United Cereal Case Essay

United Cereal Case Essay.

I. Key Problem

United Cereal is a diversified company established in 1910 by Jed Thomas. The company produces snack foods, dairy products, beverages, frozen foods, baked goods, and cereals. The cereal industry generates one third of United Cereals revenue. United Cereal focuses on “commitment, diligence, and loyalty” which attracted many people to work for the company. Jed expected his Managers to adhere to a strong set of values and wanted committed Managers that would uphold his philosophy of the “The UC Way” to its customers.

In addition, the company focused on listening to its customers and spotting current trends to make the market part of their core value.

United Cereal was well known as an innovator in the cereal industry and had implemented the “brand management” system, where brand Managers had sole leadership of the brands. During the global expansion of United Cereal in 1952, the company implemented Country Managers (CM) in Europe, who worked on customer satisfaction by studying changes in cultural trends.

The company’s philosophy was to listen to the customer and create a product that the customer wants. The Country Managers constantly strived to meet customers’ needs around different regions in Europe. European breakfast cereal was a very profitable recession-proof market with few competitors.

United Cereal was second, after Kellogg’s, who had 26% of the cereal market. Laura Brill was United Cereal’s European vice president when Healthy Berry Crunch was going to be launched. This became one of the toughest decisions of her career. Laura wanted to launch it to all of Europe and for this new cereal to be the company’s first coordinated multimarket launch. Managers and vice-presidents were hesitant about this idea. The following question arises from this dilemma. What international strategy should United Cereal implement with Healthy Berry Crunch cereal in order to reduce costs and increase market share in the European sector?

II. Relevant Theory

This case relates to international strategies, which compounds the choice of multi-domestic and global strategies. United Cereal has established national subsidiaries, which are led by Country Managers. The Country Managers are fully responsible for the product and market in their Country as well as manufacturing, marketing, R&D, etc. of the product. By having individual subsidiaries in each Country, the cost of innovation and production became a major factor for United Cereal. Many of the Country Managers worked very hard on reducing costs, instead of launching and innovating new products. This strategy in a competitive market was not enough and each subsidiary shifted their strategy into a cost reduction strategy instead of an innovative and competitive strategy. The good side of multi-domestic strategy is the creation of new products that met customers’ satisfaction. The disadvantage of this strategy is that the subsidiaries are fully empowered by the brand, and any decisions made were by inexperienced young Managers.

On the other hand, the innovative idea that Laura Brill has is the global strategy, which she wanted to name “Eurobrands.” Eurobrands will centralize decisions for products as well as marketing, promotion, and advertising. This will reduce cost on SG&A by 10% to 15% over 3 years. In addition, the Eurobrand concept will work perfectly today as old cultural behaviors have disappeared in the European community, and many of the EU regulations in regard to labeling and marketing are no longer relevant. The disadvantage with the Eurobrand concept is that the United Cereal way of listening to all Europeans could be lost. In the case of Healthy Berry Crunch, only France tested the product, therefore, United Cereal does not know how or if the rest of Europe will respond to the product.

III. Assessment on Alternatives

In this case there are two alternatives. Launch Healthy Berry Crunch in France or launch Healthy Berry Crunch as United Cereals first Eurobrand concept. a. Launch Healthy Berry Crunch in France – according to the survey given in France, 64% of the people said that they would re-purchase the product in the next three months. Kellogg’s Special K with strawberries is the only competitor in the market currently offering healthy cereal to the consumers. Jean-Luc Michel did intensive testing of the product and the analysis has shown a trend towards healthy food in France. Therefore, the introduction of Healthy Berry Crunch would be a great success in the Country.

In addition, Healthy Berry Crunch will reflect the company’s core values and innovations that each subsidiary has been known for. b. Launch Healthy Berry Crunch as United Cereals First Eurobrand – if this alternativeis chosen, United Cereal will save between 10 to 15% in research and development over a period of 3 years. By being the first to launch a healthy product like this all over Europe, it will create a big advantage over United Cereal competitors and reduce the threat of competitors entering the European market. Although Healthy Berry Crunch tests were only performed in France, the overall European culture is becoming similar in that they are trending towards healthier eating habits. Therefore, the likelihood of this product being liked by the rest of the population is great.

