business envoronment in icbt

Business Environment Group Assignment

1.0Introduction

In this report as group the members of the group have indentified what do the

vision and mission statements are and how the organizations have tried to achieve their goals and

objectives and also how organizations behave in the market in other words how they respond to

various opportunities and threats within the market. This report also has identified different

market structures and different organization strategies which are taken in order to face problems

that arise in business world.

The objective of this report to put theory into practice by taking actual

organizations and see how different theories are adopted in more practical terms so that the

students have a better understanding about the business world. And the main aim is to see how

business organizations act according to the situation they are faced with and what market

structures they operate in how large firms dominate the market and also how small firms can be

threat to these large firms.

Batch No: - 35 Page 1


1.1 Cargills (Ceylon) PLC history, vision, mission, values and stakeholder

influences.

In 1844, William Miller and David Sime Cargill commenced a general warehouse, import and

wholesale business in Colombo, Fort. The establishment was named the 'House of Cargills'. A

successful bid by Sir Chittampalam A. Gardiner saw the House of Cargills being incorporated as

a Public Limited Liability Company on 1 March 1946.

In 1981 Ceylon Theatres acquired controlling interest of the Company and Mr. Albert A. Page

was appointed the Managing Director. Mr. Albert Page went on to become the Chairman of

Cargills on 26 November 1982.

Under the new management, Cargills explored the potential of innovating on its trading legacy.

As a result, in 1983 Cargills established the first supermarket chain in Sri Lanka with the

opening of its first outlet at Staple Street.

Cargills ventured into the production of processed meats in 1993 when the Company invested in

its first manufacturing facility Cargills Quality Foods, in Mattakkuliya. In 1996 Cargills acquired

the franchise license for KFC and innovated on its secret recipe to deliver products that suited the

local palate.

Cargills began sourcing fruits and vegetables directly from farmers in 1999 when it established

its first collection centre in Hanguranketha. In 2002 it invested in a dairy processing plant and

thereby expanded it’s out grower network to include dairy farmers. Cargills Magic ice cream was

the outcome of this endeavor. In the same year Cargills diversified into agri-processing with

Cargills Kist which created further market opportunities for farmers.

In 2008 Cargills acquired Millers Limited consolidating its marketing and distribution operation.

Our vision

To be a global corporate role model in community friendly national development.

Our mission



Serve the rural community, our customer & all other stakeholders thought our core business –

food with love & other related businesses, based on our three main principals of

Reducing the cost of living.

Enhancing youth skills.

Bridging regional disparities.

By enhancing local & global markets.

Our values

Customer focused – focused on customer delight accountable.

Accountable – An accountable & responsible corporate citizen.

Respect – respecting our culture, our country & the law.

Green – bringing our business in line with “green” concepts of reduce reuse & recycle.

Innovative – consistently innovative to ensure our core principle resonate in our business.

Love –spreading wining love through food.

Lead – leading corporate thinking & strategy.

Serve the hat ion – unlimitedly serving Sri Lanka true to our promise of being the pride of the hat

ion.

STAKEHOLDERS OF CARGILLS (CEYLON) PLC

1. Owners

2. Managers

3. Employees

4. Suppliers

5. Government

6. Banks



INFLUNCE OF STAKEHOLDERS IN CARGILLS (CEYLON) PLC

1. Owners :-

The owners are probably one of the most important people in a business. They

are making rules and regulation, expecting good profit from the company, and making

strategic level decisions.

2. Managers :-

Managers are planning, organizing and controlling the supermarket. How

staffs working in the working place? , Allocating the resources to right place.

3. Employees:-

The business may be affected by how well their staffs do in customer

services. They have an interested in the business in the form of wages, increment and

bonus.

4. Suppliers :-

They are the one providing all goods for sales. They want to get always good

turn over for them products. If the company will give good turn over for them products,

suppliers will give discounts and offers.

5. Government :-

Are they paying income tax regularly? Are they making any

environmental pollution .They will concern about all these things.

6. Banks :-

Bank also influences. If the company going to take any loans, they will get

interest from the company. Credit card or debit card transaction, cheques and bank drafts

all these things.

