PROJECT 1: Environmental Analysis 1

Project 1: Starting an External Environmental Analysis

Lexus Automotive Corporation
Francesca Brianna Biacan
BMGT 495, Section 6386
University of Maryland Global Campus
Dr. Milton Walters
May 28th, 2024
PROJECT 1: Environmental Analysis 2

Company Overview

Within Toyota Motor Sales, U.S.A., Inc., a fully owned subsidiary of Toyota Motor

Corporation, lies the Lexus division. Introduced in 1989 as a flagship luxury sedan to rival well-

known luxury brands like Mercedes-Benz and BMW, the Lexus LS quickly became known for

its superb build quality, dependability, and customer service, which helped to establish Lexus as

a major player in the luxury car market. As the first automotive brand in history to open a

dealership in its home nation of Japan, Lexus did so in 2005. An analysis of the market indicates

that the Lexus brand has successfully opened dealerships in over 70 economies worldwide

(Forbes, n.d.). Over time, Lexus has added a variety of luxury sedans, SUVs, coupes, and

hybrids to its lineup, all with an emphasis on providing sophisticated driving experience and

cutting-edge technology.

Company Mission, Vision, and Objectives

Toyota’s global objectives state to “create and develop advanced technologies and

provide outstanding products and services that fulfill the needs of customers worldwide; and to

foster a corporate culture that enhances both individual creativity and the value of teamwork,

while honoring mutual trust and respect between labor and management,” in which succeeds

through one of its three subsidiaries: Lexus (Toyota, 1992).

A mission statement should clearly communicate to stakeholders the significance of the

organization's contribution to society and the reasons for their support (Chapter 2, Mastering

Strategic Management, 2014, p. 41). "Covenant, Environment, Design, Innovation, and Quality"

are the guiding principles of Lexus. The company's dedication to keeping the covenant guides
PROJECT 1: Environmental Analysis 3

every decision, design decision, and service provided by Lexus. It ensures that customers will

receive the tailored attention and sincere consideration that have made Lexus a leader in

customer satisfaction both within and outside of the automobile industry.

Lexus is a very progressive company that will expand on its achievements in the future

by carrying on with its environmentally conscious design philosophy, producing emotionally

charged designs, offering captivating driving experiences, and creating innovative brand and

product promotions. It envisions a future in which a larger global Lexus/Toyota community

would unite even more individuals. The company's guiding principles will aid in achieving this.

Evaluation of the General Environment

Industry Classification

An industry is a collection of companies connected to one another through their primary

commercial activities. One approach to classify industries is to apply Porter's five forces model.

Competition originates from multiple sources, according to this theory. As to de Bruin (2016),

the degree of competition in every market is determined by five main dynamics, which are the

threat of new entrants, suppliers' and buyers' negotiating power, the risk of replacement goods or

services, and the rivalry between existing industries. The combination of these forces determines

an industry's profitability and, consequently, its appeal to consumers. Lexus Automotive

Corporation is classified as an automotive company. The design, development, production,

marketing, selling, maintenance, repair, and customization of motor vehicles are all part of the

broad spectrum of businesses and organizations that make up the automotive industry.

PESTEL Analysis
PROJECT 1: Environmental Analysis 4

A PESTEL analysis is a framework or technique used to analyze and monitor the macro-

environmental elements that could significantly affect the performance of an organization (De

Bruin, PESTEL Analysis, 2016).

Political

The political environment focuses on the role of the government in shaping business.

Government factors can include tax policies, trade restrictions and tariffs, and the stability of

governments they operate within (Chapter 3, 2014, p. 77). Studies indicate that Lexus, via its

parent company Toyota, has a favorable political influence globally because of its investments in

the production of environmentally friendly cars, which are required by law to be expensive

(Simão and Lisboa, 2017). High-end vehicles like Lexus have complied with environmental and

safety standards. Toyota's political impact has been favorable. The nation lessens its reliance on

gasoline by manufacturing environmentally friendly vehicles that consume less fuel and cut

down on gasoline use. However, because full is substantially less expensive than in Japan and

the US, its clients profit from this problem. The growth of a nation's economy and national

security will be impacted both directly and indirectly by its reliance on foreign sources for

natural gas and oil.

