STRATEGIC MANAGEMEN1 - Copy.docx - STRATEGIC MANAGEMENT Case M/s Ximi wants to enter in the washing machine and refrigerator market in india The company

STRATEGIC MANAGEMEN1 - Copy.docx - STRATEGIC MANAGEMENT...

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STRATEGIC MANAGEMENT
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Case: M/s Ximi wants to enter in the washing machine and refrigerator market in india. The company has earned a lot of reputation in the global market. The company is known for low priced segment and delivers the best quality. The service is the best in the world. The response time to customer problems is less than 24 hours. 1. The CEO appoints you as a consultant to analyze the external environment for the Ximi Brand Analyze. Ans: Business Environment Types (External Micro and External Macro) External Micro Environment: Micro external forces have an important effect on business operations of a firm. However, all micro forces may not have the same effect on all firms in the industry. For example, suppliers, an important element of micro level environment, are often willing to provide the materials at relatively lower prices to big business firms. They do not have the same attitude towards relatively small business firms. Similarly, a competitive firm will start a price war if its rival firm in the industry is relatively small. If the rival firm is a big one which is a capable of retaliating any adverse action from its rival, a competitive firm will hesitate to start a price war. We explain below important factors or forces of micro-level external environment. Suppliers of Inputs: An important factor in the external environment of a firm is the suppliers of its inputs such as raw materials and components. A smooth and efficient working of a business firm requires that it should have ensured supply of inputs such as raw materials. If supply of raw materials is uncertain, then a firm will have to keep a large stock of raw materials to continue its transformation process uninterrupted. This will unnecessarily raise its cost of production and reduce its profit margin. To ensure regular supply of inputs such as raw materials some firms adopt a strategy of backward integration and set up captive production plants for producing raw materials themselves. Further, energy input is an important input in the manufacturing business. Many large firms such as Reliance industries have their own power generating plants so as to ensure regular supply of electricity for their manufacturing business. However, small firms cannot adopt this strategy of vertical integration and have to depend on outside sources for supply of needed inputs. Further, it is not a good strategy to depend on a single supplier of inputs. If there is disruption in production of the supplier firm due to labour strike or lock-out, it will adversely affect the production work of a firm. Therefore, to reduce risk and uncertainty business firms prefer to keep multiple suppliers of inputs.
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Customers: The people who buy and use a firm’s product and services are an important part of external micro-environment. Since sales of a product or service is critical for a firm’s survival and growth, it is necessary to keep the customers satisfied. To take care of customer’s sensitivity is essential for the success of a business firm.
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  • Spring '16
  • NMIMS

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