Introduction
An organization is regarded as an entity that is made up of people with a collective objective and is connected to the external environment. Hence, a business organization is a group of people collaborating to achieve a commercial objective (Handy, 2005). Toyota Motor Corporation is a Japan based auto manufacturing company with its headquarters in Toyota, Aichi. The company was ranked as the 13th largest in the world in terms of their revenue. It was the largest automotive manufacturer in 2010 ahead of the Volkswagen group and the general motors in terms of their production. The Toyota motor company established its United Kingdom manufacturing operation as the Toyota manufacturing UK in 1989. The manufacturing plants are located in Burnaston, Derbyshire, where they assemble the cars. In 1992, the Toyota manufacturing UK started rolling out its production line with Carina E, thereafter the production has included the Auris, Corolla and Avensis. The company also has an engine manufacturing plant in Deeside North Wales. It is a significant employer in the UK with over 3,800 people working with the company directly. At the Burnaston plant, the processes that take place include the stamping, painting, welding, plastic moulding of bumpers and dashboards, and subsequent assembling. At the Deeside plant, the processes include machining, aluminum casting and assembly.
The purposes of different types of organizations
There are different types of organizations in the UK, which include, sole traders, partnerships, companies, and franchise. The sole trader is the most common form of business organization in the UK as it covers a wide range of activities which include plumbing, electrical and cleaning among other. More than 20% of the sole traders in the UK operate in the construction companies. Another 20% in the retail industry while 10% in finance and another 10% in the catering sector. The advantage of the sole trade is that it does not have complicated paper works as the decision is made more closely. The partnership type of organization is also common in the UK and it comprises of 2 to 20 partners. This form of organization is, however guided by the partnership Act of 2002 that also allows large firms to form a partnership. Formation of a partnership in the UK involves a solicitor. Companies are also forms of organization in the UK and are usually owned by shareholders (Harris, Botten & McColl, 2008). The role of the shareholders is to appoint the directors of the company who on the other hand give directions to the organization. Therefore, a company is a legal organization with its own rights of existence in accordance with the law. The shareholders usually put funds to the company in the form of buying shares. A company has to be registered through the registrar of companies and should have official address. In the UK limited companies are usually run by one or two directors, meaning that there should never be a vacancy of director at any given time.
Franchising is also a type of business organization, which is also gaining popularity in the UK. Franchising usually grants the organization permission to sell other companies, products and trade under a different name in a particular area. Therefore, in the case of Toyota, it operates as a company in the UK because it is legally registered as a foreign company and has local investors or shareholders. The UK national economy can be divided into various sectors. The purpose of the Toyota manufacturing UK is categorized in the secondary sector of the economy because it involves in manufacturing of finished goods. This means that all the manufacturing, the processing and assembly are done in the country. The company is involved in the automobile production and contributions significantly in the country’s job opportunities (Wright, 2008).
Meeting the objective of various stakeholders
A stakeholder is a party that is affected and affects an organization. It is a party that has vested interest in an organization. There are primary stakeholders such as employees, consumers and shareholders. The secondary stakeholders include the state and the environment among others(Post, 2002). The stakeholders are important people in the organization who play an essential role in influencing the actions and decisions within the organization. Therefore, stakeholders usually have an interest in the conduct and performance of the organization because their future benefits are directly and closely linked to the business fortunes (Haddow Hare, Hooley, & Shakir, 2013).
Stakeholders in an organization such as the UK Toyota comprise of the employees, managers, suppliers, customers, trade unions, financial institutions, the state and owners. All these stakeholders have varied types of expectations and objectives that are also important to the success of the organization in the modern business environment.
Employees: The success of the organization in the future is critical for the employees because it would determine the job security and adequate remunerations. It can also determine the unemployment. Therefore, the interest of the employees in the business is to see performance so that they can retain their position or get better ones in the organization. The business performance is linked to their individual success. The employees are also concerned about their pension, career development, and training. The Toyota manufacturing UK has established a pension fund and is also providing training facilities that help them to fulfill their career needs. Therefore, Toyota manufacturing UK is committed to meeting the objectives and expectations of its employees and the management team. This is because the company believes that the employees play a pivotal role to the success of the business. The Toyota manufacturing UK is also committed to ensuring that its employees are well remunerated on the national minimum wage and offer other additional benefits (Harris, Botten & McColl, 2008).
