In a business, there are multiple factors that can influence the activities of an organisation;
political, social and legal.
A political factor is an activity related to government policy and its processes, these can
have a direct or indirect effect on a business. New legislations or regulatory shifts can
have a huge or minor impact on how the company operates.
Social factors are the experiences that influence an individual's attitude, lifestyle and per-
sonality. Businesses have an interest in social factors as it can help a business create
products and services that appeal to a certain targeted audience.
Legal factors relate to the new laws and govern how a business behave and how it can act
in relation to other businesses, customers and the environment.
Political factors both have positive and negative effects on a business. Taxation and tariffs
for example can have negative effects for organisations. Tariffs and taxation on materials
needed to build cars, increases expenses for Lexus, reducing overall profit. Taxes can
also reduce the number of potential customers, as the price of cars increase.
Toyota and Lexus on numerous occasions stated that they will be bringing a factory to
China to produce Lexus ES sedan and Lexus RX models. However, the value of China’s
auto sales decreased by 1.4% and other cars such as Infiniti, Jaguar Land Rover and
Cadillac have decided to start production in China. An executive at Lexus says that they
want to make Lexus a “more well-recognised name” and have set a target to strengthen
Lexus in China and increase its overall sales to over 100,000 vehicles a year, while they
are only able to reach 83,700 sales, a steady increase of 12 percent up from 2014. Lexus
however are still in the early stages of moving as in China to have a foreign car production
the business needs to partner with a Chinese local. Toyota and Lexus have been opposed
to the regulation.
The production of Lexus in China would allow one of Toyota's existing Chinese partners to
receive half of the profits Lexus generates there. The executives stated “Our Chinese part-
ner would try to have a say in every aspect of the Lexus business in China", "That would
strip us of all the freedom we enjoy today in running the Lexus business."
Lexus currently has been positively affected by political policy regarding China and Amer-
ica. China has a long history of trade with America but has recently increased tariffs on
American built vehicles by 40%. This has lead the Japanese imports to increase by 24%
since the tariff on 6th July 2018.
, The Chinese yuan has fallen more than 3% against the dollar in June 2018, as the trade
war between the two biggest economies have worsened. Japan wanting to start production
in China, has been postponed due to the yuan continuously weakening against the dollar.
To keep the economy sustained, China has had to raise costs, making China less compet-
itive as a manufacturing base. Due to the weak yuan, shipping the cars from Japan to
China makes it a cheaper option.
America is a strong economic trader, and is one of the largest consumers of luxury cars.
America has recently though had multiple disputes put on trading, exercising large tariffs
on most items being imported. The government had done this in an effort to promote inde-
pendence in the US.
Recently, the American government increased tariffs on steel and aluminium. Two main
metals used in car production. While Lexus has two factories producing the cars, the gov-
ernment has felt the global oversupply of steel and aluminium, created by China, threaten-
ing American steel and aluminium producers, as there is not enough demand for a more
expensive option from the US. With the 25% increase of tariff on the metals, intended to
promote the use of American manufactured metals, it however will increase the price of
the cars domestically.
Germany has a very strong relationship with the United States. Lexus, having two facto-
ries. Having the US as a strong ally with Germany as a rich country with one of the highest
incomes per capita, allows the opportunity for Lexus to have a wider audience in Germany.
Having a good relationship and larger showrooms in order to sell their luxury cars could
generate a larger audience in the German market.
Another political factor impacting Lexus is the heavy immigration controls, America follows.
Having such strong immigration regulations can have negative effects on the labour pool
of workers with necessary skills, due to Trump wanting jobs for Americans first. This puts
pressure on companies to hire Americans rather than newly immigrated personnel. This
can have a negative effect on Lexus employees in America. With America having an aver-
age literacy rate of 86%, the amount of qualified employees will be limited as they are
forced to hire Americans first rather then others nationalities that could be more educated
with higher literacy rates . This will also affect the target market, as less people will be al-
political, social and legal.