IV. Suggested Course of Action

After analyzing this case, the best course of action is to launch Healthy Berry Crunch as United Cereals first Eurobrand concept. In order to support this idea, a major change in the organizational structure of United Cereal must be done. This will result in staff reduction and other savings such as marketing and production costs. The direction that Laura Brill wants to take with the future organizational structure is to create Eurobrand teams. The brand Managers from the subsidiary and a regional vice president will be part of the Eurobrand team. This team will be responsible for the development, engineering, marketing, and research of new products. The Eurobrand strategy will introduce Healthy Berry Crunch in Europe and will gain more market penetration than any other competitor.

On the other hand, depending on the circumstances, the multi-domestic strategy is a strategy that does not look at other possibilities in other markets or regions. They act like a “mini UC” in each Country, and the expenses and the time spent are usually not very profitable to the company. Despite the criticisms and concerns that may occur during the organizational structural change, the Eurobrand strategy will bring leadership and teamwork among the members of the team. They will act as leaders in the product formulation, market positioning, packaging, advertising, pricing, and promotions. At the same time, they will be responsible on cutting costs and finding ways to raise revenue to United Cereal.

V. Key Takeaways

Learning about the two different international business strategies: multi-domestic and global strategy was very interesting. Each Country, continent, region, etc., could differ from each other, and that is when leaders must be wise in choosing international strategies. In the case of Europe, most of the countries that surround the continent have been unified in one community. That is the reason why their cultures, economies, policies, and so on, have been converging over the years. A practical way to study the international market is applying the CAGE model. This model will provide us with another way to look at global expansion by analyzing cultures, administrations, geography, and economics globally.

When industries reach international markets, they are either multi-domestic or global. What dictates which of these strategies is better, depends on the economies of scale and how customized the industries want to be with their products.

United Cereal Case Essay

The Impact of Eu on the Irish Legal System Essay

The Impact of Eu on the Irish Legal System Essay.

The purpose of this report is to highlight how European Law has affected the Irish Legal System and the extent to which these laws are binding in Ireland. Ireland began negotiations to join the European Union (EU) in 1972. For this to happen a referendum was taken and an amendment to the constitution had to be made. Ireland signed the Treaty of Accession and became an official member state in 1973. By joining the EU, Ireland accepted the supremacy of European Laws. This means that those laws are bound and must be applied in the country over National Legislation and even over the Constitution.

This had a significant impact in the Irish Legal System as sometimes EU Laws and National Laws conflict and, if this happen, the EU Law takes precedence. (Accounting Technicians Ireland Course Manual)

There are two types of European Law:
* Primary Legislation
* Secondary Legislation

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Section 2
EUROPEAN UNION LAW – PRIMARY LEGISLATION

The European Treaties are considered to be the Primary Legislation and they establish the European Union’s principles and laws.

Its major objective is to make the EU more efficient. After being developed, the Treaties must be signed by all the member states and then each member must ratify the Treaty in its own National Law. As to ratify the Treaties, Ireland must amend its Constitution which is done through referendum and only then the Treaty becomes Law and is brought into force.

Various Treaties were signed and amended over the time and to date we have six, which are:
* The Treaty of Rome (1957)
* The Single European Act (1987)
* The Maastricht Treaty (1993)
* The Amsterdam Treaty (1997)
* The Nice Treaty (2001)
* The Lisbon Treaty (2009)

2.1 Treaty of Rome: This Treaty established the European Economic Community (EEC) and the Institutions of Europe. Its major purpose was to facilitate trading between the community’s members by reducing the customs duties and establishing a Common Market for the EU

2.2 The Single European Act: This Treaty is a revision to the Treaty of Rome. It reformed the Common Market and gave rise to a Single Market within the European Community removing the remaining barriers and facilitating the movement of goods, services, capital and people between the countries which are known as the four freedoms. This gave great opportunities to the Irish businesses and economy.

(http://ec.europa.eu/ireland/ireland_in_the_eu/ireland_and_the_single_market/index_en.htm)

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2.3 The Maastricht Treaty: This Treaty introduced the European Citizenship. This title was given to each individual national of a member state together with European Rights. The process of implementation of a single currency (€ Euro) among the EU countries was also established by the Maastricht Treaty. It also expanded the role of the European Parliament as for example in adopting acts together with the Council.

