Managerial Response To Environment Challenges

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Managerial Response to Environment Challenges

The management of a business may choose form the following strategies to deal with changing environment:

(i)    Anticipating and Adapting: Sometimes, managers can anticipate changes in environmental conditions and adapt appropriately tot eh expected changes. With information gleaned form forecasting, managers can help their organizations adapt internally to anticipated environmental demands. For instance, hotels and restaurants in populate hill stations can antipasti the tourist season and increase their supplies of fool, liquor and various other customer services.

(ii)    Smoothing or Leveling: This strategy aims at smoothing the sales throughout the year. During periods of low demand, an organization may offer inducements, such as price reductions, to encourage consumers to buy its products. During peak periods, it may charge a premium rate to make up for lean season. Smoothing explains why geysers are cheaper during the summer and air-conditioners during the winter.

(iii)    Competitive Advertising: In order to meet competition in the market, business firms may resort to competitive advertising. For instance, Prepsico and Coca Cola companies have often used this strategy to either increase or maintain their market share.

(iv)    Brand Building: Often, multinational companies have invested huge amounts on building brands, such as LG, Samsung. Hyundai. During the cricket World Cup 2003, LG was always at the forefront to build its brand throughout the world.

(v)    Strengthening of Distribution Network: Several companies like Hindustan Lever, Coca Cola, Pepsi, Titan, ITC, etc. have strengthened their distribution network in India. They have been concentrating on marketing in rural markets by launching law priced models of their products. Rural markets in India have a great potential. Direct marketing companies like Amway and Tupperware have also been successful in pushing up their sales directly to the customers.

(vi)    Upgradation of Technology: Use of latest technology can provide a competitive edge to their users. That is why, most of the big companies spend huge budgets to develop new technology or acquire new technology from multinational corporations. Technology transfer to India has now become easier because of Government Policy of economic liberalization.

(vii)    Diversification Strategy: Many companies have undertaken diversification programmers to strengthen their position in the market. Reliance has diversified into textiles, petrochemicals, financing, information technology, communication, etc. Eureka Forbes, known for vacuum cleaner, has entered into water purifier, food processor, electric iron, etc.

(viii)    Joint Venture: Many companies in India have entered into joint venture arrangements with foreign motional corporations for the supply of latest technology. For instance, Mahindra and Mahindra entered into joint venture with Ford and SIEL with Honda. This has helped them to offer improved models in the market.

(ix)    Merger and Acquisition: Two or more competing firms may merge together to create to create a bigger unit or one firm may acquire another firm to increase its competitive strength. For instance, Hindustan Lever took over Tata Oil Mills (TOMCO)to take on competition from proctor and Gamble. It has also acquired Kissan and Kwality. Similarly Coke acquired Parle Drinks (the manufacturer of Limca and Thumps Up) to take on Pepsi. 

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