Business Organizations and Environments in a Global Context: Toyota Business in Poland

Business Organizations and Environments in a Global Context: Toyota Business in Poland

SWOT Analysis


Toyota has an excellent organization that focuses on Research and Development (R & D) that serves to expand its functionality and the product portfolio, promote environmental safety, maintain quality, and promote product compatibility (Arutyunova, and Orlova, 2013, 5). The focus of the company’s R&D is to create new products, improve the processes, and improve the functionality of existing products. All the facilities usually undergo R&D to enhance the capabilities of both the original and existing products. R&D is responsible for Toyota’s technological leadership and the evident incorporation of new inventions and features into their products (Dijk, Orsato and Kemp, 2013, 139). Closely related to that is the fact that Toyota has strong brand recognition and market position not only in Poland but also across the globe. For example, Toyota has 7.5% of the total Polish market share, which is impressive by all standards considering the large pool of motor vehicle manufacturers across the country and Europe (Fan, Geddes, and Flory, 2013, 102). Finally, Toyota has an extensive distribution and production network that enables it to reach various client bases. In the globe, the company and its affiliates produce motor vehicles and spare parts through close to 50 manufacturing companies situated in 28 different countries. The annual average production stands at 7.5 million cars globally that means that it has a healthy market base. Moreover, the company has a vast distribution channel that ensures the diversification of risks and meeting of the clients at the point of need within a reasonable time.


The declining sales due to various reasons is a significant cause of concern to Toyota, particularly in the European region. In the recent past, Toyota experienced a decline in sales in the Polish market due to the invasion by other car brands, and the recent global financial crisis affected the company sales adversely (Yamashita, 2015). The decline in sales will undoubtedly change profitability levels. Product recalls are also a significant cause of concerns for the company. The worst product recall the affected Toyota adversely happened in 2011 when some of the vehicles developed technical glitches that led to various accidents and even loss of lives. Such happening has the propensity of negatively affecting the company’s image and the volume of sales. For example, in 2011, the company recalled over 100 000 models due to technical malfunctions. Finally, the company also occasionally suffers from bad managerial decisions such as poor allocation of resources in comparison to the competitors. For instance, the company’s Return on Equity (ROE) is quite low (2.7%) when compared to Nissan’s (8%). That is exceedingly low and may affect the company’s operations (Manral, 2016, 75).


The global automotive industry is growing, and that will spell many positives for the company as well. For example, the economic downturn of 2009 grossly affected the automobile industry, Poland too. During the mentioned period, Toyota’s sales declined by close to 40%, and the company had to retrench some of its employees. Nevertheless, the industry experienced impressive growth levels from 2011 and is currently quite stable, meaning that additional investment into Poland and the European region is indeed viable. The Polish automobile industry grew by close to 9.3% in 2016 and currently stands at $15.7 billion, which means that the potential is impressive (240). Finally, the company’s partnership with a BMW will benefit immensely. The two companies signed a memorandum of understanding in 2012 that will ensure strategic corporation of technological matters. One of the areas of collaboration in research and development that will see more significant strides in innovation and inventions to meet the current market demands. The markets (countries) targeted by the Polish automotive manufacturers (graph).


The first threat is the increasing, intense competition in the automobile industry, specifically in Poland and Europe in general. The worldwide motor vehicle industry is currently quite competitive. There is stiff competition from different players that include Honda and Nissan. The continued consolidation and globalization are likely to intensify the automotive industry. Secondly, the Japanese Yen is on the rise, and that may affect the operations of Toyota in the international market (Stepniak and Rosik, P., 2013, 155). As stated earlier, Toyota is a Japanese company, and any development in the economy of Japan will have an impact. The fluctuations in the exchange rates of the Yen against the Dollar or the Euro will have a negative influence on the valuation of the company. Finally, the occurrence of natural disasters will affect production. Japan is prone to earthquakes that tend to change the production line (Dima et al., 2014, 148). To mitigate this problem, the company established a manufacturing plant in Poland to serve that particular market niche. Such will ensure that there are no delays in the production process and that the customers receive goods at the right time.

