Professional Documents
Culture Documents
Changing Dimensions of Business Environment
Changing Dimensions of Business Environment
Business environment encompasses all those factors that affect a company's operations, and includes customers, competitors, stakeholders, suppliers, industry trends, regulations, other government activities, social and economic factors, and technological 4/1/12 developments.
Internal environment
External environment
Value System
Micro environment
4/1/12
FIRST MOVER ADVANTAGE- Awareness of environment helps an enterprise to take advantage of early opportunities instead of losing them to competitors. EARLY WARNING SIGNAL- Environmental awareness makes a firm aware of impending crises so that the firm can take timely action. CUSTOMER FOCUS- Environmental understanding makes the management sensitive to the changing needs and expectations of customers. STRATEGY FORMULATION- Environmental monitoring provides relevant information 4/1/12 which serves as basis for strategy making.
CONTD
CHANGE AGENT- Business leaders acts as agents of change by understanding the aspiration of people and other environmental forces through environmental scanning. PUBLIC IMAGE- A business firm can improve its image by showing that it is sensitive to its environment and responsive to the aspirations of public. CONTINUOS LEARNING- Environmental analysis serves as broad based and ongoing education for business executives.
4/1/12
"Today, there is a greater willingness internationally to work with India -- and to build relationships of mutual benefit." By 2032, India will be among the three largest economies in the world.
"India offers a new and promising market for our innovations and products."
Kazuo Okamoto Chairman Toyota
"We see a huge growth potential in India, be it warehousing and distribution, or even freight business or express business."
Mark As a general rule, we Bentley expect India to Manager outgrow the world Ford Global Licensing average; outgrow Eurasia and the Africa group... We would be happy to see India Olli-Pekka Kallasvuo Global CEO among our top five Nokia Corporation global businesses."
4/1/12
India, with a population of 1.1 billion, and a middle class that is larger than the entire population of US, is one of the world's largest untapped markets. Andrew Holland
Managing Director DSP Merrill Lynch
Value System
Value shared by any organization is an important factor contributing to success It has important bearing on choice of business, mission and objective of the organization, business policies and practices.
4/1/12
4/1/12
Cont..
Speed:
Speed is how we convey clear conviction. It is a value that keeps us sharply responsive, mirroring our commitment towards our goals and processes.
Innovation :
Innovation is how we create the future. It is a value that provokes us to reach 4/1/12 beyond the obvious in pursuit of that which
The Mission and Objective of any company guide the priorities, direction of development and business ITC visionetc. Sustain ITC's position as policy is to
4/1/12
one of India's most valuable corporations through world class performance ITC is committed to delivering high quality products and services. This requires a clear focus on continuously striving to create a higher value to customers by achieving excellence in all Company's operations.
Cont...
P&G, focus sustainability efforts on improvements that matter, making the most meaningful impact possible From product innovations and operational improvements to social responsibility, employee engagement, and stakeholder partnerships, we pursue our sustainability goals with the aim of improving quality of life, now and for generations to come
4/1/12
Management Structure
Organizational structure, the composition of board of director and patterns of share holding etc are the important factors influencing business decisions
4/1/12
Bajaj Auto Limited, has a new organizational restructuring for Auto business With this restructuring, the existing business roles and responsibilities at the company has been strengthened and enhanced to ensure greater effective management 4/1/12
Cont..
Companys new structure has been divided into five pillars called strategic units..