The management: The management as stakeholders have similar interests as those that the employee in the company have because the performance of the business would have a direct link to their job security. This is because the managers are just senior employees of the organization and play their decisions making roles that determine the success of the company (Haddow Hare, Hooley, & Shakir, 2013).
Suppliers: The suppliers as stakeholders also are interested in the success of the business. This is because they play a significant role of supplying raw material to the company, which are required in the automotive manufacturing. The suppliers are required to be reliable. The suppliers must also be ready to supply the required material to the company. As a result, the organization is also expected to make payments to the suppliers promptly failure to which could also affect their role in the organization. The suppliers are important stakeholders who expected the origination meets its business objectives so that it can reciprocate through making payments to the suppliers (Wright, 2008).
Customers: The customers are important stakeholders as they play a key role in the market determination. Therefore, the business success of the Toyota Company in the UK depends on the level of customer’s satisfaction. There are however different types of customers for the Toyota company operating in the UK, which include wholesalers, retailers, industries and foreigners. Since customers are the most important stakeholders in any business organization, Toyota manufacturing UK knows that the customers are crucial for their competitiveness. The expectations of the customers include high quality automobiles, reliable information regarding the new products and quality services. Toyota manufacturing UK is meticulous to their customers’ needs and believes that the quality of their automobile and safety remains central in their production (Haddow Hare, Hooley, & Shakir, 2013).
The state: The state is also a major stakeholder for the Toyota UK company. Their interest to have the company succeed is usually a general one, which is centered on the profitability. This is because the economy and the status of the public finances usually depend on the success of the businesses operating in the country. The success of the businesses ensures that they pay corporate tax which is essential for the government revenue(Harris, Botten & McColl, 2008).
The trade unions: these are also significant stakeholders which must also be considered by the organization. The trade unions usually represent the rights of the employees in the country. Their main interest is to ensure that the employee is protected for their jobs through fair wages and humane treatment. The trade unions are custodians of the employment legislations and usually raise alarm whenever the rights of the individual employees is violated(Wright, 2008). The Toyota manufacturing UK is committed to the welfare of every employee in their company.
The financial institutions: These are important stakeholders and comprises of the banks and other lenders. These stakeholders lend to both the organization as well as the customers buying automobiles from the retailers. The financial institutions usually use the credit factors to assess the credit worthiness of individual and organization. They are concerned with the various financial and business attributes, which include revenue, market share, and profitability. The Toyota manufacturing UK has indicated its commitment to fulfilling the objectives of the financial institutions (Harris, Botten & McColl, 2008).
Shareholders: These are stakeholders who are interested in the capital growth and the dividends that result from their investment in the company. Therefore, the organization is required to design and implement various risk management systems that would ensure that the shareholders' investments are safeguarded. It should also put in place a highly competent management. The Toyota manufacturing UK is committed to the objectives of all their shareholders and has considered various strategies that would protect their shareholders’ interests. The company has devised ways to reduce uncertainty and risks which could have an effect on the Toyota manufacturing UK performance, which in turn could have a negative effect on the shareholders' investments(Arslanalp & Poghosyan 2014).
Allocate resources by economic systems
The economic system is the attempts to try and meet the material needs and wants of the people through goods and services in the society(Wright, 2008). Resource allocation is important and its usually involves decisions of the region or individual country regarding the use of the total use of resources that are available in meeting the needs of the people. The allocation decision can be made by people or government and sometimes by a combination of both the people and the government through a different economic system (Arslanalp & Poghosyan 2014). It means that the production of goods and services is usually affected by the limited supply of factors which include land, labor, capital and natural resources (Bpp Learning media, 2010). The scarcity of these sources means that the government has to take part in the allocation of resources to the competing claims with regard to the opportunity costs that are associated with the economic systems. Therefore, the economic systems are a way of allocating resources indirectly to the organizations. Despite the fact that the economic systems do not influence the operations of the organizations it can assist the management in assuring that the available resources will be properly allocated. The economic systems are different from one country to the other depending on what they would want to achieve (Wright, 2008). The different economic systems include:
Free market economic system: In this economic system he government and other regulatory bodies interference or intervention is minimal. As a result, the price mechanism is usually decided by the forces of the supply and demand within the market. This means that the cost mechanism is also indirect and is decided by the market. However, its drawback is that the responsibility of the infrastructure for the players in such an economy is usually undecided which could cause confusion to the economy (Aiyar, 2011).
