Toyota Company - Facing Stiff Competition in Australia - Case Study Example

Tutorial Portfolio Name: Tutor: Subject: Date: The main issue that as actually happens is that the government is strategizing on how to reduce smoking prevalence in Australia. The government is promoting anti-tobacco media campaigns, often called counter-advertising campaigns, were originally aimed at countering the effects of tobacco advertising by cigarette manufacturers. The government is actually focusing on changing individual behavior by discouraging smoking. According to Ogden (2012), the key objectives in various campaigns have also attempted to decrease smoking rates among the Australian citizens by changing the social norms. This was done through generating public support for various tobacco control policies, such as new tax initiatives. According to Ashton (2013), the Australian government had already implemented major ass media campaigns as part of the primary strategies of discouraging tobacco use. Other policies introduce is the total ban on public smoking in the regions of Australian cities. Another strategy used in Australia to reduce the smoking habit was banning smoking in indoor hospitality venues such as restaurants and bars. The bars will not lose customers by going smoke-free. However, there have been serious reaction from bar owners. They claim that they were likely to lose smoking customers. Taxing highly cigarettes is the main way of reducing tobacco use because many people who are low income earners are more likely to quit smoking. Furthermore, young people are likely they would not join smoking because the products would be expensive or them. It is evidence that young people would prefer to spend on clothing than on cigarettes. According to various research conducted in Australia, it is evidence that smoking cigarettes kill more Australian than homicide, alcohol, AIDS, car accidents, suicide, and illegal drugs. Smoking is bad the environment. Personally, I am convinced that people smoke because ignorant. Many people do not even know the content of the cigarette, and if they knew, they would be smoking it. Reports from various leading medical practitioners have clearly indicated that smoking is bad for your lungs, colon, your heart, and every other part of the human body. Many people, not only in Australia but across the world die because of heart disease and lung cancer. Smoking is one cause of these killer diseases. The changes that were introduced in Australia have both the negative and the positive impact. Anti-smoking activists claim that smoking ban is good for business. However, the move can affect other small business that depends on tobacco. Some of the businesses that are not affected by the ban is the business that has already prohibited smoking. Some of these businesses include, fast food chains, bakeries, delicatessens, and take out places. Anti-smokers usually include these unaffected businesses in their studies. Small business is mostly affected because a loss of $200 that are due to smoking ban represent 50% loss of their business, while an upscale restaurant can make up that difference with a single meal. This means that the impact is of small negative impact. Location of the business determines the amount impact caused by the smoking ban. A business that is located in places where people come to hang around them lose a lot with this ban. The key stakeholders that are against the smoking ban are the official of cigarette manufacturers. Cigarette manufacturing industries in Australia are not happy with the government regulation of banning cigarette smoking. An anti - smoking activist on the other does not support smoking in public places such as in a restaurant, in public cars and even in bars. They believe that Exposing the public to secondhand smoke in the confined space of a car or even in restaurants and clubs is extremely hazardous.  Other stakeholders that are likely to be affected are the really smokers. The smokers are addicted to smoking, and it will be bad for them. High taxes for these products will greatly affect the budget for smokers. Some might be forced to divert money for basic need in expenses of smoking. The government and the relevant authorities need to consider such issues before making a final decision. Personally, I believe the main affected parties in this policy are the smokers, manufacturing companies and the employees. When taxes on these products are raised, it will be expensive for smokers with low income. Addicted smokers can find it hard to quit smoking. This means that they will still buy the products regardless of the prices. Demand Theory The fundamental building block of economic theory is the fact that the movement in the price of a certain commodity will affect the demand for that commodity. For example, in the price increases, the demand for that commodity reduce and vice-versa. Research has consistently indicated that whenever taxation authorities increases tax for tobacco the consequence is that the percentage of people using it will reduce considerably despite the fact that the demand for tobacco products is not as elastic as demand for many other consumer products. The number of smokers will decline because the increase in prices for cigarette will discourage former users from using it again, encourage current users to quit, and discourages non-users from starting it. The diagram below indicates the effects of increasing cigarette prices on the market. The diagram above shows an increase in price from Po to P1. The effects that the smokers or the number of cigarette purchase reduces. Supply Theory Diagram showing the effect of Tax on Cigarettes Increase in taxes in the cigarette is likely to shift the supply curve to the left as shown in the diagram above. There are various arguments from Australian cigarette manufacturers. Some of these arguments include: a) Smokers in Australian are already paying high taxes. Smokers do not cost the government much because they are likely to die early and save pension and health care spending b) The demand for cigarettes is very inelastic. This means that there is a small fall in demand when prices are increased. c) Increasing taxes is likely to cause inequality in the country. This is because the poor are likely to pay a higher percentage of tax than the rich who are more likely to have given up d) Higher taxes can also cause smuggling of illegal cigarettes SECTION 2 The Toyota Company in Australia is facing stiff competition with eight other global Camry factories that can make the same car more cheaply. The company is among the leading companies in Australia. Though the company reported total revenue of $9,011,373,000 including sales and other revenue in this year, the . The exact number of employees for this organization is not available.  