BUSINESS ENVIRONMENT PROJECT ON PARLE-G B.E

VIVEK COLLEGE OF COMMERCE BUSINESS ENVIRONMENT

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Acknowledgement

Our Special thanks to prof.Geeta who has given us the opportunity to present on this challenging project of Parle-G. It has also given us immense knowledge of business. The project is a comprehensive one ranging from fundamental concepts. I sincerely hope that this project will satisfy both teacher and the thought. I wish to thank Mr. Ajay Singh –Head HR Department.

CONTENT SO. NO

TOPIC

PAGE NO

1.

BUSINESS ENVIRONMENT

4

2.

SWOT ANALYSIS

6

3.

PROFILE

9

4.

HISTORY

10

5.

POLITICAL ENVIRONMENT

11

6.

ECONOMIC ENVIRONMENT

12

7.

SOCIAL ENVIRONMENT

15

8.

TECNOLOGICAL ENVIRONMENT

16

9.

LEGAL ENVIRONMENT

17

10.

ECOLOGICAL ENVIRONMENT

18

11.

BIBLIOGRAPHY

22

What is Business Environment..? In the words of B.O.Wheeler, "Business environment is the total of all things external to firms and individuals which affect their Organization and operations". Business is the product of the technological, political- legal, economic, socio – cultural, global and natural factors amidst which it functions. Three features are common to this web of relationship between business and its environment. First, there is symbiotic relationship between business and its environment and among the environmental factors. Business is influenced by its environment and in turn, to a certain degree, it will influence the external forces. The second feature is that these environmental factors are dynamic. They keep on changing as years roll by, so does business. The third feature is that a particular business firm, by itself, may not be in a position to change its environment. But along with other firms, business will be in a position to mould the environment in its favour, to a large extent. In simple terms environment means things surrounding the living being. Everything on this earth, whether living or non-living is surrounded by an environment and so is business. The environment of business is a sum total of natural, economic, social, and political and other forces, which constitute the surrounding of business.

A study of business environment is very useful to anticipate opportunities and to plan resources to exploit these opportunities successfully. It can also be used as an early warning system to prevent threats or to turn obstacles into opportunities

The total environment of business, for our purposes, include six factors, viz., 1 . GLOBAL 2.POLITICAL, 3. ECONOMIC, 4.LEGAL, 5. TECHNOLOGICAL, 6. NATURAL.

SWOT ANALYSIS What is a SWOT Analysis..? A SWOT (Strengths, Weaknesses, Opportunites, and Threats) is a tool used to provide a general or detailed snapshot of a company's health. Why use a SWOT Analysis..? In any business, it is imperative that the business be its own worst critic. A SWOT analysis forces an objective analysis of a company’s position vis a vis its competitors and the marketplace. Simultaneously, an effective SWOT analysis will help determine in which areas a company is succeeding, allowing it to allocate resources in such a way as to maintain any dominant positions it may have.

Positive points of Parle-G: Over the years, Parle has grown to become amulti-million US Dollar Company. Many of the Parle products - biscuits or confectionaries, are market leaders in their category and have won acclaim at the Monde Selection, since 1971.Today, Parle enjoys a 40% share of the total biscuit market and a 15% share of the total confectionary market, in India. The Parle Biscuit brands, such as, Parle-G, Monaco and Krackjack and confectionery brands, such as, Melody, Poppins, Mango bite and Kismi, enjoy a strong imagery and appeal amongst consumers. Negative points of Parle-G: HLL and ITC’s entry into biscuits will affect Parle After testing the waters with niche offerings in untapped segments of the biscuit market, heavyweights Hindustan Lever and ITC have now forayed into the mass biscuit market. While ITC has launched its glucose brand, Sunfeast, HLL has decided to differentiate its product, Modern ‘Energy’ Biscuits, by using wheat and soya as ingredients. Importantly, both ITC’s and HLL’s new offerings are priced at Rs 4 for a 100 gram pack, the same level as Parle G and Britannia’s ‘Tiger’ glucose biscuits. Given HLL’s and ITC’s massive distribution reach, this new development would clearly have a significant impact on the market shares of both Parle and Britannia. In case the taste of the new products do not go down very well with consumers, the already established players may get some breathing space, but it will be only a matter of time before that