2.4 The Amsterdam Treaty: This Treaty focused on the citizenship and individual rights. It included issues involving equality, employment, public health, etc. The Treaty also enhanced the role of the various Institutions in Europe.

2.5 The Nice Treaty: This is an amendment to the Treaties of Maastricht and Rome. Its purpose was “to complete the process started by the treaty of Amsterdam of preparing the European Union to function in an enlarged Union” (http://eur-lex.europa.eu/en/treaties/dat/12001C/pdf/12001C_EN.pdf). In other words, it aimed to reform the institutional structure of the EU as to support the expansion to East countries. The Irish people refused this Treaty at first time as it was believed that small states as Ireland were being marginalised by the Treaty. A second referendum was held and the Treaty accepted.

2.6 The Lisbon Treaty: This is again an amendment to previous treaties and again refused by Irish voters at first time. This Treaty made a number of changes, as for example in the way decisions are made at EU level and institutional changes including giving power to European council to make some changes to the Treaties.

(http://www.citizensinformation.ie/en/government_in_ireland/european_government/eu_law/lisbon_treaty/lisbon_treaty_overview.html)

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Section 3
EUROPEAN UNION LAW- SECONDARY LEGISLATION

Secondary Legislation derives from the Treaties and comprises of the following Legal Instruments: 3.1 Regulations: They are the most powerful secondary form of European legislation; as soon as they are passed they are fully legally binding in all member states without the need to form new laws. They are mainly used for uniformity of law throughout the European Union. They are on par with national law. Each member state is obliged to introduce the necessary measures to ensure they are fully implemented. (Keenan, 2012:298) An example of an EU Regulation is the EU Liquids Legislation which imposes restrictions on liquids carried into departure lounges at airports across the EU.

http://ec.europa.eu/eu_law/introduction/what_regulation_en.htm

3.2 Directives: They are instructions and guidelines specified by the EU to the member states requiring them to standardise Legislation in certain areas within a specified timeframe. Directives are binding (as with Regulations) on members to achieve certain goals, but National Authorities are free to decide on their methods of implementations .They only become legally binding once they are transposed into National Law. (Keenan, 2012:298), http://ec.europa.eu/eu_law/introduction/what_directive_en.htm One example of a Directive that is having a major impact on the Irish legal system is the Working Time Directive (2003/88/EC) formerly (93/104/EC): It was introduced to protect workers health and safety; and minimum rules are needed on working time in all EU Member states. The main rules are: * Weekly working hours should not exceed 48 hours.

* Minimum breaks, daily and weekly rest periods.
* Paid annual leave of at least four weeks per year.
* Extra protection with regards tonight workers.
* Special rules for certain sectors: doctors in training, off shore workers, sea fishing workers. (Keenan, 2012:298)

http://ec.europa.eu/social/main.jsp?catId=706&langId=en&intPageId=205
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Ireland implemented this Directive through an Act of the Oireachtas, The Organisation of the Working Time Act 1997. However Ireland was found to be in serious breach of this EU Directive in certain areas. They have laws in place for doctors working time, but a European Commission notice states that in public hospitals they often do not apply these rules to junior doctors and non-consultant hospital doctors’ .The European Commission will continue to monitor Ireland until they fully implement the Directive or they will face significant consequences. In November 2011 the EU social partners started negotiations to amend the Working Time Directive to meet the needs of employers and workers of the 21st Century. They hope to progress this during 2012 .Until such time as a decision is reached Ireland must continue in their efforts to fully comply with the existing Directive.

http://www.nhsemployers.org/employmentpolicyandpractice/european_employment_policy/pages/working-time-directive.aspx http://europa.eu/rapid/press-release_IP-12-903_en.htm

3.3 Decisions: They are European Laws relating to specific cases. This is the usual method by which individuals cases are handled by European Union Institutions. They are legally binding in their entirety upon those to whom they are specifically addressed. They can require authorities and individuals in member states, either to do something or stop doing something and can also confer rights on them. An example of this is the granting or refusal of state aid. (Keenan, 2012:298) http://ec.europa.eu/eu_law/introduction/what_decision_en.htm

3.4 Recommendations, Opinions and Resolutions: In contrast to the previous instruments the Recommendations, Opinions and Resolutions are not binding, but they still have impact on the Irish legal System. They are basically recommendations given by the EU on how the states should act in line with EU Common goals.