1.2 How the organization was able to achieve stakeholder’s expectations?

Stakeholder is an individual or group that has an effect on and is affected by

activities of an organization. Each of these stakeholder groups has an impact on the firm’s

success and at the same time it is likely to be affected by any change in its activities. Key



stakeholders in a business organization include customers, creditors, directors, employees,

government, owners, suppliers, unions and the community from which the business draws its

resources. So without stakeholders company would not exist.

According to Cargill’s the three stakeholders I chose are the employees,

customers and suppliers. Customer’s satisfaction is important to the company no matter how

much profit the company makes, but when customer satisfaction has dropped meaning it’s not

performing well. To satisfy the customers first the company should not disappoint the

employees, if the employees are disgruntled the company can’t expect them to provide a good

service to the customers. So the company should treat the employees well. Customers in

Cargill’s would look for fair price for the products which means Cargill’s should not charge

higher prices for the products. Prices are often compared with the quality if the quality is good

then the customers would not even bother to look at the price. The next expectations of

customers are the quality of customer service. If the company gets too many complaints from the

customers then it’s a bad impact on the company. Customers would also look for better customer

service, the way the employees are behaving with them, are the employees answering their

questions and etc…the employees should be friendly with the customers and help with what they

want because sometimes the customer would have a difficulty in searching the product so the

employees should help them in searching the product and tell the right place where the product is

and also the employees should answer their questions they should not ignore the customers.

Employees would look for safer working conditions whether the job is a riskier

one or not, and f it was then the employees would look for higher salary. But according to my

organization it is not a riskier one, so the employees should be paid a reasonable salary. The

employee who is at the cashier would look for a salary which suits him and the employees who

help the customers these are the people who answer the customers. These employees would

expect for a different salary. So the company should pay them the agreed amount. The company

should also not put so many rules and regulations because if the company’s rules and regulations

are too rigid then the employees would not be interested in their job and they will work for the

sake of working which will lead to a weaker customer service. The company can interest the

employees by giving them incentives to encourage them in the work like employees who have

improvement in their work can be given a promotion which means promoted to a higher position



so when the company do something like this the employees will have a target and work towards

it.

The company should maintain a good relationship with suppliers, paying them on

time not delaying any payments. So that the suppliers would also be happy and supply better

quality materials. When the company maintains good relationship with suppliers they would also

deliver goods on time which is more important. Because when the stocks are finished and if the

stocks are not there for two, three days then the customers will get fed up. So it is vital that the

company maintains a good relationship with suppliers.

1.3 The responsibilities of the organization and the strategies taken by the

organization to meet them.

Cargills (Ceylon) PLC, is a company which deals with the society on a daily

basis. So as a company which carry outs its business activities directly with the society providing

food items to consumers in their own super markets or outlets. As mentioned in their mission

statement; food with love, they have a lot of responsibilities to be taken care of which can be

listed as follows;

They have to make sure that they provide healthy and fresh food items: -

To make sure that their food items are fresh and healthy, the officers working in

Cargills go to farmers in the villages and buy their products so that it’s fresh and healthy and also

to ensure that the product is not exposed to any chemicals.

Arranging the items according to a more customer friendly manner: -

When you walk into any Cargills food city outlet you can see that the goods are

arranged in way that it suite the customer needs, so that it makes finding the items or the goods

that the customer requires more easy and faster.

Displaying the price tags of each and every item: -



All Cargills super markets have displayed all the prices of each and every item

they are selling in their respective shelves. This will help customers to purchase goods according

to their budget.

Providing an efficient and friendlier customer service: -

Cargills practice a friendlier environment within their outlets so that their

customers will not feel uncomfortable. And also their services that are starting from the cashier

to the person who is putting goods to the bags a very efficient, so that things are done very fast.

Providing food items at an affordable price: -

Cargills food city provide goods at lower price than their competitors in order to

improve living standards of the society.

Protecting the environment: -

Cargills have started a project called Go Green. In this project they have stop

issuing plastic bags, instead plastic bags they provide more environment friendly bags, so that it

could be used for a longer period and also the environment is protected.

1.4 The market in which Cargills (Ceylon) PLC operates and how it deviates

from the perfect competition characteristics.

When we study about different economies we come across different types of

market structures in which various types of industries operates in. The following are the market

structures that we can see in an economy;

Perfect competition

Monopolistic competition

Oligopoly

Duopoly



Monopoly

Perfect competition

This is when a large number of firms operate in the same industry or market,

selling homogenous products, no barriers to enter into the market or exit from the market and the

consumers are aware of the market so the suppliers cannot charge which ever price they want for

their products, they have to sell their products at the existing market price. And also there is a

huge competition within the market. Ex: - consumer goods such as soap, shampoo toothpaste etc.