R&D Engineering Two Wheeler Business Unit Commercial Vehicles Business Unit and International Business Unit
4/1/12
And in the restructuring process, BAL has adopted the method of DEMERGER Bajaj Auto LTD. Has been demerged and consequently, shareholders of the Bajaj will receive share of the demerged new companies BAL has been demerged into
BAL to focus on the Auto Business Bajaj Finserv Ltd(BFSL) to focus on wind energy generation, insurance, consumer finance etc and
4/1/12
The image of the company matters while raising finance, entering purchase or sale contracts, launching new products etc.. Also Image and brand value depends upon the experience of the customers
For instance, Coke has been named the world's top brand for a fourth consecutive year in a survey by consultancy Interbrand and Its worth $8obn 4/1/12
MACRO ENVIRONMENT
Economic environment Global environment Technological environment Political & Legal environment Social & Cultural environment Demographic environment Natural environment
4/1/12
ECONOMIC ENVIRONMENT
4/1/12
The nature of economic system Economic Structure Economic policies Organization and development of the capital market
4/1/12
4/1/12
India GDP Growth Rate India is the second fastest growing economy in the world. Indias GDP has touched US$1.25 trillion. The crossing of Indian GDP over a trillion dollar mark in 2007 puts India in the elite group of 12 countries with trillion dollar economy. The tremendous growth rate has coincided with better macroeconomic stability. India has made remarkable progress in information technology, high end services and knowledge process services.
4/1/12
India GDP per capita India Gross Domestic Product (GDP) expanded 7.90% over the last 4 quarters. The India Gross Domestic Product is worth 1217 billion dollars or 1.96% of the world economy, according to the World Bank. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force.
4/1/12
in
India,
The service sector makes up a further 28%, and industrial sector around 12%.
4/1/12
4/1/12
Primary sector, comprising mainly of agriculture, contributes to 17% of the total output.
Secondary sector comprising mainly of manufacturing, construction, electricity, water supply, etc., contributes to 29% of the total output.
Tertiary sector or the Service sector, comprising of transport, storage, communication, banking, insurance, real estate, etc. make up 54% of the total countrys output.
4/1/12
Economic Infrastructure
The following sectors come under the purview of infrastructure Electricity (which would also include generation, transmission and distribution) and R&M of power stations. Non conventional energy (including wind energy and solar energy). Water supply and sanitation Telecommunications. Road & bridges. Ports. Inland waterways. Airports. Railways. Irrigation. Storage. Oil and gas pipeline networks.
4/1/12
To sustain growth in the infrastructure of Indian economy, despite the global meltdown, the government is planning an investment of US$ 20.38 billion in the next two years for infrastructure development.
Further the government has set aside US$640.8 million for improving the condition of ports, railroads, highways and airports over a period of 15 years.
The index for the six core industries-crude oil, petroleum refinery products, coal, electricity, cement and finished carbon steel has shown a growth of 2.9 per cent for March 2009 in comparison to March 2008.
There exists an investment opportunity of US$ 25 billion by 2011-12 in India's shipping and ports sector, as the country seeks to double its ports capacity to 1500 million tons.
4/1/12
ECONOMIC POLICIES
4/1/12
Monetary Policy includes Repo rate(the rate at which RBI repurchases government securities from the commercial banks to expand the money supply), and CRR, i.e. Cash Reserve Ratio( the percentage of commercial banks deposits kept with RBI as reserve) to tighten or expand the cash circulation. Export-import policy includes the targets of the government to achieve a specific level.
4/1/12
Balance of Payment
(i) Growth in exports and imports continued their declining trend during Q2 of 2009-10. (ii) Trade deficit, however, was lower reflecting larger fall in imports, especially oil imports, on account of lower oil prices as compared to last year. (iii) Private transfer receipts continued to be sustained through Q2 of 2009-10. Software services exports, however, were lower. (iv) During April-September 2009, the current account deficit stood higher at US$ 32.2 billion as compared to US$ 39.1 in Q2 of year 2008.
4/1/12
GLOBAL ENVIRONME NT
4/1/12
4/1/12
INTERNATIONAL AGENCIES:
World Bank
World Bank president Robert Zoellick committed increased funding for India, and sought the countrys support for enhancing the lenders capital base.
India would get $ 8 billion annually from the world bank over three years. The average commitment during the past 4 financial years from the world bank was approximately $2.3 billion.
International Monetary Fund India and the IMF has a positive relationship. The IMF has provided financial assistance to India, which has helped in boosting the country's economy.
The IMF praised the country for it was able to avoid the Asian Financial Crisis in 1999 and was also able to maintain the average rate of growth of its economy.
International Monetary Fund said that the reasons behind the economy growth of India are that the RBI has been able to control inflation and has also handled its monetary policies very skillfully.
