Page 20 - DMGT401Business Environment

Unit 1: Indian Business Environment

of user-friendly software. In fact the business of accessories like car and motorcycle accessories, Notes
computer accessories, etc., depends upon the key product.
In fact, both substitutes and complementary products influence the demand for a product.
So while studying the environment one should not forget complementary products because at
some point in time, they can be the decisive factor for sales and profits.
1. Marketing Intermediaries: Marketing intermediaries are an important part of the micro
environment. These are firms and persons, who help in distribution, promotion, selling,
and provide services like consultancy. Almost every business has to take the help of these
intermediaries. Sometimes they play a decisive role. Like in the FMCG business, distribution
is of critical importance and there is intense competition to acquire the support of a strong
distributor.

Example: The primary reason Coca-Cola acquired Parle was to gain access to the
distribution network of Parle, which was wide and penetrated. Besides this there are brokers,
agents, logistics companies, private transporters etc., which play an important role.
There are incidences of retailers boycotting the product of particular companies because
of low margins. Companies also spend a significant amount on promotion and advertising
firms. For instance, companies like HLL spend as much as 800 crores on advertising as
part of their marketing strategy.

2. Financial Institutions (FIs): For any business, FIs plays a critical role, especially at the
micro level. FIs not only make available the finance but also create an environment for
investment. They also give expert opinion and consultancy to the corporate. Every corporate
is dependent on FIs – whether it is banks or consultancies or NBFCs – for its financial
needs. They also facilitate the mode of payment. For the industrial development of any
country a well-established financial institutions is a prerequisite. These FIs mobilize the
savings of the public to the corporate world. An organization that has a good rapport with
FIs usually gets finance easily and at easy terms, which makes a lot of difference in this
competitive environment.
3. Strategic Group: Strategic groups are conceptually defined as clusters of competitors that
share similar strategies and therefore compete more directly with one another than with
other firms in the same industry. A strategic group is to identify a more defined set of
organizations so that each grouping represents those with similar strategic characteristics.
They are not a formal group or an association:, in fact they are conceptual clusters in the
sense that they are grouped together for the purpose of improving analysis and
understanding of competition within their industry.
Strategic groupings look for these similarities:
(a) Extent of product diversity.
(b) Extent of geographic coverage.

(c) Number of market segment served.
(d) Distribution channel used.
(e) Extent of branding.
(f) Marketing effort.

(g) Extent of vertical integration.
(h) Pricing, etc.

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