Toyota was formed in 1937 and it started off as an automated loom company and although they are famous for cars they are still in textile business. Thy heavily invest in research and development. They are world’s largest sellers of hybrid cars. They were ranked as the world third largest automobile manufacturer in 2011 after General Motors and Volkswagen group. It is the number one green automobile manufacturing company because it cares for the environment. It is also the company with the highest number of patents in its industry; 1000 global patents.

Political Factors

The government of Japan has been subsidizing people for using hydrogen cars and this has boosted the confidence of Toyota who has manufactured world’s first hydrogen car. Apart from these political and governmental support, political issues that are country specific also affects the company and its long term vision like in Thailand in 2014 the company had planned on investing 20 billion baht but then looking at the political instability the company revised its plans about increasing the production from 800,000 cars per year to 1000000 cars per year. It even thought about cutting back on the production instead of expanding operations. In Thailand the decline in growth and demand lead the company to think this way, in 2012 the demand boomed due to subsidy given by government to first time buyers. But later the situation did not remain that hopeful. (Rochan, 2014)

Economic Factors

The automotive industry worldwide has become highly competitive and they are fighting so many battles; price wars, research and development budget, performance, customer service etc. demand for automobiles depend on a lot of factors which makes this business highly volatile. During global recession Toyota sales suffered like other companies because buying power of customers had gone down, people could no longer afford luxurious cars. Government sanctions on import of vehicles also slows down the business, changes in oil prices is directly proportional with demand of automobiles. Earthquake in Japan in 2012 had an adverse impact on businesses. Exchange rate of Japan also plays a critical role in determining the number of cars that would be sold and exported. The export oriented countries have to depreciate their currency so that exports remain cheaper.

Social Factors

Toyota had to recall its automobiles and pay huge amounts in fines and penalties when one of its car started malfunctioning and passengers experienced their vehicles going out of their control. This nearly caused the demise of the company but Toyota accepted its mistake and investigated the matter thoroughly in which they found out that the pedals are causing self acceleration. The negative publicity caused the company billions in sale, car owners said that they are 37% less likely to buy a Toyota car now. When their President was confronted about the issue his reaction was so blank that this percentage even increased to 56% after his response. Toyota let the media handle the issue and that made the matters worse for them. If it had been forthcoming with this incident and acted rationally right from the start then this negative publicity could have been minimized.

Technological Factors

Toyota is leading the world when it comes to research and development it has manufactured alternative fuel consumption vehicles keeping in view the fuel and energy scarcity. It has launched first commercial Hydrogen car. Electric cars although are much more powerful and efficient but still liquid fuel is widely used because of energy density. The next generation of cars will be hybrid which will use a combination of these fuels in order to be more efficient and cost saving. Toyota has always been ahead of game through modification in engines from lean burn, direct injection gasoline to CNG engines. The more world is pressed with energy issues the more it will become important for automobile companies to innovate in the field of technology.

Environmental Factors

Toyota has always been committed to save environment and that is the reason it is making green products. Global warming is causing extreme weather severities and if that continues the world temperature will rise by approx 4 degree centigrade by next year. When others are trying to control their Carbon dioxide emission to below 2 degree centigrade, Toyota has launched challenge of zero Carbon dioxide emission by 2050. In this challenge it will reduce its Carbon footprints by 90% and will achieve this through extra mileage engines that are improved in performance as compared to their predecessors. So environment friendly vehicle that is powerful in performance as well.

Law/Legal Factors

In 2010 Toyota had issue with pedal accelerators as a result of which drivers experienced uncontrolled acceleration, they said that accelerator pedal got stuck and this resulted in acceleration which was dangerous. This defect occurred in multiple models of Toyota that were manufactured in that year. Toyota had to settle for 1.1 billion in lawsuits in 2012. The lawsuits that were filed were of negligence and product liability. This defect actually took lives of many people and therefore Americans were furious with the company. Another lawsuit filed was for breach of warranty. These and many other lawsuits forced the company to recall its products from the market, there is a law for this kind of situation known as Auto Recall an Defects and under this law consumer has certain rights in this condition. If they have received any harm or injury as a result of this default they can even file a suit for compensation. (Toyota Recall and Lawsuits, 2010)


Rochan, M. (2014, January 20). Toyota May Kill Thailand Investment Plans if Political Crisis Lingers. International Business Times .

Toyota Recall and Lawsuits. (2010). Retrieved February 10, 2016, from Find Law:

Subscribe For Latest Updates

Signup for our newsletter and get notified when we publish new articles for free!

error: Content is protected !!

Pin It on Pinterest

Share This