Financial Information for the Years 2016, 2017, and 2018

Toyota Japan and its subsidiaries are identified with the name Toyota Industries Corporation which is used for corporate business financial reporting. The following report establishes Toyota Industries Corporation financial reports to assess the organization financial performance which can be used to infer how the Poland subsidiary has been performing.

Financial Results in 2016

The financial results for the year 2016 cover a period of between April 1, 2015, and March 2016. During the fiscal year in focus, the United States and the European economies were recovering whereas the Chinese and other Asian markets were not performing well. Besides, the Japanese economy was moderately recovering despite experiencing poor personal consumption. The tax increase in the Japanese affected the purchase of mini vehicles. In 2016, the net revenue on automobiles increased by 3.7% to 25, 977 billion yen in 2016. Operating income in the automotive operations rose by 5.3% to 2,448.9 billion yen which can be attributed to the reduction in cost and the changes in the exchange rates. In Europe where the Poland subsidiary falls there was a decrease in revenue by 189.9 billion yen to 2,661.3 billion yen in the financial year 2016, and the operating income also decreased by 8.7 billion yen to 72.4 billion yen (Financial Summary FY2016).

Financial Results in 2017

In the fiscal year of 2017 which ended on March 31, 2017, the global economy performed mildly well. However, the decision by the UK to live the European Union and the deceleration of the Chinese economy hampered Toyota Industries Corporation performance. Capital investments growth in the Japanese economy led to increased economic growth and also consumer spending recovered in the 2017 fiscal year as compared to the 2016 financial year. The net sales in the year under focus stood at 562.6 billion yen an increase of 1% from the previous fiscal year in the automobile segment. However, the operating profit declined by 24% to 24.9 billion in the financial year of 2017 in the automobile segment. In the organization profit or loss statement, the net sales were 1,675,148 million yen which is a decline from the 1, 696, 856 million yen in 2016. The net revenues for the year 2017 stood at 27,597.1 billion yen a drop of 2.8% whereas the operating income was 1,994.3 billion yen. These financial information shows that Toyota Industries Corporation performance declined in 2017 with a significant margin which notes the impacts of Brexit. In 2017, Europe accounted for only 10% of the total vehicle sales and 7% production which shows a significant decline in European subsidiaries performance in the year under review (Annual Report 2017).


Financial Results in 2018

In the fiscal year between April 1, 2017, and March 31, 2018, in which the world economy was performing moderately. Improvement in employment and income significantly boosted the recovery of the Japanese economy. Markets for the automotive market remained stable, and in China, the market expanded in 2018 financial year. The policies to reduce greenhouse gases has significantly affected production due to quotas, especially for electric vehicles. The net revenue for the year 2018 for Toyota Industries Corporation was 29,379.5 billion yen which was an increase of 6.5% compared to the net revenue of 2017 which stood at 27, 597 billion yen (Financial Summary FY2018).

PESTLE Analysis

Political Environment

Toyota Industries Corporation and its subsidiaries in European countries such as Poland are significantly affected by the changes in the global political environment. Factors such as political stability, trade agreements, and government aid significantly affect the overall performance of Toyota Corporation in the international market segments where it operates. Any trade agreements between Japan and other nations significantly benefits Toyota business in Poland. Japan’s good relationship with European countries and the United States which are essential markets are opportunities for Toyota to make sales. Trade wars between countries such as the United States and China have been a significant threat to Toyota future sales and profitability whereas the uncertainty caused by Brexit in 2016 significantly caused a decline in European sales which is attributed to the decrease in sales revenue in 2016 in the three years range of the company financial performance. Lately, the yellow vest movement in France has significantly disrupted business and trade of the Toyota subsidiary in the country which is a threat to the company financial performance (Nkomo, T., 2013.

