Chapter 2: Micro and Macro environment

Micro Environment:
There are five components associated with the micro environment of an organization. These
components are as follows.

1. The Organization Itself

2. Suppliers
3. Marketing Intermediaries
4. Competitors
5. Public

The Organization Itself

The organization itself is the first micro environmental component which focuses on the role
of the organization that it performs in the micro environment. The mission statement and
long term goals of continental biscuit were firstly developed by the top management headed
by CEO Hassan Ali Khan. After which the tactical strategies, short term goals and policies
are prepared by the middle level management, which are followed by the functional goals.
The board of directors of the organization has confined the area in which marketing manager
takes his decisions. The marketing manager works in collaboration with other departments of
the continental biscuitbecause most of the activities of the entire organization are interrelated
with each other. Also the broader organizational goals are common for all the departments of
thecontinental biscuit like purchasing department, Research and Development department,
production department etc. The main focus of all the departments is toward customer
oriented behavior that ensures the delivery of superior value to customers and this is made
possible through the efforts of the marketing department.

Suppliers
Suppliers are the second micro environments component, which are those organizations that
deliver the required resources to all the competing organizations for the production of goods
or services.

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CBL Supply chain division envelops the arranging and the board of all exercises engaged
with generation, transformation, and all coordination the executive’s exercises. Essentially, at
CBL it additionally incorporates coordination and cooperation with channel accomplices,
which can be providers, go-betweens, outsider specialist co-ops, and clients. Generally,
production network division incorporates free market activity the board inside and crosswise
over organizations.

CBL's Supply chain division is a coordinating capacity with essential duty regarding
connecting significant business capacities and business forms inside and crosswise over
organizations into a strong and high-performing plan of action. It incorporates the majority of
the coordination the executives exercises noted above, just as assembling tasks, and it drives
coordination of procedures and exercises with and crosswise over promoting, deals,
generation, money and data innovation.

Marketing Intermediaries
The organizations that assist in promoting, selling & distribution of products to final
customers of specific organization are called marketing intermediaries and are considered the
utmost factors the micro environments. Marketing intermediaries include the following.

Distributions:
The main warehouse of continental biscuits is in sakkar near manufacturing plant in sukkar,
from where whole distribution networks operate. CBL relies on 400 distributors all over
Pakistan to make its products available to the retailers and in turn the consumers. The
distributors place orders with CBL and are given the biscuits, they then are responsible for its
timely supply to the retailers. In Karachi CBL uses the services of Premiere Distributors.

Customers:
The customer market of continental biscuits is very broad because company targets people of
every age. Customers attitude must be closely studied by the organization because there are
more than one customer markets with their own unique features.

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Competitors:

The total market for biscuits in Pakistan into two distinct groups, which are the organized market
and the unorganized market. The unorganized consists of the biscuits made in the bakeries and in
the in house manufacturers. The total size of the biscuit market in Pakistan is about 50000 tons
estimated per annum. The unorganized sector is about 50% of the total market that is
25000tonnes, the remaining 25000 tons is met by the organized sector, which is an industrial
base sector. The companies in the organized sector are called the “Professionally Managed-
Marketed Marketing Companies”. There are only four of these companies in Pakistan, which are
Meiji, EBM, CBL and Dane Foods. The total sales of Meiji and Dane foods are about 1500-2000
tons each, while the sales of CBL and EBM are 10500 and 4500 tons respectively.

Public
The last component of micro environment is a public, which include a group of individuals that
can influence the ability of the organization to accomplish it objectives. Continental biscuits
should develop an effective marketing plan for both the public as well as customers. Publics can
take the following forms.

Media Public: It carries an editorial opinion, features and news.

Government Public: It considers the developmental aspect.

Citizen Public: Includes consumer organizations that can question the decisions of company.

Local Public: It includes community organizations and neighborhood residents.

General Public: It simply includes the general public.

Internal Public: It includes employees, managers and board of directors of an organization.

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Macro environment
The organization along with its other forces carries its functions in the larger area of the macro
environment. There are certain factors and forces of macro environment that are responsible for
the provision of opportunities & threats to the organization. Six types of forces are present in the
macro environment of the organization, which are as below.

1. Demographic
2. Economic
3. Natural
4. Technological
5. Political
6. Cultural

Demographic:

The demographic force of macro environment is related to the study of human population with
respect to their location, size, density, race, sex, occupation, age & other factors. Changes in
lifestyles and primarily the marketing and advertising efforts of the entire food industry have
forced people to go for much healthier food. The marketing team of the continental biscuit has a
keen interest in this actor of macro environment because it relates to the people, which are the
foundation of any market. The trends of demographic force are changing at a constant rate.
Continental biscuits target every age group people like Oreo target kids, super target middle age
and big age people. It targets both male and female, people of every occupation can buy products
of continental biscuit due to its low price. Also Migration of rural population to urban areas and
Increasing education level effect demographic environment of organization.

Economic:
The economic factor of the macro environment includes those that influence the purchasing
power of customers along with their spending patterns .Due to low price, economic factor do not
affect market of continental biscuit. The income of people increases or decreases that has little or
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no effect on market of continental biscuit because of its low price. Now customers have greater
purchasing power and they are spending more on almost every category of products that
obviously includes food products there by bringing about more spending in biscuits.

