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 developments.

COMPONENTS OF BUSINESS ENVIRONMENT

Internal environmentExternal environment

• Value System

•Mission & Objectives of business

•Management structure

•Image and brand equity

Micro environment

Macro environment

•Supplier

•Customer

•Competitor

•Intermediaries

•Public

•Financers

•Economic

•Political

•Socio-cultural

•Technological

•Natural

•Demographic

•International

SIGNIFICANCE OF BUSINESS ENVIRONMENT

• 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 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.

BRIC Report, Goldman Sachs BRIC Report,

Goldman Sachs

"India offers a new and promising market for our innovations and

products."

Yuanquing YangChairman

Lenovo

Yuanquing YangChairman

Lenovo

“I put India on the top priority market among

emerging markets."

John RedwoodEconomic Competitiveness

Policy Group, UK

John RedwoodEconomic Competitiveness

Policy Group, UK

“India is now truly a land of opportunity.”

Andrew Holland Managing DirectorDSP Merrill Lynch

Andrew Holland Managing DirectorDSP Merrill Lynch

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.

Kazuo OkamotoChairman

Toyota

Kazuo OkamotoChairman

Toyota

“By 2032, India will be among the three largest economies in the world.”

Mark BentleyManager

Ford Global Licensing

Mark BentleyManager

Ford Global Licensing

"We see a huge growth potential in India, be it warehousing and

distribution, or even freight business or express business."

Dr. Manmohan Singh

Prime Minister of India

Dr. Manmohan Singh

Prime Minister of India

"Today, there is a greater willingness internationally

to work with India -- and to build relationships of

mutual benefit."

Olli-Pekka KallasvuoGlobal CEO

Nokia Corporation

Olli-Pekka KallasvuoGlobal CEO

Nokia Corporation

As a general rule, we expect India to outgrow the world average; outgrow Eurasia and the Africa group... We

would be happy to see India among our top five global

businesses."

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.

Value System of Bajaj Auto Limited

Core Values

Speed

Innovati

on

Transparency

Customer

Satisfaction

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

beyond the obvious in pursuit of that which exceeds the ordinary.• Customer Focus We are always customer focused and will deliver what the customer needs in

terms of value, quality and satisfaction.• Transparency : Transparency is how we characterise ourselves. It is a value that makes worthy

of credibility through integrity, of trust through sensitivity and of loyalty through interdependence.

Mission and Objective

• The Mission and Objective of any company guide the priorities, direction of development and business policy etc.

•ITC’ vision is to Sustain ITC's position as 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...• Most of the companies’ objective is sustainability. •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

Management Structure

• Organizational structure, the composition of board of director and patterns of share holding etc are the important factors influencing business decisions

BAJAJ AUTO LIMITED

• 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

Cont..

• Company’s new structure has been divided into five pillars called strategic units..

R&DEngineeringTwo Wheeler Business Unit Commercial Vehicles Business Unit andInternational Business Unit

• 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 Bajaj Holdings & Investment Ltd(BHIL) to focus on investments

and new business opportunities

Company image and brand equity• 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

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MACRO ENVIRONMENT

• Economic environment• Global environment• Technological environment• Political & Legal environment• Social & Cultural environment• Demographic environment• Natural environment

ECONOMIC ENVIRONMENT

Factors of Economic Environment•The nature of economic system •Economic Structure•Economic policies •Organization and development of the capital market

Current situation in the Indian Economy

Slow recovery from the recession.

Inflation affecting the growth.

India GDP Growth Rate

•India is the second fastest growing economy in the world. India’s 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.

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.

Economic Structure of the country

•Agriculture is the predominant occupation in India, accounting for about 60% of employment.

•The service sector makes up a further 28%, and industrial sector around 12%.

Occupational Distribution:

60

28

12

AgricultureService SectorIndustrial Sector

Source: Business and Economic Facts for you

Sectoral composition of Output

Total Output

Primary Secondary

Tertiary

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 country’s output.

54

17

29Service SectorAgricultureSecondary Sector

Source: Business and Economic Facts for you

Economic InfrastructureThe following sectors come under the purview of infrastructureElectricity (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 sanitationTelecommunications.Road & bridges.Ports.Inland waterways.Airports.Railways.Irrigation.Storage.Oil and gas pipeline networks.

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.

