The history of automobile began as early as 1890s, when a few inventors came up with

the idea of self-propelled vehicles. Before the idea was founded, bicycles received wide-spread
popularity for its convenience of human transportation, which caused inventors to explore and
understand more about self-conveying vehicles.
Just over a century ago, steamships, canals,
railroads, and the telegraph were up and running.
They were the technological marvels of the 19th
century, setting the stage for the 20th century. Yet
the invention that would spark a revolution in
transportation was a simple two-wheeler - the
bicycle. Its popularity in the 1880s and 1890s
spurred interest in the nation's roads. However, it
was the car that was destined to dominate the new
roads. Bellis M. (n.d.)
The first two successes in the automotive industry were in the 1890s. In 1891, William
Morrison built a carriage which runs on electric and it drove him through Des Moines, Iowa,
which amazed people with his unique invention. Two years later in Massachusetts, a man named
Frank Duryea invented a truck which operates with a motor, with a mechanism which works
only with internal engine combustion. Not long after his success, he manufactured vehicles with
internal combusting engines. To be prcised, he manufactured only 13 units in his first year of
operation. One of the first few companies to manufacture vehicles for the public started in 1986.
At that time, electric-powered vehicles production is larger than gas-powered vehicles. Though
the market for electric-powered vehicles were dominating the market, an innovation which gave

the automotive market a hit was that, internal combustion engine vehicles no longer need a hand
crank for engine start-up. The innovation of gas-powered automotive industry soon caused the
electric-powered vehicles to lose their market share and they lost their grounds in a short period
of time. University of Michigan (n.d) stated that in 1912, a vehicle named Cadillac was the first
ever vehicle adopt an effective self-starting engine. Soon, the manufacturers realized that their
products are something good to be sold to the market, so they started marketing their products.
Automotive manufacturing companies were stopped due to the first and Second World War
because of the space needed to accommodate space for manufacturing war materials. In 19451950, it was when the Second World War ended, many automotive manufacturing companies
continued to bloom. In 1966, National Traffic and Safety Act, The Highway Safety Act and
Department of Transportation were created to standardize the safety of users of motor vehicles
on the road. In the 1980s, the Big Three began manufacturing smaller cars. In the same year, the
import market was anticipated as well; instead of competing against other firms, the Big Three is
forced to cope with fuel-efficient vehicles from Germany and Japan and the surprise was that
imported vehicles sold surprisingly well. Toyota soon became the foreign leader of the
automotive industry, conquering most of the import market share.
As we all know, Toyota is a Japanese originated car manufacturing firm. The late Eiji
Toyoda was the chairman and president of Toyota, once visited a Ford plant in America to gain
the knowledge of how Americans manufacture their cars. His visit made a remarkable change to
the way of how mighty Toyota manufactures their cars, making a big name in the global auto
industry. Ever since Toyota was founded, the company is keen on creating a more prosperous
society through automobile manufacturing, with a focus on vehicle production and sales.
According to The New York Times, (nd) the giant Japanese automaker now owns 40 assembly

plants and 12 research and development centers, with an employment of 310,000 people. Though
there are many big time competitors of Toyotas, the company still managed to kick General
Motors off the top. Today, Toyota remains as the number one automaker in the world with a
whopping 9.98million unit of cars sold as reported by Korzeniewski, J (2014)
The external environment generally has 6 different factors; demographic, technological,
sociocultural, political & legal, global and economic. These are the factors and forces that are
happening outside of the organization but will ultimately affect its overall performance. Thus, all
6 of these factors have been actively affecting the automotive industry.
Starting with the political or legal aspect, there are many types of laws and official rules
that have been affecting this industry since the 1960s and most of the rules came from the
customers rising care towards the environment and safer automobiles (Highfill, 2004). For
example, the first safety act to be approved by the Congress in 1966 was the National Traffic and
Motor Vehicle Safety Act which forced automobile manufacturers to enhance passenger safety,
driver visibility and the cars braking system (Highfill, 2004). Another act was passed in 1970
which was known as the Clean Air Act in which helped to reduce approximately 93% of
automobile gas emissions within the next 6 years (Highfill, 2004). Next are the demographics
factor in which automakers nowadays are targeting the younger generations, typically Gen X and
Gen Y people (Highfill, 2004). This is due to the belief that most of the people under the Gen Y
category are already eligible to purchase cars. For example, Americans prefer to buy large
vehicles as compared to small sized vehicles especially the retirees just to cater to their postretirement activities (Highfill, 2004). Moreover, car manufacturers have also been targeting their
sales towards a specific group of people and certain geographic locations. For example,

convertibles are not popular in cold places and minivans are most popular among soccer moms
due to the extra space available for kids (Highfill, 2004).
The Internet has also played a part in influencing the technological factor of the automotive
industry. For illustration, a study carried out by J.D. Power & Associates back in 2002, involving
almost 28000 new automobile buyers indicated that 65% of the buyers surfed the Net first before
buying vehicles and 89% of them visited the necessary auto company websites before booking
for a test drive appointment (Highfill, 2004) . Globally, some American automotive companies
have started buying foreign manufacturers which in turn caused some of the largest overseas
takeovers. Besides that, Daimler-Benz A.G. merged together with Chrysler Cooperation to form
DaimlerChrysler A.G. in 1998 (Highfill, 2004). Economically, the automobile industry has
impacted the U.S. economy largely throughout the years. For example, studies carried out in
2001 showed that the total sales of automobiles made up about 3.8% of the countrys GDP,
translating to almost $378 billion dollars in sales (Highfill, 2004). In terms of the sociocultural
aspect, it is easy to say that people these days tend to judge others based on the type of car they
are driving and most automobile manufacturers are aware of this. For instance, anyone who
drives an expensive car is immediately perceived as being wealthy since nobody wants to be
seen driving an unattractive piece of junk because of what society might think of him or her.
Basically, customers just feel better when they are driving a nice car simply because it makes
them feel better about themselves.
Since we are researching about Toyota Motor Corporation, there are a few factors from the
external environment that is affecting their performance as one of the top-selling mass-produced
cars in the world. Globally, Toyota has successfully expanded to 180 countries around the world
including Japan and the USA (Moon, 2010). Globalization can either be an easy or difficult task