Centrally planned economic system: In this economic system, the government is responsible for the allocation of the resources to the organizations in the various industries. This kind of economic system is highly preferred by the majority of the countries around the world. This means that the private sector does not play any significant role in the resource allocation, as it remains a government reserve (Bloomberg, 2011).
The mixed economic system: In this economic system, it combines the free market economic system and the centrally planned economic system approaches. The elements of both the economic systems are combined to form a mixed economic system which is popular in countries such as China, Russia and USA that have adopted this strategy in the resource allocation. This economic system ensures that there is growth and development in the country (Aiyar, 2011).
The effective use of resources has a direct effect on Toyota manufacturing UK operations. In the UK the government uses a mixed economic system where the intervention of both the government and the private company ensures that there is effective resources allocation. The government intervention in the resource allocation maybe in the form of tax and regulations, prohibitions or provision of subsidies. If the government aims at protecting its home grown auto manufactures, it would have a negative effect on the Toyota manufacturing UK because the other would be favored more in the resource allocation. This means that the Toyota manufacturing UK would fail to meet the obligations or objectives of its stakeholders. The price mechanism is important in the determination of what to produce and to whom the product would target. This is important because it indicates to the suppliers the kind of goods that the customers are willing to purchase and pay higher (Morrison, 2006). Therefore, in the production process, it depends on the most popular goods in the economy, which the resources are directed to as this would be more profitable for the economy. Therefore, the economic system adopted, would determine what to produce. The type of economic system that a country adopts depends on the involvement of the government in the decisions making with regard to the national economy.
The impact of fiscal and monetary policy of UK on TOYOTA and its activities
The UK economy has been facing recession since the beginning of 2008 resulting in a drop in its Gross Domestic Product (GDP) and the economy went down by 7.1%. It also caused the economy to have a high negative budget deficit, making the country’s debt reach a critical stage leading to high inflation rates. The economy was able to come out of recession in 2010 but the economic growth was also hampered by the heavy snowfall (Begg, 2009). The GDP in the UK has decreased to about 405,274 GBP millions in the third quarter of the year 2013 (Bloomberg, 2011). The country has to set up a fiscal policy with the aim of reducing the fiscal deficits, which included:
Fiscal policy: The country was forced to adjust its value added Tax (VAT). There was an increase in the income tax for the wealthier middle class.
Monetary policy: There was increased supply of money as the interest rates were also reduced.
The changes in the GDP affected both the national and local business. The increase in the VAT and the income Tax means that the consumers would have less demand for the goods that they can do without (Begg, 2009). Therefore the Toyota manufacturing UK will experience a highly reduced rate of demand for their automobiles as few people will be willing to buy a new car. This means that the Toyota manufacturing UK would order less from the suppliers, which could also have a negative impact on their profits.
The monetary policy would be able to lead to the reduction of the interest rates which would enable people to borrow more at a reduced cost thus increasing their spending which could see the Toyota manufacturing UK product demand start rising. However, in the event that there is more money supply, inflation will result, leading to lower demand of goods (Bloomberg, 2011). Therefore, the fiscal and monetary policy in the UK would have a negative effect on the Toyota manufacturing UK business, thus it would find it challenging to meet its stakeholder objectives.
Impact of competition policy and other regulatory mechanisms on the activities of TOYOTA in line with ‘Competition Act, 1998’ and ‘Enterprise Act, 2002’
The main aim of the competition policy in the UK is to promote healthy competition among the companies operating in the region. This would ensure that the market works better and enable the improvement of individual markets. Therefore, the policy aim is to increase the consumer choice, encourage technological innovation and promote competitive prices among the suppliers (Liker, 2004). In the UK there are four key pillars that influence the competition policy which include: Antirust and cartels, market liberalization, state aid control and merger control. The impact of the UK competition policy in the Toyota manufacturing UK is to ensure that it is restricted from monopoly formation (Bloomberg, 2011). This would therefore make the Toyota manufacturing UK managers more effective and efficient in the execution of their mandate in the company. The competition policy also gives the consumers improved quality of their preferred automobile at a lower price. The policy also is central to the increase of the consumer choice as other automobile manufacturers would also get market for their products (Liker, 2004). The policy in other words increases the stakeholders, objectives, and interests, making it more achievable. The competition policy would also have a negative impact on the Toyota manufacturing UK because it would reduce its market share with the new entrants in the market. The policy is currently based on other Acts such as the office of fair trading (OFT), regional policy, training and skills policy, competition commission (CC), enterprise strategy among others.
