Effect of Political and Economic Environment in the UK on Toyota Essay

After the oil shock in 1979 the European c sufficient car had to restructure as a result if car gross gross gross revenue drop. This pin in car sales continued until late 1980s. At the flake the demand for cars is precariously balanced. The securities industry is now veneering challenges c at oncerning feel and expert changes with Japanese and USA producers having trans constitutes in the UK. Europe is the largest producer of cable cars in the world. merchandise is declining. According to record, 13.7 million units were being produced in 1989 comp ard with 7.8 million for North the States and 9 million for Japan. (Global competition and the European Automobile Industry. Pg 3).The UK automobile was expected to rise by the year 2000 by then the commercialise would be owned by the Japanese, UK and European producers. The first caller-up to fit out automobile in UK form outside was the US cross and later(prenominal) differentwises like General Motors, BMW, Honda, later Nissan and Toyota joined. The UK has a global quality service initiative controlled by society of motor Manufacturers and traders industry forum. Currently UK has everyplace 1000 automotive supp broodrs with manufacturing pie-eyed based in the UK.How economical and semipolitical Environment atomic number 18 Affecting Toyota Generally, UK based vehicle manufactures are preserve losses. This included companies with senior high school productivity records. The economic conditions tend not to advance the vehicle market. This is due to production of cars at cheaper legal injurys in other sectors of the globe. Toyota is not an exception. The political environment of UK does not favor manufacturing plants much. This is evident finished the relaxation at which employment law makes it easier to close manufacturing firms. In cases where any manufacturing plant fails to adhere to the government regulations and the UK British act, it erect easily be alter by law.Majority of UK s uppliers are lacking some of the short principles of care like unplayful customer focus, and shortage of skills. Considering that UK has had a good tale of quality cars. The market is almost exploited customers have seen almost smorgasbord of unique cars in the Market.The economy of UK is stable relative to other economies. Hence, telephoners wishing to invest in UK find it expensive to film labor in UK. As a result, their winnings are bound due to high expenses on payment of labor.The increased cost of naught in the UKs economy to be specific is other economic factor, though this change is being felt all over the globe. This is touch Toyota as a ac bon ton negatively since most of its production requires energy. cram AnalyzesStrengthsBurnaston has make Toyota UK evaluate its first strength through Toyotas bodily finance st governgy. (Kerretsu). This is a major strength for Toyota considering that burnaston fits into Toyotas long consideration global strategy.Toyota in like manner enjoys government livelihood through seminars and automotive academy like the one launched in 2004 to enhance skill training for the industry. This is aid Toyota to market itself and gain more knowledge on automotive industry.Toyota UK, also has a diversified capital base considering that the union is foreign and its sales are doing well in other countries. incase of a peg in the market equipment casualty and demand for cars in Toyota UK, the company fuckingnot get wise because of fluidity problems as it can be funded by its branches in other parts of the world.Weakness Toyota UK is positioned in country with high quality products and variety. This reduces the sales direct relative to other countries where the company enjoys monopoly or less competition. effectual taxes are also affecting the company. The fact that Toyota is foreign company in UK makes it more tax worth than UK based Companies.Toyota UK management feels that the UK that used to once be an a ttractive place to invest has been changed by the on spillage economic and legislative climate.The strength of starling pound is also affecting Toyotas investment in the UK in relation to the weakness of Euro. Toyota is rate of flowly seeking an exchange rate solution in order to trade in UK and survive the market with minimal profits.With the introduction of work place place levies, Toyota doubts whether the charges will impact the behavior of car users something that would affect the companys sales.A shortage of trained engineers in the UK is another constraint confront Toyota UK. Toyota is wrap uped to have experienced critical shortages in training tonic personnel in the information systems department. (Memorandum submitted by Toyota motor Europe, July 2000)Opportunities Toyota UK has the chance of acquiring labor from Japan at a better cost in case the UK economy and labor market is exploited. This gives the opportunity to maximize its sales too. Expansion is still availa ble for the company. contempt the fact that the country has numerous manufacturing companies that have specialized in automotives, its also possible for the company to expand in UK since the company has its own unique brands. In addition, the company can list in the (UK) foreign stock exchange wherefore engaging in offshore. The fact that UK is historically known for its high level of production o of vehicles, as far as quality is concern is in advantage. This is because Toyota UK can learn more techniques or production and alter on the quality of products that it had been producing.Toyota can also produce in bulk. This is because the UK is a large Market and much as competition is there, one cannot run out the population factor. The UK population is big and the ratio of people to companies sell vehicles is still low enabling Toyota to Operate.Threats Competition is the major threat facing Toyota UK. With the large number of companies in UK and all producing quality cars, th e company can easily be thrown out of market or force to sell at low prices in order to fit the market. Economic dynamics are also major threats in the production abut of Toyota UK because the poor performance of the economy dictates that the cost of production might be high and selling price might be low. The U.Ks current fuel crisis is also a possible threat to Toyota UK. If the market price for fuel goes very high, then the demand for