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One example of a Resolution in which Ireland was the pioneer in adopting it, was the Ban on Smoking in Public Places- Resolution of the Council and the Ministers for health of the Member States, of July 1989.Their success encouraged many other members to adopt similar law. They implemented this through the Public Health Tobacco Act 2002-2004.They imposed a comprehensive ban on smoking in all public places and all work places including bars and restaurants. (Keenan, 2012:298)

http://www.hse.ie/eng/services/publications/services/Environmentalhealth/Tobacco_Control.pdfhttp://europa.eu/legislation_summaries/public_health/health_determinants_lifestyle/c11506_en.htm

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Section 4CROTTY VS AN TAOISEACH – A LANDMARK CASE

In this section we take a look at a case which changed the way in which the ratifications of EU Treaties would be handled, the ramifications of which are still felt today. The Single European Act (1986), which was an amendment to The Treaty of Rome (1957), was to prove a step to far for Mr Raymond Crotty, an economics lecturer from Trinity College Dublin. “The Single European Act (SEA) was an international treaty which aimed to establish closer economic and political co-operation amongst member states”.1 The government at the time had already committed to the treaty when Mr Crotty “contended that the SEA gave new legislative and executive powers far beyond that agreed by the Irish people in 1972”.1 Crotty and his lawyers, which included Mary McAleese, sought for an “injunction to restrain the government from taking further action to ratify the treaty without first holding a referendum.”1 The teams’ most compelling argument advanced, according to Barrister Martin, writer for the Irish Times, was “that the SEA committed Ireland to formulating European foreign policy, repugnant to the Irish Constitution which asserts Ireland as a sovereign, independent, democratic State and affirms Ireland’s neutrality.”1 Another argument put forward related to the specific wording contained in the Constitution after the accession to the EU.

The Article in question (29.4.10o) stated that, “No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or of the Communities, or prevents laws enacted, acts done or measures adopted by the European Union or by the Communities or by institutions thereof, or by bodies competent under the Treaties establishing the Communities, from having the force of law in the State.”2 “Article 29.4.10o ensures that Ireland could fully comply with its obligations under EU law without fear of breaching the Constitution.”3 “Only laws acts and measures that are necessitated by virtue of Ireland’s membership of the EU are Constitutional immune.”3 The question, for Crotty was what exactly was necessary? Crotty’s lawyers argued the ratification was not strictly necessary in all parts for Ireland to remain in the EU and therefore not immune from challenge on Constitutional grounds. The State maintained Crotty had no legal standing (locus standi) and even tried to discredit Crotty citing a judgement by Mr Justice Henchy implying Crotty as a “litigious person, a crank, an obstructionist, who was succumbing to the temptation to litigate the Constitutionality of a law rather than observe it”1. 7

Despite his doubts Mr Justice Barrington granted the injunction, but in February 1987 a three man High Court made the decision to rule against Crotty and revoked the injunction. Crottys’ team immediately and successfully applied for another injunction to stop the government continuing with ratification of the treaty until the case could be heard before the Supreme Court. “On April 9th, 1987, the Supreme Court held that the European Communities (Amendment) act 1986 was not repugnant to the Constitution and that the president had acted in accordance with the Constitution in signing the Bill into law.”1

Despite this disappointing ruling, the Supreme Court found the SEA itself to be unconstitutional and held that “the freedom to formulate foreign policy is just as much a mark of a democracy as the freedom to form economic policy and the freedom to legislate and concluded that the assent of the people as guardians of the Constitution was a necessary prerequisite to the ratification of the SEA (the treaty).”1 “The case brought by Raymond Crotty on the ratification of the Single European Act was clear. It set down that any treaty which substantially changed the concrete foundation of the union had to be approved by the people through a referendum.”4 The result of this has been to see the Irish Constitution amended to recognise EU law no less than seven times since 1987. It is 25 years since this landmark ruling, the impact of which has been felt many times and will continue to do so for many more.