especially since they need to make sure that they provide sufficient information about their
vehicles and company to their potential buyers. Without enough information, people will not
know the specialty of the Toyota vehicles so they might decide to purchase vehicles from the
competitors such as Nissan and Honda. Technologically, Toyota provides enough information
about their vehicles online so that customers can view their vehicles online first instead of
visiting the physical showroom. By doing this, customers can check the specifications and prices
of whatever vehicles they are planning to buy.
In the economic sense, the past 6 years have been tumultuous for most automobile
manufacturers as rising fuel prices and rising environmental concerns have caused shifts in
customer preferences. They prefer compact and fuel efficient cars rather than fuel-guzzling
trucks and SUVs. As incomes increase, the propensity of people to buy automobiles increase as
they become more affordable. For example, Toyota has signed a partnership deal with BMW
which is expected to boost the development of new products and increase in revenues in the
future (Nkomo, 2013). Demographically, Toyotas sales declined in certain geographic segments
such as in North America, Europe and Asia in 2012, which makes up a total of 60% of the
company total revenue (Nkomo, 2013). If there is a perpetual decline in Toyotas key segments,
this could put pressure on the profit-earning segments and revenues earned by the company
(Nkomo, 2013).
The world we live in now is advancing so fast that everyone is always on the look out to
seek a better way to live their lives. Despite living on a planet full of resources, many of which
these resources are slowly depleting, sooner or later we wont have certain resources. But are the
business models that are here today equipped enough to deal with this issue that we are currently
facing? Sustainability is no longer a philanthropic afterthought or about installing low energy

light-bulbs, but an approach to embed more forward thinking and responsible business practice
into how a business produces and delivers its goods and services (PWC, 2014). It is now all
about being able to sustain ones business responsibly, with a watchful eye on new external
risked and also on the future consequences of ones decisions.
A solution or in other words steps that have been taken by companies thus far to
overcome certain environmental constraints would be to anticipate what would happen in the
near future. Businesses have to always be aware of the environmental constraints and how they
can change quickly over time. They would have to anticipate changes that are most likely to
happen in the near future for the business. By doing so, the company is therefore able to mold
their company accordingly, whether its in terms of technology, or how they produces the cars,
materials they use to produces the car, so on and so forth. By anticipating change businesses are
able to adjust the way they operate to be ahead of competitors (Businesscasestudy, nd).
In terms of technology, the main thing that comes into our mind when it comes to a
company producing cars like Toyota would be whichever automotive company that has the latest
technology would obviously give them the upper hand when it comes to competing with other
automotive company. They help with designing vehicles and communicating to other facilities to
make sure that everything is operating correctly. (Moon, 2010). These technology help reduce
the job of workers, example would be that designers wont have to sit down in front of a
drawing paper and slowly draw out something which would be time consuming. Instead with the
help of technology, they help with the designs by giving a rough idea of what designs would be
nice. And it would also be easier to get what you want onto a computer screen with just a click of
a button, not only that it also helps in communication whereby two factories are able to
communicate with each other via a computer and pretty much instantaneously to check is

everything is running smoothly. Not only that Toyota has used the internet not only to show what
they have in their cars or what their car specs are, they are also using it to post or advertise about
their recall on the specific Toyota vehicle, this would prove to be very cost efficient cause Toyota
wont have to call each and every one of their customers informing them to bring back their car.
With the world evolving so fast, even human beings are getting older. Its very hard to
keep up with trends or even to find out what is the most happening trend amongst people
nowadays is hard to find out. Companies like Toyota should hire more people of younger ages,
this is because younger generation people are exposed to technology ever since they were born,
and it is more likely that they would know what trend is going round now, and what people like
or want in their everyday living. With the help of the younger generations companies are then
able to keep up with the needs of the people, changing the way they work to accommodate the
needs of the many. This in the long run would be good for the company as they would win the
hearts of many of their customers.
To sum up, by having this kind of external environment such as globally, technological,
economically and demographically this company can generate more revenues by having to put
the right pressure to the indicate segments. The definition of global environment is like
environment of nature and the contiguous that can manipulate worldwide scale (answers, nd).
Technological of external factors can impacts the business process and the business of operating
strategy have to drastically change (businessdictionary, nd). The economic environment is made
up of external factors in a business market and more extensive of economy that can influence a
business (Education-portal, nd). The last but not least, the definition of demographic is
socioeconomic characteristics of some population uttered statistically, such as education level,
income level, occupation and many more (BusinessDictionary, nd). Therefore, there are few

recommendations that Toyota can address the environmental constraints which is they have to
expect what can happen in the future endeavours, in automotive field that have use the latest
technology to attract people using their products, its also easier way to designed their car and
easier way to communicate with people. The last but not least, the recommendation that Toyota
should take into account this company should hire more people of younger generation that
exposed to the technology nowadays. Even though Toyota Company is considered as the worlds
money making car manufacturer but to make this company succeed in the near future, they can
begin the recommendation to get over their current disaster.
.

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