Business is an activity of providing products and services to earn revenue and profits from the transaction. This activity is done to satisfy the demands and needs of the people which in return helps business owner to earn certain amount of profit for the transaction. In a business many individuals work together to achieve a common goal as a result forming an organisation.
The business organisation can be of different types, structure, purpose, etc. which guides its operations and working environment (Stanwick and Stanwick, 2013). While operating there are several factors in the economy which affect the business organisation few of them are explained in the given report.
Toyota Motor Corporation is Japanese company operating in many countries and in UK as well through its subsidiaries. It is one of the largest manufacturer of automotive products and is considered as world's market leader for hybrid electric vehicles. In the present business environment of the country, there are many issues which affect the operating functions of them few are described in the report below (Cantwell, Dunning and Lundan, 2010).
Briefing Note 1
The business organisations in UK are affected by many factors such as political factor, economic, social, environmental, legal and technological factor of the business environment. The main factor affecting the organisation working is the political factor which includes the government and its policies in the country regarding tax, trade, tariffs, etc. These factors guide the main operating strategies and transactions of an entity. The current and modern issues in UK are addressed below.
In UK, the current political changes in the country have affected the businesses as their working policies. The country opting out of the European Union agreement has led to fall in the value of pound to one of its lowest values as an immediate effect. This decision was viewed as both negative and positive aspect for the business operations in the country (Trompenaars and Hampden-Turner, 2011). The major impact of this decision has caused on the business organisation as:
- The import of material form Germany and other EU countries was till now a free trade due to the agreement which will see a hike in prices of the materials leading to increase in prices of goods and services.
- The positive impact of the decision can be seen as hike in the export trade will be noticed due to higher tariffs and costs in the country.
- The country has seen the immediate impact in the form of inflation which is estimated to increase in near future along with the fall in currency value to its lowest in three decades.
- The negative impacts also includes the rise in prices of food, auto mobiles, petroleum, transport, manufacturing goods form 2.5 to 20 percent (Storey, 2016).
- The companies if lower the prices in order to maintain position in the market it will result in lower profits ultimately leading to increase in the cost of economy of UK in the long term.
- The European Unions having access to The European Free Trade Association, UK as a founding member of it will lose the access into the single market. As estimated after exiting in actual from the EU the loss to be bear by UK will be more than 70 billion pounds.
- The increase in prices of petroleum will lead to decrease in the sales of cars and other auto mobile products of the company. This can have a negative impact on the production function of the company (Basole and et.al, 2015).
- These is an estimate of possible reduction in the foreign investment inflow for the country as till now these investors were not facing high cost barriers from tariffs.
- One of the major upside of this decision can be seen as UK will be free to make major business deals with other countries all around the world.
- The rules and regulation implied by the EU agreement will be removed leading to more independent trade and agreements.
This political decision will create a huge impact on the working operations and policies and will lead to major changes in trade agreements and transactions of the Toyota company operating in UK economy. The company will need to become equipped in order to adapt to the changes gradually (Shaheen and et.al, 2014).
Another political factor affecting the business in the country is the change in National Living Wage. The policy of National Living Wage will be implemented with a rise in the per hour wages and minimum wages by the government. The businesses will have both positive and negative impact of the situation. The companies not following the policy will be fined and penalties will be doubled as before and criminal action will be taken against the director found guilty. The positive effect for Toyota being a international brand can be seen as it will have to pay a fixed rate of wages and avoid any negotiation for the same. This will create more burden for the mentioned company instead of benefits.
Briefing Note 2
The company operates in the society which comprise of the surroundings and environment. A business needs to identify the factors affecting the environment near it and work towards reducing the negative impact. The resources and materials required for the operations in the company are acquired form the environment and thus contributing in preserving them is essential. Other than providing goods and services to satisfy the needs of the people in the society, an organisation is responsible for making the lifestyle and standard of living better for the people. One of the main environmental issues in UK is the carbon emissions from the factories and manufacturing companies polluting the air and making the environment hazardous for the people (Casadesus-Masanell and Ricart, 2010). This can affect the health of the people from small to a large extent such as:
- The major problem in the country is related to the air pollution caused by carbon emissions. This has created an issue for the company as it is involved in manufacturing of cars.