Toyota manufacturing UK has a responsibility to its stakeholders. The company’s responsibility to the consumers indicates that the customer expectation is to have high quality products, services, and low prices. This responsibility is for the Toyota manufacturing UK and is achievable. The company has to ensure that its products meet the safety standard required for the automotive industry, ensure quality and great customer’s experience (Begg, 2009). The shareholder expectations are also a responsibility of the company as they expect returns from their investment. The company can achieve this by ensuring that the shareholders' investments are safeguarded and employing strategies that would ensure growth and profitability of the company. It is also responsible for the government in terms of tax payments (Sawyer, 2004). The company also has responsibility in terms environment, ethics and business, its organization image, the societal responsibilities and management responsibilities. The company strategies to mitigate the impacts of its activities and to meet the stakeholder objectives are effective and efficient.
The factors that affect the UK economy include the inability of the economy to recover. The UK economy has not fully recovered from the 2008/2009 fall in the GDP. The country's economy has stagnated in the past period. The factors that affect UK’s economic growth include the deepening crisis in the Eurozone which led to the fall in the UK exports from their main trading partners. The government policy on the economy is also another factor that is affecting the UK economy. The issue of aggregate demand is also affecting the economic growth in the country. The housing market is also crumbling down as the prices weaken further, which is leading to lower spending. The consumer confidence is still very low which is making it hard for the economy to recover quickly (Liker, 2004).
Understand the behavior of organizations in their market environment
Market structure is the organizational and the characteristics of a market (Donaldson & Farquhar, 2012). There are different market structures, which include:
Perfect competition: this market structure is comprised of many firms. It indicates that any company has the freedom to enter into the industry as all the firms produce the same products and all the companies are price takers. In a perfectly competitive industry, the prices and the quantity of the production are set at the levels where the price is equal to the marginal cost.
Monopoly: This market structure has only one firm in the entire industry. In order for a firm to maintain its monopoly in the market, there must be a laid barrier to entry. In this kind of industry, the player has the power to raise the prices and lower the output levels in the most desirable manner. In addition, the company with the monopoly sets its own prices where the marginal revenue of the company is equal to its marginal costs.
Monopolistic competition: in this market structure, there are many firms with the freedom of entry just as the perfect competition. However, each of the company produces its own unique product. This means that each player has some control of the prices.
Oligopoly: this is a market structure in which the firms are not fully in the same industry, but have a large proportion which they share in the same industry. Most of the firms in oligopoly usually produce different products which means they also have some price setting ability but are not price takers.
How market forces shape organizational responses
The market forces are important because they describe the relationship between the suppliers and demand in a given market. The company response is usually the reaction that is given by the management in a particular circumstance. The organization is forced to respond to the market forces is crucial because it would have a direct impact on its general performance or profits and reputation (McLeay, Radia, & Thomas, 2014). With regard to the supply and demand, the companies that have succeeded have taken time for market research and analysis in order to be able to supply the products that are in high demand from the consumers (Ian & Britton, 2009). Proper judgment is required because it could lead to misunderstanding of the market forces, which could affect customer satisfaction.
According to Ian & Britton,( 2009), the decision making process in any organization would depend on the market forces, which would include:
Elasticity of supply and demand: in this case the output and pricing decisions are usually affected by the organization's responsiveness to the quantity of the demand of the products in the market with the change in the prices.
Supply and demand: in order to determine how and for whom the product would be produced, it is important to note that it depends on the demand and the supply, which also leads to the resource allocation. The Toyota manufacturer UK has to decide which model of vehicle to produce by looking at the model that is highest and thus divert the essential resources in its production.
Economies of scale: this is the phenomenon where the increase of the production lowers the cost which gives the company incentives to produce more leading to higher profits.