gets corrected and the pressure will soon be back on. Structurally, the entry of players such as HLL and ITC in the mass biscuit market is bound to affect the dominance of Britannia in the biscuits market. What’s more,

competition from regional players such as Surya Foods, known for its ‘Priya Gold’ range of biscuits, has also increased. It certainly doesn’t help that the company has just had a change in leadership. Further, since the company has hived-off its dairy division, overall growth rates would clearly be lower than what investors have been used to for a while. As far as profitability goes, much depends on the company’s ability to further reduce costs, unless there is a further reduction in excise rates.

PROFILE Parle-G World's Largest Selling Biscuit A long time ago, when the British ruled India, a small factory was set up in the suburbs of Mumbai city, to manufacture sweets and toffees. The year was 1929 and the market was dominated by famous international brands that were imported freely. Despite the odds and unequal competition, this company called Parle Products, survived and succeeded, by adhering to high quality and improvising from time to time. A decade later, in 1939, Parle Products began manufacturing biscuits, in addition to sweets and toffees. Having already established a reputation for quality, the Parle brand name grew in strength with this diversification. Parle Glucose and Parle Monaco were the first brands of biscuits to be introduced, which later went on to become leading names for great taste and quality. It was called Parle Gluco Biscuits mainly to cue that it was a glucose biscuit. It was manufactured at the Mumbai factory, Vile Parle and sold in units of half and quarter pound packs. Parle-G has been a strong household name across India. The great taste, high nutrition, and the international quality, makes Parle-G a winner. No wonder, it's the undisputed

leader in the biscuit category for decades. Parle-G is consumed by people of all ages, from the rich to the poor, living in cities & in villages. While some have it for breakfast, for others it is a complete wholesome meal. For some it's the best accompaniment for chai, while for some it's a way of getting charged whenever they are low on energy. Because of this, Parle-G is the world's largest selling brand of biscuits.

HISTORY Biscuits were very much a luxury food in India, when Parle began production in 1939. Apart from Glucose and Monaco biscuits, Parle did offer a wide variety of brands. However, during the Second World War, all domestic biscuit production was diverted to assist the Indian soldiers in India and the Far East. Apart from this, the shortage of wheat in those days, made Parle decide to concentrate on the more popular brands, so that people could enjoy the price benefits. The incredible demand led Parle to introduce the brand in special branded packs and in larger festive tin packs. By the year1949, Parle Glucose biscuits were available not just in Mumbai but also across the state. It was also sold in parts of North India. By the early50s, over150 tonnes of biscuits were produced in the Mumbai factory. Looking at the success of Parle-G, a lot of other me-too brands were introduced in the market. And these brands had names that were similar to Parle Gluco Biscuits so that if not by anything else, the consumer would err in picking the brand. This forced Parle to change the name from Parle Gluco Biscuits to Parle-G. Parle-G was the only biscuit brand that was always in short supply. It was heading towards becoming an all-time great brand of biscuit. Parle-G started being advertised in the 80's. It was advertised mainly through press ads. The communication spoke about the basic benefits ofenergy

andnutrition. In1989,Parle-G released its Dadaji commercial, which went on to become one of the most popular commercials forParleG. The commercial was run for a period of years. Parle-G grew bigger by the minute. Be it the packs sold, the areas covered or the number of consumers. It became a part of the daily lives of many Indians. It wasn't a biscuit any more. It had become anicon. Then ext level of communication as sociated the brand with the positive values of life like honesty, sharing and caring. Thankfully today, there's no dearth of ingredients and the demand for more premium brands is on the rise. That's why; we now have a wide range of biscuits and mouthwatering confectionaries to offer.

