BUSINESS ENVIRONMENT

ASSIGNMENT ON SURF EXCELEmphasis on SWOT Analysis & Porter's Five Forces Model

Submitted to:Sreejith SirSubmitted by:ShaheeraB.B.A., LL.B (hons.)VIth SemesterRoll No: 36

TABLE OF CONTENTS

S.No.Topics.

1.Introduction to Business Environment

2.SWOT Analysis

3.Michael Porter's Five Forces Model

4.Company Overview - Surf Excel

5.SWOT Analysis - Surf Excel

6.Porter's Five Forces Model

7.Conclusion

OVERVIEWThe term business is understood and explained in different ways by different people. For some, business is activity, for some it is a method of transacting, for others; it is a method of making money. People also argue that business is an organized activity to achieve certain pre-determined goals or objectives. The concept of business has undergone a vast change. From a producer driven activity, it has become consumer centered phenomenon. While, earlier concept was 'to sell what is being produced', the modern concept has become 'to produce what is being desired'.The term business environment refers to the aggregate of all forces, factors and institutions which are internally affecting the business through management structure and policies as well as which are external to and beyond the control of individual business enterprises; but which influence their functioning. Business involves activities, which links an organization with outside world. Within an organization, a business is governed by the behavior of its employees, management or decision makers. In other words, business environment may be defined as all those conditions and forces though not totally but largely external to a business under which it operates.INTRODUCTION TO BUSINESS ENVIRONMENTIn modern circumstances, the business operates in a turbulent environment. Internal and external factors affect the business. Internal factors include the vision and mission of the organization and other internal mechanism of the organization. On the other hand, external factors are the ones which lie beyond the control of business and impact the organizations immensely in operations.External environment relates with the outsiders such as the suppliers, customers, creditors, employees, Government, etc. For a business organization to achieve success, it is important to hand in hand, both with internal as well as external factors.Thus, studying the environment of a business in which it operates is necessary. By knowing the environment impact over a business, the entrepreneur may make decisions in a way which are at par for smooth running of the business.DEFINITIONAccording to Barnard "Environment consists of atoms and molecules, agglomeration of things in motion, alive of men and emotions, of physical and social law, social ideas, norms of actions, of forces and resistance. The number is infinite and they are always present, they are always changing".CONCLUSIONAny business works within the framework provided by the various elements of society. Environment includes all the conditions and circumstances, influences surrounding and affects the total organization or any of its part. Business is all around us. It has a role to play in every aspect of our lives. Every activity of human being involves business to satisfy his unlimited wants and desires. Despite being universal and primary feature of human existence, it is not possible to define business with precision.

SWOT ANALYSISOriginated by Albert S Humphrey in the 1960s, SWOT Analysis is as useful now as it was then. SWOT is the analysis of a companys Strengths, Weaknesses, Opportunities, and Threats to identify a strategic niche that the company could exploit. SWOT Analysis merges the external factors (environment analysis, opportunities and threats identification) with the internal factors (companys resources analysis, companys strengths and weaknesses identification).SWOT analysis is very important. The entrepreneur is able to access the feasibility of his goals and objectives using the outcome of SWOT analysis and identification of the companys opportunities. The entrepreneur who has conceived an idea in his minds would then be able to evaluate whether such plans, mission and objectives are even close to realism or are in the wave of air only. If they are realistic, the entrepreneur can continue to formulate strategies. But if they are not realistic, the entrepreneur should amend and modify plans or discard the same to originate a new one which has more odds of the success.This tool can use it in two ways - as a simple icebreaker helping entrepreneur to analyze the plan and judge the feasibility, or in a more sophisticated way as a serious strategy tool wherein the entrepreneur checks SWOT every stage of his formulating the plan and then put forward the idea as a business.There are four components to this analysis. Strengths and weaknesses are often internal to your organization, while opportunities and threats generally relate to external factors. For this reason the SWOT Analysis is sometimes called Internal-External Analysis and the SWOT Matrix is sometimes called an IE Matrix.All four components cover certain basic questions that need to be answered. These are as follows:

