Microeconomic and Macroeconomic Factors Influencing Toyota

The company that has been chosen for the intent of this assignment is the Toyota Corporation and the merchandise that would be highlighted during this paper is traveling to be the Toyota Camry 2007 theoretical account. It is necessary to distinguish the difference between what are microeconomic factors and what are macroeconomic factors, the micro flat economic factors are something that the company can exert some degree of control and can act upon this environment to a certain grade but macroeconomic factors are such in nature that the company is unable to act upon them by any agencies what so of all time. On the literally footings, micro means little degree and macro agencies on a larger graduated table. ( Wessels, 2000 ) .

There are many factors that affect any company both on the micro every bit good as the macroeconomic degree and it is of kernel that companies realize these factors and possible factors so that they can last in the long term, these factors are divided into two parts one is the consumers and the other is the company itself. ( Samuelson, 2001 ) . The microeconomic factors that affect a company or a merchandise are

Monetary value: monetary value is one of the individual most if non the most of import factor to be considered by the company in footings of microeconomic factors that affect the company. Monetary value of a good determines the market portion, what mark market the merchandise is seeking to tap in to and how much of the good is traveling to be demanded and how much of it is traveling to be supplied by the company. ( Samuelson, 2001 ) . The monetary value of a good determines if the consumers think that the merchandise is deserving purchasing or even deserving contemplating upon, if monetary values are irrational for illustration a pie for $ 250 so the demand is about surely traveling to be negligible if non non-existent for this sort of merchandise. The monetary value is and can be influenced by the company by pull offing its supply efficaciously. Another of import consideration that needs to be taken attention of is the competitory monetary values in the economic system for illustration if Honda Accord is priced between $ 18000- $ 20000 so the Toyota Camry needs to be priced in the similar scope because they are really close rivals in the US market, if Honda Accord monetary values its merchandise lower than the Toyota Camry so it is about surely traveling to be able to acquire a larger pie of the mark market given that all other things are kept changeless or ceteris paribus regulation applies.

Opportunity Cost: The consideration of chance cost is highly of import when one negotiations about microeconomic factors, if Toyota Camry increases its monetary values so people would hold to give up more money in order to buy the same good i.e. their chance costs goes higher. ( Wessels, 2000 ) . This is where the construct of value for 1s money stairss in, if Camry is bear downing its clients $ 18000 so its value or its sensed value should be deserving $ 18000 to the client or else the client would pass the $ 18000 where he or she deems that they would be much better spent. This is where the construct of analyzing the consumer comes in. ( Lipsey, 2002 ) . The constructs of monetary value snap comes in here every bit good, if a little positive alteration in the monetary value of Camry decreases the units demanded for Camry so Camry is extremely monetary value elastic but if the alteration in monetary value merely consequences in a little alteration in the units demanded so it is inelastic and it can afford to increase its monetary values. ( Samuelson, 2001 ) . Cross snap is where Honda Accord decreases its monetary values and it affects the gross revenues of the Toyota Camry, in this instance it would be extremely transverse elastic but if no alteration or merely a really infinitesimal alteration occurs so it is non transverse elastic.

Consumer Behavior: Consumers are people that finally do or interrupt a company, this is why they need to be studied and understood because they are a really powerful force every bit far as the concern is concerned. ( Samuelson, 2001 ) . Camry should understand what the consumers are looking for when they are doing a determination to purchase a auto, is it safety? Is it lastingness? Is the fuel efficiency? Or is it all of the things mentioned earlier? When these inquiries have been answered and Camry has decided what market section it is traveling to be in so it needs to place itself consequently. Once this has been taken attention of the company would so necessitate to pass on what it stands for to the consumer ( Glass, 2010 ) so that the consumer understands what the company is offering and matches the benefits that are being offered to the monetary values that are being demanded and do the determination whether to purchase or non. ( Lipsey, 2002 ) .

