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Gbe & ibe comp ltd
This document discusses the global business environment and India. It provides an overview of key concepts like the business environment, marketing environment, and macroenvironment. The marketing environment consists of microenvironment factors close to the company and macroenvironment larger societal forces. The macroenvironment includes demographic, economic, technological, political/legal, cultural, and natural factors that can create opportunities or threats. The document also examines India's internal business environment and the factors shaping international trade.
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Gbe & ibe comp ltd
- 1. Global Business Environment &India Dr. (Mrs.) Vijaya Katti Professor & Chairperson (MDPs) Indian Institute of Foreign Trade New Delhi Session Date: 8th May 2017 Session for: CLMV Programme
- 2. Business may beunderstood as the organized efforts of enterprises to supply consumers with goods and services for a profit What is Business???
- 3.
- 4. What is BusinessEnvironment??? The environment of any organization is “ the aggregate of all conditions, events and influences that surround and affect it.” Characteristics of Business Environment: • Complex • Dynamic • Multi-faceted • Far- reaching impact
- 6. Marketing Environment • MarketingEnvironmentMarketing Environment- consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. • Includes: – MicroenvironmentMicroenvironment - forces close to the company that affect its ability to serve its customers. – MacroenvironmentMacroenvironment - larger societal forces that affect the whole microenvironment.
- 7. The Company’s Microenvironment •CustomersCustomers - five types of markets that purchase a company’s goods and services. • CompetitorsCompetitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage. • PublicsPublics - any group that perceives itself having an interest in a company’s ability to achieve its objectives.
- 8. Contd.. • Company’s InternalEnvironmentCompany’s Internal Environment- functional areas such as top management, finance, and manufacturing, etc. • SuppliersSuppliers - provide the resources needed to produce goods and services and are an important link in the “value delivery system”. • Marketing IntermediariesMarketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers.
- 9. The Company’s Macroenvironment •DemographicDemographic - studies populations in terms of age, gender, race, occupation, location and other statistics. • EconomicEconomic - factors that affect consumer purchasing power and spending patterns. • NaturalNatural - natural resources needed as inputs by marketers or that are affected by marketing activities.
- 10. The Company’s Macro environment •TechnologicalTechnological - forces that create new technologies, creating new product and market opportunities. • PoliticalPolitical - laws, agencies and groups that influence and limit organizations and individuals in a given society. • CulturalCultural - institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.
- 11. The Macroenvironment DemographicDemographic TechnologicalTechnological CulturalCultural EconomicEconomic PoliticalPolitical NaturalNatural Forces thatShape Opportunities and Pose Threats to a Company Forces that Shape Opportunities and Pose Threats to a Company
- 12. Internal Environment • ValueSystem • Mission and Objectives • Management Structure and Nature • Internal Power Relationship • Human Resources • Company Image and Brand Equity • Miscellaneous Factors
- 13. External Environment • BusinessOpportunities and • Threats to Business
- 14. Contd.. • Micro Environment –Suppliers Customers – Competitors – Marketing Intermediates – Financiers – Publics
- 15. Contd.. • Macro Environment •Global Environment - WTO principles and agreements; - Other international conventions - Treaties - Agreements - Declarations - Protocols etc. - Economic and business conditions - Sentiments in other countries
- 16. Identifying Market OpportunitiesandIdentifying Market Opportunities and ThreatsThreats • Many firms use environmental scanning to identify important trends and determine whether they represent present or future market opportunities or threats • Identify relevant environmental factors and trends – Assess Impact of trends on markets and marketing activities • Does trend create a marketing opportunity – Decide how to take advantages of opportunity • Does trend pose marketing treat – Decide how to minimize threat
- 17. The Social Environment •The social environment includes all factors and trends related to groups of people, including their number, characteristics, behavior, and growth projections. • Social Environment • Number of People • Growth Projection • Characteristics • Behaviour
- 18. The Demographic Environment Thedemographic environment refers to the size, distribution, and growth rate of groups of people with different characteristics. The demographic characteristics of interest to marketers relate in some way to purchasing behavior, because people from different countries, cultures, age groups, or household arrangements often exhibit different purchasing behaviors. A global perspective requires that marketers be familiar with important demographic trends around the world as well as within the United States.
