The paper "Toyota Company External Environment" is an outstanding example of a business case study. Founded in 1937, Toyota Company is a Japanese corporation that has grown to become the world’ s leading auto manufacturer. The company inception began in 1933 when Toyoda Automatic Loom created the provision for a new division responsible for the production of automobiles. According to the Toyota website (2015), Kiichiro Toyoda’ s, the founder, motivation’ s came from the rapid motorization-taking place in the USA. The company has since grown and as of March 2013, the company registered an annual income of 213 billion dollars.
Brands under the Toyota Corporation are inclusive of Toyota, Lexus, Hino, and Daihatsu. Toyota’ success has been attributed to its popular slogan; “ The Toyota way” that aims at the overall operational excellence of the company. In recent years, the global auto market has been more competitive than ever in history. Toyota has 10.2%, Volkswagen 9.6%, General Motors 6.9%, Ford 5.6% and the others share the remaining 67.7% according to Maxcy (2013), Toyota Company has still managed to be the most successful carmaker despite the stiff competition in the motor industry.
For the past 15 years now, the company has been the top auto manufacturing company in regards to its reliability, the initial quality, and durability. Skyrocketing fuel prices and growing environmental concerns have shifted the customer’ s preference from oil guzzling vehicles to small more efficient fuel cars. In the year 2006 and 2007 when the U. S financial crises were ripping other western nations, the company was able to earn profits of up to 13.7 US dollars in that fiscal year. Other competing firms in the market incurred losses amounting to 1.97 billion US dollars for General Motors and 12.61 billion dollars for Ford Company. With such impressive figures, the question that arises is why Toyota Company is so successful and how it has maintained its top position for so long.
The primary objective of this research paper is to analyze keenly the external environment of Toyota Motor Company to establish the potential growth factors and the company’ s competitive advantage that has helped it cut a niche for itself in the highly competitive automobile manufacturing industry. External Environment The surrounding aspects around a business that are uncontrollable are referred to as the business environment.
Factors included are such as economic, political, social, environmental, legal, and human resource. Focusing on the external environment, factors affecting the functioning of the business include political, economic, social, legal, and environmental concerns. Competitive advantage Toyota realizes that it has to be the price maker and not the price taker if it wants to remain ahead in the market. Automobile demand depends on fuel prices, product innovation, and Per capita disposable income. On the supplier's end, the material and equipment costs will be a market price determinant.
Combining these factors, the company is able to produce a product that is favorable to different markets in different parts of the world (Mittal, Mitra & Roy 2013). Competition Fluctuating oil prices One of the major factors that give Toyota Corporation a competitive edge is its ability to manufacture the fuel-efficient car, models. According to Ahmadian, Hassan & Regassa (2013), over the past five years, the fuel prices have been on a rise. Consumers prefer these cars as they are economical to fuel and maintain.
The constant fluctuation of oil prices has helped Toyota company overtake General Motors, which previously was the world’ s leading automobile company. Toyota Corporation seized the opportunity which as seen it soar to greater heights to date.
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