Another consideration that is highly of import for Toyota is that the costs of the autos that it is fabricating should be at the lowest degrees possible so that it gets the highest possible net incomes from each unit that is sold. How can the costs be controlled? There are a assortment of factors into consideration when costs are involved, foremost of all Toyota should construct strategic partnerships with all its sellers so that they are on board with the company scheme and are cognizant of what the company is seeking to accomplish. ( Glass, 2010 ) . Second it should increase the works efficiency and besides have a expression at its procedures and implement cost film editing steps where of all time it can but most significantly the workers have to be trained to be efficient so that they are on board with the company & A ; acirc ; ˆ™s policies as good. ( Samuelson, 2001 ) . If the costs are excessively high for Toyota so surely so would be the monetary values of Camry and hence this would render the merchandise unsuccessful because competitory trade name would be able to capture a larger market portion and may besides be able to drive Camry out of concern.

Competition as highlighted above ever has bearings on the company and its determinations and hence in a microeconomic environment the company has to maintain a check on the competition as good and analyse what they are making and be able to foretell what their following move is traveling to be and seek to be one measure in front of the competition at all times ( Glass, 2010 ) , although the company can non act upon its competition straight but it can take steps that can impact the competition in a positive every bit good as a negative manner. ( Donburch, 1988 ) . For illustration if Honda announces that it would establish a an Accord in 2012 that would be highly fuel efficient but at the same clip it would be able to interrupt the sound barrier, so Toyota has to come up with a merchandise that is tantamount to that Accord if non better.

The 2nd portion of this paper deals with factors at the macroeconomic degree, these factors are beyond the control of any of the houses and these are in a manner given or handed down by the province of the economic system and are mostly dependent on the authorities policies and the economic construction that is prevailing in the environment that the company is runing in, for illustration Toyota Corporation in the US would non be able to find the exchange rate of the dollar because that is more dependent on the US authoritiess policies and the determinations that are taken within the economic environment by that authorities. ( Wessels, 2000 ) .

Interest rates: Interest rates in an economic system determine whether people are traveling to salvage more or pass more, when the involvement rates are high people would prefer to salvage instead than pass but if the involvement rates are low in the economic system so people would prefer to pass their money instead than salvage it. ( Donburch, 1988 ) . The exact opposite is true when it comes to borrowing from Bankss or other fiscal establishments, people tend to take loans when the involvement rates are lower and would prefer non to loan out money when involvement rates are higher. ( Donburch, 1988 ) . How is Toyota affected by the involvement rates prevalent within in the economic system? If Toyota is to put up a new works it is decidedly traveling to necessitate a loan to put up the works, when would Toyota prefer to take the loan? When the involvement rates are on the lower side and hence this macroeconomic factor affects the scheme of the company. ( Wessels, 2000 ) .

Taxs: Toyota would prefer to put up a works where the corporate revenue enhancements are on the lower side so that it enables the company to gain higher net incomes for its stakeholders, nevertheless the revenue enhancements or the revenue enhancement government is developed by the authorities and Toyota has no say in it.

Employment: Employment or the ability of the work force to carry through the demands of the Toyota Corporation is another of import component. Toyota can non develop the whole work force or it can non supply for itself employees all by itself, the authorities has to supply for the people basic instruction and preparation ( Donburch, 1988 ) so there is adequate work-force available to work for the Toyota Corporation.

Business rhythms or cyclical tendencies of the economic system besides have a bearing on the Toyota Corporation for illustration economic system can see growing and it can besides see stagnancy and this would straight impact the gross revenues of the Toyota Camry but this is something that the company has no control over and is non able to act upon it. ( Lipsey, 2002 ) .

Inflation is another of import component when speaking about macroeconomic factors, rising prices is the general addition in the monetary value degrees within an economic system ( Donburch, 1988 ) and if monetary values increase so the costs for Toyota besides would increase and some of these costs or in some instances all of it would be transferred on to the clients of the company.


In decision, both macro and micro degrees have an of import bearing on the company but at the micro degree the company should act upon the factors in its favour and at the macro degree the company should be able to foretell the hereafter tendencies and be adaptative. ( Lipsey, 2002 ) .