PESTLE Analysis Patanjali Ayurved Ltd (PAL) has grown since its inception. Some of the factors or forces, which affected or might affect in future are analysed below using the famous PESTLE ANALYSIS Political - Present political climate is favourable to Patanjali as it is close to government and it is following government government initiative like ‘Make in India’ India’ campaign. Government is promoting Ayurveda through through “Ayush – Ministry” to promote Yoga, Ayurved and other traditional and complementary medicines. That gives Patanjali a huge boost as it itself claims it to be an Ayurvedic Ayurvedic company. Government’s taxation policies affect the cost cost of the input products, hence affecting affectin g the final price of the products. pro ducts. PAL input costs increases or decreases based on the taxation policies of the government. economic Inflation rate affects the buying nature of consumer. With inflation rate increasing continuously, people are looking for cheaper and effective substitutes. With the brand and trust of Patanjali, it has formed the potential substitute. Since the raw materials materials for the manufacturing are from the natural environment and the company focuses only in retailing in India alone, the factors like fluctuating global economy and currency fluctuations have no significant impact. Implementation of Goods and Services Tax GST) will also help PAL. Higher tax rates and interest rates affect the cost of capital adversely increasing the manufacturing cost. This makes the products costly in the market. Social - The people of India are becoming more health conscious; and want to consume organic products. Rise in healthy FMCG products from 2284.4 US $ million in 2003 to 9000 US $ million in 2016 acknowledges the above statement. This particular trend opens up the market for PAL, which offers trusted Ayurvedic products. The affordable price also helps them to cover the whole whole market size. In India, average life expectancy, which used to be around 42 in 1960, steadily climbed to around 48 in 1980, 58.5 in 1990 and around 62s in 2000. The improvement in life expectancy attributes to better diet and health consciousness among people. This particular trends enhance the scope of companies like PAL. Technological Government has created favourable climate for R &D work in country. Patanjali has in house R&D facility; using which they are developing new products in Ayurvedic way. Few examples are as below: o For the manufacturing unit in the company, it has high frequency drier unit for quick liquefaction a fluid wed processor. o Tablet compressing device with the capacity for preparing one lac tablet per hour o High speed auto coater for coating the tablets o Utility centre has been set up in the production unit has two generators with boilers and compressors o Company has PLC controlled packing machine having capacity of 300-400 volts with automatic blister packing equipment With the help of biologists and technology, techno logy, better options are a re being created in the company. With the help of the available technology, new herbs are being notified and being used in the new medicines. Company is also working for new farming ways. legalThere are several rules and laws for Ayurvedic medicines and the process by which medicines are prepared: o The Medicine Central Council Act-1970, o The Drugs and Cosmetics Act 1940 and rules made thereunder o The Drugs and Magic Remedies Act 1954 and the rules made thereunder. Quality assurance needs to be fulfilled by those medicines, which are being prepared and laws are there for this process as well. Environmental The main problem, which Ayurveda has to confront, is seasonable herbs and their locations. There are many herbs, which are available in winter season, autumn season or in summer season. Some herbs are available only on the mountains at very high location and some of them are not easily identifiable. Technology can help to construct area where we can do the artificial farming for those herbs by maintaining temperature according to the herbs. As the company itself calls itself a Ayurvedic company, it is favourable to environment and has no side effects to people nor environment
Offensive strategy: It involves direct and indirect attacks by improving own position by taking away the market share of the competitors. The primary focus of this strategy is to be a first mover and a proactive market leader and to protect itself by standing one step ahead of the competitors and allowing them to follow. If the leader’s growth is not equal or higher than the average growth rate of the industr y then the market shares and position can be easily taken over by its competitors. A firm who wants to lead the markets need to improve the speed of cost reduction, improved customer relations, value added performance characteristics and quality. Objectives of offensive strategies : To maximize the sales ,To destabilize the current market leader ,To acquire market share Frontal attack:A frontal attack is attacking a competitor ahead on by producing similar products with similar quality and price; it is highly risky unless the attacker has a clear advantage. Flank attack :In this strategy firms follow the path of least resistance where the competitor is incapable of defending. Encirclement attack: It is the combination of both frontal and flank attacks. There are two strategies that can be used under the encirclement attack. 1.Product encirclement :In this strategy, the challenger firm introduces different types of products with varied features, quality and price. 2.Market encirclement: In market encirclement strategy the challenger firm introduces the products into the new market segments which are left untapped by the competitor’s firms. Guerrilla attack:The guerrilla attack is expensive, but it is less than the frontal, flank and encirclement attacks. In guerrilla warfare, the challenger firm applies strategies with an intention to demoralize and harass the competitor by the following strategies. DEFENSIVE STRATEGY: The principle of this defensive strategy is to make difficult for the competitors to acquire the market share and the new entrants to access the market. Objectives of a powerful defender: To maintain the existing market share and to maximize profitability,To reinforce existing market position.To safeguard the existing levels of competitive advantage,To keep up top position in local and existing markets.For raising barriers of entry Various defensive strategies : Position defense:It is a simplest defensive strategy; it involves trying to hold the current position in the market by building brand image and customer loyalty by investing in the current markets. Flanking defense:This strategy states that the defending market share by entering into the new markets and diversification to compensate lose in the existing markets. But the major drawback of this strategy is losing the main focus of the business. Counter-offensive defense: Counter-offensive defense is to protect themselves from the counter attacks of the competitors with their own strategies. Contraction defense: Contraction defense is a least desirable defense strategy it involves retreating from markets and this strategy allows redeploying organisation’s resources to the other areas.