- 19. The Cultural Environment •The cultural environment refers to factors and trends related to how people live and behave. – Cultural Factors • Values • Subgroup Activities • Ideas • Beliefs • Attitudes
- 20. Cultural Diversity – Culturaldifferences are important in both international and domestic markets. – Much of the population and buying power growth in the United States is and will be from multicultural groups. 2004 2009 African Americans $723 $965 Asian Americans $363 $528 Central and Eastern Europeans $570 $810 Hispanics $686 $992
- 21. Changing Roles – Asmore women enter the workforce and household compositions change, typical household roles are altered. – Tremendous market opportunitiesTremendous market opportunities exist for firms that can develop effective strategies for appealing to these changing roles.
- 22. Emphasis on Health& Fitness The pursuit of a more healthful lifestyle includes: – eating more nutritious foods – exercising regularly – participating in various sports activities – focusing on wellness. This translates into potential market opportunities for firms that provide products and services geared toward improving health and fitness.
- 23. Consumerism Consumerism is themovement to establish and protect the rights of buyers. One increasingly important consumer issue is environmentalism. Successful marketers can respond by developing environmentally safe products and communicating their environmental contributions.
- 24. The Political/Legal Environment •The political/legal environment encompasses factors and trends related to governmental activities and specific laws and regulations that affect marketing practice. • Global Trends • Political Legal Environments • Regulation • Legislation
- 25. Global Political Trends Intoday’s world economy, international political events greatly affect marketing activities. For example the impact of the war on terrorism on the travel and security industries. A second important political trend is movement toward free trade and away from protectionism. Studies show that countries with the freest trade have the highest GDP growth.
- 26. The Technological Environment Thetechnological environment includes factors and trends related to innovations that affect the development of new products or the marketing process. These technological trends can provide opportunities for new product development, affect how marketing activities are performed, or both.
- 27. The Institutional Environment The institutionalenvironment consists of all the organizations involved in marketing products and services. MarketMarket Research FirmsResearch Firms AdvertisingAdvertising WholesalersWholesalers RetailersRetailers SuppliersSuppliers CustomersCustomers
- 28. The Economic Environment The economicenvironment includes factors and trends related to income levels and the production of goods and services. Economic trends in different parts of the world can affect marketing activities in other parts of the world. The gross domestic product (GDP) represents the total size of a country’s economy measured in the amount of goods and services produced.
- 29. Market Economy • Ina market economy, two societal units play important roles: the individual and the company • The market mechanism involves an interaction of price, quantity, supply, and demand for resources and products
- 30. Contd… • The keyfactors that make the market economy work are consumer sovereignty • Freedom of the enterprise to operate in the market
- 31. Classifying Countries • Factorconditions also known as production factors • Demand conditions include three dimensions: - The composition of home demand (or the nature of buyer needs) - the size and pattern of growth of home demand - The internationalization of demand
- 32. Two important components ofdemand • Population Size • Per Capita Income
- 33. International Trade Theory •Trade theory focuses on these questions – What products to import and export? – How much to trade? – With whom to trade? • Some theories explain trade patterns that exist in the absence of governmental interference • Some theories explain what governmental actions should strive for in trade
- 34. Contd.. Most trade theoriesemphasize differences among countries in • Climate • Factor endowment • Innovative capability
- 35. Contd.. Growth is characterizedby • Increase in exports by the innovating country • More competition • Increased capital intensity • Some foreign production
- 36. Contd.. Maturity is characterizedby • Decline in exports from the innovating country • More product standardization • More capital intensity • Increased competitiveness of price • Production startups in LDCs
- 37. Contd.. Decline is characterizedby • Concentration of production in LDCs • Innovating country becoming net importer
- 38. Competitive Structure ofIndustries • Rivalry among existing firms • Threat of new entrants • Threat of substitutes • Bargaining power of suppliers • Bargaining power of buyers
- 39. Global Environment • TheWTO principles and agreements • Other international conventions/treaties/agreements declarations/protocols etc • Economic and business conditions / sentiments in other countries etc.
- 40. Global Competitiveness Index •The World Economic Forum has ranked 138 economies in its 2016-2017 Global Competitiveness Report. • India climbs for the second year in a row, to 39th. Its 16-place improvement is the largest this year. It ranks ahead of Latin America’s Argentina (104) and way ahead of its neighbors Pakistan (122), Sri Lanka (71) and Bangladesh (106), but behind China (28). • The CLMV stands CLMV (Cambodia (89) Lao PDR (93) Myanmar (N.A.) Vietnam (60) • For the seventh consecutive year Switzerland leads the top 10, and again this year Singapore ranks as the second-most competitive economy in the world. Overall, the rankings at the top have remained rather stable, although it is worth noting the significant progress made by the United States, which retains the 3rd place this year.
