select a major indian brand.analyse the prevailing external micro environment factor it has to face. Analyse its impact on its business operations and its preparedness policy to tackle it
Answers
Answer: Business environment is the constraints and opportunities that surround our businesses. This is about exploring the nature of the business in which it is being carried out.
The analysis in this essay will be on business environment in which Reliance Industries Limited operates.
Reliance Industries Limited or RIL is commonly known as Reliance. The company was founded by Shri. Dhirubhai H. Ambani in 1977 the company was initially started as a textile company and led its evolution as a world leader in materials and the energy value chain
The Company’s operations can be classified into four segments namely:
Petroleum Refining and Marketing business
Petrochemicals business
Oil and Gas Exploration & Production business
Others
There are two types of business environment INTERNAL and EXTERNAL environment
Before coming on to the external forces, the internal forces should be made clear.
The internal forces are those forces which are controlled by the organisation itself such as the resources knowledge and decision making
Reliance in the above context has a wide variety of resources such as well qualified employees and infrastructure
As far as knowledge and decision making is concerned Because Reliance recruits very well qualified persons thereby it reflects when it comes to the decision making process of the company
External business environment comprises of Political, Economic, Social and Technological factors. These factors can have appositive as well as a negative impact on the company. There are two types of external business environment i.e. micro and macro
External micro factors are company’s suppliers, transporters, agents, distributers, and wholesalers.
External macro factors comprises of Political, Economic, Social and Technological factors.
The external micro factors can be influenced by the organisation whereas macro factors cannot be influenced by the organisation
Polypropylene market in India
Over the past forty years polypropylene growth has exceeded that of other major plastics and has become the largest volume commodity resin. Throughout the history of PP through research efforts of various companies, PP has continued to rapidly evolve with new generation of catalyst and post reactor technology. Because of the improvements made to process and application technology, this polymer has developed into one of the cost-effective bulk thermoplastic. Polypropylene is the world’s fastest growing polymer with an average growth rate of about 7-8%.
It is very important for a company to understand and try to manage the external micro factors i.e. PEST forces as discussed above
(P)OLITICAL FACTORS
Political factors include government policies relating to the industry, tax policies, laws and regulations, trade restrictions and tariffs etc. As in any part of the world, political influence is highly essential to start a business in India. Especially if you are planning to start a multi-billion business, some sort of political patronage is an absolute necessity. Not only for safeguarding the interest of the company but even to begin the process of getting the required sanctions, one requires hold in the high echelons of politics and administrative circles.
Reliance industries also hold a high echelon of political and administrative circles so as to safeguard the interest of a company and for getting the required sanctions.
(E)CONOMICAL FACTORS
The economic factors relate to changes in the wider economy such as economic growth, interest rates, exchange rates and inflation rate, etc. These factors comprise of Government intervention in the free market, infrastructure quality, economic growth rate, availability of labour, wage rate of labour.
(S)OCIAL FACTORS
Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, changes in tastes and buying patterns, etc.
Safety of a person overrides all the production targets’ is the Health, Safety and Environment Policy of Reliance.
Occupational Health Centres (OHCs) have been established to provide education on health and awareness issues, diagnostic camps and health exhibitions are also arranged. RIL also offers periodic medical examination of all the employees (including Contractors’ employees) along with their family members. In case of any hospitalisation RIL employees are supported by consistent co-operation and cashless hospitalisation amenities from one corner of a country to another. The company also provides fully equipped hospitals in all its major townships. The company also helps conduct Periodic potable water sampling analysis and health audits for the canteens and guest houses.