GE-McKinsey nine-box matrix is a strategy tool that offers a systematic approach for the multi business corporation to prioritize its investments among its business units. GE-McKinsey is a framework that evaluates business portfolio, provides further strategic implications and helps to prioritize the investment needed for each business unit (BU) .
Grow-SBUs that are classified into this category attract various company's investment as they are expect to yield high returns in the future. These investments should be split into categories such as research and development, acquisition of other SBU's, extensive advertisements and expanding production capacity Selectivity -SBUs that hold a lot of ambiguity fall into this category. They are usually only invested in if there is any prospect of competencies in managerial and corporate capabilities and if companies have any money left after investments in 'grow' business units. Harvest -SBU' performing poorly in unattractive industries are classified into this category. Companies only invest in them if they generate enough cash to equal the investment amount, otherwise, they may be liquidated Advantages Helps to prioritize the limited resources in order to achieve the best returns. Managers become more aware of how their products or business units perform. It’s more sophisticated business portfolio framework than the BCG matrix. Identifies the strategic steps the company needs to make to improve the performance of its business portfolio. Disadvantages Requires a consultant or a highly experienced person to determine industry’s attractiveness and business unit strength as accurately as possible. It is costly to conduct. It doesn’t take into account the synergies that could exist between two or more business uni
BCG biscuits
Leader /follower
growth
Parle g Hide & seek milano monaco Krack jack Top marie Cheesling nimkeen 20-20 Milh bikies cream
L L F L L F F L F F F F
3 12 10 4 3 2 -4 15 7 10 9 -2
Relative market share 3X 2X 0.6X 4X 3X 0.5X 0.1X 5X 0.2X 0.7X 0.6X 0.1X
Vaue chain analysis Primary Activities TD:- Research & Development has played a significant role in the growth of the organization. The company has continuously invested in R&D. The company has a dedicated Group R&D Centre in India. PPG Asian Paints has a robust R&D lab in Mumbai that specialises in colour development and troubleshooting. operations Asian Paints have world class production facilities across the world. The company have 23 manufacturing facilities across the world. Marketing & Sales Asian Paints puts forward a unique selling proposition. The Rural Marketing Initiatives started since 1960. Distribution is one of the main strategy of Asian Paints. Advertising & Promotional started in 1980s. Advertising Methods include Radio, TVCs, Print, and Internet Service - the very core of all the business activities of Asian Paints. From the beginning, Asian Paints has fostered a customer-centric approach to business. A simple but unbeatable concept of "going where the customer is" drives all our retail strategies. Asian Paints efforts are continuously on to engage the consumer in the painting process and fulfill all the requirements related to the world of painting. Supporting Activities technology developmemt (IT) plays a key role in enabling the company to grow and generate profits. Asian Paints is the only company in India to have integrated Supply Chain Management (SCM) Solution from i2 Technologies, and Enterprise Resource Planning (ERP) solution from SAP. With these IT tools firmly in place and with the backing of an extensive communication platform, Asian Paints is an internally enabled enterprise. Logistics Asian Paints has harnessed the powers of state-of-the-art supply chain system using cutting edge technology to integrate all its plants, regional distribution centres, outside processing centres and branches in India. The supply chain runs through a wide spectrum of functions right from materials planning to procurement to primary distribution. It has played a pivotal role in improving operational efficiencies and creating agile procurement, production and delivery systems. Human Resource Asian Paints believes that people are its strongest assets, for a company can go only as high as its people aim. It is people who innovate and invent, and who engineer the efficiencies that make a business succeed. It is they who drive growth and lead to greater heights. At Asian Paints, human resources systems are designed to create a focused, performance oriented and agile company. A talent pool of over 5000 employees employed across 17 countries bring in a unique blend of mind-sets and skills Inbound logistics
Operations
Outbound logistics
Marketing and sales
Services
Asian paints
9
10
10
10
10
Nerolec
10
9
8
8
9
Dulux
9
7
9
9
8
Shalimar
8
8
7
7
7
Key Points Mintzberg suggests there are five ways in which the term ‘strategy’ is used. These are called his ‘5Ps for Strategy’. Strategy can mean any of the following: Strategy as Plan: The strategy is made in advance of its implementation and is followed up by actual implementation and development. Strategy as Ploy: This is a specific manoeuvre intended to outperform a competitor. Strategy as Pattern: Strategy ca sometimes be explained in terms of a pattern that emerged rather than something that was preplanned. Strategy as Position: This is represented by finding a niche, providing distinctive product, or by exploiting existing competences to deter competitors. Strategy as Perspective: This refers organisational culture as strategy can be a result of the way a company views itself.
