The Institutional-Based View (IBV), as defined by Garrido et al. (2014), gives a structure for comprehending how both formal and informal institutions impact the strategic choices and results of companies working in various contexts. In the case of Toyota Nigeria, the IBV is important for examining how the company deals with the regulatory, economic, and socio-cultural factors that influence the Nigerian market. This analysis closely evaluates the institutional factors affecting Toyota Nigeria, emphasizing the opportunities and challenges faced by the company.

The regulatory environment of the country is one of the major institutional factors that impacts Toyota Nigeria. The government of Nigeria has put in place some policies to boost local production in the automotive sector, such as promoting local assembly instead of always depending on fully built imports (NADDC, 2023). This initiative supports the overall national plan to boost industrial development, decrease reliance on imports, and generate employment opportunities. For Toyota Nigeria, this is both a chance and a difficulty. A chance in the sense that local assembly helps the company take advantage of lower import taxes and also fits with government incentives, which results in its products being more affordable and competitive. But then, Okonjo-Iweala (2014) also explained that the regulatory environment in Nigeria is often plagued by lack of stability and uniformity, resulting in challenges. Abrupt changes in policies, questionable governmental priorities, and inefficiencies within administrations can bring about operational challenges, resulting in increased costs and potential disruptions in the supply chain.

The economic environment in Nigeria further complicates Toyota’s strategic positioning. According to Manasseh et al. (2019), Nigeria’s economy is heavily dependent on oil, making it vulnerable to global oil price fluctuations. These economic shifts directly affect consumer purchasing power, which in turn impacts demand for vehicles. During periods of economic downturn, the reduced purchasing power among consumers can lead to a decline in sales for Toyota. Additionally, inflation and exchange rate volatility are persistent challenges in Nigeria, contributing to rising operational costs for Toyota Nigeria (Gidigbi, Babarinde and Lawan, 2018). The need to import key components and materials further exposes the company to currency risks, complicating pricing strategies and potentially eroding profit margins. An evidence of this is the current dollar naira spike which has caused inflation all over Nigeria, particularly the cost of vehicles and Import duties (Babalola, 2024)….