SRI KRISHNA COLLEGE OF TECHNOLOGY

SCHOOL OF MANAGEMENT
COIMBATORE-641402

INTERNATIONAL BUSINESS ASSIGNMENT

ENVIRONMENTAL ANALYSIS

Submitted by,
SIVARANJAN.M
(19tpmb139)
1.Pre and post COVID-19 pandemic in devoloped, under devoloped
and devoloping countries of Nutri choise:

During this unprecedented time, our purpose of enhancing quality of life and
contributing to a healthier future is now more important than ever. From our supply chain, to
our factories, and right through to your homes, we’re working around the clock to ensure that
we continue to meet the nutritional needs of your families and pets during this difficult time.
We have a duty to ensure that much-needed food, petfood and beverage products are
available around the world.

People are at the heart of our business. Therefore, the health and safety of our employees,
business partners and the communities where we operate is extremely important for us.

We have an essential role to play during the COVID-19 crisis. Food and beverages help keep
people healthy and enhance their quality of life. We care about our responsibility to provide
good nutrition, especially for the most vulnerable in society - children, the elderly and those
struggling with illness. Our people are fully committed and are working tirelessly to ensure
that supply is maintained. We are working very hard to keep them healthy and safe.

Since the very beginning of this crisis, together with our people, we have driven substantial
local relief efforts in the communities where we operate. Building on these efforts, we have
joined forces with the International Federation of the Red Cross and Red Crescent Societies
to further support those in need during this COVID-19 pandemic.

For the last 154 years, you, our consumers, employees, and business partners have relied on
us during the most challenging times. And today, we’re right there with you in fighting this
significant global challenge with flexibility, resilience, courage, and a caring heart.

2. SUPPLY CHAIN :
 Besides families, who have been forced to stay home due to the COVID-19
induced lockdown, biscuits have also been an easy to reach out product for the
migrant workers in their long struggle to reach home in the absence of public
transport.

That biscuits are sold as a packaged product, too worked to the advantage of the
category as the worries over handling and hygiene were eliminated.

The challenge of getting manpower to work with only 50 percent was also met
with and the company began production in earnest.

 COVID-19 amplifies risk of worldwide food-price spike.

 Governments must work together to avert disruptions to

food supply chains.

 Food protectionism must be avoided, two financial experts

warn.
Even before the pandemic, there were signs that global food prices could
soon surge. Extreme weather events induced by climate change have
become more common. African swine fever wiped out over one-quarter of
the world’s pig population last year, causing food prices in China
to increase by 15-22% year-on-year so far in 2020. And, more recently,
the worst locust blight in 70 years has destroyed crops in East Africa. In
Kenya, the price of maize, a staple food, has risen by over 60% since 2019.

COVID-19 is amplifying the risk of a worldwide food-price spike, which

would trigger crises in many developing countries. In the poorest of these,
food accounts for 40-60% of the consumption basket, about 5-6 times its
share in advanced economies.

While lockdowns have led to a collapse in demand for durable goods and
discretionary services, the opposite is true of food. In cities around the
world, reports of panic buying and food hoarding have proliferated since the
pandemic began.
On the supply side, global grain stockpiles are healthy but could quickly be
depleted as the virus disrupts food production and distribution. And
shortages of animal feed, fertilizers, and pesticides have increased both the
costs of farming and the risk of bad harvests.

Moreover, from harvesting fruits and vegetables in India to operating meat

plants in the US, labor shortages are becoming increasingly apparent as
cross-border travel restrictions in much of the world disrupt the normal
seasonal cycle of migrant farm workers. And transportation shortages are
making it more challenging to get produce to market – when there is
one.But that takes time, not least because commercial and consumer food
products are prepared and packaged differently. In the meantime, fresh
produce has had to be destroyed.

Furthermore, some major food-producing countries have already imposed

export bans or quotas in response to the pandemic, as Russia and
Kazakhstan have done for grain, and India and Vietnam have done for rice.
Meanwhile, other countries are stockpiling food through accelerated
imports, as is true of the Philippines (rice) and Egypt (wheat).

Such food protectionism may seem like a good way to provide relief to the
most vulnerable segments of the population, but simultaneous interventions
by many governments can result in a global food-price surge, as happened
in 2010-11. The World Bank estimates that protectionism accounted for
about 40% of the increase in the global price of wheat and 25% of the rise
in maize prices at that time.

