Business enviournment

8/6/2019 Business enviournment

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BUSINESS ENVIRONMENT

Dr. K. KRISHNAKUMAR

Assistant ProfessorDept. of Mechanical Engineering

College of Engineering,Trivandrum


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What is a Business?

Any business organisation has to

interact with its environment

Examples???

What are the environments?

Internal and External


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Internal Environment Factors like Personnel, Physicalfacilities, Marketing mix,etc.

They are the strength and weakness

of the firm

The firm has proper control over

these factors

These factors can be manipulated by

the firm to suit the external

environment


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Internal Environment

Human Resources

The skill, quality, commitment of

personnel

Readiness for change

Loyalty towards the management


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Management Structure and Nature

Organisational Structure

Composition of Board of Directors Efficiency to implement decisions

Speed of implementation ofdecisions

Compare BHEL and RIL


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Value System

Value system pursued by the

founder and top management

Perception of shareholders,associate companies and public

Compare Tata group and Essar of

Ruia group


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Brand Image

Every company has got a brand

image

Brand image influences the

purchase of the companys

product Compare car from Maruthi and

other makers


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External Environment

Micro Macro

External ExternalEnvironment Environment


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Micro Environment

Customers

To create and sustaincustomers

A firm should have a widerange of customers- Dependingon single customer is risky

Bargaining power of company


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.. Customers

Customer segment

Target customers

Marketing mix

Eg: Maruthi ,W

ipro


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Competition

Does not mean from same product

Substitutes can also pose threats

Eg: TV Stereo sets, Two wheeler,Refrigerator

Brand Competition: Samsung, LG,

Videocon Passanger Car: ZEN, SANTRO,

INDICA- XETA, I10, etc.


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..Competition

Compare

Pre-Globalisation Era

Post-Globalisation Era


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Publics

Any group that has an impact on anorganisation

Eg: Media Public-Bhopal Gas Tragedy(Union Carbide)

Coca Cola

Local Public Tata Plant at Singur,WB


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..Publics

Citizen Action Public-

Environmental Problem

Law Acquisition

Eg: Narmada Dam

Nuclear Power PlantsTitanium Factory, Trivandrum


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Marketing Intermediaries

Firms that aid the company in promoting,

selling and distributing its products to final

buyers Their attitude and policy affect the

company dearly

Among the pr oducts of various company,they might show interest in selling the

product of a particular company


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.. Marketing Intermediaries

Recently, many retailers boycott the

products of HLL due to low margin

Many retailers are not interested in

selling the products

ofpu

blic sect

orcompanies


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Macro Environment

They are the remote environment

Macro Environment variables are

Global factors

Social/Cultural factors

Demographic

fact

ors

Political factors


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..Macro Environment

Natural factors and

Technological factors


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Case

Mahindra & Mahindra manufactures and markets jeeps,and had a hold over a considerable portion of the jeepmarket in India in the past. It was ranked sixth in theautomobile sectorof Indian 2004,upfrom the tenth rank

in 2003.

The following are the prominent jeeps whichoperate in the Indian market currently -Mahindra-Voyager, Mahindra -Armada, and Mahindra-Commander.

Mahindra & Mahindra is now facing problems like cut-throatcompetition, price rise, and sluggish market for jeeps

.

Interms of price competition, Mahindra & Mahindra has anupper hand compared to Tata jeeps while Tempo Traxhas comparatively low price.


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..Case

Realizing the need to grow fast, the companyformulated well. They formulated plans todevelop and grow in foreign market The firststep was participation in trade fairs abroad,

particularly in Hanover (Germany) and Paris(France). This has helped popularize its vehiclein those countries

Mahindra jeeps started selling in France and jeepexport became an important marketing activity ofthe company The Company startedmanufacturing diesel engines in collaborationwith Peugeot of France.


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..Case

As soon as the Company came to know that Australia,Denmark, Italy, Norway, and Sweden could prove tobepotential markets, plans began tobe made accordingly.The Company estimated that it would be able to export

about 2,500 jeeps annually to Australia.

In order to caterto the lower segment of the market, the Mahindra jeepsin Australia faced competition from Japanesecompanies. Stringent design rules and requirement alsoneeded tobe met in Australia.

The company is confident of meeting all suchrequirements. The government's liberalization policy willalsobe helpful.


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..Case

The company's new policy has to take into accountenvironmental factors. The export policy with specialreference to export market also deserves considerableevaluation and; analysis because environmental factorssuch as technology, economics, social and politicalinfluences relevant to strategic decisions operate in anindustry.

Mahindra & Mahindra assessed all the opportunities in themarket as well as the impact of external environment ontheir strategic planning before expanding production. In

2004, Mahindra &Mahindra showed significantimprovement compared to Maruti Udyog, ranked as thenumberone auto mobile company, as is evident from thetable below.


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..Case

Case QuestionIn the case discussed above which are the

different environmental factors that lead to

opportunities and threats to Mahindra &

Mahindra?

Documents

Business enviournment