Competition in the car industry, in Australia, is so high that it affects the operation of the company. The managing director of the company was worried about the future of the company. Competitors are imitating the car models of the Toyota company and selling them cheaply. This has reduced the market demand because customers are price sensitive in high involving products like car. According to the Toyota Australia executive director of sales and marketing, the company is looking forward to balancing both the domestic and export demand. They consider this strategy essential because it will improve the competitiveness of the company. Competition has a serious impact on the business because it will affect the prices of the car being sold. Furthermore, the business is likely to run at a loss because they will be forced to sell the cars at low prices as a way of maintaining the operation of the company. Stakeholders that are likely to be affected by the current states of the company include the shareholders, employees, customers and the financial institutions. The dividends paid to shareholders are likely to reduce because the net profit of the company will automatically drop. The shareholders normally get their dividends from profits. Employees are also likely to be affected because the management will tend to cut factory worker bonuses and overtime - to save $17 million a year. Personally, I believe that the company will improve its performance by exploring new market especially in developing countries. The company needs to focus on the new market with high demand so that they can maximize those markets. Furthermore, the company needed to improve its products and focused on satisfying customers’ needs so that they can develop customers’ loyalty and long term relationship. Focusing on satisfying the customers need is a strong marketing tool in any competitive market. It is always essential to prove to customers that company’s products more superior to that of competitors. Besides satisfying customers, it is also essential for the company to value employees. Employees are vital assets for the company. They interact with customers more often than their managers do. This means that employees determine the image and competitiveness of the company. Managers need to show a sense of teamwork and concern to the employees. They should value employees in terms of decision making. Employees get motivated when are included in the decision making process. Oligopoly The Toyota company faces stiff competition though it is for few companies. The nature of this market is complex; it contains few market players serving the entire market. However, the company competes with a few companies because there are various barriers to this market. Some of these barriers include the economies of scale, government regulations, high startup cost among others. In this industry, no single company can raise the prices of the car because customers are price sensitive. The company will definitely lose customers in case they increase the prices for their cars. It is possible for Toyota company and its competitors to form cartels so that they can reduce competition in the market. However, the formation of the cartels in Australia has had a specific prohibition (Division 1 of Part IV). Companies engaged in cartel conduct may be guilty of a criminal offense or subject to a civil penalty in Australia. These laws established in the interest of the Australian citizen. The Australian government has placed various measures to ensure that the customers do not exploit in any way. This is vital because a Toyota company or any car company cannot increase the prices because they will obviously loose the customers. The diagram below shows the graph that reflects the operation of the Toyota company. Kinked demand curve theory. If a Toyota company or any other company dealing with the car selling increase the price beyond P1, it will automatically loose customers. In this market, no company can sell its car above the kinked. The customers are very sensitive, and they can easily shift to the competitors because the cars offered are of the same model. Some of the main factors affecting the Toyota business are that there many car substitute in the market. Customers have a wide selection. Furthermore, the latest technology is used by all companies. The engine capacity for various vehicles varies depending on the class of the customer. This makes impossible for the Toyota company to increase the prices of their products because customers can move to the competitors products. In conclusion, Toyota Company is facing stiff competition in Australia. The sales realized in the company as greatly reduce because most of the Australian prefers to import a car rather buy from the local manufacturers. In fact, up to 100 workers at Toyota Australia’s car industry will be dismissed next month. This is because the company is experiencing a huge drop in export orders. It is evident that the company is performing poorly, and this has led to the sacking of employees. This will take place as of November 29, this year. This will be accompanied by a 8% reduction in the number of cars produced at the Victorian plant on a daily basis, down from 470 to 431. References Ashton, A. (2013). Issues in Prevention, Diagnostics, Screening, Statistics, and Testing. ScholarlyEditions Ogden, J. (2012). Health Psychology. McGraw-Hill International Beissmann, T. 2013. Toyota Australia announces 100 redundancies following export dip. Accessed on  October 15th, 2013. (http://www.caradvice.com.au/255537/toyota-australia-announces-100-redundancies-following-export-dip/)  Dowling, J. 2013. Exports the key to Toyota Australia's future success. Accessed on  October 15th, 2013. (http://www.news.com.au/business/companies/exports-the-key-to-toyota-australias-future-success/story-fnda1bsz-1226761395369 ) Read More