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Analyse article - Essay Example

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Firstly, the Toyota president Akio Toyoda, was quoted by BBC News saying that some negative factors such as extremely competitive market made the company to take such a drastic measure (BBC…
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Analyse article

Download file to see previous pages... Schaper further argues that in a competitive market environment effective and efficient firms survive while the inefficient businesses collapse. Considering the remarks by the president of Toyota Company, the business may have faced serious competition from other vehicle manufacturers in Australia such as Elfin Sports Cars Pty Ltd, Ford Performance Vehicles, and GM Holden Ltd as well as competition in the export markets of other countries that offer favorable vehicle manufacturing conditions.
Another factor that contributed to the decision by Toyota Company is high cost of production attributed to the high labor costs (BBC News Business 10 February 2014). Under normal circumstances, the cost of production in an organization is usually lower giving enough room for profit realization when products are sold. However, the Toyota Company based in Australia experienced reduction in profits and eventually loses in the production of vehicles due to the increased production cost. The company tried to solve the problem of increased labor costs through proposed changes in employee contracts that would have resulted in removal of additional allowances and changes in overtime (BBC News Business 10 February 2014) but the implementation was blocked in a Federal Court.
The other critical factor that contributed to the decision by Toyota Company is lack of government support. According to Ch et al., government policies have both positive and negative impacts on businesses operating in the country in question (2011, p.941). In the case of Toyota Company, the impacts of policy changes by Australian government left the company with negative business effects. To begin with, a national commission recommended to the government that subsidies that were initially given to the car manufacturing industry should be stopped and that the companies should device ways of cutting down the production cost (BBC News Business 10 February 2014). Secondly, the proposed changes on employee ...Download file to see next pagesRead More
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