Monopolistic competition

When there are a large number of firms operating in the same industry or market

selling similar products with different features or in other words they practice product

differentiation. There are no barriers to enter or exit from the market consumers and producers

do not have good idea about the market. Ex: - restaurants, institutes, hairdressers etc.

Oligopoly

There are a large number of firms operating in the market but few very large firms

dominate the market. Price is relatively stable within the industry, branding is practiced by the

firms and there are high barriers to enter into the market, non price competition prevail in the

market and also the firms are independent. Ex: - banks, mobile communication providers, super

markets etc.

Duopoly

When the market or the industry is dominated by two large producers and when

they are highly independent it’s a duopoly. The smaller firm follows the price which is set by the

larger firm and there are high barriers to enter into the market. Ex: - Gas industry and petroleum

industry in Sri Lanka.

Monopoly

When one firm dominates the whole industry or the market it’s called a

monopoly. Price is set by that the firm according to their will. There are high barriers to enter



into the market. Ex: - Sri Lanka Railway Department, Ceylon tobacco, Sri Lanka electricity

board etc.

So by looking at the above market structures we can come to a conclusion or in other words we

can say that our organization fits into the Oligopoly market structure. Since the industry which

the organization operates in has the characteristics of an Oligopoly market. The following are the

characteristics of the industry which the organization operates;

Few very large firms dominate the market: - Cargills Food City, Keels Super, Arpico

Supermarket and Lak Sathosa.

Prices of the goods sold are relatively stable and similar in all the firms.

Firms practice branding to attract customers.

Non price competition exists in the market (different super markets provide different

services to attract customers): - provides privilege cards and other seasonal promotions.

Firms are independent.

There are high barriers to entry: - since there are large firms operating in the industry and

also they have Outlets Island wide new firms cannot come into the market easily and

compete.

How the Oligopoly market deviates from the perfect competition.

Perfect competition market, as mentioned earlier have the following

characteristics.

Large number of firms operates in the industry.

Products which are sold are homogenous.

There is no barrier to enter or exit from the industry.

Firms are price takers or in other words consumers can demand.

Each producer contributes or supplies a small proportion of the total output.

Consumers as well as the producers are aware of the industry or in other words have a

good knowledge about the market.



By looking at the above characteristics of the perfect competition market we can

say that the industry which our firm operates in (Oligopoly Market) deviates by the following

characteristics.

There are only few large firms operating within the industry.

There are high barriers to enter and exit from the market.

Sometimes product differentiation is practiced.

Branding and brand royalty prevail in the market.

1.5 The behavior of the organization and the competitive strategies adopted to

gain competitive advantage over the competitors.

In a market or in an industry we can see that various firms behaving in different

ways which are adopted by their firm or organization in order to be competitive and gain a

comparative advantage over the competitors. According Michael Porter’s Five Forces model

business can identify how to take advantage of opportunities and overcome threats.

Michael Porter’s Five Forces

1. Buyers.

2. Suppliers.

3. Industry Competitors.

4. Potential Entrants.

5. Substitutes.



Figure 1

By looking at the above model businesses can analyze the current situation which

they are in and make decisions to maximize their profits and to be competitive with their rivals.

Cargills (Ceylon) PLC in order to stay competitive they practice or in other words heavily

depend on marketing their products and services. The following are some definitions for

marketing.

Marketing: -

American Marketing Association Definition

The process of planning and executing the conception, pricing, promotion, and distribution

of ideas, goods, and services to create exchanges that satisfy individual and organizational

objectives.

American Heritage Dictionary's Definition of Marketing

The commercial functions involved in transferring goods from producer to consumer.



Ref: (http:// www.definition.net/marketing.html) Accessed 31/10/210.

Marketing in simple terms means the process of analyzing human needs and wants and satisfying

them. Cargills advertise their super market chain by using the following slogans.

On your way home.

Pride of the nation.

Best savings.

Best buy.

Cargills uses the media (television & radio), catalogs, newspaper and also sometimes leaflets to

promote their products and services.

In order to gain a comparative advantage over the competitors businesses adopt different

strategies. They are as follows;

Cost leadership.