Natural:
The natural force of the macro environment consists of the natural resources that are required by
the organizations as inputs or that is influenced by the marketing activities. In the natural
environment of the entire biscuit industry, the natural resources include basic biscuit ingredients
such as wheat, butter and sugar.

Availability of raw material :

As far as the raw materials are concerned, CBL has the availability of sugar as well as butter or
vegetable oil. However, the availability of wheat is a problem. For manufacturing biscuits, the
wheat used contains a glutin base. Glutin is an ingredient used to keep the biscuits together so
that they do not crumble. Wheat from Punjab has a different glutin base as compared to the
wheat in Karachi or the wheat that is imported from the US. CBL fulfills most of its wheat
requirements from Punjab.

Costs of Energy:
The major sources of energy for the food industry in Pakistan are electricity, gas and petroleum
for the running of the machinery. Energy costs, especially those of electricity, are increasing
constantly due to which, among other companies, CBL is also facing a high energy cost but this
increase in costs is not transferred onto the consumers. The company sets aside a portion of its
revenue for meeting these unforeseen increases in energy costs.

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TECHNOLOGY

In the fast paced world of today, technology plays a significant role in determining the
competitive advantage of one organization over another. Responses to rapid technological
changes in the environment shape a company’s destiny.

Technology in the Biscuit Industry :

Biscuit making is not a very high technology business. But technological progress has surely
brought a few dramatic changes in the way that biscuits are produced. packaging, formation of
the dough, making sheets in which the biscuits are packed. The machinery that is installed is
very expensive and involves complex ovens and other tools. The ovens are of various types.
Previously, brick ovens were used in the biscuit industry. The rapid technological progress has
eased the biscuit manufacturing process by introducing gas ovens. Even though technology plays
an important role in the biscuit industry of Pakistan, yet it is not as fast paced as it is in other
major industries.
The various machinery used in biscuit manufacturing is:
· Universal vertical mixer
· Sugar pulverizing crusher
· Rotary biscuits moulder
· Electric baking moulders
· Electric baking oven
· Baking oven, fire bricks
· Weighing scale
· Tools and equipment

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Reseach and Development :

CBL does not spend a lot on R&D since biscuit making is not such a complex and vast industry.
The research at CBL only involves an analysis of the biscuit market and a quality control
procedure. The company also concentrates on extensions in existing brands such as, new flavors
introduced, new ingredients like nuts or almonds etc. Moreover, CBL has recently finished an
exercise on ISO 9000 under which it has to follow certain rules and regulations for quality
control. Celebrating almost 30 years of excellence, the company has been certified as
manufacturers of quality products ensuring hygiene and nutrition to its consumers. Taking
technology in view, CBL is basically aiming at economies of scale in its production processes as
mentioned before. Taking advances in technology along, the company has always indulged in
cost efficient and environment friendly operations by understanding the ways in which
technology has shaped the economies of the world and the consumers therein.

POLITICAL ENVIRONMENT

In the political environment, we study the government laws and agencies and their influences on
the overall running of the firm. Especially in the Pakistani political arena, which experiences
changing governments from time to time, private as well as public limited companies are faced
with increased regulations and more pressuring laws.

Taxes :
As tax rates and import duties fluctuate it is very difficult for the firm to set stable price of its
product. Company has to set a reasonable price, which is affordable by the people of the segment
it is targeting. When prices rise CBL loses its low income customers and the extra revenue goes
to the government. So it is not only the customers who loses out by paying a higher price but also
the Company which faces decline in sales and so a decline in profits.

Import duty :
An increase in import duty can also be beneficial when CBL is marketing its product. An
increase in import duty will raise the price of all foreign brands competing in the local market. In

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this way CBL can have a competitive advantage over its foreign competitors and can gain a
greater market share.

CULTURAL ENVIRONMENT

Due to advertisement, increased rate of literacy and easy access to information people are
becoming increasingly aware of different products that available in the market today and are
quality conscious and value-oriented consumers. They go for nutrition rather than taste. People
now believe more in packaged foods, ready to cook products that save time.

Traditions:
Tea parties have become a way of celebration and biscuits are a part of it. Biscuits have been a
part of the tradition here in Pakistan and are served in different ways. For example, Peak Freans
brand Rio is a specialty for tea parties. CBL’s Prince is the favorite lunch item for children in
school. Ticky packs of various biscuit companies are now available in the market, which provide
economy and convenience to the consumers.

Convenience for working mothers:

An increase in the number of workers especially women has also increased the demand for fast
food including biscuits. It helps them save their time and makes it free to allocate somewhere
else. Concept of ‘heavy meal’ is diminishing and people take biscuits in between the meals at
any hour of the day. To give a good nutrition to their children, mothers are reckoning upon
biscuits which children eat eagerly and ensure nutrition and health to them.

Availability of imported packaged foods not only snacks but biscuits too have influenced
packaged food industry in Pakistan. Pakistani manufacturers of biscuits and other food items are
now trying to reduce their production costs in order to offer their products at a much lower prices
than those of the foreign products but offer the same quality of items. Therefore, the biscuit
industry in Pakistan is also under pressure to adopt new strategies to countering this foreign
threat.

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