IB- pestle-analysis-of-india

India rubber industry

Course Code: MGN 301 Course Title: International business

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Academic Task No.: Assignment-2 Academic Task Title: India rubber industry

Enterprise LtdDate of Allotment: 01/28/2016 Date of submission: 03/25/2016

Student’s Roll no: B-19 Student’s Reg. no: 11312145Evaluation Parameters: (Parameters on which student is to be evaluated- To be mentioned by students as specified at the time of assigning the task by the instructor)

Learning Outcomes: (I come to know that India have the 2thnd largest population in the world and I understand about the Geographical location, Major religions, Languages and pestle analyse of India. And also a learn about swot analysis of rubber industry of India)

Decl arati on:I declare that this Assignment is my individual work. I have not copied it from any other student‟s work or from any other source except where due acknowledgement is made explicitly in the text, nor has any part been written for me by any other person.

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Contents

1. about India

2. Introduction

3. PESTLE Analysis

Political

Economical

Social

Technological

Legal

Environmental

4. Overview of Indian Rubber Industry

5. Rubber Production in India

6. Rising imports of Natural Rubber

7. Decline in Natural Rubber price

8. Rubber consumption in India

9. SWOT Analysis

10. Conclusion

11. References

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India

India, officially the Republic of India is a country in South Asia. It is the seventh-largest country by geographical area, the 2 most populous countries, and the most populous democracy in the world. The Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal on the east, India has a coastline of 7,517 kilometres .It is bordered by Pakistan to the west, People's Republic of China, Nepal, and Bhutan to the north, and Bangladesh and Myanmar to the east. India in the vicinity of Sri Lanka, Maldives, and Indonesia in the Indian Ocean.

Home to the Indus Valley Civilisation and a region of historic trade area and vast empires, Indian subcontinent was identified with its commercial & cultural wealth for much of its long history. Four major religions, Hinduism, Buddhism, Jainism and Sikhism originated country, while the Zoroastrianism, Judaism, Christianity and Islam arrived in the first millennium of CE and shaped the region's diverse culture. The British East India Company from the early eighteenth century and colonised by the United Kingdom from the mid-19 century, India became an independent nation in 1947 after a struggle for independence that was marked by widespread non-violent resistance.

India is a republic consisting of 28 states and 7 union territories with a parliamentary system of democracy. It has the world's 12th largest economy at market exchange rates and the fourth largest in purchasing power. Economic reforms since 1991 have transformed it into one of the fastest growing economies; however it still suffers from high levels of poverty, illiteracy, disease, & malnutrition. A pluralistic, multilingual, and multiethnic society.

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India at Glance

1. Population : 1,150,000,000 (1.15 billion)

2. Area : 3.3 million square kilometres

3. Geographical location : Lies between latitudes 8 ° 4' & 37 ° 6 ' north and longitudes 68 ° 7 ' and 97° 25' east

4. Coastline length : 7600 km

5. Languages : 17 major languages, 844 dialects

6. Major religions : Hinduism, Islam, Christianity, Buddhism, Sikhism, Jainism

7. National anthem : Jan gana mana written by Rabindranath Tagore

8. National Song : Vande Mataram, composed in Sanskrit by Bankimchandra Chatterji

9. National emblem : Replica of the Lion Capital of Sarnath

10.National flag : Horizontal tricolour in equal proportion of deep saffron on the top, white in the middle and dark green at the bottom. In the centre of the white band is a wheel.

11. National animal : Tiger (Panthera Tigris)

12. National bird : Peacock

13. National flower : Lotus

14. National tree : Banyan

15. National fruit : Mango

16. National currency : Rupee (One Rupee=100 paisa)

17. National Sport : Hockey

18 Independence : 15th august, 1947

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Introduction

PESTLE Analysis of India

In business PESTLE analysis role is very important. Originally designed as a business environmental scan, the PESTLE analysis is an analysis of the external macro environment in which a business operates. These are factors which are beyond the control or influence of a business, however are important to be aware of when doing product development, business or strategy planning.

PESTLE means:

P- Political E- Economical S- Social T- Technological L- Legal E-Environmental

The PESTLE subject should be a clear definition of the market being addressed, this is the followings:-

A company looking at its market A product looking at its market A brand in relation to its market A local business unit or function in a business A strategic option, such as entering a new market A potential acquisition A potential partnership An investment opportunity

Now we see in details of PESTLE factors/Impact in India In next following pages:

POLTICAL

These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidising firms? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.

