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The macro environment is the external environment of a company, where it operates and exits. Though it significantly affects the structure of the company, it is not controllable (Bailey, Driffield and Karoglou 2017). Thus, the competitive strategy of a company decided on the basis of its macro environment. To gain a competitive advantage over its existing competitors, a long term plan is taken into consideration, which is called a competitive strategy. The objective of competitive strategy is to generate a good return on investment and establish a defensive position in the market. Competition in a business is considered as an essential aspect, which decides the success or failure of an organization. It provides a clear understanding of the market and existing companies.
Conversely, the micro environment is the internal environment of a company. These factors exist within the interior surrounding of a firm. Therefore, a company needs to maintain a perfect combination of macro and micro environment in order to sustain and succeed in the competitive market. One of the most crucial concepts of marketing principles is PESTLE analysis, which analyses the macro environment of a company. It helps the company to understand the environment under which it is operating (Burns and Dewhurst 2016). Six different dimensions of the PESTLE analysis are Political, Economic, Social, Technological, Legal and Environmental. On the other hand, Porter’s five forces model is used to analyze the micro environment of an organization. Here, two different multinational companies have taken into consideration to examine how micro environment and macro environment affected the business of these companies. These two companies are Toyota Motor Corporation and Uber Technologies, Inc.
Toyota Motor Corporation is a multinational company from Japan, which operates in the automotive industry. It was established in 1937. Toyota is the market leader in sales of hybrid electric vehicles in the world. It also encourages the adoption of hybrid vehicles by all the market leaders across the globe. It is the sixth-largest company in the world in terms of total revenue as of 2018. It is the largest automobile manufacture as of 2017. There is a considerable impact of Brexit on the flourished business of Toyota (Bailey and De Propris 2017). The withdrawal of the United Kingdom (UK) from the single market of the European Union (EU) is known as Brexit. To come out of the EU market and EU trade regulations, the UK decided to leave the EU. It brought a drastic change in the global market. The UK has not yet signed any negotiation deal with the EU for the Brexit. Hence, there exists a persistent uncertainty and crisis in the economy. It affected the domestic market of the UK and the rest of the countries of the world. Therefore, the existing companies operating in the UK market have suffered huge losses. It also adversely affected the trading partners of the country. Thus, multinational companies have also faced many challenges in an environment full of uncertainty (Cox 2017).
The most influential multinational corporation Toyota planned to change its strategic, financial and operational plans to sustain in the market. To run the business successfully in the European market, it is necessary to identify the risks associated with it and minimize them. Therefore, the company already took many measures to mitigate the effect of the Brexit on the business. The future investment of the company in the UK market may jeopardize due to uncertainty over Brexit. There exists a lack of clarity in the Brexit deal of the country. The position of the government has also changed in the country amid Brexit turmoil. Thus, the Japanese car giant decided to revise the future spending plan in the UK (Theguardian.com 2017). The company have planned to invest 240 million British Pound in its plant in Derbyshire as it will get barrier and tariff free access between the EU and UK even after Brexit. However, the company was forced to skip its plan of investment, as the UK government was unable to seal a negotiation deal with the EU. As a result, the market share of the company plummeted dramatically. It also led to huge revenue loss.
As the Brexit uncertainty continued, it will impact the growth and expansion of the company in future as well. The car manufacturing giant may force to halt production in the UK due to increasing uncertainty. Even, the company may temporarily shut down its plant in Derbyshire for future risk (Ho 2014). Here, the macro or external environment of the company has affected due to the vital political factor. As the political structure of the UK will change due to Brexit. It will affect all the companies and countries trading with it. The political and legal structure of the UK will change with Brexit. The political factors such as ideologies and beliefs of the ruling party will be impacted due to Brexit. Moreover, it will also affect the legal factors such as judgments, regulations, laws and rules practised earlier in the country. Therefore, it will bring drastic changes in the ongoing business and trade structure of the country. As Toyota is operating in the UK and it set up plants in the domestic market of the UK. The political and legal instability in the country had impacted the business of the company in many ways. Therefore, to successfully run a business, it is essential to have a stable political and legal condition. The ongoing conflict will continue to hamper the growth of the company. As a result, it changed its long term competitive strategy to strengthen the external environment of the company.
