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BST Draft - Elements of Business Environment

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19 views

BST Draft - Elements of Business Environment

Uploaded by

Anish Kantheti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Business Studies Project

Elements of Business Environment

Meaning of Business Environment

Features of Business Environment


Importance of Business Environment
Dimensions of Business Environment
History of Coca-Cola
Coca-Cola’s history began in 1886 when the curiosity of an Atlanta pharmacist, Dr. John
S. Pemberton, led him to create a distinctive tasting soft drink that could be sold at soda
fountains. He created a flavored syrup and took it to his neighborhood pharmacy, where
it was mixed with carbonated water and deemed “excellent” by those who sampled it.
Dr. Pemberton’s partner and bookkeeper, Frank M. Robinson, is credited with naming
the beverage “Coca-Cola,” as well as designing the trademarked, distinct script still
used today.

The first marketing efforts in Coca-Cola history were executed through coupons
promoting free samples of the beverage. Considered an innovative tactic back in 1887,
couponing was followed by newspaper advertising and the distribution of promotional
items bearing the Coca-Cola script to participating pharmacies.

Prior to his death in 1888, just two years after creating what was to become the world’s
#1-selling sparkling beverage, Dr. Pemberton sold portions of his business to various
parties, with the majority of the interest sold to Atlanta businessman, Asa G. Candler.
Under Mr. Candler’s leadership, distribution of Coca-Cola expanded to soda fountains
beyond Atlanta. In 1894, impressed by the growing demand for Coca-Cola and the
desire to make the beverage portable, Joseph Biedenharn installed bottling machinery
in the rear of his Mississippi soda fountain, becoming the first to put Coca-Cola in
bottles. Large scale bottling was made possible just five years later, when in 1899, three
enterprising businessmen in Chattanooga, Tennessee secured exclusive rights to bottle
and sell Coca-Cola. The three entrepreneurs purchased the bottling rights from Asa
Candler for just $1. Benjamin Thomas, Joseph Whitehead and John Lupton developed
what became the Coca-Cola worldwide bottling system.

Entry of Coca-Cola in India


Coca-Cola came to India in 1956. Since India had not any foreign exchange act,
Coca-Cola made huge money operating under 100% foreign equity. Indian foreign
exchange act was implemented in the year 1974 during Indra Gandhi time. The foreign
exchange act stated that foreign companies selling consumer goods must invest 40% of
its equity stake in India in its Indian associates. Coca-Cola agreed to invest 40% foreign
equity but stated that they would still hold full power in technical and administrative units
with no local participation allowed.

This demand was against the foreign exchange act. The government instructed
Coca-Cola to either write up a new plan or to leave the country. In 1976 Indira Gandhi
called for elections and all of the other political parties formed one party in her
opposition. They called themselves the Janata Party. This Party came into power in
1977 and stressed that Coca-Cola should either accept the foreign exchange act or
leave the country. Coke India left that year. Later George Fernandez said that Coke had
100% equity in India but their investment was not much as they came into the country
with only Rs. 6,00,000, which at the present rate of exchange is less than $20,000. On
this Rs.6,00,000 investment, they had taken out of the country, with an estimation of
250 million rupees as profit in the twenty years they had been in the country.

In 1993 Coca-Cola re-entered after government approval, due to the new liberalization
policies that were coming to India. The foreign exchange act which had once prevented
companies from keeping too much equity had now been completely modified.

The modification made it so that companies which exceeded foreign equity by 40% of
the total were to be treated on par with Indian companies. Automatic approval was to be
granted for equity investment of up to 51% and for foreign technology agreements in
high priority industries. Non-Indian residents and companies owned by them abroad
were allowed to invest up to 100% equity in high priority industries, allowing greater
freedom for repatriation of capital.
In 1999, Coca-Cola bought Parle, India’s top soft drink brand, which bottled Thums up,
Limca and Gold Spot. Before Coke and Pepsi re-entered India, more than 50 Indian
soft-drink brands had been developed. As time passed after Coke and Pepsi entered
India, people witnessed the progressive disappearance on indigenous drinks and the
demand for healthier drinks lowered as well.

Effects of Various Elements of Business Environment On Coca-Cola


in India

Political Environment
Like other developing countries the market of India is likely to be influenced by the
aspects like ideologies followed by the political parties and various policies by the
government. By the new economic policy of India, the idea of liberalization and
globalization were introduced in the market which paved the way for Coca Cola’s entry.
For the reason that the political system of India is very corrupted and dishonored, the
company has been forced to do so by the political parties.

Economical Environment
After the introduction of New Economic Policy in the Indian economy, the financial
condition of the country has become very stable. The introduction of this policy has
shortened the issuance of an industrial license. The liberalization in the policy of foreign
capital has attracted more foreign direct investments which have improved the national
economy. Since the economy is in stable condition and is in the path of positive growth,
India is a very potential market for Coca Cola.

Social Environment
The majority of the Indian population is youth and possess high purchasing power. As
the Indian population is growing exponentially, the number of customers will also
increase. The young generation of India gives more importance to their health and their
health-conscious nature is driving them to choose healthy and refreshing drinks.

Being a sub-tropical country, the weather of India is very hot and people insist on buying
a cold refreshing bottle of beverage to quench their thirst. The affinity of the Indian
population towards foreign products is very favorable for Coca Cola.
Technological Environment
Although India is a developing country, it has made great advancements in the field of
Information Technology. The technology in India has developed and adapted the use of
4G and 5G networks.

The space and research technology of India has achieved many milestones and hence
self-sufficient in providing the updated solution. These conditions provide confidence to
Coca Cola to further expand its business in India.

Legal Environment
Because of the rapid growth of the FMCG market in India, the legislation has introduced
many amendments in the law belonging to it. These changes have made a positive
impact on the economy by which the FMCG market has shown rapid growth.

To support the investing companies the government of India has introduced the idea of
excise free zones. This is a great relief to the companies since it will allow them to
concentrate primarily on the manufacturing process rather than outsourcing. These
legal proceedings provide a very healthy environment for Coca Cola.

Top 5 Cold Drink Brands in India


1. Coca-Cola with picture
2. Pepsi with picture
3. Sprite with picture
4. Thums Up with picture
5. Fanta with picture

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