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India is the biggest democracy in the World. The government type is federal republic. Based on English common law, judicial review of legislative acts, accepts compulsory ICJ jurisdiction with reservations, separate personal law codes apply to Muslims, Christians, and Hindus. The political Situation in the India is more or less stable. Most of its democratic history, the federal Government of India has been led by the (INC) Indian National Congress. State politics dominated by several national parties including the INC. The Bharatiya Janata Party (BJP), the Communist Party of India (CPI), and various regional parties. In the 2009 Indian elections, the INC won the biggest number of Lok Sabha seats and formed a government with a alliance called the United Progressive Alliance (UPA), supported by various left-leaning parties and members opposed to the BJP. Overall India currently has a coalition led government and both major political parties the UPA and BJP, whichever comes in power.

These are the major factors those effect on political environment:-

ECONOMICAL

It includes interest rates, taxation changes, economic growth, inflation and exchange rates. As you will see throughout the "Foundations of Economics" book economic change can have a major impact on a firm's behaviour. For example:

higher interest rates may deter investment because it costs more to borrow a strong currency may make exporting more difficult because it may raise the price in terms of

foreign currency inflation may provoke higher wage demands from employees and raise costs higher national income growth may boost demand for a firm's products

As a part of economic reforms, the Government of India announced a new industrial policy in July 1991,

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The broad features of this policy as follows:

The Government reduced the number of industries under compulsory licensing to six. Disinvestment was carried out in case of many public sector industrial enterprises. Policy towards foreign capital was liberalized. The share of foreign equity participation was

increased and in many activities 100 per cent Foreign Direct Investment (FDI) was permitted. Automatic permission was now granted for technology agreements with foreign companies. Foreign Investment Promotion Board (FIPB) was set up to promote and channelise foreign

investment in India.

In Indian economy is strong. We see in recession our economy is less affect from recession compression to western countries. These following factors:

SOCIAL

Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. In the India, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staff are living longer. It also means some firms have started to recruit older employees to tap into this growing labour pool.

It describes the characteristics of the society in which the organization exists. Literacy rate, customs, values, beliefs, lifestyle, demographic features and mobility of population are part o the social environment. It is important for managers to notice the direction in which the society is moving and formulate progressive policies according to the changing social scenario

India is the second most populous nation in the world with an approximate population of over 1.1billion people. This population is divided in the following age structure: 0-14 years – 31.8%, 15-64 years – 63.1% and 65 years and above – 5.1%.

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TECHNOLOGICAL

New technologies create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products. Today in India 3G technology starts. A heavy infrastructure for bandwidth. BSNL and Reliance have more covered city by optical fibre. India have many Technological Projects. Good Service provider in IT sector ex TCS, Infosys and many more.Today India is a big market in mobile sector here 5-6 player operataors and new operators launch their services soon.

IT Development

(ii)New Materials and processes

(iii)Government technology funding

(iv)Speed of technology transfer

(v)Software upgrades

LEGAL

These are related to the legal environment in which firms operate. In recent years in the India There have been many significant legal changes that have affected firms' behaviour. The introduction of discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation's actions. Legal changes can affect a firm's costs and demand.

This consists of legislation that is passed by the parliament and state legislatures. Examples of such legislation specifically aimed at business operations include the Trade mark Act 1969, Essential Commodities Act 1955, Standards of Weights and Measures Act 1969 and Consumer Protection Act 196.

In India take many type of permission to the sate govt or central govt.

In India many type of act like license permission, copyright permission, and many types of other permission.

(i)Employment law

(ii)Trade and product restrictions

(iii)Health and safety regulations

(iv)EU and international laws

(v)Monopolies commission

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ENVIORNMENTAL

Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.

In India we know that many types of enviormental problems this are basic things but more important for our enviorment. also biotic factors ,abiotic factors and their interaction with one another. Pollution free industrial activity i.e. is necessary condition of industrial organization.

Industrialization and urbanization have resulted in a profound deterioration of India's air quality. Of the 3 million premature deaths in the world that occur each year due to outdoor and indoor air pollution, the highest number are assessed to occur in India.

