In majority of the cases, there lies a relative simplification for customers from shifting from Toyota to the product in substitution. These substitute to the products of Toyota include bicycles, public transportation and other sources of transportation. However, there is only a moderate availability of these substitutes (Ehsani et al., 2009).
The suppliers of Toyota focus on influencing the company for the improvement of the business organization. In the case of Toyota, the below mention factors have a significant impact on the external environment of automobile industry:
Moderate effect and number of suppliers in the industry
Higher level of supply in the overall setting that is a considerably weak force
Low level of forward integration among the key suppliers that is a weak force
The limited numbers of suppliers all across the globe have been creating a moderate force in influencing Toyota. In terms of theory, the power to bargain is significantly high when the number of suppliers are few (Grundy, 2006). However, there is use of increasingly available supply in order to manufacture the products of Toyota, which further result in weakening the power of suppliers. In addition, most of the suppliers across the industry do not seem to be having forward ownership or integration, while controlling the materials distributes that further end up reaching companies such as Toyota.
Power to bargain among the customers
The customers of Toyota have a direct impact on the business in terms of revenues. In the case of Toyota, following are the main factors contributing to the increased power to bargain among buyers across the respective industry (Helfat and Peteraf, 2003):
Low costs to switch that has a strong impact
Higher level of quality presented in information that has a strong impact
Moderately available substitute that has a moderate effect
The low costs to switch depicts that the customers can be successful in easily changing from the company of Toyota to competing companies without bearing any additional cost. Typically, there is occurrence of this change when the customers consider purchasing a new car (Kurnaz et al., 2010). In addition, the customers of Toyota have easy choices of best options, as they have an accessibility of appropriate information like information of product from the websites of companies.