Parle G

By –JITENDRA PATEL
ROLL NO -16024

BUISINESS ENVIRONMENT .
 BUSINESS ENVIRONMENT

 What is business?

As the new millennium unfolds itself,

environment of business is going to be much
more turbulent. Borders of countries are
crumbling. The present decade has ushered in
several structural changes in our economy,
thus minimizing the impact of certain
environmental factors on business and
bringing some, hitherto less significant forces,
to certain stage.

Business, it is said, is a product of

environment. The nature of business, location
of a business enterprise, the product to be
manufactured or services to be rendered, size
and volume of operation, the price to be fixed
and other related factors relating to the
business unit are determined by the
environment within which the business
operates. Business may be understood as the
organized efforts of enterprises to supply
consumer’s with goods and services for a
profit. Though business is a creation of its
environment, the influence of the former on its
external forces is equally significant. The
purpose of business goes beyond earning
profit. It is an important institution in society.
Society cannot do without business. It needs
no emphasis that business needs society as
much.

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  What is environment?
Environment refers to all external forces which
have a bearing on the functioning of business.

According to Keith Davis, "Environment of

the business means the aggregate of all
conditions, events and influences that
surround and affect it."

According to Barry M.Richman and Melvyn

Copen, “Environment are largely if not totally,
external and beyond the control of individual
industrial enterprises and their managements.
These are essentially the ‘givers’ within which
firms and their managements must operate in
a specific country and they vary, often greatly,
from country to country.”

What is Business Environment?

In the words of B.O.Wheeler, "Business

environment is the total of all things external to firms
and individuals which affect their Organization and
operations".

Business is the product of the technological, political-

legal, economic, socio – cultural, global and natural
factors amidst which it functions. Three features are
common to this web of relationship between

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business and its environment. First, there is
symbiotic relationship between business and its
environment and among the environmental factors.
Business is influenced by its environment and in
turn, to a certain degree, it will influence the external
forces.

The second feature is that these environmental

factors are dynamic. They keep on changing as years
roll by, so does business.

The third feature is that a particular business firm,

by itself, may not be in a position to change its
environment. But along with other firms, business
will be in a position to mould the environment in its
favour, to a large extent.

In simple terms environment means things

surrounding the living being. Everything on
this earth, whether living or non-living is
surrounded by an environment and so is
business. The environment of business is a
sum total of natural, economic, social, and
political and other forces, which constitute the
surrounding of business.

A study of business environment is very

useful to anticipate opportunities and to plan
resources to exploit these opportunities
successfully. It can also be used as an early
warning system to prevent threats or to turn
obstacles into opportunities

The total environment of business, for our

purposes, include six factors, viz., political – legal,

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economic, socio – cultural, technological, global and
natural.

From the above six environments we have chosen

three environments viz., GLOBAL, POLITICAL and
ECONOMIC ENVIRONMENTS.

PROFILE

 Parle-G World's Largest Selling

Biscuit

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A long time ago, when the British ruled India, a
small factory was set up in the suburbs of
Mumbai city, to manufacture sweets and
toffees. The year was 1929 and the market was
dominated by famous international brands that
were imported freely. Despite the odds and
unequal competition, this company called Parle
Products, survived and succeeded, by adhering
to high quality and improvising from time to
time.

A decade later, in 1939, Parle Products began

manufacturing biscuits, in addition to sweets
and toffees. Having already established a
reputation for quality, the Parle brand name
grew in strength with this diversification. Parle
Glucose and Parle Monaco were the first
brands of biscuits to be introduced, which later
went on to become leading names for great
taste and quality. It was called Parle Gluco
Biscuits mainly to cue that it was a glucose
biscuit. It was manufactured at the Mumbai
factory, Vile Parle and sold in units of half and
quarter pound packs.

Parle-G has been a strong household name

across India. The great taste, high nutrition,
and the international quality, makes Parle-G a
winner. No wonder, it's the undisputed leader
in the biscuit category for decades. Parle-G is
consumed by people of all ages, from the rich
to the poor, living in cities & in villages. While
some have it for breakfast, for others it is a

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complete wholesome meal. For some it's the
best accompaniment for chai, while for some
it's a way of getting charged whenever they
are low on energy. Because of this, Parle-G is
the world's largest selling brand of biscuits.

HISTORY
Biscuits were very much a luxury food in India,
when Parle began production in 1939. Apart
from Glucose and Monaco biscuits, Parle did
offer a wide variety of brands.

However, during the Second World War, all

domestic biscuit production was diverted to
assist the Indian soldiers in India and the Far

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East. Apart from this, the shortage of wheat in
those days, made Parle decide to concentrate
on the more popular brands, so that people
could enjoy the price benefits.