(Source: Planning Commission of India)

ECONOMIC POLICIES

Industrial policy Export-import policy Monetary policy Fiscal policy

Monetary Policy includes Repo rate(the rate at which RBI re-purchases 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.

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.

GLOBAL ENVIRONMENT

.

1. International Agencies (World Bank, IMF & WTO)

2. Economic and Business condition in other countries

Factors of Global Environment

INTERNATIONAL AGENCIES:

World Bank•World Bank president Robert Zoellick committed increased funding for India, and sought the country’s support for enhancing the lender’s 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.

Done to help India in coping up with the recent financial crisis.

•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.

As of now, IMF's role in India is that of surveillance.

International Monetary Fund

•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.

Economic and Business conditions in other countries

• Recent example of financial crisis in USA

•Low investments by foreign companies.

•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 bottom-line growth in their balance sheets because of less demand from foreign countries and consequently less revenue from exports.

Price of Crude oil

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.

This happened because of a sharp fall in crude oil prices.

India’s Global Competitiveness Chart

Measured by World Economic Forum Measured by IMD

2002 57/75 2002 41/49

2003 48/80 2003 50/59

2004 56/102 2004 34/60

2005 55/104 2005 39/60

2006 50/117 2006 39/61

2007 43/125 2007 27/55

2008 48/131 2008 29/55

2009 50/134 2009 29/57

Rating based on economic performance, business efficiency, government efficiency and infrastructure.Source: IMD world competitiveness yearbook 2009

Technological and

Physical Environment

The main elements of technological and physical environment are:

•Rate of technological change.•Approaches to production of goods and services.•New processes and equipment.•Research and Development systems.

Some latest technological changes are:

Country’s first paperless mobile verification product

• Adopted by Odyssey Technologies, a Chennai based company.

• The product is Epic, which the company is testing, consists of a mobile phone fitted with a smart card and software that enables the phone’s 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 enables capture of basic info for on-the-spot verification.

• Advanced version of wi-fi.

• 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.

• In contrast, the WiFi wireless local area network standard is limited in most cases to only 100 - 300 feet (30 - 100m).

Wimax

•The technology is intended for smart phones or multimedia cell phones.

•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.

• Private players are yet to enter the market, and are awaiting .a spectrum auction by the Indian government

Research & Development

0.8% of the country’s 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.

Political & Legal Environment

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:

General Laws Financial Laws Labor laws Taxation Laws Other Laws

General Laws

These laws are applicable to all the types of organization irrespective of there size and type. These include:

Contract Act 1872: 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.

Financial Laws

These law relates to financing of business firms. These include:

1 SEBI Act, 1992: The Securities and Exchange Board of India Act regulate the

working of security market.

2 Banking Regulation Act, 1949: The Banking Regulation Act was passed as the Banking Companies Act 1949

and came into force wef 16.3.49. Subsequently it was changed to Banking Regulations Act 1949 wef 01.03.66.

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:

Factories act 1948 Industrial employment act 1946 Industrial Dispute act 1947 Trade union act 1926 Payment of bonus act 1965

Factories act 1948

The act came into force on 1st April 1949. The object of this act is to secure health, safety, welfare, proper working hours, leave and other benefits to workers . Section 116 provides that, this act also applies to factories belonging to the central or any state government.

The laid down following provisions which employer have to follow: Provisions regarding health(Section 11-20) Provisions regarding safety (Section 21-41) Provisions regarding welfare (Section 42-50) Provisions regarding working hours (Section 51-62)

Industrial Dispute act 1947

The act came into force on 1st April 1947. Since then it has been amended in 1949,1950,51,52,53,56,57,59,61,63,64,65,70,71,72,76,82&84

An Act to make provisions for the investigation & the settlement of industrial disputes and for certain other purposes.

The act lays down the authorities under the act for the settlement of the industrial dispute.

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. 2008-09.

