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Toyota has a global geographic structure with subsidiaries and plants all over the world. Toyota's external environment relates to major forces outside the organization with potential to influence significantly their products and services. Toyota America will be analyzed in terms of the opportunities and problems they are currently facing and their likely contributing factors. Under the general environment we will be discussing the six dimensions: Demographics, economic, sociocultural, global, technological and political/legal dimensions respectively.

Demographic

The current demographic situation in the US is that baby boomers are retiring. This will not directly influence Toyotas sales, but will influence the future buyers and vehicles that will need to be produced.

Economic

Toyota is currently the most profitable automobile company in the industry. The general industry that Toyota competes is with the big three's and Honda. Right now the U.S. economy is in turmoil. Profitability outlooks are almost out the door. The American public is simply not buying, thus making it tough for Toyota along with their competitors.

Sociocultural

Threw out the late 40's to the present Toyota's sales have steadily increased (Ireland, Hoskisson, Hitt C-235). The reason for this increase in sales was the negative reputation that American people had against the Japanese after WWII. This stigma has long been forgotten in the American society, thus accommodate Toyota factories in the US in the late 80's (Ireland, Hoskisson, Hitt C-239). Presently the Toyota Company is widely accepted by general society of the U.S.

Global

Toyota has set up production plants in the U.S., China, France, Mexico, and the Czech Republic (Ireland, Hoskisson, Hitt C-236). There are little changes in the global environment that Toyota does not combat. Their company supplies trucks, luxury vehicles, cars, and compact cars to fit the ever-changing needs of the global market.

Technological

Toyota has been able to stay in tune with the changing technological trends. Toyota has kept to its roots by staying with a strong belief in the "Toyota Production System", and the motto of Kaizen (Ireland, Hoskisson, Hitt C-236). With the current adoption of just in time inventory Toyota has been able to keep costs low and use their technology to stay ahead of their competition in the US who still rely on mass production and assembly lines.

Political/Legal

Since Toyota has started production in the US they have had little political and legal implications. One theory that US manufacturers hold about Toyota is that they don't have to deal with unions, have little financial burdens and retirement and pension plans, and have little healthcare and legal costs (Ireland, Hoskisson, Hitt C-239).

Source: Understanding Business Strategy, 2nd edition, isbn#9780324578997

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Q: What is the nature of the external environment surrounding Toyota co?
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