The incredible demand led Parle to introduce

the brand in special branded packs and in
larger festive tin packs. By the year 1949, Parle
Gluco biscuits were available not just in Mumbai
but also across the state. It was also sold in
parts of North India. By the early 50s, over 150
tonnes of biscuits were produced in the Mumbai
factory. Looking at the success of Parle-G, a lot
of other me-too brands were introduced in the
market. And these brands had names that
were similar to Parle Gluco Biscuits so that if
not by anything else, the consumer would err
in picking the brand. This forced Parle to
change the name from Parle Gluco Biscuits to
Parle-G.

Parle-G was the only biscuit brand that was

always in short supply. It was heading towards
becoming an all-time great brand of biscuit.
Parle-G started being advertised in the 80's. It
was advertised mainly through press ads. The
communication spoke about the basic benefits
of energy and nutrition. In 1989, Parle-G released
its Dadaji commercial, which went on to
become one of the most popular commercials
for Parle-G. The commercial was run for a
period of 6 years.

Parle-G grew bigger by the minute. Be it the

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packs sold, the areas covered or the number of
consumers. It became a part of the daily lives
of many Indians. It wasn't a biscuit any more.
It had become an icon. The next level of
communication associated the brand with the
positive values of life like honesty, sharing and
caring.

Thankfully today, there's no dearth of

ingredients and the demand for more premium
brands is on the rise. That's why, we now have
a wide range of biscuits and mouthwatering
confectionaries to offer.

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 GLOBAL ENVIRONMENT

Going international is yet another trend

followed by modern business houses.
Internationalization and globalization is fast
becoming imperative for modern business due
to technological innovations, crumbling trade
barriers, global flow of capital and technology,
information explosion, intensity of market
competition, changing life styles and the
demand for new products. Production facilities
are being set up in different countries and
products are being sold through a global
network. Gradually, business houses are
exposed to global competition which augurs
well for consumers. Internationalization of
business is a means of sustaining a strong
domestic base in terms of technology, product,
market and the capital over a longer period.

At the company level, globalization means two

things:
(a) The company commits itself heavily with
several manufacturing locations around
the world and offers products in several
diversified industries.
(b) It also means the ability to complete in
domestic markets with foreign
competitors. In the popular sense,
globalization refers mainly to multi-plant
operations.

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  RELATING PARLE-G WITH THE
GLOBAL ENVIRONMENT

According to Parle-G, the term GLOBALISATION

does not merely mean imports and exports,
but letting your presence felt all over the
world. Expansion and recognition are the main
factors of going global. The immense popularity of
Parle products in India was always a challenge to
their production capacity. Now, using more modern
techniques for capacity expansion, they have begun
spreading their wings and are going global.

Parle biscuits and confectionaries are fast gaining

acceptance in international markets, such as, Abu
Dhabi, Africa, Dubai, South America and Sri Lanka.
Even the more sophisticated markets like USA &
Australia, now relish Parle products.
Parle-G continues to climb the stairs of success.
Take a look at the global market where it is being
exported. First came the Middle East then USA
followed by Africa and then Australia. An Indian
brand, that's exported to almost all parts of the
world. After all that's what you would expect from
the Parle-G World's Largest Selling Biscuit.

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Other international companies choose India as
a global market because labour in other
countries is costly as compared to in India. In
India things are quite easier. Government has
become more liberal for MNC’s to enter Indian
market which results in high competition with
the in-house companies. For example: China
has a huge impact on the Indian market.
Cameras from Japan and China are of hi-tech
technologies which are available at the
cheapest rates. There is a huge gap between
the prices of Indian products and such other
imported products. Another example is of
Intel-II. They have now started manufacturing
chips in India which further resulted as a tough
competition to other Indian companies.
Another international biscuit making company
is ITC which winded up its business within a
year due to tough competition laid by Parle-G.

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Parle-G has a strong base in India since 1939.
it has now become the largest biscuit selling
company in entire India and is also proved to
be three times more then the US based biscuit
manufacturing companies. Parle-G has 40
factories working all over the country including
6 mother units. These mother units are located
at Mumbai, Rajasthan, Haryana, Bangladesh,
Bhuj and Uttaranchal.
Raymond Vernon had introduced a product-
cycle theory in late 1960s, but this theory is
still relevant till today. This theory explains
that how companies go global. Initially, small
scale companies produce attractive products
and sell them in their home markets. Sooner or
later, foreigners come to know about these
products. As the popularity of these products
increases they start exporting them abroad. As
the foreign demand grows, the economies of
foreign production changes. Eventually, the
company starts setting up their own plants
globally. In this manner various companies go
global.
But Parle-G doesn’t agree with this theory laid
by Vernon. According to them there are four
stages that the company should follow for
going global. They are: infancy, growth,
maturity and decline. Parle-G is yet at the
growth stage of the theory for going global.
Going global for any company involves risk.
Hence, Parle-G recruits a special team for
market surveys called a market research team.