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CONCLUSION

In conclusion, we can see that the accession of Ireland to the EU had a huge impact on the Irish Legal System, from ratifications of EU Treaties to the implementation of EU Regulations, Directives and Decisions there has become a new legal order in Ireland.

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BIBLIOGRAPHY
Listing Books:
Accounting Technicians Ireland Course Manual (2013/2013) Law & Ethics Republic of Ireland Keenan, J (2012) Essentials of Irish Business Law, 6th ed
Carolan, B (2009) EU Law for Students in Ireland
Listing electronic sources:
Retrieved 6th November 2012 from http://europa.eu/legislation_summaries/institutional_affairs/treaties/index_en.htm Retrieved 6th November 2012 from http://ec.europa.eu/ireland/ireland_in_the_eu/ireland_and_the_single_market/index_en.htm Retrieved 8th November 2012 from

http://eur-lex.europa.eu/en/treaties/dat/12001C/pdf/12001C_EN.pdf Retrieved 8th November 2012 from http://www.citizensinformation.ie/en/government_in_ireland/european_government/eu_law/lisbon_treaty/lisbon_treaty_overview.html European Commission What are EU Regulations? , retrieved 3 November 2012 from http://ec.europa.eu/eu_law/introduction/what_regulation_en.htm European Commission What are EU Directives? , retrieved 3 November 2012 from http://ec.europa.eu/eu_law/introduction/what_directive_en.htm European Commission What are EU Decisions? Retrieved 3 November 2012 from http://ec.europa.eu/eu_law/introduction/what_decision_en.htm European Commission Working Time Directive , Retrieved 3 November 2012 from

The Impact of Eu on the Irish Legal System Essay

Airbus versus Boeing: When is Intervention Not Intervention Essay

Airbus versus Boeing: When is Intervention Not Intervention Essay.

Where do you stand? Do you think the EU subsidies and soft loans to Airbus are fair? Why or why not? What advantages does Airbus gain from free financial support from the EU governments? Are complaints about the EU government intervention fair in light of Europe’s long history of democratic socialism? I think that the subsidies and soft loans provided to Airbus are unfair and provide them with an unfair competitive advantage. Airbus is given aid from Britain, Spain, France, Germany, and the European Union.

These countries’ governments are responsible not only for providing the funding that created Airbus, but also for funding its ongoing success. In fact, government aid is responsible for the creation of all their aircraft models. With this kind of support, it is nearly impossible for Airbus to fail. I feel as if these European governments have gone too far in helping Airbus succeed. It’s one thing to help a company start up, but continually infusing money into a company guaranteeing its success provides unfair advantages over other companies, such as Boeing, that have been able to sustain without such drastic help.

The extensive financial assistance has allowed Airbus to quickly gain market share and outsell Boeing. Thus, Airbus has been able to grow and profit while Boeing has had no other choice but to sit back and watch Airbus take over the commercial aircraft industry—the industry Boeing had led for decades. Airbus gains substantially from receiving free financial support. The subsidies given to Airbus provide for research and development which results in reduced costs of production and increased knowledge of the industry. The free support allows Airbus to reap profits much sooner than a business not given subsides would be able to.

Along with the grants (money that does not have to be paid back) the loans given to Airbus are referred to as “soft loans”, which means that Airbus incurs no risk if the business fails. The loans only have to be repaid if Airbus achieves profitability. The fact that Airbus has taken on virtually no debt in the past few decades dramatically improves the outlook of the company and provides more potential for long term success. Having little or no debt improves their financial statements and makes Airbus a more attractive investment option for other investors.

The complaints about the EU government intervention are still fair even after taking into consideration Europe’s long history of democratic socialism. In Europe, the governments play a large role directing the national economy and it’s very common for the governments to intervene. Normally I would agree that government intervention that supports the well being of the public is a good thing, but it’s a different story when the intervention of one country’s government benefits the local economy at the expense of foreign economies.