POLITICAL ENVIRONMENT RELATING PARLE-G WITH THE POLITICAL ENVIRONMENT Two basic political philosophies are in existence all over the world viz., democracy and totalitarianism. Parle-G follows totalitarianism as its basic philosophy. Totalitarianism is also called as authoritarianism, individual freedom is completely subordinated to the power of authority of the company and concentrated in the hands of one person or in a small group which is not constitutionally accountable to the employees. In this method, final decision is taken by the head only but after negotiating with everyone by conducting several meetings. Parle-G biscuit is basically aimed for poor category of people as its price is only Rs.4 since last 10 years which is affordable to any class of the population. Therefore government should see that

such companies which provide economic help to the country should not be disturbed in any sense. Infact government should help in such a way that such companies grow even more which can further improve the economic conditions of their domestic countries. But in India the situation is totally opposite. Parle-G pays excise duty which if it doesn’t pay can reduce its MRP even lesser while other products such as cheese, jam, butter which are consumed by middle or upper class people are exempted from paying excise duty. In this way government in spite of many requests is not giving its helping hand to Parle-G. “Constitution has put several road blocks which have checked the pace of the company’s economic development.” Parle-G is totally in favour of the above statement as they say new rules and policies depend on government to government. They adopt various laws for their own mutual benefits.

ECONOMIC ENVIRONMENT Economic environment refers to all those economic factors which have a bearing on the functioning of a business unit. Any business firm depends on the economic environment for all the inputs needed and also to sell their finished goods. Thus, it can be said that business depends on economy and economy does not depend on the business. The major macro-economic factors which have considerable influence on business are: 1)Growth strategy 2)Economic systems 3)Economic planning

4)Industry 5)Agriculture 6) Infrastructure 7) Financial and fiscal sectors 8)Removal of regional imbalances 9)Price and distribution controls 10)Economic reforms 11)Human resources 12)Per capita and national income

RELATING PARLE-G WITH THE ECONOMIC ENVIRONMENT As part of the efforts towards a larger share of the global market, Parle has initiated the process of getting ISO 9000 certification. Parle-G had laid down its first factory in late 1929. this factory used to manufacture only sweets and candies. But later by 1989 they also started producing biscuits. The four main contents used in Parle-G biscuits are: 1) 2) 3) 4)

Wheat Vanaspati Sugar Salt

PROCESS FLOW CHART Raw material testing Mixing Moulding Baking Cooling Packing Producers exploit consumers by various tactics. Therefore, Parle-G had started conducting consumer awareness so as to protect their consumers from getting fooled. In these awareness campaigns they suggested various means for

identification of original Parle products. Following are some indications that will differentiate original from the duplicate ones. There are errors in the spelling which can exploit people. GLUCO biscuits are the original name but the duplicate name is GLUCOSE biscuit. On all the Parle-G products we find a Parle logo but in duplicates there is no such logo found.The total work strength of Parle-G in its Mumbai factory is 730 blue color workers out of which 70 are female workers. Other than its labour staff there are 200 more administrative staff. For maintaining cordial relationships between management staff and labour staff there is one labour union at present. Earlier there were two labour unions which divided the labourers into two sections. This increased competition which gave good productivity initially but later proved to be the cause of

industrial dispute in Parle-G. The two unions started internal disputes which forced the company to reunite both the unions into one union. This was the last case of industrial dispute occurred in Parle-G. Since then there is no such case of industrial dispute.

Social ENVIRONMENT Human welfare & quality of life are two sides of the same coin. Both figure a good deal in everyday life and human beings everywhere endeavor to improve their standard of living. A comparison of standard of living in different countries has hitherto been done on the basis of per capita GNP or GNI , converted to a common currency vis – a-vis the dollar normally in India the per capita GNP is computed in Rs and then converted into dollars. An appropriate measure of the quality of the life of the populace of a country should encompass not only physical aspects such as education, health, longevity, etc. but should also reflect the state of human right in the form of civil and political liberties.