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This team keenly studies the culture, market
situation, fashions, preferences, habits and
taste of the consumers of the country they are
going to enter. As Parle-G is meant for poor
class of population, other variety in biscuits
made by Parle-G are for middle and upper class
people, they need to study all levels of society
to launch the product similar to their
conclusions. Supplying or launching a new
product requires sample testing before the
same. According to Parle-G, company should
behave in the same manner and culture as of
its host country. They need to follow their laid
rules and regulations and their local laws.
Parle-G will continue in its host countries the
same performance appraisal methods as in its
home country. Because they follow the norm
which says that the employees are of same
capabilities and talents everywhere even
though the working conditions are not the
same. Hence, they would appraise the
performance of their employees based on
caliber and not based on the impression of the
host countries.
Managerial practice adopted by Parle-G:
Japanese organization
1)Life time employment
2)Slow evaluation and promotion
3)Non-specialized career paths
4)Collective decision making

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5)Collective responsibility
They have already adopted the technique of
5’s which most companies adopt viz., Seiri,
Seiton, Seiso, Seiketsu, Shitsuke.
The exports of Parle-G are hardly 3% of its
total production. But for
boosting their exports their target is to
reach 5% of its total production. Their main
aim is to first fulfill the needs of domestic
market and then boosting their exports.

POLITICAL ENVIRONMENT

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  RELATING PARLE-G WITH THE
POLITICAL ENVIRONMENT

Two basic political philosophies are in

existence all over the world viz., democracy
and totalitarianism. Parle-G follows
totalitarianism as its basic philosophy.
Totalitarianism is also called as
authoritarianism, individual freedom is
completely subordinated to the power of
authority of the company and concentrated in
the hands of one person or in a small group
which is not constitutionally accountable to
the employees. In this method, final decision is
taken by the head only but after negotiating
with everyone by conducting several meetings.

Parle-G biscuit is basically aimed for poor

category of people as its price is only Rs.4
since last 10 years which is affordable to any
class of the population. Therefore government
should see that such companies which provide
economic help to the country should not be
disturbed in any sense. Infact government
should help in such a way that such companies
grow even more which can further improve the
economic conditions of their domestic
countries. But in India the situation is totally
opposite. Parle-G pays excise duty which if it
doesn’t pay can reduce its MRP even lesser
while other products such as cheese, jam,
butter which are consumed by middle or upper

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class people are exempted from paying excise
duty. In this way government in spite of many
requests is not giving its helping hand to
Parle-G.

“Constitution has put several road blocks

which have checked the pace of the company’s
economic development.”
Parle-G is totally in favour of the above
statement as they say new rules and policies
depend on government to government. They
adopt various laws for their own mutual
benefits.

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 ECONOMIC ENVIRONMENT

Economic environment refers to all those

economic factors which have a bearing on the
functioning of a business unit. Any business
firm depends on the economic environment for
all the inputs needed and also to sell their
finished goods. Thus, it can be said that
business depends on economy and economy
does not depend on the business.
The major macro-economic factors which have
considerable influence on business are:
1)Growth strategy
2)Economic systems
3)Economic planning
4)Industry
5)Agriculture

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 6)Infrastructure
7)Financial and fiscal sectors
8)Removal of regional imbalances
9)Price and distribution controls
10)Economic reforms
11)Human resources
12)Per capita and national income

 RELATING PARLE-G WITH THE

ECONOMIC ENVIRONMENT

As part of the efforts towards a larger share of

the global market, Parle has initiated the
process of getting ISO 9000 certification.
Parle-G had laid down its first factory in late
1929. this factory used to manufacture only
sweets and candies. But later by 1989 they
also started producing biscuits.

The four main contents used in Parle-G

biscuits are:
1)Wheat
2)Vanaspati
3)Sugar
4)Salt

Process flow chart

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 Raw material testing

Mixing

Moulding

Baking

Cooling

Packing

Producers exploit consumers by various

tactics. Therefore, Parle-G had started
conducting consumer awareness so as
to protect their consumers from getting
fooled. In these awareness campaigns
they suggested various means for
identification of original Parle products.
Following are some indications that will
differentiate original from the duplicate
ones.

 There are errors in the spelling which

can exploit people. GLUCO biscuits is the
original name but the duplicate name is
GLUCOSE biscuit.

 On all the Parle-G products we find a

Parle logo but in duplicates there is no
such logo found.

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 The total work strength of Parle-G in its
Mumbai factory is 730 blue color workers
out of which 70 are female workers. Other
than its labour staff there are 200 more
administrative staff.