vehicles also go shovel in because people will not be willing to subvert vehicles if fueling is very expensive. (Marketing Teacher 2000).PEST ANALYSIS The UK political set up has history of non-violence and generally friendly to foreigners. The government policies that regulate taxation and supervise traffices in UK are however, strict. This does not restrict companies willing to do business though, because the judge are fixed. The governments policy on the economy in relation to automobile is rather positive since the government offers supp ort to encourage innovation. On basis of religion and culture the UK people are a collection of divers(prenominal) denominations that rarely affect investment policy. The governments elaborateness in trading agreements is however an added advantage for Toyota UK, because they are assured of grimness of their license.Economic FactorsThe UK raised his interest rates to 5.75% this year. With a rise in interest rates, Toyota UK is affected negatively as it can not be banking its money in Japan. As long as the interest rates are high, this means that the bank charges will be high, reducing the profits that a company can make. UKs monetary policy committee (MPC) warned inflation is still on aid and remains a endangerment to the entire economy. (BBC News. 24) Some analysts have gone further to determine that this rate of inflation might rise further. This is bad advanceds for Toyota as the sales of the company will have a less value than approximated. As a result, expansion is limite d as the purchasing power is reduced. The good news about the economy of UK is the fact that the countrys gross domestic product is relatively high and per capita income is high enough these two combinations encourage liquidity among the citizens which realizes sales for Toyota. Socio-cultural factors.UKs reception of foreign products is positive. People do not discriminate instead they observe quality. Majority of dwellers of the land are slope speaking hence communication between Toyotas salesmen and the citizens is easy. The ability to socialize by the inhabitants and minimal discrimination facilitates marketing. The older generation of UK has accumulated wealth and then Toyota has a wide client base.Technological factors. It would be a lie to argue that technology allows for products to be made more cheaply in the UK than Japan. However technology allows for production of quality automobiles in UK. This helps Toyota to produce quality and leave room for innovation. For instanc e Ford attach to and BMW have products that are better than Toyotas, depending on class of the customers who is buying. Integration of sale of automobiles and insurance company is another technological advantage. This allows companys selling automobiles to be able to connect their clients with insurance companies. (Alan Capman1995-2005)PORTERS FIVE FORCESThreat of comforter products Toyotas products have a couple of other products similar to them. This makes the companys products to have high elasticity of demand. Buyers have high propensity to substitute. This puts Toyota at the bargaining edge through pushing the company to keep modifying its products in order to be competitive. Toyota has to keep revising its prices too. Again this is a disfavour because probably the cost of production was higher than the prevailing market price. Despite of the high elasticity of demand the switching costs of products is still high, devising consumers to stick by one product, this adds to Toy otas advantage. The level of product differentiation is another major threat of substitute products. Toyota has an added advantage over this issue since it has different products and can offer customized products too. Threat of the entry of new competitors. Unless the entry of new firms is blocked, Toyota is exposed to the perfect competition. However Toyota has taken care of this risk through economies of product differentiation and brand equity. The absolute cost advantages are among other ways that Toyota has established its market.The intensity of competitive rivalry. This is the major or deciding(prenominal) of industry competitiveness. Toyota is facing both marketing and innovation competition. The number of competitors is change magnitude following the governments opening of investors willing to invest. Not forgetting companies like Ford Operations. Toyota has high levels of advertising expertise internationally. Bargaining power of customers. This is the customers ability to pressure the firm to reduce its prices. The number of buyers volume. In UK though buyers are many, options regarding which company to buy from are also many making buyers to have a bigger influence on bargain than Toyota. Not forgetting the availability of information which has been made possible by internet and the UK media. Bargaining power of suppliers. Toyota UK requires labor, components and other factors. Suppliers can influence the market by raising the cost of raw materials to enjoy the industries profit too. However, Toyota UK has suppliers who are competing against themselves too hence making supply price low due to availability of commodities at ease. For example, the tire industry. (Morison .J 2006)Conclusion Toyota Company UK has established itself despite the competitive environment due to diversified portfolio where the company sells other products like, used trunks, car bodies, primary NAICS and insurance linkings. Recently Toyota was confirm as be best performin g automobile company in the UK. Media tenor UKs leading media on opinion reported during the 7.5 international Auto salons in Genf. Media tenor, realized a pessimistic trend for the prospective of the car industry in UK. Toyota has been rated the best performer, as other companies report losses and closing down some of their joints. Overall, Toyota has been able to extend its products to cooperate. Among BMW, DC, Volkswagen, Toyota and Ford in UK, Toyota has the best performance so far.Referencehttp//europa.euMarketing Teacher. (2000). jam analysis lesson- www.marketingteacher.comMedia tenor International Newsletters (2005-03-08). -Toyota outshines competitors again in UK. www.mediatenor.comAlan Capman (1995-2005) Pest Market analysis tool www.businesshalls.comMorison .J (2006) International business environment global and topical anesthetic market place in a changing world. Palgrase Macmillan.