PESTEL

ANALYSIS ON
FMCG SECTOR
 INTRODUCTION
 The term fast moving consumer goods (FMCG) refers to those retail
goods that are generally used or replaced in short period of time i.e
a day , a week , a month , & within one year. FMCG is also known as
the CONSUMER PACKAGED GOODS (CPG). These products are
relatively sold at low cost.
 FMCG’S have a short life , either as a result of high consumer
demand or because the value of product deteriorates gradually . It
comprises consumer non-durable products that include food ,
beverages , personal care , & household care . Goods such as meat
, fruits , and vegetables , daily products and baked goods – are
highly perishable .
 Among all the secotrs FMCG’S industry is one of the fourth largest
sector in the country and growing at a booming rate over the years
. The indian FMCG industry is mainly classified as organized and
unorganized . The FMCG sector is highly segmented as different
products are made for different segments in the society.
PESTEL ANALYSIS ON FMCG INDUSTRY:-
 POLITICAL FACTORS :-
Political stability – Political stability is one of the most important
factor which influence the growth of business directly . If political
stability is higher , then it leads to perfection in business and on the
other hand if there is un-stability the business will have to suffer .
Taxation policy – Tax policy of the government will affect the price
of inputs and it ultimately affect the prices of final products and it will
affect the sale of products .
Government intervention – This indicates that at what level the
government intervenes in the economy . If the government intervenes
is more sometimes it helps the organisation at large extent .
Subsidies – The subsidies which are provided by government to
different organisation at different level also help it to grow at faster rate
and helps the organisation in reducing the finance which is to be
funded from outside and it directly reduces interest amount paid in
favor of fund raised from outside .
 Trading policies – This indicates the policies related to import and
export of goods and services from different nations . If the policies are
favourable more goods and services will be imported and exported ,
and on the other hand if policies are unfavourable it will restricts the
import and export .
Labour law – Labour law also affects the organisation , for example-
child labour , a child below 14 year of age can not work in factory or
any hazardous place.

 ECONOMIC FACTORS:-

Interest rate – Interest rate directly affects the cost of capital , if the interest rate is
higher the cost of capital will increase and if it is lower then cost of capital will be
lower . This directly affect the profit of the organisation and it’s growth .
Tax charges – If the tax charged by the government is lower the it will reduce the
product price and if it is higher then it will increase the price of the product .
Exchange rates – This shows that what is the exchange rate or foreigh currency rate
. If the exchange rate is higher more amount is paid on import of goods and if it lowers
less amount is to be paid and on the other hand if its higher the amount received will
be more and if its lower the amount received will be low .
 National income – National income is important factor as if affect
the growth of the organisation . If per capita income is more the
amount spend will be more and if it will be lower the amount spent will
be less .
Economic growth – Economic growth is important factor in the
development of the organisation . If the economy grows at a higher
speed it will directly affect the growth of the organisation .
Inflation rate – Inflation means the rise in the value of all the
products in the economy , if inflation rate is higher the cost of products
will be higher and if inflation rate is lower the cost of product will be
lower . This directly affect growth of the organisation .