2. STEPS TO BOOST SALES GROWTH:

The purchase of consumer goods products is
usually based on a pretty ad hoc decision-making process. The decisions are very
often made just on fly at the Point of Sales. So FMCG manufacturers are
constantly looking for the new ways to influence the buyers’ behaviour.
So everything at the POS matters: availability,
access to the product, attractive display, special promotional offer, etc. All those
factors can influence the decisions of the consumers and in consequence your success
by proper retail execution. So do not stay behind and prepare your company to be able
to win the battles on the store level. Ensure a perfect experience at the POS.
 First rule of the pandemic: don’t panic.
 Second rule of the pandemic: rethink your marketing.
You are probably as cash-strapped right now as millions of other
entrepreneurs and companies across the globe. You don’t have the money
to run Google or Facebook ad campaigns or pay for influencer
endorsement and press releases.

But marketing isn’t just about paid promotion. In fact, there are many highly
effective techniques out there you probably never stopped to think about
because you were too focused on context ads.

If you play your cards right, you can come out on the other side of the
epidemic stronger than you were before. Read on for 10 actionable steps to
streamlined, cost-effective marketing that will drive your leads and sales,
even during the lockdown.

1) Adjust Your Messaging

In the past few months, our lifestyle has changed completely – and the way
you address your customers will need to change, too.

But it’s a very fine balance. On the one hand, you can’t be too cheerful, as
if nothing has happened. On the other hand, you shouldn’t sound too
anxious, sad, or unnaturally concerned.

 Start with a full audit of your social media, emails and website
content. Remove anything that can seem insensitive or inappropriate.
 Explain to your customers exactly what your company can and
cannot offer during the lockdown. For example, do you still deliver
orders? Will it take longer to ship an item than normal?
 Prioritize what’s important to the client. It’s great to let your audience
know that all your employees are now working safely from home. But
first the customer wants to know when their order or refund will arrive.
 Don’t pretend that nothing has changed or that we’ll all soon go back
to normal. We won’t, and your audience knows that.
 Find the right tone of voice: not too cheerful (because people are
dying), not too anxious or sad.
 Aim for the messages of hope, support, safety, comfort and well-
being.
 Encourage your audience to stay at home if that’s the general
guideline in your area. Avoid using images and messages that go
against this message – such as hanging out in a bar, crowd gatherings,
etc.
 Never let it seem like you’re trying to benefit from the disaster. If
you’re launching a new product or service, highlight how it will help your
 customers to cope. A good example is Mattel Playroom: a space that
teaches parents to play with their kids – and Mattel toys.

2) Rethink Your Social Media Strategy

According to a constantly updated study by Rival IQ, brands have been

posting less frequently on Facebook, Instagram and Twitter – 3 times a
week instead of 4. But at the same time, engagement rates are going
through the roof. There are 2 reasons for this:
 Post quality is higher: marketers try to come up with relevant and
authentic content instead of the usual ‘hey, our company is great’.
 Algorithms: the way Facebook and other platforms work, more users
will see each of your posts if there are fewer of them.
How can you use this data to increase your social media engagement?

 Put a lot of thought into everything you write.

 Work on every visual.
 Add some interactivity, like quizzes or polls.
 Tell your audience about the anti-COVID19 measures you’re taking.
 Offer some inspirational messages or science-based advice

3) Get Creative with Your Visuals

The pandemic has given us many memorable images and concepts. The
spiky virus itself, face masks, social distancing, empty streets, staying
home – all these ideas are already being used in creative campaigns by big
brands.

You can also spruce up your ads, social media and website by using
coronavirus-related symbols. It’s ok to add some humor: people need a
smile in these hard times. Make sure to do it appropriately and tactfully –
remember that thousands of people have lost their loved ones.

Think of a creative way to integrate the theme of distancing and keeping

your loved ones safe into your brand logo, banner ads or Instagram posts.

Use Online Networking Tricks

Speaking of cancelled events, you probably hoped to do some networking

during coffee breaks and perhaps get new leads. Good news: you can still
do that – though in a new, post-coronavirus way.
If you were registered for a conference that has been cancelled or
postponed until next year, try to seek out other attendees. The event
website should have a full list, including the people who were supposed to
participate in panel discussions. They are probably just as disappointed as
you are!

3.Impact of Micro Environment Factors:

The micro-environment of a business includes the factors in the immediate

area of operation affecting its performance and decision making freedom.
They include competitors, customers, distribution channels, suppliers, and the
public. These factors affect the performance of the business in several ways
and understanding them is important for strategy formulation. It also helps in
organizational planning for operational efficiency and financial success. These
factors are important for any business. Below is a brief analysis of these micro-
economic factors that affect nearly every business.

