Page 12 - DMGT401Business Environment

Unit 1: Indian Business Environment

It is the demography that decides the pricing, promotion and distribution strategies. 70% Notes
of India's population is lives in villages and of this, 70% are youth, which is why every
business house is launching new products, specifically for rural market.

Example: ITC launched its unique and ambitious programme called e-chaupal, targeted
at the rural market.
4. Socio-culture: Socio-culture variables like the beliefs, value system, attitudes of people
and their demographic composition have a major impact on their personality and behavior
style. The consumers' preferences have undergone a drastic change through the 1990s.
This has led to the production of more cars, refrigerators, air conditioners and other
articles that were at one time considered ostentatious and luxurious.
Not only this, socio-culture paradigms also dictates the preference of consumer in different
regions.

Example: Companies launch different products in the south and north because of
differing preferences. Companies have to change their product portfolio because of cultural
preferences as McDonalds and KFC did when they launched their restaurant chain in India.
5. Technological: Technological forces present a wide range of opportunities and threats that
have to be accounted for in the process of business strategy formulation. Technological
advancement may dramatically affect an "organization's products, services, markets,
suppliers, distributors, competitors, customers, manufacturing process, marketing practices,
financial composition, and competitive position." Some of the important factors that
influence operating in the technological environment are:

(a) Sources of technology like company sources, external sources and foreign sources,
cost of technology acquisition, collaboration and transfer of technology.
(b) Rate of change in technology, rate of obsolesce.

(c) Impact of technology on human being, the man machine system, and the
environmental effect of technology.
(d) Communication and infrastructural technology in management.

In fact, technology is today a decisive factor. From FMCG to the microprocessor industry,
everybody is investing heavily in technology. The technological knowledge of a consumer
also influences the decisions. Organizations have to modify products according to the
level of technological knowledge of the target costumer, because in developing nations
complex household machines that need programming will not work. So they have to be
technologically more and more focused.
6. Global Environment: The international environment consists of all factors that operate at
the transnational, cross-cultural level and across the border. The world is a global village
today and it is getting closer and closer as far as business is concerned.

For the sake of business, countries are burying their grievances and forging economic
relationships. Erstwhile adversaries like America and Russia are today good friends and
China and India are coming closer.
India has signed a bilateral treaty with Sri Lanka, it is developing close economic
relationship with South Africa and Brazil, and is planning to develop a road network in
South East Asia. India is also a close all of ASEAN, and is also a signatory of WTO which
has a multilateral trade agreement among more than 100 nations.

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