Consumer action and expectation: this is another force which demands the foreseeing and reacting to the customer demand, which also forms another important element of competition.
The employee skills: Due to globalization, technology and labor force skills is increasingly becoming and important factor that determine the decisions made by organizations. Skilled workforce is able to execute their services effectively and efficiently. All these market forces have an impact on the Toyota manufacturing UK and its response by ensuring that it positions itself at advantaged position.
How the business and cultural environment in the UK can shape the behavior of TOYOTA as an organization
The business organizations usually operate in an environment that has both the inter-reliance and often interacting with each other. The business environment is regarded as the social, economic, legal or political surrounding the business organization which also have an effect on the organization and operation performance (Donaldson & Farquhar, 2012). The environmental elements are difficult to predict and control.
The political environment: This is where the international companies operate in countries that have policies and governments. This affects the licensing and the general business climate in the country.
Economic environment: this includes the issues of fluctuations in the raw materials, increase taxes and recession among other that would have direct impact on the company operations.
The social factors or environment: This includes establishing a system that determines the consumer behavior, personality and purchasing decision.
Technological factors: this includes the interaction and communication of products by the organization using modern tools. It also determines the inventory system, the distribution chain and product research and development.
The legal environment: this includes the laws governing the production and the quality of the products which determine the business production.
The Toyota manufacturing UK response to the cultural factors is through improving the quality and recalling all defective automobiles thereby creating consumer trust. The company has also taken on the social networks to communicate and provide information to its consumers of various products.
The significance of the global factors that shape national business activities
The significance of international trade to TOYOTA UK business
International trade is regarded as the exchange of goods, services and capital across the international territories (Ian & Britton, 2009). UK is the fourth largest economy in the world. There are many other international companies in different industries that are operating in the UK apart from Toyota. International trade is important to the UK because it helps in the economic growth through revenue. It also provides the local consumers with alternative products, thus reducing monopoly of a particular company. International trade also helps in the transferring of the intellectual assets, which include skills and knowledge (Ian & Britton, 2009). It has increased competition, which has also lead to high quality products from the Toyota Company. The employment offered by the multinational companies is significant to the economic growth of the country. On the other hand, international trade leads to migration and infiltration of foreigners into the country leading to security issues.
The impact of global factors on TOYOTA UK business
Globalization is the process characterized by international integration among people, organizations which arise from interchanging of the world views, ideas, products, services and cultural aspects (Lechner & Boli 2011). The world is becoming more and more globalized resulting in quicker and faster communication and transportation networks. Globalization is an aspect where a company or individuals are no longer bound within the national territories, but have an increased opportunity for movement and investing in another location. The ease of doing business is increasing as more barriers to international trade is being melted down (Paul & Dorron, 2008).
There are global factors influencing that are affecting the UK business organizations which include security threat and imitation of people from troubled causing an influx of unemployed individuals. Competition from the giants is making it hard for the small companies to rise as the resourceful companies overshadow them. This has affected smaller companies in the UK market. The globalization is also providing the business a good opportunity for growth due to a wide market (Lechner & Boli 2011). There is also the US regulation on environmental and litigation, which may have a negative impact on Toyota company business. However, the company can also take advantage of the opportunities brought by the world trade organization.
The impact of policies of the European Union on TOYOTA UK business
The core purpose of the European Union is to promote social, economic, and political integration among the countries in the Western Europe (Paul & Dorron, 2008). The European Union goal is to develop a barrier free trade zone that would lead to a more efficient market among the uniting countries. There are policies that have been enacted by the EU, which have had their impact on the organization operating in the UK such as the Toyota manufacturing UK. These policies include the climate change Act that was passed in order to curb the carbon emission in an effort to reduce global warming (Donaldson & Farquhar, 2012). This policy is significant to the Toyota manufacturing UK because it requires that the vehicles have an age limit on the roads. Another policy is the regional policy, which allows the firms in the destitute regions with funding and grants to cushion them against the fierce competition from the multinationals. The adjustable tax rates also brings about the differentiation in VAT taxes among the countries in the UK, which therefore mean that the rates charged for Toyota manufacturing UK in one part is not the same as another part in the same region. The social policy is also requiring that all the companies manufacturing or doing business in the region adhere to the health and safety requirements in the area.
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