A political factor is an activity related to government policy and its processes, these can
have a direct or indirect effect on a business. New legislations or regulatory shifts can
have a huge or minor impact on how the company operates.
Social factors are the experiences that influence an individual's attitude, lifestyle and per-
sonality. Businesses have an interest in social factors as it can help a business create
products and services that appeal to a certain targeted audience.
Legal factors relate to the new laws and govern how a business behave and how it can act
in relation to other businesses, customers and the environment.
Political factors both have positive and negative effects on a business. Taxation and tariffs
for example can have negative effects for organisations. Tariffs and taxation on materials
needed to build cars, increases expenses for Lexus, reducing overall profit. Taxes can
also reduce the number of potential customers, as the price of cars increase.
Toyota and Lexus on numerous occasions stated that they will be bringing a factory to
China to produce Lexus ES sedan and Lexus RX models. However, the value of China’s
auto sales decreased by 1.4% and other cars such as Infiniti, Jaguar Land Rover and
Cadillac have decided to start production in China. An executive at Lexus says that they
want to make Lexus a “more well-recognised name” and have set a target to strengthen
Lexus in China and increase its overall sales to over 100,000 vehicles a year, while they
are only able to reach 83,700 sales, a steady increase of 12 percent up from 2014. Lexus
however are still in the early stages of moving as in China to have a foreign car production
the business needs to partner with a Chinese local. Toyota and Lexus have been opposed
to the regulation.
The production of Lexus in China would allow one of Toyota's existing Chinese partners to
receive half of the profits Lexus generates there. The executives stated “Our Chinese part-
ner would try to have a say in every aspect of the Lexus business in China", "That would
strip us of all the freedom we enjoy today in running the Lexus business."
Lexus currently has been positively affected by political policy regarding China and Amer-
ica. China has a long history of trade with America but has recently increased tariffs on
American built vehicles by 40%. This has lead the Japanese imports to increase by 24%
since the tariff on 6th July 2018.
, The Chinese yuan has fallen more than 3% against the dollar in June 2018, as the trade
war between the two biggest economies have worsened. Japan wanting to start production
in China, has been postponed due to the yuan continuously weakening against the dollar.
To keep the economy sustained, China has had to raise costs, making China less compet-
itive as a manufacturing base. Due to the weak yuan, shipping the cars from Japan to
China makes it a cheaper option.
America is a strong economic trader, and is one of the largest consumers of luxury cars.
America has recently though had multiple disputes put on trading, exercising large tariffs
on most items being imported. The government had done this in an effort to promote inde-
pendence in the US.
Recently, the American government increased tariffs on steel and aluminium. Two main
metals used in car production. While Lexus has two factories producing the cars, the gov-
ernment has felt the global oversupply of steel and aluminium, created by China, threaten-
ing American steel and aluminium producers, as there is not enough demand for a more
expensive option from the US. With the 25% increase of tariff on the metals, intended to
promote the use of American manufactured metals, it however will increase the price of
the cars domestically.
Germany has a very strong relationship with the United States. Lexus, having two facto-
ries. Having the US as a strong ally with Germany as a rich country with one of the highest
incomes per capita, allows the opportunity for Lexus to have a wider audience in Germany.
Having a good relationship and larger showrooms in order to sell their luxury cars could
generate a larger audience in the German market.
Another political factor impacting Lexus is the heavy immigration controls, America follows.
Having such strong immigration regulations can have negative effects on the labour pool
of workers with necessary skills, due to Trump wanting jobs for Americans first. This puts
pressure on companies to hire Americans rather than newly immigrated personnel. This
can have a negative effect on Lexus employees in America. With America having an aver-
age literacy rate of 86%, the amount of qualified employees will be limited as they are
forced to hire Americans first rather then others nationalities that could be more educated
with higher literacy rates . This will also affect the target market, as less people will be al-