Parle planners have devised certain measures, which tend to benefit the socially weaker section of the society more than better off section. Such a system is referred to as a progressive system. Basic items and basic necessities are price controlled under advice of Bureau of industrial cost and prices (BICP-now remodeled on the lines of tariff commission with much more transparency in operations) Parle also deter completions resulting in inefficiencies. Such price controls are made possible through budgetary support. This in turn has got so magnified that the fiscal deficit has shown a conspicuous rise invoking comments from international financiers. The fiscal deficit is estimated to be Rs 13.52 billion (4.4% of GDP) in 2003-2004. Revenue deficit is estimated Rs 46 crore or 2.5% of GDP as per the union budget 2004-2005.

Technological environment Technological environment exercises considerable influence on business .It is through business that technology reaches people. Technological changes are very fast and to keep pace with them, it is difficult to grow an enterprise if new technology is not introduced in the place of old n outdated one’s. Goods produced become competitive due to the application of new technology.

Cost reduction and quality improvement are also possible through the use of modern technology. Moreover, today’s technology is tomorrow’s junk. Technology includes the technique of production, innovations and inventions that affect quality and quantity of the production. Technology is the application of science (basic science)to actual use in industry and also in other aspects of life Technological environment is the result of technological developments in the manufacturing activities. Manager says “a firm which is unable to cope up with the technological changes may hardly survive in this competitive world”. He also says “every business unit has to study new technological developments connected with its business and introduce them to extent possible. Along with production, technology needs to be used for correct and quick decision making”. He also says “technological environment is the result of scientific and technological developments taking place in the manufacturing activities.

Legal environment The regulatory environment is comparatively new component of total business environment. The government regulates business activities and government rules and regulations create regulatory environment .It is the result of government intervention in the economic and business spheres. Regulatory environment creates a framework of regulations and legal provisions within which business units have to operate. What to do and what business can do are decided by the regulatory environment. It is also called as

legal environment. Legal system of a company has profound impact on major decisions concerning both investment and operations in the company. In brief, regulatory environment is the net results of various laws , rules, procedures and regulations made by the government from time to time in regards to the formation and operations of business enterprise. There are many laws in India which affect parle’s business directly or indirectly. The important are noted below: 1. Industries (Development and Regulation) Act, 1951. 2. The Monopolies and Restrictive Trade Practices Act, 1969. 3. Foreign Exchange Management Act, 2000(FEMA). 4. The Indian Companies Act, 1956. 5. Consumer Protection Act,1986.(CPA) 6. Environment Protection Act, 1986. 7. SEBI.

Ecological ENVIRONMENT Natural factors create some sort of special environment for the business unit called natural environment. This factors are

uncontrollable. They include geographical factors such as weather and climatic conditions. In addition , factors like rainfall,minerals,natural resources which creates natural environment which are considerable in influencing functions of business enterprise. In brief , natural environment consist of air,land,water and all natural resources found on the surface of the earths in its bowels. Going international is yet another trend followed by modern business houses. Internationalization and globalization is fast becoming imperative for modern business due to technological innovations, crumbling trade barriers, global flow of capital and technology, information explosion, intensity of market competition, changing life styles and the demand for new products. Production facilities are being set up in different countries and products are being sold through a global network. Gradually, business houses are exposed to global competition which augurs well for consumers. Internationalization of business is a means of sustaining a strong domestic base in terms of technology, product, market and the capital over a longer period. At the company level, globalization means two things: (a) The company commits itself heavily with several manufacturing locations around the world and offers products in several diversified industries. (b) It also means the ability to complete in domestic markets with foreign competitors. In the popular sense, globalization refers mainly to multi-plant operations.