- This has resulted in decrease in the sales of the company in order to reduce the carbon emission elements (Schjoedt and et.al, 2013).
- The companies are now focusing on producing low carbon emission cars in the country to cope up with the environmental policies introduced by the government.
- Toyota has launched various cars with substantially low carbon emission which will lead to rise in sales for the company in near future.
- These models of cars will take time to be accepted by the people as it compromises on some factors in order to provide better environmental elements.
- The maintenance of these models of cars require comparatively low cost but the maintenance process will get frequent as it uses alternative source of power.
The company engaged in automotive manufacturing has dealt with the present environmental changes and adapted according to the policies of the government. This is done as to contribute for making environment and society better and reducing the impacts of business operations.
Briefing Note 3
The legal environment of country is guided by the government and the legal policies put in effect by it (Wang, Wang and Yang, 2010). The government in UK introduced some legal policies to guide the trading and business activities in the country. The law in UK is managed by the courts of English and Wales. English law is considered the most superior from case law which is formed by the judges and court of the country. It is the common law which originated in the middle era in England. This legal system is used to decide the cases related to civil and criminal nature. There are various acts which govern the business environment such as:
Competition Law- Competition law was established in 1998 in UK. The major task of competition law in to create an environment which is free from unhealthy competition (Kietzmann and et.al, 2011). This law focuses on creating a market where free trade and practice is followed. The main motive is to have no firms which dominates the market to create monopoly. With the strong implementation of the competition law, many multinational firms try to enter the market but the downside of relaxed competition law is that the market gets flooded with the new ventures (Baden-Fuller and Haefliger, 2013). This practice does not allow to establish any player in the market and large organisations such as Toyota finds it challenging to maintain its operating profit if price fall in the automotive industry.
Environmental Law- With the increase in the urbanisation the environmental sources of the country starts decreasing so there is need to draft an Environmental law whose main agenda is to protect the environment from the depletion of resources. There are various acts formed in UK so that environment can be safeguarded. There is a need for proper implementation of the law to treat industrial waste properly and dispose it off without damaging the environment. This law can prove to be beneficial for a large organisation
as they have a system of internal check on the production process and can help to protect and conserve the environment around it (Understanding Business Rates, 2017).
Toyota will be able to set new factory as the UK government will prefer these large organisation. But as a negative impact any new amendment can be introduced by the UK government to reduce the air pollution from vehicles which will directly affect the automotive industry. As a research analyst these are certain recommendations which I can provide in order to prepare the company beforehand to cope up with the changes in the business environment (External Environment: Introduction (GCSE), 2017).
The above report related to the external factors affecting the operations of a large business organisation, in this case Toyota taken as an example. The business operations of an organisation are affected by the factors in the community. The impact of these factors prevailing as current situations in UK are explained on the mentioned company. As a research analyst I analysed some factors and explained their impact on the company in present and future context as well. Thus, defining the reasons that can disrupt and change the working operations of the firm.
- Stanwick, P. and Stanwick, S.D., 2013. Understanding business ethics. Sage.
- Trompenaars, F. and Hampden-Turner, C., 2011. Riding the waves of culture: Understanding diversity in global business. Nicholas Brealey Publishing.
- Storey, D.J., 2016. Understanding the small business sector. Routledge.
- Basole, R.C and et.al, 2015. Understanding business ecosystem dynamics: a data-driven approach. ACM Transactions on Management Information Systems (TMIS), 6(2), p.6.
- Shaheen, S.A and et.al, 2014. Public Bikesharing in North America During a Period of Rapid Schjoedt, L and et.al, 2013. New venture and family business teams: understanding team formation, composition, behaviors, and performance. Entrepreneurship Theory and Practice, 37(1), pp.1-15.
- Cantwell, J., Dunning, J.H. and Lundan, S.M., 2010. An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Journal of International Business Studies, 41(4), pp.567-586.