Economic Environment

Economic factors can be used to assess Toyota threats and opportunities in their global operations. The most significant economic factors affecting Toyota include the weaker Yen as compared to the U.S dollar which is an opportunity for Toyota to sell more of its automobiles in the United States because they will appear cheaper (Vošta and Kocourek, 2017). The growth of the US and the Chinese economies are opportunities for further sales and investment for Toyota. Besides, developing countries’ economies are also a potential opportunity for Toyota subsidiary in Poland to increase its sales in the 2019 financial year. In Poland, the state has been performing well economically which is a potential for Toyota subsidiary in the country to increase its sales as the economy expands. The economic growth is expected to slow to 3.9% in 2019 which will affect the overall demand for automobiles negatively Poland.


Social Environment

Sociocultural factors in Toyota operating environment has a significant impact on the organization overall productivity and sales projection (Schreurs and Steuwer, 2015). In Poland and Europe, there is an increase in the demand for hybrid and electric cars which is an opportunity for the Toyota subsidiary to increase sales by producing more innovative products. However, there is an increase in the widening of the wealth gap which declines the ability of Toyota to make sales in the market. Social media power has been realized in Poland where there is a growing orientation caused by the changing social environment which allows individuals to share their experiences using social media platforms.

Technology Environment

Technology has significantly changed how businesses operate in their respective environments (Vošta and Kocourek, 2017). In Poland and the global as a whole especially e-commerce which is a significant opportunity for Toyota to grow its sales due to the growing ease of selling goods directly to consumers irrespective of their geographical location. Besides, Toyota Poland subsidiary investment in technology to produce more electric and hybrid variants which are on demand as the consideration of global climate change implications force many countries to review accepted vehicle emissions.

Legal Environment

Legal aspects such as intellectual property laws have significantly improved the gains of automobile producers due to the growth of the security of Toyota innovations. This is a significant opportunity for Poland’s Toyota subsidiary to invest in new products which will significantly improve the company competitive advantage by patenting its innovations (Vošta and Kocourek, 2017). Environmental laws are a threat to the organization especially in terms of emission regulations which are increasingly becoming essential for the success of the fight against climate change. Besides, the advent of e-commerce has led to the creation of laws to protect consumers buying products online which is an opportunity for Toyota Poland subsidiary to attract consumers by enforcing the consumer protection regulations in the organization e-commerce transactions which will improve consumer trust.

Environmental Factors

Ecological concerns are a significant concern for every international business due to climate change which threatens the overall sustainability of the industry. Different environmental laws such as emission regulations and contribution towards the mitigation of adverse climate conditions should be a concern of Toyota Poland subsidiaries. The organization should produce more environmentally friendly products such as electric and hybrid vehicles. Therefore, climate change is an opportunity for Toyota to evolve and offer more environmentally friendly products at a competitive price (Vošta and Kocourek, 2017).

Reflection Summary

Previously, the research on Poland’s Toyota subsidiary failed to take into context that Toyota is a multinational corporation that uses the Toyota Industries Corporation as the trading and reporting name. In this case, the previous conclusions in regard to Toyota Industries Corporation failed to identify that the subsidiary in Poland financial performance can only be deduced from the perspective of the European segment and the multinational annual financial reports which identify the net revenues and operating income which can be used to assess the overall organization performance in all the segments and subsidiaries. As such, when determining Toyota’s Poland subsidiary, it is essential to consider the political, legal, environmental, economic and technological factors which identify the organization operating environment as well as the opportunities and threats of the subsidiary and the corporation as a whole. Globalization has significantly led to the identification of the world as a single market primarily due to e-commerce which makes it possible for consumers to access products without physical presence. Therefore, the financial and PESTLE assessments identify Toyota Industries Corporation operations as well as a current potential which helps to determine the organization financial standing. In this case, available financial information is insufficient to make business recommendations of Toyota Poland subsidiary because reporting is usually for the entire organization. However, using PESTLE analysis and financial performance information on Toyota Industries has aided in the generalization of the results to Toyota Poland subsidiary viability and prospects. Lastly, previously the SWOT analysis only used data from 2011 to 2015 which does not shed light on the current organization situation hence, the need to adopt more recent operation times from 2016 to 2018 which represents the contemporary organization situation.












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