An American multinational company, Uber, offers services in ridesharing, food delivery, micro mobility system with scooters and bikes and ride sharing hailing. As of 2015, Uber had more than 1.1 million active driver-partners and operated in 64 countries and 351 cities of the world (Cramer and Krueger 2016). It acknowledged as the most valuable private start-up of the world, which was worth 50 billion US dollars in 2015. As of 2018, the company earned a revenue of 11.27 billion US dollars. It is estimated that the company will have 110 million users worldwide by 2019. However, it has faced many challenges in terms of regulatory norms. Despite its riches, the company has struggled a lot to run its operation due to regulatory issues smoothly. It was also unable to control its drivers, whose role is most important in the success of the company. It has also faced challenges in setting the language to talk about ride-sharing (Sammut?Bonnici and Galea 2015). The performance of the company has also criticized for its unlawful practices. In recent years, the business of the company has disrupted as many drivers left the company. It lost 80,000 drivers at the end of 2015, which affected the progress of the company.
Uber was fought legal battles around the world with its driver-partners, as they were looking for benefits of traditional workers. In California, the driver-partners had filed a class-action lawsuit for maintenance and petrol expenses (Cannon and Summers 2014). Whereas, in the UK, the driver-partners demanded minimum wage protection and paid vacations. The company called its drivers as partners. It tried to ensure the rights of the drivers and provided them with flexible working hours. In the UK, the driver-partners worked for lower than ten hours a week. They were allowed to choose when and where they wanted to work, according to the company. However, the company penalized its driver-partners if they turn down too many fares at a time. Sometimes pay of these drivers gets deducted based on their decision related to routes. Thus, it aggravated the agitations among the drivers of the company. They had claimed that they were treated as an employee, not as a partner (Kilner 2017). Hence, the company should provide them with all the facilities like an employee. Here, the business of the company mainly depends on the drivers. Drivers are considered as suppliers in this case. According to Porter's five forces model, the bargaining power of the suppliers is an essential aspect of a company. It may strengthen or weaken the internal environment of the company. Suppliers can be a source of power for the company over its rivals. In the case of, Uber, drivers are the main suppliers of the company (Jullien, Pardi and Pérez 2014). The whole service provided by the company is dependent on the drivers. It will not be possible for the company to run its business without managing the drivers as the agitations among the driver-partners of the company increased in recent years. It hampered the growth of the company. Here, suppliers refused to work with the Uber, and they demanded some extra benefits as the company provided to other employees (Dälken 2014). Therefore, the micro environment or internal environment affected the business of the company adversely. It may lead to the closure of the renowned ride-sharing company.
The company had faced many hurdles, and the bargaining power of the suppliers influenced the business of the company. It also faced fierce competition from its rivals. The turmoil in the internal environment of the company helped the competitors to have a competitive advantage. Thus, the company must change its internal competitive strategy in order to run the business smoothly (Theguardian.com 2015). Uber will be able to cope up with the ongoing conflicts with the help of proper competitive strategy. Therefore, both macro and micro factors play a significant role in the success and failure of a company. All the companies need to take necessary steps to avoid theses macro and micro environment hinders. Though, both of these factors are vital for the growth of business and economy. The impact of the external factors is more severe in comparison with internal factors. The micro environment can be controlled by solving the internal factors of an economy and business. However, it is challenging to control the macro environment of an economy and business as the external factors are based on a broad spectrum and beyond control (Theguardian.com 2018). Therefore, the macro environment will influence more than micro environments. Thus, the impact on Toyota will be much higher than Uber. The macro factor, such as political and legal crisis led to massive turmoil in the economy. As a result, the business of the Toyota hampered. The uncertainty related to Brexit is beyond the control of the company. Thus, it creates a big impact on the growth of the company.
Two leading multinational companies of the world such as Toyota Motor Corporation and Uber Technologies Inc had suffered due to changes in the macro environment and micro environment of the company (Block et al. 2015). It compelled both companies to change their competitive strategy accordingly. The business of Toyota suffered as economic uncertainty and turmoil increased due to Brexit. It affected the political structure of the country. As political factors play an important role in strengthening the business, the company had faced various hurdles. To sustain in the market, it planned to shift its plants from the domestic market of the UK. It also planned to postpone investment in the existing plants of the UK. The changes in the competitive strategy will help the organization to compete with its biggest rivals (Testa et al. 2016). One of the largest ride-sharing multinational company, Uber, went through a serious turmoil as many drivers left the company. Though the company called them driver-partners, they were treated as an employee. Hence, they had complained against the company for not providing the benefits of an employee. Both macro and micro factors influence the success of the companies significantly. However, the influence of the macro factors on Toyota is greater than the influence of the micro factors on the Uber. Uber may take several measures to please the drivers and get out this crisis. It is difficult for Toyota to come out of this crisis, as the political uncertainty of the UK is beyond its control.
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