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PESTLE Analysis Paper

Words: 1380, Paragraphs: 16, Pages: 5

Paper type: Analysis, Subject: News

The external business environment is elaborated using the PESTLE Analysis. The PESTLE Analysis entails political, environmental, socio-cultural, technological, economic and legal factors. Political factors: Toast’s operations in the US are affected by political factors like government policies. For example, the government policy is that all foreign companies must hire USA citizens to reduce the high rate of unemployment in the county. Furthermore, Toyota suffers from the high taxes levied by the IIS government to protect local automobile firms from foreign competition.

Economic factors: the taxation lulls, economic trends, the economic slowdown and recession affect business operations of Toyota. The above makes Toyota forced to change its operation such as recruitment policy to avoid losses during recession (Cannon & Olivares, 2010). Socio-cultural factors: Toyota must meet the demands and needs of the customers in the automobile industry because their tastes and preferences change very often. The rising rates of unemployment have forced consumers to purchase more economic vehicles that use fuel efficiently.

Technological factors: the US government has invested heavily in technology velveteen, information and communication, Innovations and research funding. There is a fast change in technological environment among the customers that call for Toyota to embrace technological advancement and hire skilled employees to cope up with the change so as to compete with the rivals. Environmental factors: the US government is keen on environmental conservation via the Vehicle Pollution and Control Act 1970 and the Clean Air Act. Toyota must comply with the above laws in order to reduce carbon dioxide emissions.

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Legal factors: Toyota must comply with the strict intellectual property laws and taxation laws in USA. The company must follow ethical practices where all employees are treated equally without discrimination. The internal business analysis of Toyota The internal business environment of Toyota is analyzed using SOOT analysis that entails the strength, weakness, opportunity, and threat Strengths: Toyota is a leading automobile manufacturer due to its strong brand name, good competitive advantage and production. It has invested heavily in research and development, Just-in-Time and Total Quality Management production line.

The above has given the company a loyal customer base. Toyota manufactures high-quality products that satisfy the customers. Weakness: there are few assembling plants in LISA leading to low production capacity. Also, Toyota has poor product differentiation. Opportunity: Toyota should embrace the new hybrid technology by competing with Honda Civic Hybrid model. The hybrid technology will give Toyota a competitive advantage. The company should take advantage of the rise in fuel tax by manufacturing models that consume low fuel. Threat: there is a Constant shift in consumer taste and the emergence of substitute vehicle products.

Besides, there is market saturation and stiff competition in the automobile industry. Furthermore, the inconsistency of the exchange rate FORE affects Toast’s profitability (Hines, Found, Griffith & Harrison, 201 1). Porter’s five forces analysis The Porter’s five forces analysis entails the threat of new entrants, the bargaining power of suppliers, the threat of substitutes, the bargaining power of customers and the nature of competition. First of all, Toyota faces a high threat of substitute products such as train service and bus transport.

Secondly, the suppliers have a low bargaining power due to the presence of few firms in the market. Besides, there is a low threat of new entrants cause it requires a huge capital. On top of that, the customers have a high bargaining power due to availability of several car brands in the market. Last but not least, Toyota faces less competition in the automobile industry. Toyota uses value chain analysis to gain competitive advantage. The efficient Production Systems (T AS) traces the value chain analysis. Moreover, Toyota uses lean manufacturing process to improve the quality and reduce wastage (Monde, 2011).

The internal and external business environment of Apple The internal business analysis of Apple Strengths: Apple has a strong and well-established brand name due to its laity products. The company is innovative and regularly comes up with new products and ideas. Besides, it has a strong research and development, financial vitality and customer loyalty. Weaknesses: One of the weaknesses of Apple is its poor relationship with Intel and Microsoft. Also, its products are sold at a higher price compared to rivals making it hard for customers with low income to access their products.

On top of that, Apple has small product life cycle and technological complications (Has, 2013). Opportunities: The mobile industry is growing fast, and Apple should manufacture new products. The company should take advantage of its technological innovation by developing strong position in the market. Also, Apple should take advantage of the rapidly growing online store. Lastly, it should improve warranty program and reduce prices in order to beat the rivals. Threats: Apple faces stiff and fierce competition from the rivals. Also, the economic crises will impact the sales of Apple negatively.

Furthermore, the profitability of tunes (online store) is affected by free downloading of videos and music. Apple uses value chain analysis to gain competitive advantage over the rivals. Its rodents are in developed in USA and the software and hardware products assembled in China. The products are of high quality compared to those of the rivals. The final products are distributed via outbound logistics. The external business environment of Apple Political factors: The governments in most countries regulate business operations.

The prices of Apple’s product will rise because the VAT rate in countries such as the UK is going up. Economic factors: The spending patterns of consumers have changed due to global economic downturn. The inflation, consumer spending and interest rate affects Apple. Socio-cultural factors: The current generation of 21st century consumers has a strong passion for new innovative technology. Apple must consider the culture, religion, population growth rate and lifestyle of consumers because it will affect its operations. Technological factors: The young consumers are attracted to the latest technologies.

Apple must move on to recent and new technology and be updated to avoid being obsolete because there is a fast change in technology. Environmental factors: The awareness of environment conservation will force Apple to use environment-friendly materials to avoid pollution. Apple has to consider packing its products in materials that can be recycled because most governments are keen on green production and control of environment pollution. Legal: The new legal laws on employment, health, regulatory bodies, safety and trading policies affects Apple’s operations. The company must comply with them.

Porter’s five forces First of all, Apple faces a high threat of substitute products such as train service and bus transport. Secondly, the suppliers have a high bargaining power because there are several firms that ARQ Eire their services. Furthermore, there is a high threat of new entrants because small capital is squired to establish a company. Moreover, the customers have a high bargaining power due to availability of many electronics in the market. Last but not least, Apple faces high competition in the electronics industry due to the presence Of several rivals.

Apple Uses value chain analysis to gain competitive advantage. The company differentiates its product from the rivals to create a premium product with a premium price. The efficient Production Systems (TAPS) traces the value chain analysis. Moreover, Apple uses lean manufacturing process to improve the quality and reduce wastage. Also, Apple maximizes on research and development to stay ahead of the rivals (Average, 2013). Apple has been able to differentiate itself from competitors even though when the industry has a huge competitiveness.

Apple verifies the effectiveness of its strategies by examining the link between the objectives and plans of achieving them through innovation. It continuously checks whether the strategy is meeting the targets by evaluating the performance and use of resources. The measurement guideline of Apple is effective since it uses the resources allocated according to the plan to deliver the expected results. On the other hand, Toyota verifies the effectiveness of its strategies by developing measurable strategies, measuring the variables and implementing the objectives.

Additionally, the performance is contain joyously evaluated and reviewed. The measurement guideline of Toyota is effective because the customers are provided with products just in time. Conclusion Toyota and Apple are successful organizations due to their compliance with the internal and external business environment. Furthermore, they have good business strategies that have given them a competitive advantage over the rivals.

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