Differentiation strategy.

Costs focus strategy.

Differentiation - focus strategy.

Figure 2

(http://marketingteacher.com/lesson-store/lesson-generic-strategies.html) Accessed 02/11/210.


http://marketingteacher.com/lesson-store/lesson-generic-strategies.html

http://www.definition.net/


Cargills (Ceylon) PLC have adopted out of the above strategies the Cost Focus

Strategy. In this strategy the main focus is to lower the cost of investment compared to a

strategy aimed at the entire market, it allows specialization and greater knowledge and also it

makes entry into new market more simple.

This has made Cargills easier to sell their products relatively lower than their

competitors. This gives them a comparative advantage over their competitors.

1.6 The organizations response to situation such as excess demand and excess

supply.

In a market the price of a good or service is decide upon the equilibrium point of

demand and supply or in other words, where the supply curve intersects the demand curve. This

could be further explained by the following diagram.

Figure 3



In some scenarios when there is more supply in the market for a certain product or

in other words supply which exceeds the demand of that certain product, there is an excess

supply within the market for the good or service. This could be further explained by the

following diagram.

Figure 4



By looking at the above diagram we can see that the supply is greater than the

demand, this creates a disequilibrium in the market. Since there is an excess supply the producers

are willing to sell more products but the consumers are not willing to buy or purchase them.

In some scenarios we can see an excess demand in the market or in other words

where the demand in the market for a certain product exceeds the market supply for that product.

This could be further explained by the following diagram.

Figure 5



In the above diagram we can see that the demand exceeds the supply. This creates

an excess demand in the market. Even though the buyers or the customers are willing to purchase

more quantity of that certain product the producers are not willing or able to supply to the

market.

When there is an excess supply in the market Cargills (Ceylon) PLC practices the following

things;

They clear there perishable stock by selling them at 50%

Non perishable stock is been supplied gradually to their Super Market outlets so there

will not be an excess supply.

Most of the time they sell the goods at a lower price.

Arrangers the product in a visible area so that the customer is tempted to purchase it.

When there is an excess demand in the market Cargills (Ceylon) PLC practices the

following things;

They increase the price of the certain good which there is a high demand.

They purchase products more than the average from their suppliers.

Arrangers the product which has a high demand in a visible place so that the customer

can spot it easily.

This is how Cargills (Ceylon) PLC respond to the above mentioned situations so

that they can continues to earn profits and meet their goals and objectives.

1.7 The role of regulatory bodies applicable to the organization

Cargills has a high demand in pharmaceutical industry than in other industries.

TRUST: - pharmaceutical products need to be produced under higher manufacturing standards

as Cargills decide so they have to invest expertise to their manufacturing for producing



pharmaceutical products are line with GMP (GOOD MANUFACTURING PROCESS)

guidelines.

DEDICATIONS: - the GMP and quality assurance needs the regulatory bodies and functions

for the Cargills pharmaceutical products to make a different than in other industries. Therefore

they have put in all the quality managements and account management application together and

plant engineering to dedicate pharmaceutical industry.

EXPERIENCE: - Cargills has an over experience in developing products for the pharmaceutical

industry by taking a leading role of development manufacturing guidelines for excipients by

supporting.

MANUFACTURING PROCESS UNDER FOOD INGREDIENTS IN CARGILLS

The process of technology involved in their production as well as wide of variety

of different lecithin products available.

To process lecithin’s the following principles will be included;

01. modification of lecithin’s

02. enzymatic modification

03. chemical modification

04. solvent extraction

05. de-oiling with acetone

06. fractionation with alcohol

07. chromatographic purification

It is possible to combine individual processes and products with other functions to

determine the relationships. The aim of all the process is to give technical or physiological

properties to the natural substances where it does not process. It can be done by adopting the

lecithin to specific applications required.

CERTIFICATION SYSTEM

Cargills has established a product portfolio where they can supply by the

customer solution company which was required by over the years. Whereas all the Cargills



lecithin production operates under certified quality management system. Some Cargills

production is only approved for certain stage of levels. So the customer should have the

responsibility to response to a particular geography which was presented by Cargills products.

They are usage of levels which is often used by the customers in customer’s product. Finally the

claims are made about the customers product can be command with all regulations and laws.


Documents

business envoronment in icbt