Monday, 11 June 2012

Q. 3 Silver Line Manufacturers produce several varieties of automobile components. They have 3 to 5 suppliers who supply materials regularly. Recently, procurement manager of Silver Line discussed in the meeting that they have to look out for new suppliers since they would be expanding their business operations to many places. How do you think Silver Line have to go about this situation? [10 marks]

A marketing oriented company always keeps tab on its external environment carefully to analyze opportunities and threats. This external environment influences company’s strategies in two levels i.e. external macro environment and external micro environment. The macro environment involves political and legal, economic and natural, social and cultural and technology environment. The micro environment consists of supply chain, customer and competitor. These factors are uncontrollable by the organization. Even the best company faces threat if one of the external environments is adverse to it. A moderate company will be successful if the external environment favors it.

Hence Silver Line Manufacturers should monitor the external environment carefully and continuously.
Environmental scanning
This is the process of gathering, analyzing and forecasting of external environments’ information to identify opportunity and threats that company faces.
Need for environmental scanning:
It helps in
1. Identifying the opportunities that company has in immediate future.
2. Identifying the threats faced by the company.
3. Demand forecasting
4. Developing appropriate business plans.
5. Adjusting the company strategy in changing competitive environment.
3. Analyzing the organization’s micro environment
Marketing department let alone can not satisfy all the needs of customer. Therefore it is essential to integrate the functions of suppliers, publics, company departments and intermediaries in creating the value to the customer. These forces are known as organization’s micro environment.
Microenvironment: The forces which are very close to company and have impact on value creation and customer service
 Forces in the micro environment:
Deducing a strategic plan in to specific marketing plan require coordination of other functions like finance, Human resource, production, and research and development.
Marketing intermediaries: The firms which distribute and sell the goods of the company to the consumer.
Marketing intermediaries plays an important role in the distribution, selling and promoting the goods and services. Stocking and delivering, bulk breaking, and selling the goods and services to customer are some of the major functions carried out by the middlemen. Retailers, wholesalers, agents,brokers, jobbers and carry and forward agents are few intermediaries to name. Retailers are final link between company and customers. Their role in the marketing of product is increasing every day.
These are microenvironment groups, which helps company to generate the financial resources, creating the image, examining the companies’ policy and developing the attitude towards the product.
We can identify six types of publics
1. Financial publics influence the company’s ability to obtain funds. For example, Banks, investment houses and stockholders are the major financial publics.
2. Media publics carry news and features about the company e.g. Deccan Herald
3. Advertisement regulation agencies, telecom regulation agency( TRAI), and insurance regulation agency(IRDA) of the government
4. Citizen action groups: Formed by the consumer or environmental groups. For example, people for ethical treatment of animals (PETA) or Greenpeace.
5. General publics: a company should be concerned towards general publics’ attitude towards its products and services.
6. Internal publics: Employees who help in creating proper image for the company through word of mouth.
A company should monitor its immediate competitor. The product should be positioned differently and able to provide better services.
Suppliers are the first link in the entire supply chain of the company. Hence any problems or cost escalation in this stage will have direct effect on the company. Many companies adopted supplier relation management system to manage them well.
6. Customers
A company may sell their products directly to the customer or use marketing intermediaries to reach them. Direct or indirect marketing depends on what type of markets Company serves. Generally we can divide the markets into five different categories. They are
a. Consumer market.
b. Business market
c. Reseller market
d. Government market and
e. International market
You will come to know about these five different markets from the following example.
MRF a tyre company sells its product directly to consumer (in case of urgency, customer purchases directly from showroom) i.e. operates in consumer market. It operates in business markets by selling tyres to companies like Maruti Udyog limited. MRF also sells TYREs to BMTC and KSRTC, transport organizations of Karnataka government. If MRF sells tyre in African or American countries then it is operating in the international market. If MRF buys the old tyres, retreads it and sells it to the consumer at a profit then company is operating in the reseller market.

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