Zero CO₂ Challenge,” decided to challenge itself to reduce vehicle CO₂ emissions
by 90 percent in comparison with 2010 levels, by 2050. To realize this, in addition to mileage
improvement of engine-driven vehicles, Toyota will promote the development of next-
generation vehicles with low or zero CO₂ emissions—hybrid vehicles (HVs), plug-in hybrid
vehicles (PHVs), electric vehicles (EVs), and fuel cell vehicles (FCVs)— and further accelerate the
spread of these vehicles. These eco-friendly vehicles can start making a contribution to society
only when they come into widespread use” (Toyota Global Sustainability Report, 2016).
Legal:
Legal compliance ensures that brands continue to do business successfully and without any
worry. From labor laws to quality related laws and other laws that may vary from nation to
nation and market to market, there are several areas where legal issues can result in losses for
companies. Passenger safety and environmental impact are important areas where legal
tension can be problematic. Toyota is focusing on passenger safety and still recalls because of
problematic passenger safety air bags had troubled it in 2016. It has implemented internal
controls to ensure compliance throughout the organization. From education and training
programs to corruption prevention measures, it has taken care to ensure legal compliance all
over the company at all levels. “The Guiding Principles at Toyota states that Toyota will “honor
the language and spirit of the law of every nation and undertake open and fair corporate
activities to be a good citizen of the world.” It is through this process that Toyota seeks to fulfill
the responsibilities expected of it, which leads to compliance”.

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Assignments # 2

Assignment Topic Group wise:

Factors Trends Opportunities Treats

PESTEL ANALYSIS OF TOYOTA MOTORS

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