The IMF has suggested that India can become a financial super power by bringing in more reforms in its economic policies that will increase its growth rate to 8%.
India had last borrowed from the IMF during the balance of payment crisis in the early 1990s and since the country had fully repaid its loans, the IMF's role had been "considerably" scaled down.
4/1/12
India got involved in WTO taking effective entry first in GATT in order to enhancement and increasing rule based system in the governance of international trade is to ensure more stability and predictability.
Recently Nuclear Agreement has successfully added to its campaign for growth of potential market and strong economy.
Foreign collaboration and allowance of their investment in various sectors directly along with technology and skilled techniques now have been being cultivated the endeavor of attachment in WTO.
4/1/12
Apart, companies, mainly IT and ITES companies whose prime business target was USA are bound to suffer.
Also, textile companies will find themselves with low top line and bottomline growth in their balance sheets because of less demand from foreign countries and consequently less revenue from exports.
4/1/12
Crude oil accounts for around 28% of the total import by India.
Therefore price of crude oil becomes an important part in determining the balance of payment.
India's import bill contracted for the first time in almost nine years during January 2009, led by crude oil and capital goods, which constitute nearly half the total imports.
Initial estimates available with the commerce ministry show that imports dipped 16.1 per cent to $18.92 billion in January 2009, compared with $22.56 billion in January 2008, when they grew at 64 per cent.
4/1/12
Rating based on economic performance, business efficiency, government efficiency and infrastructure. Source: IMD world competitiveness yearbook 2009 4/1/12
Rate of technological change. Approaches to production of goods and services. New processes and equipment. Research and Development systems.
4/1/12
The product is Epic, which the company is testing, consists of a mobile phone fitted with a smart card and software that enables the phones camera to capture documents easily, saving paper, effort and time of the physical verification.
All the inputs are made into a PDF document, and the agent digitally signs the document, to enroll a customer.
EPIC eliminates 80 percent of paper documents and 4/1/12 enables capture of basic info for on-the-spot
Wimax
WiMAX can provide broadband wireless access (BWA) up to 30 miles (50 km) for fixed stations, and 3 - 10 miles (5 - 15 km) for mobile stations.
4/1/12
In contrast, the WiFi wireless local area network standard is limited in most cases to only 100 - 300 feet (30 - 100m).
for
smart
phones
or
Video broadcasting and other e-commerce services such as stock transactions and e-learning will now be made possible, much faster. 3G offers 3 MBps speed for downloading which is very high compared to that of 2G technology.
3G provides for internet surfing, downloading, e-mail attachment downloading, audio-video conferencing, fax services and many other broadband applications.
BSNL and MTNL launched 3G services in selected cities in India this February.
4/1/12 Private players are yet to enter the market, and are
Research & Development 0.8% of the countrys GDP was spent on Research and development last year. (ET report) In US and Japan, it is 1.4% and 1.6% respectively, but as their GDP is also much higher than India, it makes a huge part of investment.
4/1/12
4/1/12
Legal Environment
Legal Environment consists of all the rules, regulations and procedures which govern business activities. The law governing business may be classified as follows:
v v v
4/1/12
General Laws
These laws are applicable to all the types of organization irrespective of there size and type. These include:
It came into force on Sep 1,1872 and applicable to whole of India. The law of contract lays down circumstances under which the promise made by the parties to a contract shall be legally binding on them. The Law also contain general principle on which several business law are based.
4/1/12
Financial Laws
These law relates to financing of business firms. These include:
4/1/12
Labor Laws
These laws seek to protect the interest of workers. These laws laid down the provisions for the welfare of the workers. These include:
v v v v
Factories act 1948 Industrial employment act 1946 Industrial Dispute act 1947 Trade union act 1926 Payment of bonus act 1965
4/1/12 v
Taxation Laws
These laws regulate taxes on business firms etc. Every business earns profits or incurs loss, so business have to give certain part of his income to government in the form of taxes, these laws govern the payment of these taxes. Gross tax receipts budgeted at Rs.6,41,079 crore in B.E. 2009-10 compared to Rs.6,87,715 crore in B.E. 4/1/12
Customs Act
Other Laws
1)Companies act 1956: The main aim of the act is to ensure healthy growth of the corporate sector & safeguard the interest of investors and the general public. 2)Partnership act 1932: This law governs business between two persons who have agreed to share profits of a 4/1/12 business carried on by all or one of
Political Environment
Political Environment comprises the elements relating to government affairs. It serves as a regulatory framework of business. Click to edit Master subtitle style
4/1/12
4/1/12
2) Ruling partys
reforms started in 1991. vCurrent govt. is the single party govt. of Congress.
