How Economic Conditions Affect Company Performance: A Case of Toyota
Economic conditions control business transactions and affect the performance of most companies. They include political factors, business environment, currency, global economics, government influence, etc. Such conditions have different scales of power on the performance of the company. In addition, they also have other impacts on the yearly performance of enterprises. For instance, multinational organizations may encounter challenges executing cash transfers to support their overseas operations. Such difficulties may trigger imbalances in capital concentration and complicate working capital management due to increased capital outflows and inflows. In light of these, it is crucial to consider the many conditions that influence business issues, such as profit margins, Federal Reserve Bank monetary policy changes, liquidity, cash flow, sales, and customer satisfaction. Economic conditions affect a company’s performance and can be indicated by issues such as interest rates, customer turnovers, liquidity, and Federal Reserve Bank monetary policy changes, among many more.
Like most companies, Toyota is also subject to global economic factors. The company has increased its sales significantly in recent years, leveraging different economic conditions. According to Dvorský et al. (2020), Toyota has dramatically gained from the global market conditions, which have seen it achieve a sales record of about 0.9 million cars in one month. Globalization as an economic condition has provided a large market for the company to reach more customers. The sizeable global market provides consumers who benefit Toyota Company, influencing its interests and revenues.
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Toyota’s goals are contingent on political and government influence. Political ties and government influence in business impact the performance of a business. Kim et al. (2021) found that political relations, government laws, and policies, such as taxes and restrictions, influence the performance of a business. Political ties and government policies across the globe have made it easy for the company to increase its sales and revenues. One of the main goals of Toyota Company is maximizing profits which good political ties and favorable government policies have positively influenced the company’s performance.
Among its competitors, Toyota Company has a forward PE ratio. Forward PE ratio of Toyota s influenced by economic factors such as currency, government influence, and the business environment. Utama et al. (2020) argue that the money market, government policies, and business environment influence a company’s performance by providing transaction basics. The dollar has streamlined the company’s global transactions as it provided standard values for all other currencies to be accepted and used for transactions across the globe. Nonetheless, government policies create conducive business environments for not only local companies but also global ones. As such, the company enjoys a forward PE due to the money market, government policies, and business environment.
Economic conditions control business transactions and thus affect the performance of a company. These conditions include political factors, business environment, currency, global economics, government influence, etc. These conditions have different scales of influence on the performance of the company (Zayed et al., 2022). Due to these conditions, Toyota Company has had profitable years by achieving a return on assets, forward PE ratio, and return on equity. Nonetheless, the company’s interest rates have also grown, reflecting good performance. Economic conditions affecting Toyota’s performance included interest rates, customer turnovers, liquidity, and Federal Reserve Bank monetary policy changes, among many more. In sum, the company’s performance is greatly attributed to global economics, politics, government influence, and the business environment.
References
Dvorský, J., Gavurová, B., Čepel, M., & Červinka, M. (2020). Impact of selected economic factors on the business environment: the case of selected east European countries. Polish Journal of Management Studies, 22(2), 96–110. https://doi.org/10.17512/pjms.2020.22.2.07
Kim, N. L. T., Duvernay, D., & Le Thanh, H. (2021). Determinants of Financial Performance of Listed Firms Manufacturing Food Products in Vietnam: Regression Analysis and Blinder–Oaxaca Decomposition Analysis. Journal of Economics and Development, 23(3), 267–283. https://doi.org/10.1108/jed-09-2020-0130
Utama, A. N. B., Tan, S., Lubis, T. A., & Machpuddin, A. (2020). The influence of company’s external and internal factors to financial performance and company competitiveness on consumer good companies industry. Jurnal Perspektif Pembiayaan Dan Pembangunan Daerah, 8(4), 405–414. https://doi.org/10.22437/ppd.v8i4.10703
Zayed, N. M., Mohamed, I. S., Islam, K. M. A., Perevozova, I., Nitsenko, V., & Morozova, O. (2022). Factors Influencing the Financial Situation and Management of Small and Medium Enterprises. Journal of Risk and Financial Management, 15(12), 554. https://doi.org/10.3390/jrfm15120554