Toyotas Learning Case Study

External environment of an organization which affects its ability to reach business goals,

Customers -  customers are the first thing which comes to organizations minds when it comes to external forces which effects organizations operations. Customers create demand for the products, the higher the demand the higher the production. They are also the source of income and the key to profit. For example when the recall happened, the demand for Toyota cars went down which caused a decrease in sales and a halt in production which decreased the profits.

Competitors- every organization has competitors specially large organizations like Toyota have a lot of competitors as they search for higher mirgins and profits, which is why they try to differentiate as much as they can in the hope to win compititors customers. They do this by adding new features to their products and being innovative. Toyota was ahead of its competitors as it launched the prius which was the first mass produced hybrid car powered by petrol and electricity.

Suppliers- Suppliers also affect the company because they are the ones that supply the inputs needed for productions, the quality of the end product depends on them as the better the inputs the better will be the outcome.as Toyota is known for their quality, their suppliers must consider producing qualitative supplies. Different suppliers globally produce different products as their way of production differs, the recall which bhappened was only in the U.S not japan.

Distributors-  Toyota suspended the manufacture and sale of eight of its most popular models which represented 65 percent of sales of the Toyota brand because of a brake and other faults which caused many incidents, even death. Toyota asked its distributors to stop the sales of the eight models to ensure the safety of their customers and restoring confidence, which also effected the distributors because prior notice was not given to stop the sales of these eight models.

Pestle analysis scans the organizations external micro environment.

Political environment- during the problem which Toyota faced, it had to recall millions of cars worldwide to ensure their safety, it was unable to resolve their defects in time,Under the Federal Law, the deadline to disclose defects for the automakers is 5 business days, Toyota was unsuccessful to fix the defects for no less than 4 months which made them face trial. They faced fines as recall of faulty brakes was delayed.

Economic Environment:

The automobile industry has been highly competitive and they are fighting many battles like price wars, research and development budgets, performance, customer service etc. the demand for automobiles depends on many factors which makes this business highly volatile. Toyota faced difficulties because of the recession which hit in 2009 because the buying power of customers went down and people could no longer invest in cars. Toyota also faced difficulties because of the brake and other fault incidents where it earned a enormous fine of 16 Million USD. Which also reduced the sales and attracted a great deal of negative publicity.