Toyota: External Analysis and CSR Strategies

Introduction

Through external analysis, it is possible for the companies to identify the circumstances to run the business and conduct the operational activities in the market and on the other hand the corporate social responsibilities are effective for the corporate firms to create values for the social communities as a whole and secure future sustainable development (Rajak and Vinodh, 2015). The study aims to analyse the external environment of the business Toyota by PESTEL and Porter Five forces analysis. On the other hand, it also focuses on acknowledging the strategies of Toyota in managing their corporate social responsibility and recommends some suitable suggestions through which he brand can improve green environmental footprint and contribute positively to create vales for all the stakeholders.

Organisational background

Toyota Motor Corporation is the Japanese multinational automotive manufacturing firm, headquartered in Japan. The company is efficient to serve the customers around the international nations by delivering quality vehicles, engines and other automotive parts. The total numbers of employees of the company are 370870 in this year who are also efficient to serve the customers in a better way by delivering luxury vehicle, commercial vehicles and effective engines (Toyota, 2019a).

The company recently focuses on electric cars to provide green environmental footprint by investing more in the electrified vehicles. The company is efficient to generate US$ 272 billion revenue in this year by serving the whole world successfully.

Task 1: Primary and external influence of the organisation

In order to conduct the external analysis, the PESTLE and Porter’s five forces analysis are appropriate where the company’s business environment can be evaluated well. The PESTLE and Porter’s five forces analysis of Toyota can be developed further.

1.1 PESTLE analysis

There are political, social, economic as well as technological, legal and environmental forces that are effective to run the business sustainably.

Political:

Stable political condition is the contribution factor in Toyota where it can run their business operational activities worldwide sustainably. Additionally, free trade agreement, inter country cooperation as well as government support for eco friendly products are effective for the company to sustain in the business and run their operations across the international countries.

Economic:

Toyota has the opportunity to improve export from Japan due to weaken Japanese Yen versus US Dollar. Gradual growth in the US and UK as well as other Asian countries and high personal income f the individuals are contributing factors, where Toyota has the opportunity to grab the market demand with innovation and creativity.

Social:

Increasing interest of the hybrid cars and luxurious cars, as well as electric cars and social development are effective to enhance the market demand and this is beneficial for Toyota to make the business sustainable by strengthening their customer’s base.

Technological:

Rising the use of e-commerce services, enhancement of the mobile technology are the opportunities, where the company can expand their activities across the world, where the technological innovation and creativity as well as use of latest technology in developing electric cars and luxury vehicles are effective for Toyota to grab the market opportunities.

Legal:

Improvement in the intellectual property laws as well as customer protection, copyright and increasing strict law on complex environment are contributing factors for the business Toyota.

Environmental:

The environmental factors are effective where the firm has the opportunity to perform by maintaining green environmental footprint and secure future sustainable development. Managing climate change, declining global oil reserve and increasing emphasis on the business sustainability through using recycling technique and reduction of the carbon emission are the factors which influence the firm to take the initiative to run their operations sustainably.

1.2 Porter’s five forces analysis

Under the Porter’s five forces model, there are five forces which are competitive rivalry, threats of new entrants, and threats of substitute products, bargaining power of the customers and the bargaining power of the suppliers.

Competitive rivalry:

The competitive rivalry in the automotive industry is high and there is strong competition due to the existing competitive brand such as Ford, Suzuki, Hyundai, Honda, General Motors, Volkswagen and FCA which are also profitable in the automotive market and they are performing efficiently in the market by serving the customer proficiently with quality products. Hereby, there is intense competition in the market and huge presence of the competitive firms raises the competition among the rivals (Toyota, 2019b).

Threat of new entrants:

The threat of new entrants is low, as the company Toyota is efficient and it has string market share where the new entrant cannot grab the market initially. The new entrants has high capital cost and cost of brand development as well as huge among of investment required for managing the supply chain and these are the major factors which reduce the threats of the new entrants for Toyota.

Threat of substitute products:

The threat of substitute products in moderate, as there different products, available in the global automotive market where the competitors such as Ford, Suzuki, Hyundai, Honda, General Motors, Volkswagen and FCA are efficient to deliver quality and innovative products. Low switching cost, moderate availability of the substitute product and low convenience in using substitute product are the factors that determine the moderate threat of substitute products for the company Toyota.