4/1/12
3)Economic Liberalization
Balance of Payments crisis in 1991 forced liberalization of economy Reforms have decreased restrictions on FDI and opened competition in most industries
Improved the overall investment climate by liberalizing many restrictions on investment, including foreign investment, repatriation of profits, deregulating interest rates, and opening up the insurance sector to private sector participation Rationalizing the tax regime, including 5858
4/1/12
nts
The study of demographic environment for business is important because people constitute the market for the business. Firms often uses demographic characters for market segmentations. DemographicsKey to Growth are: 54% of Indian population under 25 years 4/1/12 80% under 45 years
Demographic Environment
Demographics-continued
By 2013, net addition to the productive population (aged 25-44 years ) will be 91 million or 33% increase. the share of the working age population (15-64 years) in total population will grow from the current 59% to about 65%, translating into 882 million by year 2020. India also has a large number of young graduates with strong technical and English language skills A young highly skilled workforce is powering Indias high value industries.
4/1/12
6161
Demographics-continued
According to the Vision 2020 document of the Planning Commission of India, the country will witness continued urbanization. The urban population is expected to rise from 28% cent to 40% of total population by 2020. Future growth is likely to be concentrated in and around 60 -- 70 large cities having a population of one million or more A whole new consumer class A rapidly growing middle-class
4/1/12 6262
Key driver for investment opportunities is the growth of the middle class
Increased from 10% to 22% of population from 1990-2008 Expected to grow from 22 % to 48% from 2008-2015
4/1/12
6363
Over the years, spending power has steadily increased in India. Over the next five-seven years, 180 million people are expected to move into the consuming and very rich classes. (= 2/3 of US population) On average, 30-40 million people are joining the middle class every year
4/1/12 6464
Government spending on education has doubled in the past three decades The number of universities has more than trebled over the same period Education is driving the development of advanced industries such as
The availability of a skilled workforce is encouraging foreign companies to set up research and development facilities in India As well as call centers and other outsourced services 4/1/12 6565
Population
v
The population reached 117 crore in 2001. The prospects for its further growth are explored using state-level projections. It is likely to be in the vicinity of 1.4 billion by 2026, and could well approach 1.6 billion by 2051.
Cultural Environment
Culture may be define as that complex whole which consists of customs, attitudes, beliefs and value of the society.
Elements of Culture
4/1/12 Knowledge
&belief
Ideas
Natural Environment
Natural Environment refers to all the ecological & geographical factors and forces surroundings. Natural resources include land, water resources, forests, climate, rain fall and mineral resources.
v v v
MICRO ENVIRONMENT
Consist of factors in the companys immediate environment that affect the performance of the company. Customers Competitors Suppliers Marketing Intermediaries Financiers Publics
4/1/12
Economic Liberalization Increasing Income Levels & Brand Consciousness Growing number of Nuclear Families Rise in Economic Independence of Women Inclination towards supporting Social Causes.
4/1/12
company
Consumer Is King
Salaam Maggi 25 years campaign is a great opportunity to further the brands connect with its consumers
4/1/12
The Onida Devil RIP ! Multinational feels it has outlived its objective due to change in taste and financial capability
Competitors
Michael Porter five forces of competition are: Threat of competitors Threat of New Entrants Threat of Substitutes Bargaining Power of Suppliers Bargaining Power of Buyers
1. 2. 3. 4. 5.