Strengths What advantages does your idea have? How does it serve the society better than anyone else? How do you use unique or lowest-cost resources to your idea that others cant? What would be your strengths in the market ones this idea is materialized? What factors mean that you get the sale? What is your innovations Unique Selling Proposition (USP)?Consider your strengths from both an internal perspective, and from the point of view of your customers and people in your prospective market.Weaknesses What is the further scope of improvement? What are the things that need to be avoided? What are people in your market likely to see as weaknesses? What factors lose you sales?Opportunities What good opportunities can you spot in relation to the innovative idea you have? What interesting trends are you aware of?Useful opportunities can come from such things as Changes in technology and markets on both a broad and narrow scale. Changes in government policy related to your field. Changes in social patterns, population profiles, lifestyle changes, and so on. Local events.Threats What obstacles are likely to be faced? What are your competitors doing? Are quality standards or specifications for your job, products or services changing? Is changing technology threatening your position? Could any of your weaknesses seriously threaten your business?When looking at your strengths, think about them in relation to your competitors. For example, if all of your competitors provide high quality products, then a high quality production process is not strength in your organizations market, its a necessity.A useful approach when looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.

MICHAEL PORTER'S FIVE FORCES MODELThe Porters Five Forces tool is a simple but powerful tool to evaluate the power of business. This is useful, because it helps to understand both the strength of current competitive position, and the strength of the position moving into.With a clear knowledge of where power lies, fair advantage can be taken in case of situation of strength, and contrarily improve a situation of weakness, and avoid taking wrong steps. This forms an important part of planning toolkit of business endeavor.Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating whez used to understand the balance of power in other situations.Porters Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are:(i) Supplier Power: This assesses how easily suppliers may drive up prices. This in lieu depends upon the number of suppliers of each key input. The uniqueness of their product or service, their strength and control over the entrepreneurs cost of switching from one to another, and so on are significant factors to measure suppliers powers. The fewer the supplier choices, and the more is the need of suppliers help, the more powerful suppliers become.(ii) Buyer Power: This evaluates how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers; the demand for the new product or service. The importance of each individual buyer to business, the cost to them for accepting the new product launched, and so on are influencing factors to know how much buyers can affect the success of business plan.(iii) Competitive Rivalry: What is important here is the number and capability of competitors. If there are many competitors to the new product, who offer equally attractive products and services, then the product will most likely have little power in the situation, because suppliers and buyers will have alternate choices to make in case they do not get a good deal. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.(iv) Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.(v) Threat of New Entry: Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.

COMPANY OVERVIEW

Surf Excel originally launched itself in 1948 under the brand name Surf in Pakistan & in 1959 launched in India as India's first detergent powder. Initially, this brand was positioned on the clean proposition of washes whitest. However, with the coming of various local detergent manufacturers and the entry of other global brands, Surf Excel underwent various changes in its Brand Communication. This is in line with the global communication platform of 'Dirt Is Good', which is a communication strategy of Unilever for its premium detergent products, sold under various brand names; such as Omo in Brazil, Persil in UK and Skip in France, Greece, Spain and Portugal. Some of the other major detergent products of Unilever in India are Rin and Wheel. The latest entry into the segment is Comfort, a Fabric Conditioner.Product RangeSurf Excel products include Surf Excel, a detergent powder designed specially for washing machines as it has a low lather formula. Surf Excel Matic was launched in the year 2002. Surf Excel Matic has 2 variants Top Load & Front Load. Surf Excel Matic Top Load with special Multi Active System molecules is specially designed to work in large quantities of water & remove tough stains in the washing machine itself. While Surf Excel Matic Front Load with its concentrated 'low foam'2X Formula is designed to remove stains without generating excess foam which is harmful for washing machine. Quick Wash is a product that saves up to 2 buckets of water and Blue is used for Fabric and Color Care. Surf Excel also has some specialist products like Gentle Wash, a liquid detergent, and Surf Excel Bar, a nil mineral detergent bar.

SWOT ANALYSIS (SURF EXCEL) StrengthsA. Strong Brand PortfolioB. Quantity and VarietyC. Solid Base of the CompanyD. Innovative AspectsE. Unique Selling PointsF. High qualityG. Reach of the productsH. social responsibility of the companyI. Competitive advantagesJ. Success of the Slogan - 'Dirt is Good'

Weaknesses1. Strong Competitors2. High Price of the Product3. Substitute Product4. Policy of Spending for the Social Responsibility5. Financials of the company6. Lack of control in the markets7. Lack of Reliability of data, plan predictability8. Lack of Competitive Strength

Opportunitiesa. Changing lifestyle of the peopleb. New markets, vertical, horizontalc. Increasing the volume of productiond. Seasonal Weather & Fashion influencese. Geographical Export & Importf. Niche Target Marketg. Business and product developmenth. Technology Development & Innovationsi. Applying tactics & surprise