Bargaining power of the customers:

The bargaining power of the customers is high due to low switching cost, high quality of information and moderate substitute products availability.

Bargaining power of the suppliers:

The bargaining power of the suppliers is weak due to high overall supply, efficient suppliers, strong supply chain and moderate population of the suppliers.

Task 2: Corporate social responsibility and sustainability

Toyota as a Japanese multinational automotive manufacturing company focuses on the quality products including automobiles, luxury vehicles, engines, and commercial vehicles in order to maximise their organisational values in the global automotive market. The company’s vision is to lead the future mobility society, enriching the lives around the world with the safest and most responsible ways of moving people. Through the commitment of the quality, innovation and respect for the planet, the company strive to exceed the expectations and rewarded with smile. The company focuses on meeting the challenges in the automotive industry as well as improve engagement with the talent and passion of the people who believe in a better way. The company is evolving with a mobility company, performing in the global automotive manufacturing industry, contributing the communities as well as developing new technologies and creating better cars that would meet the customer’s satisfaction. The company mainly focuses on meeting the customer’s requirements by enhancing innovation and creativity and delivering quality products for the customers so that it is possible to create values for the customers and retain them for long with the best quality innovative products (Toyota, 2019c).

2.1 CSR influences Toyota decision making as an organisation

In the recent era of globalisation, there is high concern of protecting the environment and managing the positive organisational footprint where the firms try to improve their corporate sustainability by making effective decisions. In this regard, the recent trend of managing environmental sustainability influences Toyota to focus on creating values for the people living in the society by providing pollution free environment and creating green environmental footprint. Toyota 2050 mission is one of the effective initiatives, taken by the leader of the company, through which Toyota aims at reducing the environmental impacts of the vehicles so that the whole of transportation can be sustainable in near future. The company intends to reduce the environmental burden for the automobiles to as close as zero for contributing positively in the earth. Natural disaster and global warming are the major environmental issue and through the mission 2050, Toyota aims to reduce the carbon emission from the vehicles which enable the company to become closer to zero emission initiative. In addition to this, for new vehicle zero carbon emission, the company focuses on creating technologies for existing conventional engine vehicles as well as developing electrified vehicles which are great initiatives of the company to reduce the carbon emission of the vehicles and provide green environment to the social communities (Toyota, 2019e). Moreover, promotion towards using the environment friendly vehicles is another initiative which raises awareness among the customers across the globe to utilise electric vehicles to create social values and provide green environmental footprint (Grayson and Hodges, 2017).

The recent environmental concern and sustainable practice are also including the company to maximise global footprint, where the company takes social initiatives of the company are such as contribution on charity homes and investment of social education, which are effective for creating values for the social communities as a whole across the globe. The organisation Toyota in this regard focus on taking the initiatives of traffic safety and security to promote integrity, maintain real world safety and involve people and vehicle and traffic environment positively. Customer first and quality first measures also social initiatives, where the company aims to create vales for the end users where the customers can maximise their satisfaction level by getting quality products and services efficiently (Toyota, 2019f). For enhancing strong corporate citizens, the company focuses on the sustainable contribution on the social development projects and respect human rights by taking care of the source of conflict free minerals. Apart from that, collaboration with the business partners as well as increasing cooperation with the employees, suppliers and distributors and providing high return on investment to all the stakeholders are the major strategic planning through which the company is efficient to create social values for the people (Toyota, 2019g).

Additionally, in order to protect natural resources, the company develops the decision to make positive contribution in the earth where the strategies of in minimising the water usage and ensuring purification of the water for minimising wastage and returning to the environment are effective to create positive environmental impacts. Apart from that, recycling approach is another one through which the company can protect the forests and biodiversity and reserve the natural resources of earth. Minimising the water wastage and maximising the optimum use of water is effective for discharging and purifying water like river water. The majority of the process are resent to the production department of Toyota where the company focuses on recycling water, using rain water and reviewing the water usage and these initiatives are appropriate for enabling the reduction of the water consumption and save 90% of the plant in the planet, which in turn helps to reduce carbon in the environment and produce oxygen or the healthy wellbeing of the society.