4/1/12
Telecommunication Sector
India is expected to be among the fastest growing telecom markets in the world 500 million subscribers are expected by March 2010 Over 8 million new users are added every month mostly in wireless. Tariff war unleashed by the relatively newer players like Docomo, MTS , Aircel 4/1/12
4/1/12
SERVICE PROVIDER Bharti Airtel Reliance Communications Vodafone Essar BSNL Idea Cellular
Suppliers
Outsourcing
Telco decided to shop globally for the best deals and use its own expertise to make whatever modifications were needed. Just In Time(JIT)
Eicher is ensuring Just In Time Supply for its trucks from manufacturing 4/1/12 facilities/warehouses located within
Marketing Intermediaries
Firms that aid the company in promoting, selling and distributing its goods to final buyers. Hindustan Lever faced major challenge due to a collective boycott in Kerala on the issue of Trade margin.
4/1/12
Created Zoozoo Effect which allowed Vodafone to register an online toll of around 4,00,000 Fans Idea Cellular agency : Lowe Walk & Talk Campaign helped Idea Cellular to retain its position as the Fifth 4/1/12 largest operator.
FINANCIERS
Indian companies are increasingly looking for funds to fuel their expansion from sources other than bank loans. More than two-thirds of companies' fund requirements in the AprilSeptember period this year for Indian companies came from non-banking sources. External commercial borrowingsHT Source : 4/1/12 (ECBs) are typically cheaper by
Publics
A public is any group that has an actual or potential interest in or impact on an organizational ability to achieve its interests. Baba Ramdev filing case against Surf Excel
4/1/12
PEPSICO
Click to edit Master subtitle style
4/1/12
ENTRY OF PEPSI IN INDIA : 1988 Acceptance of the Pepsi Offer bringning about an Play a central role inin India
agricultural revolution and employment in the state of Punjab (This was a wonderful offer, given the political/social unrest in Punjab in the 1980s) Focus on food and agro-processing; only 25% of the investment would be for soft drinks business Boost the image of Indian products in foreign markets 4/1/12
Our Vision
"To build Indias leading total beverage company, delighting consumers by best meeting their everyday beverage needs, and stakeholders, by delivering performance with purpose,
4/1/12
Pepsico India
PepsiCo Indias Revenue : Rs 5,200 crore revenues (year to date until September 30, 2009) 37% of PepsiCo Indias Revenue come from snacks and foods. In Q3, best growth for worldwide came from India PepsiCo
Juice drinks
30%
3,000
40% Q2-
35% Q132%
PepsiCo India is the countrys largest corporate involved in potato contract farming and deals with 1,50,000 tonnes of the tuber Two-fifths of energy used at its various Indian plants come from renewable sources- biomass and wind turbines. PepsiCo India sets up potato chips capacity at about 80% compared to 4/1/12
Customer Focus
Due to market opportunities and customer requirements An increased consumer preference for healthier drinks PepsiCo turned its efforts towards food sector and noncarbonated beverages. Slew of indigenous products as Aliva, Kurkure, Nimbooz launched.
4/1/12
REVENUES IN INDIA
PepsiCo Revenue : 2009
4/1/12
4/1/12
Technology
R & D with a budget of $4.5 billion . Idea & Technology of Nimbooz used to launch a Hibiscus Based drink in Egypt.
4/1/12
PEPSI VS COKE
4/1/12
Longest-running battles in global competition has been the fight for market dominance between Coca-Cola and Pepsi Co While Coca-Cola Indias consolidated share of carbonated soft drinks is 57.8%, PepsiCo follows at a distant second with 35.6% share. (as on Sep 2008)
4/1/12
THUMS Up, owned by Coca-Cola Company that also owns the worlds largest-selling cola Coke, has close to 16.4% share in the countrys aerated drinks market, compared with Pepsis share of around 13%. (according to AC
Nielsen data) source :-http://epaper.timesofindia.com
4/1/12
video
4/1/12
REFERENCES
Business today (Jan24),2010 Business India (Dec27),2009 4Ps Business & Marketing(Jan 15),2010 4Ps Business & Marketing(Dec 18),2009 The Analyst (Dec),2009 Marketing Mastermind(Nov), 2009 www.financialexpress.com www. epaper.timesofindia.com www.moneymint.in www.indiacar.net www.icmr.com
4/1/12