For any business to remain competitive in today’s world, it has to explore both domestic and international markets. All business organizations that operate at both local and international levels encounter various factors that affect their day-to-day operations. Such factors can be either internal or external. Internal factors refer to those issues that are within the control of the business whereas external factors are those factors that are beyond the control of the firm. Usually the external factors result from the external business environment and are thus referred to as environmental factors. Profit organizations often encounter numerous environmental factors that affect their marketing decisions and strategies.
In this paper I will look at various environmental factors that have affected the global and domestic marketing decisions for Toyota Motor Corporation. This is a car manufacturing firm based in Japan. The company is the largest motor manufacturer in the world. It runs its operations both at domestic and international levels and thus targets both domestic and international markets. The company has more than three thousand domestic sales centers and over one thousand international sales centers (Young & Aitken, 2007).
In my view, there are various factors that have had great impacts on the marketing strategies of Toyota Motor Corporation. These factors can be largely grouped into economical, socio-cultural, technological, competitive, political and legal factors. In most cases these environmental factors pose great challenges to the normal functioning of business organizations. Environmental factors also pose threats to the success of businesses. Firms must, therefore, formulate and develop appropriate strategies for tackling these factors.
Firstly, social factors refer to demographic features or characteristics and values. Demographic characteristics include such factors as gender differences amongst consumers, cultural differences between communities, consumer perceptions and attitudes as well as cultural diversities. Toyota Motor Corporation has to know the various perceptions that its target consumers have towards its motor vehicles. For example, Toyota Corporation has to determine the tastes and preferences of its consumers in Africa. Buyers in America may prefer four wheel double cabin pickups while buyers in Uganda may prefer single cabin pickups.
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Secondly, economic factors refer to distribution of incomes amongst consumers, buying capability of consumers, availability of economic resources such as raw materials, labor and operational costs. Economic factors often adversely impact the cost of operating the business. For example, when the cost of raw materials is high, the costs of production will also increase and when cheap labor can be acquired, the costs of production may rduce. Toyota Motor Corporation has been struggling with being the cost leader in the motor industry by ensuring that it acquires its factors of production cheaply and thus be able to produce cheap motor vehicles. Similar, it often deploys market penetration pricing strategies to ensure that it attracts a large pool of potential buyers. According to Fleisher and Bensoussan, marketing today greatly depends on global economic status (2007). When there was a worldwide recession, consumer purchasing power shrunk and hence fewer sales could be made. Similarly, trade agreements between the company and its suppliers have affected Toyota’s marketing strategies.
Due to global economic interdependence, the company has been forced to sell its products in accordance with the prevailing global market situations. When the global demand is low, it has to formulate marketing strategies that aim at stimulating demand and when the global demand is high, the company has to formulate extensive distribution strategies to ensure availability of its products wherever the consumers need them.
Similarly, trade practices and agreements may also affect its marketing decisions; for example, the company may enter into a contract with its distributors that make them the sole agents of the company in specific markets. This would imply that Toyota Motor Corporation may not sell directly to the customers even if the distributor becomes bankrupt, unless the contract is legally terminated.
Thirdly, technological factors concern new inventions and innovations that are either science or engineering based. Toyota Motor Corporation has to produce innovative cars that are capable of meeting consumers’ dynamic wants. Through continuous research and development, the company has been able to manufacture motor vehicles that satisfy various segments of its domestic and international markets. For example, there have been fewer cases of product defects returned to the company by its customers. This has helped in building a good company image. Most consumers view its motor vehicles as reliable and consuming less fuel, hence, economical. The company has to ensure that technologies that it uses in manufacturing its motor vehicle are relevant and consistent with current technological advancements. It should adopt new technologies that would result into increased productivity as well as production of high quality cars.
Fourthly, competition refers to the level of competitiveness within the industry. Paley defines competition as the ability of other firms operating within the industry to provide similar products or substitutes that are capable of satisfying the needs of the market (2006). As for Toyota Motor Corporation, it has to strive at maintaining competitive advantage over its competitors, such as Nissan, Mitsubishi, Mazda and Chevrolet. This entails production of high quality and high performance motor vehicles that are customer foccused. Its motor vehicles should have the capacity to meet and exceed customer expectations. Toyota Motor Corporation has to analyze the weaknesses and strengths of its competitors so as to develop exploitative marketing strategies that would give it competitive advantage over the competitors.
Fifthly, political and legal factors relate to the political status of the country, its rules and regulations imposed on businesses by the government. Such regulatory restrictions often tend to control the conduct of business transactions in a country. Political instabilities such as wars have also negatively affected Toyota Motor Corporation’s marketing efforts for its products.
Moreover, other factors such as natural disasters and calamities have negatively affected marketing decisions of Toyota Motor Corporation. For example, major manufacturing activities of the company are based in Japan which has been repeatedly struck by earthquakes and hurricanes. In 2011, the company was forced to shut down its plants and consequently lost its manufacturing capacity. This resulted into decreased sales even though the demand remained high.
Furthermore, the company must be socially responsible and be able to give back to the community. For example, it can build schools in villages or donate relief food supplies to families affected by earthquakes or other natural calamities. It can also contribute to conservation and protection of the environment. This will help the company in building a good image in the society.
Toyota Motor Corporation also has to comply with legal requirements of the countries in which it operates. This will help in reducing conflicts with the State Agencies. For example, it has to pay all taxes or license fees due. In my view, adherence to the Foreign Corrupt Practices Act of 1977 will help the company to avoid corrupt dealings which may cost it lots of money. Toyota Motor Corporation should be ethically and morally upright in all its transactions.
In conclusion, for any business firm to achieve and maintain competitive advantage in the present day competitive markets, it has to observe the various environmental changes that occur in the business arena. It must then develop appropriate strategies to counterattack any negative change that would affect its business operations.
Furthermore, a firm must also explore new opportunities within the market; for example, unmet needs of consumers as well as niche markets. Marketers should constantly research on ways of exceeding the consumers’ expectations. A detailed analysis of both the domestic and international markets is thus essential. Similarly, firms should target the international market because it offers great opportunities for growth and expansion of the business. However, the business must be ready to face the various challenges associated with such markets.