Mahindra and Mahindra: External Environment Analysis

Mahindra and Mahindra External Environment AnalysisA tune can non pop off in a shell. In order to exist and function effectively, a business has to act and react to what happens in the external environment. The aggregates of totally conditions, events, and influences that surround and rival it says Keith Davis (Saleem Shaikh, Business Environment, 2010) The external environment of a business refers to all those factor that directly influence the working of a business. These factors are not in come across of businesses, but it is extremely important for a business because they shape the kind of business activity one can cave in.The factors which influence the external environment of a business arePolitical factors This means how the changes in the political relation policies, political systems and the approach and philosophy of the political party in existence influences the working of a business enterprise.Economic factors This means how a business is impact by the economy in terms of government spending, interest rates, taxation, exchange rates, planetary sparing factors, infrastructure outgrowth, capital formation, etc.Social factors E genuinely business nerve operates in according to the norms of the society and to satisfy their needs. This means how the culture, values, beliefs, tastes, preferences and behavior of the consumers, households and communities affects the working of a business. technological factors Technology is considered to be one of the most important factors which affect the business environment. It means how the rapid change and innovation in technologies affect the performance process and help businesses to produce innovative products.Ecological factors Ecology is the study of environment which includes plants, animals, water, air, sunlight etc. These factors affect the working of a business organization considerably in a manner that government has taken slightly legislative measures for the protection and control of p ollution in the environment like The peeing Act, 1974, The Air Act, 1981, The Environment Protection Act, 1986.Legal factors The legal environment plays a very important role in business. Every aspect of business is modulate by the law of the country. These include the laws related to industrial licensing, factory administration, payment of wages, companionship laws, import and export laws etc.In order to stay and fail successfully in the grocery for long term a business has to take in consideration all the above mentioned factors and change accordingly. These factors piss affected the performance and long term sustainability of Mahindra and Mahindra to a large extent.Mahindra and MahindraMahindra Mahindra Limited is part ofMahindra sort which is based inMumbai. The company was started in 1945 inLudhianaas Mahindra Mohammed by the brothers K.C. Mahindra and J.C. Mahindra along withMalik Ghulam Mohammed.It was changed to Mahindra Mahindra in 1948 and is currently headed by Anand Mahindra. It is now a US $7.1 billion Indian multinational.Mahindra is the only Indian company which manufactures top tractor brands in the world. directly it has its presence in almost every segment of the automobile manufacturing, from deuce-wheelers to SUVS, CVS and UVS. Recently Mahindra acquired a majority stake in REVA Electric Car Co Ltd. (now cal lead Mahindra REVA). The Mahindra Group expanded its IT portfolio when Tech Mahindra acquired the leading global business and information applied science services company, Satyam Computer Services. The company is now known as Mahindra Satyam.Mahindra Mahindra has diversified its businesses into mixed celestial spheres which areAutomotive sectorTwo wheeler sectorFarm equipment sectorHospitality sector development engineering science sectorFactors influencing Mahindra and Mahindra in its unhomogeneous business sectors(P)olitical factorsAutomotive, Two wheeler and farm equipment sectorsIn 2002, the government of India for mulated an auto policy that aimed at promoting integrated, enduring and self-sustained growth of the Indian self-propelled exertion. The approval for foreign equity investment up to 100% in the automotive sector was allowed and minimum investment criteria disallowed. The government promoted establishments of international companies for manufacturing small, affordable rider machines as well as tractor and ii wheelers. The government assisted the development of vehicle propelled by alternate energy source. The government formulated plans to have a terminal life policy for Commercial Vehicles along with incentives for replacement for such vehicles. It too promoted multi-model transportation and the implementation of mass rapid transportation system.These political influences have lead Mahindra and Mahindra to increase production of its vehicles and inflow of foreign investments. Also the development of alternate energy source vehicles has led Mahindra to acquire majority stake in REVA electric car co ltd.Hospitality sectorIt includes the central governments legal goings and regulations. This includes discordant Laws and Acts passed out by the government in Hospitality sector some of which are as followsThe influences of these political acts has led to the commencement of Mahindra holidays and resorts limited in 1996, crack family holidays in India and abroad. This has helped the company to grow immensely.Information technology sectorThe IT industry of India suffered political instability for a few years but it has been stable since 1999. The Indian government has decided to contract IT job to Indian IT companies creating more opportunities for the company and the industry at large. Consumer protection laws, competitive regulations and terrorist attacks are other factors to be considered. The Indian it sector does not much influence of political stability, so if the government changes it has little effect on the industry. These political forces have led Te ch Mahindra in the leaders category with a hugely successful public issue in 2006. Changes in the political conditions have allowed many companies to enter IT sector like Mahindra Mahindra. This has lead to establishment of tech Mahindra by the Mahindra free radical and acquisition of Satyam.(E)conomical factorsAutomotive, two wheeler and farm equipment sectorThe automobile companies are reorganizing their sales process due to economic pressure on the industry. The government has granted concessions, by step-down the interest rates for export financing. The growth of Indian economy at the rate of 8.5% per annum has had a great influence on the automotive sector in India. