Using The Macro External Environment Analysis

Using The Macro External purlieu AnalysisMacro away environment here includes the factors much(prenominal) as issues related to politics, economical re frames and achievements, social behaviour, technological enhancements and inventions, environmental changes and environmental concerns and law and legislative changes. All these factors bear a signifi pilet effect on any effort and business. A business has take into consideration all(a) such effects and then formulate its st targetgies and policies to work along with them and prosper.PESTEL analysis tool helps in determining the effect of all such factors on an exertion and businesses. With the help of PESTEL analysis we allow for be seeing the affects of such factors on Indian Bakery and dairy farm Industry.PESTEL analysis is a proficiency for identifying and listing the political, economic, social, technological, environmental and legal factors in the general environment virtually relevant to an organisation. (Boddy, D (2 005). Management An Intoduction. 3rd ed. UK Pearson Education. 88.)Type of FactorsEffecting FactorsPolitical scotchSocial expertEnvironmentalLegal claim on impost on Sugar Raw existent ImportShortage of d nakedNeed for Healthy Eating HabitsCloning of LivestockChange in the Climatic ConditionsRaising the Norms for the Probiotic FoodVAT on BiscuitsRise in Sugar Production and tariff freehanded Sugar ImportsProblems with Cloned Livestock bleak Age PackagingRemoval of Import Duty on Dairy Products internationalizationIncentives to Build Cold Storage FacilitiesRequirement for LogisticsPoliticalExemption on Customs Duty on Sugar Raw Material ImportDue to the shortage in the intersection of scrawl the deadline for the exemption on customs duty on raw carbohydrate imports has been broad by the administration to April 1, 2011 (Dey, A Jha, Dilip K (2010) nontaxable sugar imports increase till April 2011, backup Standard). Since sugar is a major input in the bakery, the price of sugar risquely influences the price of inputs of the bakery industriousness. Exemption on customs duty will help in purchasing sugar at lower approach, which in turn will control the cost of toil.VAT on BiscuitsThe VAT of 12.5% on Biscuits, world the only touch on nutrition item to attract such superior VAT rates, will affect the pricing of the exertion (Bhushan, R (2009) Biscuit prices to rise by 10%, The scotch Times). Price of the biscuits king need to be change magnitude due to the high VAT rates which may result in switch of brands due to the highly competitive food market.Removal of Import Duty on Dairy ProductsThe whole-sale price based inflation indicates that the take out prices hire persistd up by 14.73% over the last year. Worried near the rising prices governance announced the removal of duty on plane Milk Powder (SMP) and different dairy products (Govt removes import duty on dairy products (2010), Business Standard). The imports at cheaper rate wou ld help in shrivel the cost factor for dairy products.Incentives to Build Cold Storage FacilitiesWastage of food items due to lack of coldness storage facilities become to a handout of Rs. 500 billion e rattling year. The government announces schemes and incentives to attract investments in cold storage w arehousing (Union Budget 2010 Cold-storage incentives to attract fresh funds (2010), The sparing Times). Increase in the number of cold storage facilities would help in preserving products better and reduce the wastage cost.EconomicalShortage of MilkEven though the milk production has risen by 4.6% compound annual bonny harvest-feast rate, it still dissolvenot match up with the change magnitude need. The demand for milk has been growing at a faster rate than the growth rate of milk production resulting in the shortage of milk submit (Milk railroad siding would stagnate (2010) The Economic Times). India brush offnot meet its pass judgment demand if the demand and dep ict rise at the same rate. For the same the reason, the milk prices are on a constant rise. Price of milk increased by 12.6% to 13.6% (Goyal, K (2010) Indias Food-Price Inflation Holds Near 11-Year High- Business Week). This can cause an increase in the input cost for the dairy products and which in turn can lead to hike in price or lower profit margins. If the participation increases the price of its products, it may affect the sales as it might miss on consumers.Rise in Sugar Production and Duty Free Sugar ImportsThe total sugar production in the first sextette months ending September 2010 is expected to be 22% more than the end product in the unchanged phase last season, the total production expected is at 16.7 million (Press Trust India (PTI) (2010) Sugar output rises 22% in first half of 2009-10, Business Standard). Due to the shortage in the production of sugar the deadline for the exemption on customs duty on raw sugar imports has been extended by the government to April 1, 2011 (Dey, A Jha, Dilip K (2010) Duty-free sugar imports extended till April 2011, Business Standard). The increase in sugar production and the duty exemption on raw sugar can help in purchasing sugar at lower prices and this in turn can help in producing goods at lower prices.GlobalizationGlobalization a universal phenomenon is affecting each and every industriousness. The domain of a