Economical

The rapid development of the nation and the economy's progressive expansion are two of

the most significant economic factors influencing the Lexus brand (Imai, 2017). This industry is

impacted by domestic as well as global economic issues. Among the most important economic

elements influencing the Lexus brand are the nation's quick expansion and development together

with the economy's gradual growth (Imai, 2017). This indicates the company has room to expand
PROJECT 1: Environmental Analysis 5

to meet the growing needs of the middle class in the nation. Economic considerations so produce

a favorable environment for the company to expand.

Customer service is the most important microenvironmental factor influencing an

organization's performance since it forms the core of all business operations. Simão and Lisboa

(2017) claim that Toyota Lexus bases its business decisions on what customers desire, which is

why the corporation spends a lot of money on customer research and pricing. The target market

for the company is the middle and higher classes in the nation. This suggests that there's an

opportunity for the company to spread across the country to accommodate the middle class's

expanding wants. Consequently, the organization's positive expansion prospects are brought

about by the economic circumstances.

As for statistics based on employees, 33% of workers consider the company's goal to be

the main reason they choose to stay at Lexus. When asked who they thought had the best loyalty

at work, 50% of employees responded with Lexus's goal and vision. Research indicates that data

clearly shows that a clearly defined mission statement and united core business principles are

necessary to sustain staff alignment (Comparably, n.d.).

Social

The primary social elements influencing a business's operations are its values, traditions,

religion, and social structure. The automotive industry has several challenges, chief among them

the ever-evolving tastes and preferences of consumers, which range from a growing inclination

toward tiny, fuel-efficient cars to premium luxury vehicles. This is a result of rising fuel prices

and consumer demand for environmentally efficient vehicles. However, Lexus has the potential

to offer hybrid and electric vehicle rates (Simão and Lisboa, 2017). However, the company must
PROJECT 1: Environmental Analysis 6

ensure that the growing economic disparity in the nation does not impact the middle class, which

constitutes the brand's primary income stream.

Technological

Innovations, the rate at which technology diffuses, and the replacement of technology are

some of the key technological aspects influencing the automotive sector. In the automotive

industry, new technology brings with it new potential. The Internet of Things, 5G, AI, and

additive manufacturing have all emerged as sources of manufacturing efficiency and product

innovation, which has resulted in dramatically altered consumer experiences. Because Lexus has

adapted to new technology advancements, it has a competitive advantage against rivals like

Saudi Arabia, whose government is actively pushing technical growth in the nation (Imai, 2017).

This demonstrates how Lexus has an opportunity due to the nation's technology ecosystem.

Conclusion

Because Lexus offers a range of operational characteristics, its product is comprehensive,

dependable, and sustainable. One of the main success factors globally has also been the great

attention given to the model and brand launching and marketing procedure. Through measures

like positioning, targeting, and segmentation, the brand has also built and maintained a large

global customer base, resulting in high profit margins. Lexus activities can be considered

sustainable in the short- and long-term by utilizing the suggested marketing approach.
PROJECT 1: Environmental Analysis 7

References

Comparably. (n.d.). Lexus Mission, Vision, & Values. Retrieved from

https://www.comparably.com/companies/lexus/mission

De Bruin, L. (2016, September 18). Scanning the Environment: PESTEL Analysis. Retrieved

from https://www.business-to-you.com/scanning-the-environment-pestel-analysis/

Forbes. (n.d.). Profile: Lexus. Retrieved from https://www.forbes.com/companies/lexus/?

sh=29a2c03c2dc7
PROJECT 1: Environmental Analysis 8

Imai, N. (2017). Toyota Production System for Business Process Management. Holistic Business

Process Management: Theory And Practice, 14, 57.

Lexus. (2022, September 24). What is the Lexus Mission Statement? Retrieved from

https://support.lexus.com/s/article/What-is-the-Lexus-mis-8023

Toyota. (n.d.). Toyota Global Vision. Retrieved from https://global.toyota/en/company/vision-

and-philosophy/global-vision/

Toyota. (1992). Guiding Principles at Toyota. Retrieved from

https://global.toyota/en/company/vision-and-philosophy/guiding-principles/

#:~:text=Create%20and%20develop%20advanced%20technologies,respect%20between

%20labor%20and%20management.

Saylor. (2014). Chapter 3: Evaluating the External Environment. Retrieved from

https://leocontent.umgc.edu/content/dam/equella-content/bmgt495/Chapter3_Evaluating_

External_Environmentt.pdf?ou=1030043

Simão, Lidia & Lisboa, Ana. (2017). Green Marketing and Green Brand – The Toyota Case.

Procedia Manufacturing. 12. 183-194. 10.1016/j.promfg.2017.08.023.