Pollution problems

Planning permissions

Waste disposal

Noise controls

Environmental pressure groups

Overview of Indian Rubber Industry

Indian Rubber Industries is 32 years old Co. & the brand owner of Maruti Lawn Mower. It is one of the leading distributors in the field of horticulture tools and equipment that include rotary slasher, brush cutter, hedge trimmer, long reach hedge trimmer, chain saw, pole pruner, gang mower, cut-off saw, concrete cutter, power sprayer, mist blower, vacuum shredder, earth auger, fogging machine and garden roller, with manufacturing facilities of Lawn Mowers with Brand name Maruti Lawn Mower in New Delhi India.The Indian rubber industry is one of the key sectors of the economy and a sector that has been in existence from the early days. Though in the initial days, the sector was more attuned to catering to the inward needs to the country, the sector has now evolved to become a manufacturing major. Some of the key factors that highlight the criticality of this sector in the Indian economy are:

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The area under rubber plantations in India is ranked sixth globally

India ranks fourth in the world natural rubber production

India is ranked second in the consumption of natural rubber, behind China

India is the top ranked nation globally in terms of productivity

The Indian rubber industry consists of around 5,500 units3 and is dotted with the presence of several small and tiny units. Tyre industry constitutes around 60 per cent of Indian rubber industry turnover.

There are about 6000 unit comprising 30 large scale, 300 medium scale and around 5600 small scale and tiny sector units. These units are manufacturing more than 35000 rubber products, employing 400 hundred thousand people, which also includes 22000 technically qualified support personnel, contributing Rs. 40 billions to the National Exchequer through taxes, duties and other levies. The Indian Rubber Industry plays a vital role in the Indian national economy. The rubber plantation sector in India produces over 630 hundred thousand tones of natural rubber and there is a projected production of more than one million tones in near future. This has helped in the radical and rapid growth of the Indian rubber industry. This prospect of growth is further enhanced by a boom in the vehicle industry, improved living standards of the people and rapid over-all industrialization. The per capita consumption of rubber in India is only 800 grams compared to 12 to 14 kilos in Japan, USA and Europe. So far as consumption of rubber products is concerned, India is far from attaining any saturation level. This is another factor leading to tremendous growth prospects of the industry in the years to come.

Rubber Production in India

Here are some facts regarding rubber industry in India.

India is the third largest producer of rubber in the world.

It is the fourth largest consumer of natural rubber.

It is the fifth largest consumer of natural rubber and synthetic rubber together in the world.

India is the world's largest manufacturer of reclaim rubber.

India and China are the only two countries in the world which have the capacity to consume the entire indigenous production of natural rubber.

Rising imports of Natural Rubber

In the first nine months of financial year 2015, India’s natural rubber imports increased by

24.89 per cent to 326567 tonnes as compared to same period of last year. The imports increased

mainly on account of drop in production in the country and lower prices in the world market

which prompted tyremakers to increase overseas purchases to meet rising demand. Import of

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natural rubber in India in value terms is likely to touch $1,107 million by the end of the current

fiscal year 2014-15. Further, in the month of December 2014 the imports increased by 8 per

cent to 29,728 tonnes as compared to same month of previous year.

Rubber planters see a crisis-like situation looming, with international rubber prices falling in the

Bangkok market to a seven-year low. This has resulted in a sharp rise in imports by Indian

rubber consuming industries such as the tyre industry. In the face of a heavy inflow of imported

rubber, domestic prices, too, fell to a five-year low of Rs 124 a kg for the benchmark variety,

RSS-4.

Decline in Natural Rubber price

Rubber price is under pressure both in the domestic as well as international markets on account

of poor demand from countries like China and oversupply of the commodity. This sharp fall in

price is due to the poor off take by China which is the world’s largest consumer, and by the

European nations. The ongoing economic slow-down in China favours a sluggish demand.

The persistent fall in the price of natural rubber has caused concern among rubber farmers in

Kerala. Rubber price, which ruled around Rs 220 per kg in January 2011, has now touched a

low of Rs 123 per kg in the domestic market.

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Rubber consumption in India

The following industrial sector consumes most of the rubber products.