function is coming closer, the communication gap is closing and the businesses are going global. This can serve as an opportunity to expand the business to a global take simply on the another(prenominal) hand there is a brat of tonic entrants from international market.Requirements for LogisticsLogistics in India deliver due to the silly infrastructure and other limitations. There is a high demand for civilize third party logistics so the domestic logistics service providers are assay to improve their service. International participation is also expected in the logistics perseverance (Pa ndey, S Basu, A (2010) Logistics cos ramp up supply range to meet rising demand, The Economic Times). Sophiscticated logistics system will help in proper supply chain management and on time sales pitch of goods, which help in maintaining the ledge life of goods on meeting the demand on time.SocialNeed for Healthy Eating HabitsStudies say that Indians are more prone to Coronary Artery Disease (CAD), which is the major breakaway risk factor causing Cardiovascular diseases, due to the smaller calibred arteries show in Indians (Isalkar, U (2009) Indians more prone to heart disease, The Times of India). This suggests that Indians should move towards more healthy food and diet. This could be a new range to explore for Britannia with its new health associated products like Nuti-Choice biscuits and Actimind flavoured milk.Problems with Cloned LivestockCloned animals are suppositional to be suffering from large-offspring syndrome. The mother cows face a bother in giving birth to the re-created animals as they are larger than normal. overly these cloned animals suffer from health issues (Gogoi, P (2007) The case against re-create, BusinessWeek). It is morally wrong to clone animals as they cause problems to the mother during the birth and moreover the cloned livestock suffer from health issues which might make unsafe to consume the produce from them.TechnologicalCloning of LivestockIndia, a late entrant in copy research, is now moving with a considerable pace in cloning technology. Hand guided cloning technique, a technique very opposite from the conservative cloning practice has been a successful venture (Mahalakshmi, BV Chowdhary, S (2009) Cloning Glory, The Financial Express). pertly Age PackagingThe new case systems help in protecting food from micro-organisms by creating shelter layer. It uses new technologies like oxygen scavenging function, atmosphere control, biodegrability etc. and is low cost (Han, J Packaging Innovations, Bakers Journal). The packaging technology helps in preserving food for longer by protecting them from micro-organisms with the help of new technologies, thus resulting in longer shelf life of the food. The advantage of low cost packing and longer shelf life could be very beneficial for the union in increasing its profit margin.EnvironmentalChange in the Climatic ConditionsClimate plays an chief(prenominal) role in the agriculture process. The change in the rainfall exemplar has been a matter of concern now in India. The agriculture welkin in areas which are monsoon dependent suffered badly due to the change in the rainfall pattern. The sector suffered a huge sledding in terms of total output (Bhosale, J (2009) Farmers worried over climate disturbances, The Economic Times). The loss in crop will affect the input supply and this might delay or cause problems in the production. So the industry might not be able to meet the demands resulting in the loss of customers.LegalRaising the Norms for the Pro biotic FoodThere is a need for lay the standards for probiotic food. Clinical tests should be conducted on the probiotic foods before they could reach the market for sale. The Indian Council of Medical and Research has submitted the proposal for the same to the government (Das, S (2009) Probiotic food likely to come under clinical trial ambit, The Financial Express). tight norms will help in raising the quality standards but on the other hand the cost and time of production might later on increase.Micro External Environment AnalysisFactors that influence the micro external environment are Competitor Rivalry, Threat of New Entrants, Threat of Substitutes, Buyers federal agency and Suppliers Power. These factors play a vital role in determining the online situation of the business and to plan strategies accordingly.With the help Porters Five Forces we will be analysing these factors and their immediate effect on the company.Five forces analysis is a technique for identifying and listing those aspects of the five forces most relevant to the profitability of an organisation at that time. (Boddy, D (2005). Management An Intoduction. 3rd ed. UK Pearson Education. 