The corporate sustainability also influences the firm to improve economic performance and satisfy the stakeholders of the company. In this regard, the company’ production output in this year is more than 10634905 units which indicates that the organisation is efficient to strengthen their customers base and invest a lump sum amount for successful products of the quality vehicles. Additionally, the revenue of the company in this year is approximately US$ 272 billion and the operating income is also positive in this year. Hereby, the company is successful to fulfil the economic responsibility of the firm and influence further investment on social development. Through profit maximisation and sales growth, the organisation Toyota becomes efficient to fulfil the economic responsibility and make positive contribution on the economy of the countries across the globe. Corporate responsibility can be managed through this strategic decision of Toyota, were the firm maximises the values for all the stakeholders by profit and sales growth.

2.2 Critically Evaluate the Effectiveness of Toyota response to CSR

The above mentioned initiatives of the company Toyota are appropriate for the society as these are effective to create values for all the stakeholders, where the initiatives provide a scope to the firm to fulfil their social and economic as well as environmental responsibility through which the company Toyota improves their brand image in the global automotive industry. Apart from that, the company is also efficient to develop carbon emission free environment to enhance zero emission initiative and provide green environmental footprint in near future which are beneficial for the firm to provide positive brand image and provide green environmental footprint in the society (Toyota, 2019h). Though the company is efficient to manage the corporate social responsibility by managing the positive environmental footprint, there is lack of initiatives for social development. The company should develop effective strategic decision where social development can be achieved successfully.

Additionally, the above mentioned strategies to mange corporate sustainability are beneficial for the firm Toyota to secure future sustainable development and to create values for the social communities as a whole and run the busyness efficiently for profit maximisation. Hereby, through the above mentioned social and environmental initiatives, it is possible for the firm to achieve future sustainable development by realising future mobility society an enable prosperous lifestyle. The above mentioned CSR activities of the firm are beneficial to create values for the social communities as a whole and run the busyness efficiently for profit maximisation. However, the firm lacks to enhance the living standard of the social communities and the company Toyota in this regard needs to enhance the CSR activities to sustain in the automobile competition and provide positive impacts on the society for which the recommendation for future success of Toyota will be developed further.

2.3 Recommendations for Toyota

In order to enhance the green environmental footprint, the company needs to focus on developing new production sites for producing the electric vehicles which is one of the major initiatives to provide green environment to the society. Apart from that, it needs to invest more in the charity home and educational program so that it can raise awareness about the necessity of education and influence the society to be engaged with educational activities. In addition to these, the organisation needs to increase air purifier technique that drives the street so that it would provide green pollution free environment. Environmental education facility also needs to be increased where proper investment on the activities to protect the world would be beneficial to provide green environmental footprint. Apart from that, the company needs to utilise solar panel for electricity so that it can reserve the natural resources and utilising recycle technique for producing the vehicles more efficiently.

Conclusion

The company Toyota is efficient to maximise their values in the automotive industry by develop effective strategic planning where the company focuses on creating value for all the stakeholders engaged with the business. Through the external analysis, it can be stated that, the company has favourable environment where it can utilise the company rules and technological advancement for securing future sustainable development. Apart from that, the environmental initiatives such as water purification, reduction of carbon emission, producing electrified vehicles in the market are effective to create positive environmental footprint. Moreover, the strategies of enhancing cooperation and communication with the stakeholders, giving high return on investment to all the stakeholders and creating values for them, investment on research and charity and social developmental project, enhancing traffic safety are also social initiatives, through which the company can enhance their performance and secure future sustainable development.

Reference List

Crane, A., Matten, D. and Spence, L. eds., 2019. Corporate social responsibility: Readings and cases in a global context. London: Routledge.

Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make corporate social responsibility work for your business. London: Routledge.

Lins, K.V., Servaes, H. and Tamayo, A., 2017. Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), pp.1785-1824.

Rajak, S. and Vinodh, S., 2015. Application of fuzzy logic for social sustainability performance evaluation: a case study of an Indian automotive component manufacturing organization. Journal of Cleaner Production, 108, pp.1184-1192.