AUTOMOTIVE TYRE SECTOR: 50% consumption of all kinds of rubbers

BICYCLES TYRES AND TUBES: 15%

FOOTWEAR: 12%

BELTS AND HOSES: 6%

CAMELBACK AND LATEX PRODUCTS: 7%

OTHER PRODUCTS: 10%

Indian rubber market

India’s production varies between 6 and 7 lakh tons annually which amounts to Rs. 3000 crores. Seventy percent of the total rubber production in India is in the form of Ribbed Smoked Sheets (RSS). This is also imported by India accounting for 45% of the total import of rubber. The Indian rubber industry has a turnover of Rs 12000 crores. Most of the rubber production is consumed by the tyre industry which is almost 52% of the total production of India. Among the states, Kerala is the leading consumer of rubber, followed by Punjab and Maharashtra. The exports of Indian natural rubber have increased tremendously over the years and have reached 76000 tons in 2003-04. Though, India is one of the leading producers of rubber but it still imports rubber from other countries. At present, India is importing around 50000 tons of rubber annually.

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SWOT Analysis

S.

Company has remained in no.1 position in tyre industry and was the first to reach annual turnover ofRs.5000Crore in India

. They have 6 manufacturing facilities in India (all in south) in proximity of rubber belt of India, with sales network divided in 4 zones; east(14), west (23), south(33) and north(27 dealers)- very strong and developed distribution network.

Good export market with company exporting tyres and conveyor belts to 65 countries

Complete product portfolio with tyres for all types of vehicles-heavy duty vehicles, SUVs, small & luxury cars, two & three wheelers, conveyor belts, paints & coats and pretreads.

It enjoys strong brand equity and loyalty of customers.

Company is willing to take innovative measures to suit different terrains of India.

Strong financial position

Diversified into Funskool, MRF Pace Foundation, MRF Racing

Advertising as India eco-friendly car tyre making

SWOT Analysis

W . Volatility in industrial

relations. Ex: the labour unrest

Intense competition due to presence of other global brands

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company.

O . Emerging markets and

growth of automobile industry

More tie-ups with Automobile companies as it’s mainly into B2B market.

Horizontal and concentric Diversification.

T Price wars

Stiff competition from national and international brands

Cheaper technologies

Volatility in prices and availability of raw material as India’s rubber production is less than its demand.

Government Policies w.r.t export duties, import duties, tax levied on automobile industries and economic condition of nation as it determines the sale of automobiles.

Introduction of other transport facilities like metro, monorails and local trains keeping pollution hazards caused by combustion of automobile fuels

CONCLUSTION

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The PESTLE analysis here shows what is a factor in India who relates to the Business. This study is more and more beneficial for any business organization. In the report given detail of our India political, social economical, legal, environmental and technological. This all the issue of India market stability, government politic. Political stability in India. And many other things show this. We say that PESTlE analysis role is in today scenario in business very important. We see here India PESTLE analysis. In India many opportunity to open a business. Some problems in India But we Know every where every things is not available.

From the foregoing, it is evident that India has a favorable business environment. Investors from all over the world can invest in profitable ventures in India. The PESTEL analysis of India reveals that the country has a high potential to sustain profitable business ventures. In spite of there being various weaknesses and threats of businesses in India, there are innumerable strengths and opportunities for people to exploit in India

And

The Indian rubber industry has a turnover of Rs 12000 crores. Most of the rubber production is consumed by the tyre industry which is almost 52% of the total production of India. Among the states, Kerala is the leading consumer of rubber, followed by Punjab and Maharashtra. The exports of Indian natural rubber have increased tremendously over the years and have reached 76000 tons in 2003-04. Though, India is one of the leading producers of rubber but it still imports rubber from other countries. At present, India is importing around 50000 tons of rubber annually. And also India is the world

o India is the third largest producer of rubber in the world.

o It is the fourth largest consumer of natural rubber.

o It is the fifth largest consumer of natural rubber and synthetic rubber together in the world.

o India is the world's largest manufacturer of reclaim rubber.

References

1. Salem sheikh Text Book

2. Read more: http://www.ukessays.com/essays/economics/pestel-analysis-of-indian-business-environment-economics-essay.php#ixzz42nT8W.

3. http://www.indiannaturalrubber.com/

4. http://www.all-about-india.com/ 5. http://rapidbi.com/pestle/Introduction-to-the-PESTLE-analysis-tool.html#political

6. http://www.english-test.net/gre/vocabulary/meanings/349/gre-words.php.

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http://www.all-about-india.com/

http://rapidbi.com/pestle/Introduction-to-the-PESTLE-analysis-tool.html#political

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