It’s understandable that European countries are more susceptible to government intervention, but that does not provide them with a valid excuse for allowing their intervention practices to affect firms on a global scale. While the actions of the EU were most likely intended to achieve economic objectives that would enhance Europe’s airline industry and more importantly the well being of European citizens, the intervention ultimately provided Airbus with a favorable competitive position and an unfair advantage in conducting business. Such a result is unjust for competing firms like Boeing.

Airbus versus Boeing: When is Intervention Not Intervention Essay

Nafta Eu Compare Contrast Essay

Nafta Eu Compare Contrast Essay.

The North American Free Trade Agreement (NAFTA) is an agreement signed by the governments of Mexico, Canada and the United States. It creates a three way trade bloc in North America. The agreement was made on January 1, 1994. The trade bloc is the largest in the world as of 2010. The European Union (EU) is an economic and political union of 27 member states which are located mainly in Europe. Its capital is de facto Brussels. The EU operates through a system of independent institutions and intergovernmental negotiated verdicts by the member states.

Important institutions of the EU include the Council of the European Union, the European Commission, the European Council, and the European Central Bank. The European Parliament is elected every five years by EU citizens.

The EU allows free trade in between 27 very powerful economies, provides coordinated environmental legislation, free movement of goods and citizens between countries, and it provides support for minority languages within Europe. NAFTA enables a food corporation in Sioux Falls, South Dakota to increase profits and sales across Canada, but it also caused many jobs to be lost in South Dakota.

NAFTA allowed many of U.S. manufacturers to move jobs to lower-cost Mexico. The manufacturers that remained lowered wages to compete with those industries. Many of Mexico’s farmers went bankrupt because of business by U.S.-subsidized farm products. U.S jobs were lost and wages were suppressed. In response to competitive pressure, Mexico agricultural business used more fertilizers and other chemicals, resulting in the deterioration of Mexico’s environment.

In the EU commissions hold much more power than the head of state, councilor as well as the elected parliament. Another thing is that it’s making the fishermen lose their jobs because they aren’t getting a sufficient amount of business. The European Union like NAFTA, there are a lot of trade agreements between the countries, in what is also referred to as the Common Market. The EU is more advanced than NAFTA, covering a lot of other aspects of relationships between the countries. The three member countries use their own currencies in NAFTA, while people in EU have a single currency called Euro. EU is a distinct political entity while NAFTA is just an agreement meant to foster trade between member countries. NAFTA only has 3 member countries and The EU has 27.

Nafta Eu Compare Contrast Essay

Effect of Political and Economic Environment in the UK on Toyota Essay

Effect of Political and Economic Environment in the UK on Toyota Essay.

After the oil shock in 1979 the European Automobile had to restructure as a result if car sales drop.  This fall in car sales continued until late 1980’s.  At the moment the demand for cars is precariously balanced.  The Market is now facing challenges concerning quality and technological changes with Japanese and USA producers having transplants in the UK. Europe is the largest producer of automobiles in the world.  Production is declining.  “According to record, 13.7 million units were being produced in 1989 compared with 7.

8 million for North America and 9 million for Japan”.  (Global competition and the European Automobile Industry. Pg 3).

The UK automobile was expected to rise by the year 2000 by then the market would be owned by the Japanese, UK and European producers.  The first company to set automobile in UK form outside was the US Ford and later others like General Motors, BMW, Honda, later Nissan and Toyota joined.  The UK has a global quality improvement initiative controlled by society of motor Manufacturers and traders industry forum.

  Currently UK has over 1000 automotive suppliers with manufacturing firm based in the UK.

How Economic and Political Environment are Affecting Toyota

            Generally, UK based vehicle manufactures are recording losses.  This included companies with high productivity records.  The economic conditions tend not to favor the vehicle market.  This is due to production of cars at cheaper prices in other sectors of the globe. Toyota is not an exception.

            The political environment of UK does not favor manufacturing plants much.  This is evident through the ease at which employment law makes it easier to close manufacturing firms.  In cases where any manufacturing plant fails to adhere to the government regulations and the UK British act, it can easily be terminated by law.

Majority of UK suppliers are lacking some of the short principles of management like good customer focus, and shortage of skills.  Considering that UK has had a good history of quality cars.  The market is almost exploited; customers have seen almost variety of unique cars in the Market.