These include Income tax act 1961 Wealth tax act Excise act Customs act Central sales tax act

Income tax act 1961It is one of the most important taxation law and applies to all the types of

business. The act came into force on 1st April 1962. It is very voluminous piece of legislation containing more than 450 sections. Changes in the tax as announced in budget: Minimum Alternate Tax (MAT) to be increased to 15 per cent of book profits from 10 per cent. The period allowed to carry forward the tax credit under MAT to be extended from seven years to ten years

No changes made in the Corporate Tax rates Fringe Benefit Tax on the value of certain fringe benefits provided by

employers to their employees to be abolished Scope of provisions relating to weighted deduction of 150% on expenditure

incurred on in-house R&D to all manufacturing businesses being extended except for a small negative list

Minimum Alternate Tax (MAT) to be increased to 15 per cent of book profits from 10 per cent. The period allowed to carry forward the tax credit under MAT to be extended from seven years to ten years

Customs ActMajor changes in customs act as in budget are:• Customs duty of 5% to be imposed on Set Top Box for television broadcasting. • Customs duty on LCD Panels for manufacture of LCD televisions to be reduced from 10% to 5%. • Full exemption from 4% special CVD on parts for manufacture of mobile phones and accessories to be

reintroduced for one year. • List of specified raw materials/inputs imported by manufacturer-exporters of sports goods which are

exempt from customs duty, subject to specified conditions, to be expanded by including five additional items.

• Customs duty on 10 specified life saving drugs/vaccine and their bulk drugs to be reduced from 10% to 5% with Nil CVD (by way of excise duty exemption).

• Customs duty on specified heart devices, namely artificial heart and PDA/ASD occlusion device, to be reduced from 7.5% to 5% with Nil CVD (by way of excise duty exemption).

• Customs duty on bio-diesel to be reduced from 7.5% to 2.5%. • Concessional customs duty of 5% on specified machinery for tea, coffee and rubber plantations to be

reintroduced for one year, up to 06.07.2010.• Customs duty on cotton waste to be reduced from 15% to 10%. • Customs duty on wool waste to be reduced from 15% to 10%. • Customs duty on cotton waste to be reduced from 15% to 10%. • Customs duty on wool waste to be reduced from 15% to 10%.

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 business carried on by all or one of them acting for all.

Political Environment

Political Environment comprises the elements relating to government affairs. It serves as a regulatory

framework of business.

Constituents of Political Environment

1) Constitution of the country The constitution of the India was adopted by constituent assembly on 26 th November 1949 and came into effect from 26 th January 1950 .Our constitution is

worlds largest containing 395 articles and 10 schedules. it is divided into 22 parts containing articles & schedules. The most important part of the constitution are:

Part II- Relating to citizenshipPart III- Relating to fundamental rightsPart V- Relating to the unions Part VI- Relating to The states Constitution of the country contain all the laws & regulations which the business has to comply with in order to establish business. There have been 94

amendments of the Constitution of India since it was first enacted in 1950.

2) Ruling party’s rules and regulations No matter how attractive the economic prospects of a particular country or region are, doing business there might prove to be financially disastrous if the host government(s) inflict(s) heavy financial penalties on a company or if unanticipated events in the political arena lead to the loss of income-generating assets.

Several coalition Governments since economic reforms started in 1991.Current govt. is the single party govt. of Congress.

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3)EconomicLiberalization

• 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

• Declining Rates of Taxes and Import Tariffs– Rationalizing the tax regime, including lowering tariff

barriers, simplifying the trade regime, reducing marginal tax rates, and simplifying tax procedures

Social & Cultural Environment

Social & Cultural Environment refers to the characteristics of the society in which a business firm exists.

• Demographics• Changing values in society• Changes in consumer tastes and preferences• Levels of education

Components

Demographic EnvironmentThe study of demographic environment for business is important

because people constitute the market for the business. Firms often uses demographic characters for market segmentations. Demographics—Key to Growth are:

• 54% of Indian population under 25 years• 80% under 45 years• 25% of all people under 25 years in world are in India• India’s youth bulge and recent job creation is leading to

consumption driven growth• The younger generations’ habits differ greatly from the previous

generations’, causing radical shifts in consumption patterns

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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 India’s high value industries.

62

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

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A Vibrant Middle Class 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

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A Rapidly Growing Middle Class• 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

65

Education– A Driving Force• 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 – Information technology, engineering and pharmaceuticals

• 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

Population

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. These projections employ what some would

regard as fairly 'optimistic' assumptions about the pace of future demographic progress.

India population is growing @ 1% p.a.

Cultural Environment

Culture may be define as that complex whole which consists of customs, attitudes, beliefs and value of the society.

Knowledge &belief Ideas Preferences

ELEMENTS OF CULTURE

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.

Sources of raw material Employment generation Location of the industry

MICRO ENVIRONMENT• Consist of factors in the company’s immediate

environment that affect the performance of the company.