RELATING PARLE-G WITH THE ECOLOGICAL ENVIRONMENT

According to Parle-G, the term GLOBALISATION does not merely mean imports and exports, but letting your presence felt all over the world. Expansion and recognition are the main factors of going global. The immense popularity of Parle products in India was always a challenge to their production capacity. Now, using more modern techniques for capacity expansion, they have begun spreading their wings and are going global. Parle biscuits and confectionaries are fast gaining acceptance in international markets, such as, Abu Dhabi, Africa, Dubai, South America and Sri Lanka. Even the more sophisticated markets like USA & Australia, now relish Parle products. Parle-G continues to climb the stairs of success. Take a look at the global market where it is being exported. First came the Middle East thenUSA followed byAfrica and thenAustralia. An Indian brand, that's exported to almost all parts of the world. After all that's what you would expect from the ParleG World's Largest Selling Biscuit. Other international companies choose India as a global market because labour in other countries is costly as compared to in India. In India things are quite easier. Government has become more liberal for MNC’s to enter Indian market which results in high competition with the in-house companies. For example: China has a huge impact on the Indian market. Cameras from Japan and China are of hi-tech technologies which are available at the cheapest rates. There is a huge gap between the prices of Indian products and such other imported products. Another example is of Intel-II. They have now started manufacturing chips in India which further resulted as a tough competition to other Indian companies. Another international biscuit making company is ITC which winded up its business within a year due to tough competition laid by Parle-G. Parle-G has a strong base in India since 1939. it has now become the largest biscuit selling company in entire India and is also

proved to be three times more

then the US based biscuit manufacturing companies. Parle-G has 40 factories working all over the country including 6 mother units. These mother units are located at Mumbai, Rajasthan, Haryana, Bangladesh, Bhuj and Uttaranchal. Raymond Vernon had introduced a product- cycle theory in late 1960s, but this theory is still relevant till today. This theory explains that how companies go global. Initially, small scale companies produce attractive products and sell them in their home markets. Sooner or later, foreigners come to know about these products. As the popularity of these products increases they start exporting them abroad. As the foreign demand grows, the economies of foreign production changes. Eventually, the company starts setting up their own plants globally. In this manner various companies go global. But Parle-G doesn’t agree with this theory laid by Vernon. According to them there are four stages that the company should follow for going global. They are: infancy, growth, maturity and decline. Parle-G is yet at the growth stage of the theory for going global. Going global for any company involves risk. Hence, Parle-G recruits a special team for market surveys called a market research team. This team keenly studies the culture, market situation, fashions, preferences, habits and taste of the consumers of the country they are going to enter. As Parle-G is meant for poor class of population, other variety in biscuits made by Parle-G are for middle and upper class people, they need to study all levels of society to launch the product similar to their conclusions. Supplying or launching a new product requires sample testing before the same. According to Parle-G, company should behave in the same manner and culture as of its host country. They need to

follow their laid rules and regulations and their local laws. Parle-G will continue in its host countries the same performance appraisal methods as in its home country. Because they follow the norm which says that the employees are of same capabilities and talents everywhere even though the working conditions are not the same. Hence, they would appraise the performance of their employees based on caliber and not based on the impression of the host countries.

Managerial practice adopted by Parle-G: Japanese organization 1)Life time employment 2) Slow evaluation and promotion 3) Non-specialized career paths 4) Collective decision making 5) Collective responsibility They have already adopted the technique of 5’s which most companies adopt viz., Seiri, Seiton, Seiso, Seiketsu, Shitsuke. The exports of Parle-G are hardly 3% of its total production. But for boosting their exports their target is to reach 5% of its total production. Their main aim is to first fulfill the needs of domestic market and then boosting their exports.

BIBLIOGRAPHY The information mentioned above was taken from: www.parleproducts.com 2) www.wikipidea.com 3) BUSINESS ENVIRONMENT IN INDIA (Dr. BS KS CHOPRA) EVEREST PUBLISHING HOUSE PUNE. 1)