Customers:

Customers are considered the most important factor in the microenvironment

because of the impact they have on business. Their importance has grown
higher in the 21st century.  Moreover, the better a business knows its
customers, the healthier is its bottom line. A company can create promotional
strategies and campaigns to attract and retain its customers effectively by
understanding them better.  Being more customer-oriented helps in this
hypercompetitive era because customized service helps retain your customers
longer.  Sometimes, it also helps at generating new revenue streams as you
can sell more to your existing customer base if you understand its preferences
better.  There are several more things that show the central importance of
customers in the context of business.  Businesses are using every means to
strengthen their customer connection. It is not just about earning from them
but knowing them, including and retaining them for longer. Customer
engagement has become a key focus for businesses and it is also because of
the growing competition.
Employees:

Employees are one of the very important micro-economic factors affecting the
performance of any business. The performance of the employees is one of the
primary drivers of organizational performance and productivity.  Research has
also highlighted the key role HR plays in the success of a business. A large
number of successful companies have excellent HR policies in place. They offer
the best training and salaries to their employees, like Google, Facebook,
Microsoft, Apple, and Amazon. Apple is also focusing on inclusion and
diversity as well as employee engagement. Motivated and skilled employees
are essential for the success of a business.  This is also why companies focus
on attracting and retaining the best talent. Leading companies offer a mix of
financial and non-financial benefits to maximize employee satisfaction. 

Suppliers and distribution channels:

Managing the supply chain and distribution network should also be a primary
focus of businesses that strive to be successful. A well-managed supply chain
reduces operational costs and improves efficiency. Some companies that have
managed efficient supply chains have been able to pass the savings to their
customers. For example, Costco and Walmart are large retailers with well-
managed supply chains. They have been able to maintain lower prices through
supply chain optimization. Selecting the right distribution channels and
optimising them also affects operational efficiency and improves the bottom
line. Apart from sales, customer service is also just as important. You need to
be within your customers’  reach if you want to see your business being
popular and successful. The importance of managing the supply chain and
distribution network has also grown because of the fact that it helps reduce
operating expenses.
Competitors:

Competition is everywhere and in every industry.  The level of competition in

any industry has a major effect on profits.  The higher the number of your
competitors, the lower is your market share. When several businesses are
battling for winning market share in a limited space, the chances of market
growing saturated quicker are higher. Not just this, competition affects
businesses in other ways too. To stand out in a highly competitive market is
not easy and businesses must differentiate to attract customers. Moreover, the
pressure of competition also compels businesses to regularly update their
business and marketing strategies.  However, sometimes competition can be a
positive factor and can help churn demand.

Shareholders and Investors:

Shareholders and investors are among the most important internal

stakeholders for any business. Businesses also exist for creating shareholder
value. These people have helped you grow your business and expect returns
on their investment.  You share both your risks and profits with them.  So, any
business must create healthy profits to keep its investors happy.

Public and Media:

A company’s image also decides its fortune in the market.  So, every brand in
the 21st century needs a strong brand image. It is why they are investing in
social and environmental concerns to create a responsible social image. Often
this also translates into financial success for businesses. Brands with a good
brand image are easily noticed and are therefore successful at attracting
customers. The public supports the companies that have an ethical image and
if you are not a responsible business, chances of a poor image in public and
media are higher. Image means a lot in today’s environment and sometimes
lost reputation can be very difficult to regain.
These were some of the most important micro-economic factors that are a
part of the immediate operational environment of businesses. Customers,
employees, and shareholders are people you need to really care for. Having
motivated employees leads to good business performance. Maximising
customer satisfaction improves your bottom line. So, the satisfaction of both
should be a focus of businesses. However, shareholder happiness is also
important.  Apart from these things, a strong brand image is just as essential
and businesses must care for their image in the public and the media. If
businesses understand these micro-economic factors and their effect, they can
plan and formulate strategies effectively.

4. IMPACT OF MACRO ENVIRONMENT ON FMCG

PRODUCTS:
The life styles and culture of India is changing drastically. The population of
India is increasing every year and this will have a direct impact on the FMCG industry
and its organizations. Although population of India is increasing every year the
population growth rate is decreasing over a period of time. In 2008 the population
growth rate is 1.6%, in 2009 it is 1.5%. In 2010 the growth rate is 1.3%. Although the
figures didn’t change drastically, the supply and demand of the FMCG products will
be affected due to change in population structure. There will be decrease in demand
and intense competition as the birth rates and number of customers decrease. Most
importantly it is the change is life style of Indian customers and social behavior will
affect the FMCG industry in India. It will demand a new products and services over
the time and will lead to increase in investment in R&D of FMCG companies. Now
the world is facing with food shortage leading to increasing invest in food
production. If the organizations fail to offer products and services according to
changing lifestyle and behavior then it will be difficult for any organization to survive
in the market.