For maintaining cordial relationships

between management staff and labour
staff there is one labour union at present.
Earlier there were two labour unions which
divided the labourers into two sections.
This increased competition which gave
good productivity initially but later proved
to be the cause of industrial dispute in
Parle-G. The two unions started internal
disputes which forced the company to
reunite both the unions into one union.
This was the last case of industrial dispute
occurred in Parle-G. Since then there is no
such case of industrial dispute.

SWOT ANALYSIS

What is a SWOT Analysis?

A SWOT (Strengths, Weaknesses,
Opportunites, and Threats) is a tool used to
provide a general or detailed snapshot of a
company's health.

Why use a SWOT Analysis?

In any business, it is imperative that the
business be its own worst critic. A SWOT

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analysis forces an objective analysis of a
company's position vis a vis its competitors
and the marketplace. Simultaneously, an
effective SWOT analysis will help determine in
which areas a company is succeeding, allowing
it to allocate resources in such a way as to
maintain any dominant positions it may have.

Positive points of Parle-G:

Over the years, Parle has grown to become a
multi-million US Dollar company. Many of the
Parle products - biscuits or confectionaries, are
market leaders in their category and have won
acclaim at the Monde Selection, since 1971.

Today, Parle enjoys a 40% share of the total

biscuit market and a 15% share of the total
confectionary market, in India. The Parle
Biscuit brands, such as, Parle-G, Monaco and
Krackjack and confectionery brands, such as,
Melody, Poppins, Mangobite and Kismi, enjoy a
strong imagery and appeal amongst
consumers.

Be it a big city or a remote village of India, the

Parle name symbolizes quality, health and
great taste! And yet, we know that this
reputation has been built, by constantly
innovating and catering to new tastes. This
can be seen by the success of new brands,
such as, Hide & Seek, or the single twist
wrapping of Mango bite.

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In this way, by concentrating on consumer
tastes and preferences and emphasizing
Research & Development, the Parle brand
grows from strength to strength.

Negative points of Parle-G:

HLL and ITC’s entry into biscuits will affect Parle

After testing the waters with niche offerings

in untapped segments of the biscuit market,
heavyweights Hindustan Lever and ITC have
now forayed into the mass biscuit market. While
ITC has launched its glucose brand, Sunfeast,
HLL has decided to differentiate its product,
Modern ‘Energy’ Biscuits, by using wheat and
soya as ingredients. Importantly, both ITC’s and
HLL’s new offerings are priced at Rs 4 for a 100
gram pack, the same level as Parle G and
Britannia’s ‘Tiger’ glucose biscuits.

Given HLL’s and ITC’s massive distribution

reach, this new development would clearly have
a significant impact on the market shares of
both Parle and Britannia. In case the taste of the
new products do not go down very well with
consumers, the already established players may
get some breathing space, but it will be only a
matter of time before that gets corrected and
the pressure will soon be back on. Structurally,
the entry of players such as HLL and ITC in the
mass biscuit market is bound to affect the

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dominance of Britannia in the biscuits market.
What’s more, competition from regional players
such as Surya Foods, known for its ‘Priya Gold’
range of biscuits, has also increased. It certainly
doesn’t help that the company has just had a
change in leadership.

Further, since the company has hived-off its

dairy division, overall growth rates would clearly
be lower than what investors have been used to
for a while. As far as profitability goes, much
depends on the company’s ability to further
reduce costs, unless there is a further reduction
in excise rates. Given the increase in
competition, taking price hikes may still be
some time away. In such a scenario, Britannia’s
long-term growth rate would turn out to be
much lower than earlier estimates. It’s no
wonder then that the stock has underperformed
the market and peers in the FMCG sector by a
huge margin during the current rally. The stock
still gets a discounting of around 14 times FY04
earnings, which, considering that growth rates
will drop, gives the feeling that the stock’s
underperformance will continue.

ITC Ltd has posted a 21.8% rise in net

profits to Rs 323.51 crore for the October-
December 2002 quarter (Q3) compared to the
corresponding period of the previous fiscal. Net
sales during the quarter was reported at Rs
1,647.60 crore, up 12.2% over the
corresponding of the previous period.

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 In the nine months ended December 2002,
ITC’s net profits were up 16% to Rs 1,047.93
crore.

ITC said: "The company’s corporate strategy

aims at creating multiple drivers of growth
anchored on its core competencies."

Its current focus is nearly exclusively on four

business groups: FMCG, hotels, paperboards,
paper & packaging and agri-business. ITC

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 BIBLIOGRAPHY

The information mentioned above was taken

from:
1)Mr. AJAY SINGH – Head, HR Department
2) www.parleproducts.com

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 INDEX

SR.NO TOPICS PAGE NOS.

01 Business 2-4
environment

02 Profile 5-6

03 History 7-8

04 Global 9-13
environment

05 Political 14-15
environment

06 Economic 16-18
environment

07 Swot analysis 19-22

08 Bibliography 23

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