- 41. Source : TheGlobal Competitiveness Report 2016–2017, World Economic Forum
- 42. 7 Indian CompaniesMade it to Global Fortune 500 List for 2016 • Seven Indian companies have made it to the Fortune 500 list for 2016, which is led by Walmart, the world's largest retailer. • Indian Oil Corp. is the highest-ranked Indian company on the list at 161, with revenue of $54,711 million. Other Indian companies in the list are as follows:
- 43. Indian companies –Fortune 500 List of 2016 In brackets = Revenue in US$ Billions Company Rank Indian Oil Corp. 161 (USD 54,711 million) Reliance Industries 215 (USD 43,437 million) Tata Motors 226 (USD 42,092 million) State Bank of India 232 (USD 41,681 million) Bharat Petroleum 358 (USD 29,082 million) Hindustan Petroleum 367 (USD 28,829 million) Rajesh Exports 423 (USD 25,237 million)
- 44. How India rankson Doing Business topics Source: Doing Business 2017 – India, (World Bank)
- 45. How far hasIndia come in the areas measured by Doing Business? Source: Doing Business 2017 – India, (World Bank)
- 46. Summary of DoingBusiness indicators for India (India has improved over earlier year) Source: Doing Business 2017 – India, (World Bank) Indicator India DB2017 India DB2016 Starting a Business (rank) 155 151 Time (days) 26.0 28.0 Paid-in Min. Capital (% of income per capita) 0.0 0.0 Dealing with Construction Permits (rank) 185 184 Time (days) 190.0 190.0 Cost (% of warehouse value) 25.9 26.5 Registering Property (rank) 130 140 Getting Credit (rank) 44 42 Paying Taxes (rank) 172 172 Time (hours per year) 241.0 243.0 Resolving Insolvency (rank) 136 135 Recovery rate (cents on the dollar) 26.0 25.7
- 47. Drivers of globalmanufacturing competitiveness Talent-driven innovation Cost and availability of labor and materials Energy cost and policies Supplier network Local market attractiveness Economic, trade, financial and tax systems Physical infrastructure Government investments in manufacturing and innovation Legal and regulatory system Healthcare system Manufacturing competitiveness Market forces Government forces
- 48. Indian Business Environment • TopFive countries in Global Competitiveness are as follows: – Switzerland – Singapore – United States – Netherlands – Germany • Ranking of Select emerging economy nations is: – Singapore (2) – China (28) – India (39) – Taiwan (14) – Brazil (81) – Russia (43) – CLMV (Cambodia (89) Lao PDR (93) Myanmar (N.A.) Vietnam (60) • Five years from now, emerging economy nations surge to occupy the top three spots, with China retaining the top spot, and India and Brazil moving up to claim the second and third rankings, respectively. Source : The Global Competitiveness Report 2016–2017
- 49. Investment Climate inIndia and China: A comparison Indicators India China Advantage A. Macroeconomic Stability (i) Fiscal Deficit High Moderate China (ii) Current account Deficit Deficit, but manageable Surplus Same (iii) Inflation Rising Rising Same B. Infrastructure Poor Good China C. Institutions (i) Legal Developed Not developed India (ii) Corruption Present Present Same (iii) Red tape More Less China (iv) Political Stable Stable Same (v) Openness More Less India (vi) Financial Robust Fragile India D. Demographic (i) English-speaking population More Less India (ii) Ratio of Young to Old Favourable Favourable Same (iii) Higher Education Better Good India
- 50. India's scores onGlobal Dynamism Index (GDI) Scores on a scale of 1-100; Ranking on the basis of 60 countries covered in the survey Source: Global Dynamism Index 2013, Grant Thornton India
- 51. Latest Position • Studieshave shown a distinct change in the pattern of international trade in the recent years. • Intra-regional trade has grown manifold at the expense of trade between developed and developing countries. • These studies also point to the emergence of hub countries, i.e., Asia in manufacturing; Americas in agricultural products; Africa in natural resource based commodities and India, possibly in services. • They also suggest that FDI strategies will increasingly get regional. • The implication of these is that developing countries will become more immune to global slowdowns. • The fact that Asian countries, as also Latin America, were relatively less impacted by the global economic slowdown perhaps bears this out.
- 52. THANKS Contact: Dr. (Mrs.) VijayaKatti Professor and Chairperson (MDPs) IIFT, New Delhi E-mail: [email protected]; [email protected]