83.)Competitor RivalryBIL has a market share of 38% and has been growing at 27%, compared to the industry growth rate of 20% (Saxena, R (2007) Battle-scarred Britannia on expansion spree, Business Standard) and has many competitors based on the nature of product.Parle and ITC (Sunfeast) pose a great competition to BIL (Biscuit Industry India (2010), Market Research India). BIL earning major of its income from the biscuits (Britannia Annual base 2007-08 (2008)), and Parle and ITC are the other major players in biscuit market.BIL is also into the production of dairy products, where the two major players in market are Amul and Nestle. Amul is the loss leader in the dairy industry.There is also a high level of competition from the un organize baking sector. general rivalry is high.Threat of New EntrantsT he entry on a small scale dairy industry and in the unorganised baking sector is easy.But on the other hand to enter the large scale dairy industry and organised baking sector a huge amount of investment is requisite in terms acquiring assets and to establish supply and distribution chains. judicature regulations pertaining to food norms and others may also seem to be unattractive.Looking at the latest trends, the bakery industry is expected to earn huge revenues which might attract new entrants (Vijay, N (2008) Indian Bakery sector foresees high growth and increasing interest in product offering, FnBNews.com).So the scourge of new entrants is moderate.Threat of SubstitutesSavoury snacks, crisps, cereals, fruits and other fast food can be substituted for biscuits.Dairy products are dubious to be replacing with other products as they key ingredients of majority of peoples diet.So the threat is a very moderate threat of substitutes.Buyers PowerThe buyers of these products could be a retailer or the consumer.Both the dairy and bakery industry are price sensitive, so a little increase in price might lead the consumer to shift other brand or product.So the buyers power is calculate to be very strong.Suppliers PowerThe major supplies for a bakery industry include wheat, sugar and other agriculture products. And the major supplies for dairy product is milk.Its difficult to bargain with the suppliers of the above mentioned inputs as the price of these inputs is majorly influenced by the production of these inputs. The prices tend to be high as the demand for these products is rising at much faster rate than supply.The secondary supplies include the packaging material.The secondary supplies can be easily substituted with the low-cost ones to save on cost.Overall the suppliers power is assessed to be moderate.Conclusion of Five Forces AnalysisThere is an humanity of major players in the market with a moderate level of threat of new entrants and substitutes.The supp liers power is moderate but the buyers power is measured to be strong.So the rivalry is suggested to be high.Stakeholders and corporal Social Responsibilities (CSR)Freedman (1984) defines a stakeholder as any individual or group who can affect, or is affected by, the achievement of the organisations objectives. Further in addition to that, Clarkson (1995), stated that the government and the other communities that effect the functional of the business and the market also form as a part of stakeholders. Stakeholders, except the employees, have a high power over the strategic change ideas (Hayes, J (2007). The Theory and form of Change Management. 2nd ed. UK Palgrave Macmillan. 153).Internal StakeholdersThe familiar stakeholders are the ones associated with the company internally. For BIL its internal stakeholders would beThe ShareholdersThe Board of Directors, andThe EmployeesCurrently, nearly 51% of shares are held by Corporate Bodies and the rest 49% is held by the public (State ment showing shareholding pattern (2009), Britannia Industries Limited). The come along consists of 11 members (Company Overview, Britannia Industries Limited) and employees nearly 2000 people (Britannia Industries Ltd. Overview, MarketLine).External StakeholdersThe external stakeholders are the ones who are not immediately associated with company but influence the decision making of the company. To BIL the external stakeholders are as followsCustomersSuppliersContractorsGovernmentRegulatory Agenices (like Food refuge and Standards Authority of India, etc.), andSocietyBritannia being the leader in the baker industry of India has a huge amount of customers to cater. Britannia has to keep up the tastes and quality preferences of its customers. The government plays an important in influencing the market by creating and changing the policies. BIL has to adhere to the rules and regulations explicate by the regulatory agencies. The suppliers and contractors form an important part of a b usiness. Britannia solely relies on its suppliers and contractors for its raw materials.Corporate Social Responsibility (CSR)For years corporal entities followed the practice of providing goods and services and maximizing wealth. But the trends have changed over the level of years. The companies are now expected to be more socially responsible. The company now has to be responsible to the stakeholders, society and environment. They are expected to devote back to the environment and society for all the affects that are caused due to its trading operations (Idowu, S Filho, W (2009) Global Practices of Corporate Social Responsibility. Berlin Springer. 1-2).BIL believes in working with the society and the culture. It gives a premier importance to the nation and its policies. It believes in being a good corporate citizen by not just adhering to the rules and regulations but also by helping the community to improve the quality of life. BIL involves itself in initiating and providing support to community health and family welfare, water management, vocational training, educating people and back up the application of modern techniques and technologies. BIL believes in ethical behaviour.