CustomersCompetitorsSuppliersMarketing IntermediariesFinanciersPublics

Changing Taste Of Consumers

• Economic Liberalization • Increasing Income Levels & Brand

Consciousness• Growing number of Nuclear Families• Rise in Economic Independence of

Women• Inclination towards company

supporting Social Causes.

Consumer Is KingSalaam Maggi 25 years campaign is a

great opportunity to further the brand’s connect with its consumers

The Onida Devil – RIP !Multinational feels it has outlived its objective due to change in taste and financial capability of the consumer.

Competitors

• Michael Porter five forces of competition are:1. Threat of competitors2. Threat of New Entrants3. Threat of Substitutes4. Bargaining Power of Suppliers5. Bargaining Power of Buyers

Telecommunication SectorIndia 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 ……

Customer Market Share of Top 5 Telecom Cos in India

SERVICE PROVIDER MARKET SHAREBharti Airtel 24.6%

Reliance Communications 17.7%Vodafone Essar 17.4%

BSNL 12.7%Idea Cellular 11.2%

As on Sep 2009

Table compiled from data : The Analyst (Dec 2009)

SuppliersOutsourcing

• 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 facilities/warehouses located within 30 min distance from Eicher Plant

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.

• Vodafone agency : Ogilvy & Mather

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 largest operator.

FINANCIERSIndian 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 April-September period this year for Indian companies came from non-banking sources.External commercial borrowings (ECBs) are typically cheaper by nearly three percentage points compared to domestic banks.

Source : HT

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

PEPSICO

ENTRY OF PEPSI IN INDIA :1988Acceptance of the Pepsi Offer in India

Play a central role in bringning about an 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 businessBoost the image of Indian products in foreign marketsCreation of 50,000 jobs in India

Our Vision "To build India’s leading total

beverage company, delighting consumers by best meeting their everyday beverage needs, and stakeholders, by delivering performance with purpose, through our talented people."

Pepsico IndiaPepsiCo India’s Revenue : Rs 5,200 crore revenues

(year to date until September 30, 2009)37% of PepsiCo India’s Revenue come from snacks and foods.In Q3, best growth for PepsiCo worldwide came from IndiaIndia is a low-cost-high-quality benchmark for other PepsiCo regions.PepsiCo India overtake Nestle India as No.1 among Indian branded and processed foods and beverage companies.

Share & Growth

38%

30%

8,000

3,000

Carbonated drinks

Juice drinks

PepsiCo Share (%)

Market Size(Rs crore)

Q3- 40%

Q2-35%

Q1-32%

Growth of PepsiCo Beverage in 2009

Beverages Share….

Compiled from data :BT(Jan 24)

PepsiCo India is the country’s largest corporate involved in potato contract farming and deals with 1,50,000 tonnes of the tuberTwo-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 that of western countries at the same quality.

Customer Focus• Due to market opportunities and customer

requirements An increased consumer preference for healthier drinks PepsiCo turned its efforts towards food sector and non- carbonated beverages.

• Slew of indigenous products as Aliva, Kurkure, Nimbooz launched.

REVENUES ININDIA

81%

14%

4%

Pepsi Revenues : 2000

Carbonated soft drinks

Food

Non-Car-bonated drinks

45%

37%

18%

PepsiCo Revenue : 2009

Compiled from data :BT(Jan 24)

• Launched for greater customer engagementmore than 12 lac flavour ideas as on 20th Jan 2010.

Technology

• R & D with a budget of $4.5 billion .• Idea & Technology of Nimbooz used to launch

a Hibiscus Based drink in Egypt.

PEPSI VS COKE

Longest-running battles in global competition has been the fight for market dominance between Coca-Cola and Pepsi CoWhile Coca-Cola India’s consolidated share of carbonated soft drinks is 57.8%, PepsiCo follows at a distant second with 35.6% share.

(as on Sep 2008)

THUMS Up, owned by Coca-Cola Company that also owns the world’s largest-selling cola Coke, has close to 16.4% share in the country’s aerated drinks market, compared with Pepsi’s share of around 13%. (according to AC Nielsen data) source :-http://epaper.timesofindia.com

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REFERENCESBusiness today (Jan24),2010Business India (Dec27),20094Ps Business & Marketing(Jan 15),20104Ps Business & Marketing(Dec 18),2009The Analyst (Dec),2009Marketing Mastermind(Nov), 2009www.financialexpress.comwww. epaper.timesofindia.comwww.moneymint.inwww.indiacar.netwww.icmr.com