Threatsi. Political effectsii. Legislative effectsiii. Environmental effectsiv. Economic Crisisv. Change in the lifestylevi. Introduction to Local Productsvii. Obstacles facedviii. Increase in production and labour costix. Chances of Price War

MICHAEL PORTER'S FIVE FORCES MODEL (SURF EXCEL)

New EntrantsThe only new entrant in the detergent industry who has affected the sales and brand image of Surf Excel is only Ariel, the counterpart introduced by Procter&Gamble in 1967 while Surf Excel established itself in 1949.However, quite a few number of players have entered local markets without much sales. A few may be named as below:1. Pedro2. Admiral Plus3. Differ Oxy Wash4. Skylab5. Astro6. Fresha7. Master8. Supremo9. Dishmatic10. Wonder Wash Matic; etc..

SuppliersHUL's distribution strategy has changed over time. Earlier wholesalers and large retailers used to place orders directly to the company. The company salesmen used to collect these orders and then deliver the goods to the concerned customers.This simple system was good enough in the beginning. But then HUL changed things in order to provide quality service to its customers. They appointed one wholesaler in each market as a Registered Wholesaler. This wholesaler was then the guy to whom all the salesmen went with the orders that they have taken. He handed over the products to the salesmen who then distributed them to customers. This strategy helped HUL to reach more customers.As time went by and the competition got tougher, HUL had to make its distribution network leaner and meaner than ever before. Also Surf Excel being a detergent powder is a FMCG. So HUL had to make sure that the retailers' shelves were replenished in time. To do that, they had depots all over the country. These depots or warehouses stocked finished products and acted as buffers in case of an increase in demand. Earlier the registered wholesalers used to get the goods direct from the company. Now the company sent the goods to the depots from where the Redistribution Stockiest got them. This made their distribution system a much more efficient and well-oiled machine.

BuyersThe buyers of the products from Surf Excel are mainly the middle class and high class families and individuals as their products are comparatively highly priced. However this does not adversely affect the functioning or sales of the product due to its wonderful quality and easy wash experience.It is seen that many individuals prefer using this since it helps finish the task faster.

SubstitutesSubstitutes are available for Surf Excel in the names of 1. Ariel2. Tide3. Omo4. Bonux5. Nirma6. Sunlight7. Henko8. Nirma9. Rin10. Domex

CompetitorsAs per recent survey, the existing competitors for Surf Excel in India, are as follows:WheelLaunched in 1987 by Hindustan Unilever Limited, Wheel is India's top detergent brand. Launched with the motive of catering to the masses this detergent brand in India was an instant hit especially with the India's low income group. Known for its effective cleaning with least effort, this product today is the country's most widely used detergent brands both in urban as well as rural India. The introduction of wheel came as a welcome solution for the elimination of dirt especially from heavy laundry like bed sheets, curtains blankets etc.

SunlightSunlight is India's oldest detergent brand. Sunlight among the top detergents brands in India was launched in 1888. It was first introduced in the market in the shape of a laundry cake. Since the shape did not favor the brand much it was later relaunched in the form of a detergent which sold like hot cakes and gave tough competition to the other detergent brands in the Indian market

RinIntroduced in 1969 Rin was launched keeping in mind the 'Aspiring' or mid strata of the Indian society. Known for providing innumerable benefits at absolutely affordable prices this brand soon shot up to the top three detergent brands in India

CONCLUSION

Introduced by HUL to cater to the 'Affluent' or elite-class of India, Surf Excel has evolved to become synonymous with the word detergent in India. Reputed as being the pioneer of detergents in the country Surf Excel over the years, has evolved to become one of the most flexible detergents that is used to cater to the constantly changing washing needs of the Indian masses. Ranging from whitening to removal of stubborn stains this top detergent brand in India caters to all kinds of washing requirements. Surf Excel already has a huge customer base. So their priority in the coming years has to be to hold onto these existing customers and defend their turf from competitors. They will also have to adapt and change with times like they did before by changing their whole promotion platform. That is the kind of strategizing that keeps a brand alive in today's competitive market.India is a country where there are more villages than there are towns. In these villages lie the customers that Surf Excel hasn't captured yet. There are remote villages where Surf hasn't reached. So it would be a good idea to come up with a variant that can compete in the economy segment against detergents like Nirma.