BUSINESS ENVIRONMENT

1. BUSINESS ENVIRONMENT Chapter 3 Sudhir Sinha KV SEONI MALWA

2. Introduction Chapter 3 Sudhir Sinha UIT The environment is a generic term and refers to all of the forces outside business that affect management’s ability to build and maintain successful relationships with target customers.

3. Includes: Micro environment - forces close to the company that affect its ability to serve its customers. Macro environment - larger societal forces that affect the whole microenvironment. Chapter 3 Sudhir Sinha UIT

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6. Political and Legal Environment: More flexible policies been framed for ease finance and finance procedure, banks are encouraged to provide easy auto finance to the customers, auto industries starving to get benefit of such policies so they attract consumers by pricing and promotional offers. For example: Exchange offers with ease finance schemes, special discount offers, 0% finance schemes • Minimum 100days National Rural Employment policy- 2008-09 for the poor rural area as to make their stronger uplift economic advantage, so that strong rural economic platform can be achieved, which is the ideal platform as entry level most successful segment for two- wheeler companies. To attract such consumers company launched special rural segment motor bike like “CD Dawn”, “joy” out of which “CD Dawn” is the most successful model. • After the liberalisation policy in 1991 two wheeler industry claimed highest growth every financial year and today it reached as the second largest producer in the world. • There are some adverse impact also as 12% excise duty lead the two wheeler companies difficult to fight with small budget car manufactures like: TATA Nano, so the industry demanding to lower down the excise duty up to 8% as to sustain and differentiate both of the markets. For example the bike owner of Karizma or Hunk or CBZ Xtreme will attract for the low budget car due to equal cost of ownership and more benefits. • The frequently rising prices of fuel have brought many reforms in the sector to provide fuel efficient motorbikes, for example: Bajaj “platina”, “Discover”: Hero Honda “Deluxe” , “Splendor” , “Passion”. It also immerge electric bike segment which becomes very successful in urban sectors. Chapter 3 Sudhir Sinha UIT

7. E. Economical Environment • Automobile industry in India mostly for the two wheeler segment depends on the lower and medium middle class people, which having strongly buying cyclist over a period of time so even the recession period there is a bloom in automobile industry which results surprisingly developed and strong potentials. • Middle class segment becoming stronger over a passing year which is the most prominent factor for two wheeler domestic sales, therefore company focused to this niche segment by introduction “Splendor +”, “Passion pro”, “Glamour FI” • Overall growth for the two wheeler industries has been registered 24.58% out of that Motorbike have 24.91% for April-February 2010. • According to IMF the worst global economy era will be going and the expected growth will be from 1.4% to 2.5% by the year 2010. Considering this company has planned to launch new variants in the market, “New Karizma ZMR” and “Hunk Limited Edition” already launched. • Considering overall growth company also planned to increase its production capacity and therefore it wants to invest in its fourth plant, which will bring not only the production capacity but will be introduced new products in different segments. Chapter 3 Sudhir Sinha UIT

8. S. Socio/Cultural Environment • It basically focused to the demographic and cultural factors of the society, which is the vast area to study the changes in social and cultural background and according to this company has to respond in the market. • For example: HERO Honda have launched its first scooter “Pleasure” with the tag line of “why should boys have all the fun”, with considering the cultural change in Indian society as women are tends to work rather than to prefer at staying home, as the scenario was changed and that change brings something different respond in the market. • After carefully considering all and extensive research company have launched many favourable models in the market which suits with the ideology of young generation like: “Glamour FI”, “Ambition 135”, “Achiever”, “CBZ Xtreme”, “Hunk” and “karizma” these preferable launches were done in between 2004 to 2009 that time there are players in the market like Bajaj “Pulsor 180 and 220 DTSi”, “TVS Apache”, Honda “Unicorn 150cc” and Yamaha FZ. • Hero Honda “Street” was launched by the influence of heavy traffic and narrow riding space in the urban areas, it was the clutch less gear shifting vehicle specially designed for metros. So that hassle free driving experience can be achieved, not only this but it’s reduced load on clutch plate will increase the engine and fuel performance. • As per the demographic analysis of rural area Hero Honda launched several models like from: “CD 100”,”CD 100SS”,”Joy” and “Dawn” which are tuff on the road and consist of much more metals rather that hard fibre body. Chapter 3 Sudhir Sinha UIT

9. T. Technological Environment: • New innovations and advancement in the technology is always acceptable in the working environment of Hero Honda group. • The most successful model of company was launched in 1994 “Splendor”, the company also get success to keep the track and continue it over the decade and more today there are different variants available in “Splendor” as “Splendor +”, ”Super Splendor” and ”Splendor NXG”. the latest model comes with self start option, alloy wheels and disc brakes. • Splendor +: 97.2 cc, kick start Super Splendor: 125 cc, electric start, multi plate wet clutch. Chapter 3 Sudhir Sinha UIT

10. T. Technological Environment: • Glamour: 124.7cc, kick & electric, Side draft variable fuel system, Advanced Micro Processor Ignition. • Glamour FI: 124.8cc, kick & electric start, Programmed Fuel Injection system, full transited Ignition. • • CBZ Xtreme: 149cc, disc brakes, alloy wheels, pilot lamp, multi reflector head light. • • Hunk: 149cc, Robust Masculine look, Gas charged shock absorber, Advanced Tumble Flow Induction fuel system ATFI. • • Karizma ZMR FI: 225cc, front & rear disc break, collapsible rear view mirror, Integrated LED tail light, 5 speed gear box. • The above examples indicates that company periodically evaluate and changes the needed technological factors and put the most running existing model in the market with distinguish approach by changing style and design, nevertheless best thing it indicates here is technological advancement: HUNK’s Advanced Tumble Flow Induction fuel system and Glamour’s Programmed Fuel Injection system lead it ahead to compete with Bajaj’s DTSi and exhaust TEC technology. Chapter 3 Sudhir Sinha UIT

11. The Company’s Microenvironment • Company’s Internal Environment- functional areas such as top management, finance, and manufacturing, etc. • Suppliers- provide the resources needed to produce goods and services. • Marketing Intermediaries- help the company to promote, sell, and distribute its goods to final buyers Chapter 3 Sudhir Sinha UIT

12. Demographic Trends • Changing Age Structure • Population is getting older Changing Family Structure Marrying later, fewer children, working women, and nonfamily households Geographic Shifts Moving to the Sunbelt and suburbs (MSA’s) Increased Education Increased college attendance and white-collar workers Chapter 3 Sudhir Sinha UIT

13. Economic Environment Economic Development Changes in Income Key Economic Concerns for Marketers Changes in Consumer Spending Patterns Chapter 3 Sudhir Sinha UIT

14. Of Oneself Of Others Of the Universe Views That Express Values Of Nature Of Organizations Of Society Cultural Environment Chapter 3 Sudhir Sinha UIT