Economic:

Current slowdown in global economic scenario affected almost every industry across
the world. There has been increase in unemployment and low consumer spending
power. This leads to consumers not opting to buy expensive products or services.
This further pressurizes the RMCG companies to reduce the prices for the products
and services.

Organizations will have to review this economic ride and have to respond
accordingly,

A successful organization will respond according changing economic conditions,

consumer and stakeholder behavior. An efficient organization must be aware of the
changing economic condition across the country and global and should employ a
suitable strategy to stay in the market.

Political:

Political factors will have a greater influence on the organization and industry and it
is the duty of the organizations to comply with it. It is necessary for the organizations
to comply with the legislations implemented non conformance of which may lead to
serious implications on the organization. The government has implemented certain
restriction in the import policies. However tax exemptions in sales and excise duty are
provided for the small scale industries. This will allow the SMEs to invest more and
will increase the number of new entrants. Transportation and infrastructure facilities
are improving not only in urban but also in the rural area which will help in
distribution network.

Technological:

Advancement in technology boost the production with enhancement in quality of

products and services rendered to the customers. Organizations began to adopt e-
business to improve brand communication and market. Technological advancement
makes the supply chain and transactions along the chain simple. Organizations
reduced costs with effective IT technologies and increased the rate of information
transactions. Technology is playing a key and huge part in the FMCG sector by
developing the new packaging, increasing productivity and longer shelf life of food
products.

Better, stronger, more effective and faster are the key elements that all
manufacturers in this sector push for, as it drives sales. The advancement enhances
the sales by enabling the manufactures to produce better products with attractive
packaging and better communication. With advancement in communication
technology and rising social media network it enables the organizations to
communicate better to the customers by improved marketing campaigns.

International trends:
The economic crisis and slowdown had greatly affected the sales FMCG goods across
the world. However emerging economies like India, China and Brazil are not greatly
affected and manage to do well to recover quickly. A common trend that was
followed across the world during economic slowdown was trading down. Because,
customers became more cautious looking for less expensive brands, special offers
and discounts. This added tremendous pressure on the market prices due to severe
competition and down trading. However emerging economies like India, China and
Brazil saw development in hypermarkets helping the growth of FMCG markets in
these countries.

Macro environmental opportunities:

India has Vast Rural Market with majority of population where the market is still
untapped market. India has cheap labour to provide cost advantage over other
countries. Many multinational companies are having cost advantage by outsourcing
its product requirements from its Indian company.

ENVIRONMENTAL THREATS AND OPPORTUNITIES:

Industry structure:
The FMCG market of India divided into two sectors the organized sector and the
unorganized sector. The organized sector has only few Indian companies and MNCS
whereas the unorganized sector is crowded by a many local players.

Indian FMCG market accounts for about Rs.460 billion where the market has been
highly occupied by local and unbranded products. This has been a challenge for
many organized players to successfully launch a product and to occupy the market
share. Distribution and supply chain has also been a challenge as India’s
infrastructure and transport systems not quite helpful with millions of retail outlets in
the country. Although infrastructure and transportation system is developing in
recent times it is still considered as a challenge by many players.

The FMCG sector has a wide range of products including confectioneries, beverages,
detergents, toothpaste, toilet soaps, shampoos, creams, powders, food products,
cigarettes.

Typical characteristics of FMCG products are:

The products cater to necessity, comfort and luxury.

Price and income elasticity of demand varies across products and consumers.

Individual items are of small value (small SKU’s) although all FMCG products put
together account for a significant part of the consumer’s budget.
The consumer spends little time on the purchase decision. He seldom ever looks at
the technical specifications. Brand loyalties or recommendations of reliable retailer/
dealer drive purchase decisions.

Limited inventory of these products (many of which are perishable) are kept by
consumer and prefers to purchase them frequently, as and when required.

Brand switching is often induced by heavy advertisement, recommendation of the

retailer or word of mouth.

Distinguishing features of Indian FMCG Business

FMCG companies sell their products directly to consumers. Major features that
distinguish this sector from the others include the following:

Design and Manufacturing

Low Capital Intensity as most of products in FMCG requires relatively little investment
in plan, machinery and other fixed assets.

Basic technology required for manufacturing is easily available.

Third party manufacturing is common and the benefits include production and
inventory planning flexibility, flexibility in controlling labor costs and logistics.

Marketing and Distribution

High Initial Launch Cost with huge investment in product development, market
research, test marketing and launch. Creating awareness for a new brand requires
enormous initial expenditure.

Huge Distribution Network as India has millions of retail outlets across the country
making the logistics functions difficult for many players.

Competition:

Market is crowded with many unorganized players. Presence of many unorganized

players and highly capable MNCs provides fierce competition in the market to launch
many new brands. This gives wide range of choice of brands for the customers.