The economy of UK is stable relative to other economies.  Hence, company’s wishing to invest in UK find it expensive to hire labor in UK.  As a result, their profits are limited due to high expenses on payment of labor.

The increased cost of energy in the UK’s economy to be specific is another economic factor, though this change is being felt all over the globe.  This is affecting Toyota as a company negatively since most of its production requires energy.

Swot Analyzes

Strengths

Burnaston has made Toyota UK evaluate its first strength through Toyota’s corporate finance strategy.  (Kerretsu).  This is a major strength for Toyota considering that burnaston fits into Toyota’s long term global strategy.

Toyota also enjoys government support through seminars and automotive academy like the one launched in 2004 to enhance skill training for the industry.  This is helping Toyota to market itself and gain more knowledge on automotive industry.

Toyota UK, also has a diversified capital base considering that the company is international and its sales are doing well in other countries. incase of a fall in the market price and demand for cars in Toyota UK, the company cannot collapse because of liquidity problems as it can be funded by its branches in other parts of the world.

Weakness

            Toyota UK is positioned in country with high quality products and variety.  This reduces the sales level relative to other countries where the company enjoys monopoly or less competition.

Heavy taxes are also affecting the company.  The fact that Toyota is foreign company in UK; makes it more tax worth than UK based Companies.

Toyota UK management feels that the UK that used to once be an attractive place to invest has been changed by the on going economic and legislative climate.

The strength of starling pound is also affecting Toyota’s investment in the UK in relation to the weakness of Euro.  Toyota is currently seeking an exchange rate solution in order to trade in UK and survive the market with minimal profits.

With the introduction of work place parking levies, Toyota doubts whether the charges will impact the behavior of car users something that would affect the company’s sales.

A shortage of trained engineers in the UK is another constraint facing Toyota UK.  Toyota is reported to have experienced critical shortages in training new personnel in the information systems department. (Memorandum submitted by Toyota motor Europe, July 2000)

Opportunities

            Toyota UK has the chance of acquiring labor from Japan at a better cost in case the UK economy and labor market is exploited.  This gives the opportunity to maximize its sales too.

            Expansion is still available for the company.  Despite the fact that the country has many manufacturing companies that have specialized in automotives, it’s also possible for the company to expand in UK since the company has its own unique brands.  In addition, the company can list in the (UK) foreign stock exchange hence engaging in offshore.

            The fact that UK is historically known for its high level of production o of vehicles, as far as quality is concerned is in advantage.  This is because Toyota UK can learn more techniques or production and improve on the quality of products that it had been producing.

Toyota can also produce in bulk.  This is because the UK is a bigger Market and much as competition is there, one cannot rule out the population factor.  The UK population is big and the ratio of people to companies selling vehicles is still low enabling Toyota to Operate.

Threats

            Competition is the major threat facing Toyota UK.   With the large number of companies in UK and all producing quality cars, the company can easily be thrown out of market or forced to sell at low prices in order to fit the market.

            Economic dynamics are also major threats in the production process of Toyota UK because the poor performance of the economy dictates that the cost of production might be high and selling price might be low.

            The U.K’s current fuel crisis is also a possible threat to Toyota UK. If the market price for fuel goes very high, then the demand for vehicles also go down because people will not be willing to buy vehicles if fueling is very expensive. (Marketing Teacher 2000).

PEST ANALYSIS

            The UK political set up has history of non-violence and generally friendly to foreigners.  The government policies that regulate taxation and monitoring businesses in UK are however, strict.  This does not restrict companies willing to do business though, because the rates are fixed. The government’s policy on the economy in relation to automobile is rather positive since the government offers support to encourage innovation.  On basis of religion and culture the UK people are a collection of different denominations that rarely affect investment policy.  The governments involvement in trading agreements is however an added advantage for Toyota UK, because they are assured of validity of their license.

Economic Factors

The UK raised his interest rates to 5.75% this year.  With a rise in interest rates, Toyota UK is affected negatively as it can not be banking its money in Japan.  As long as the interest rates are high, this means that the bank charges will be high, reducing the profits that a company can make.  UK’s monetary policy committee (MPC) warned inflation is still on aid and remains a danger to the entire economy.  (BBC News. 24) Some analysts have gone further to determine that this rate of inflation might rise further.  This is bad news for Toyota as the sales of the company will have a less value than approximated.

            As a result, expansion is limited as the purchasing power is reduced. The good news about the economy of UK is the fact that the country’s GDP is relatively high and per capita income is high enough these two combinations encourage liquidity among the citizens which realizes sales for Toyota.

            Socio-cultural factors.

UK’s reception of foreign products is positive. People do not discriminate instead they observe quality.  Majority of dwellers of the land are English speaking hence communication between Toyotas’ salesmen and the citizens is easy. The ability to socialize by the inhabitants and minimal discrimination facilitates marketing. The older generation of UK has accumulated wealth thus Toyota has a wide client base.

Technological factors.

            It would be a lie to argue that technology allows for products to be made more cheaply in the UK than Japan. However technology allows for production of quality automobiles in UK. This helps Toyota to produce quality and leave room for innovation. For instance Ford Company and BMW have products that are better than Toyotas, depending on class of the customers who is buying. Integration of sale of automobiles and insurance company is another technological advantage. This allows company’s selling automobiles to be able to connect their clients with insurance companies. (Alan Capman1995-2005)

PORTER’S FIVE FORCES

Threat of substitute products

            Toyotas products have a couple of other products similar to them. This makes the company’s products to have high elasticity of demand. Buyers have high propensity to substitute. This puts Toyota at the bargaining edge through pushing the company to keep modifying its products in order to be competitive. Toyota has to keep revising its prices too. Again this is a disadvantage because probably the cost of production was higher than the prevailing market price. Despite of the high elasticity of demand the switching costs of products is still high, making consumers to stick by one product, this adds to Toyotas advantage. The level of product differentiation is another major threat of substitute products. Toyota has an added advantage over this issue since it has different products and can offer customized products too.

            Threat of the entry of new competitors. Unless the entry of new firms is blocked, Toyota is exposed to the perfect competition. However Toyota has taken care of this risk through economies of product differentiation and brand equity. The absolute cost advantages are among other ways that Toyota has established its market.

The intensity of competitive rivalry.

This is the major or determinant of industry competitiveness. Toyota is facing both marketing and innovation competition. The number of competitors is increasing following the governments opening of investors willing to invest. Not forgetting companies like Ford Operations. Toyota has high levels of advertising expertise internationally.

            Bargaining power of customers. This is the customers’ ability to pressure the firm to reduce its prices. The number of buyers’ volume. In UK though buyers are many, options regarding which company to buy from are also many making buyers to have a bigger influence on bargain than Toyota. Not forgetting the availability of information which has been made possible by internet and the UK media.

            Bargaining power of suppliers. Toyota UK requires labor, components and other factors. Suppliers can influence the market by raising the cost of raw materials to enjoy the industries’ profit too. However, Toyota UK has suppliers who are competing against themselves too hence making supply price low due to availability of commodities at ease. For example, the tire industry. (Morison .J 2006)

Conclusion

            Toyota Company UK has established itself despite the competitive environment due to diversified portfolio where the company sells other products like, used trunks, car bodies, primary NAICS and insurance linking’s.

            Recently Toyota was confirmed as be best performing automobile company in the UK. Media tenor UK’s leading media on opinion reported during the 7.5 international Auto salons in Genf. Media tenor, realized a pessimistic trend for the future of the car industry in UK.

            Toyota has been rated the best performer, as other companies report losses and closing down some of their joints. Overall, Toyota has been able to extend its products to cooperate. Among BMW, DC, Volkswagen, Toyota and Ford in UK, Toyota has the best performance so far.

Reference

Marketing Teacher. (2000). Swot analysis  lesson- www.marketingteacher.com

Media tenor International Newsletters (2005-03-08). -Toyota outshines competitors again in UK.  www.mediatenor.com

Alan Capman (1995-2005) Pest Market analysis tool www.businesshalls.com

Morison .J (2006) International business environment global and local market place in a changing world. Palgrase Macmillan.

Effect of Political and Economic Environment in the UK on Toyota Essay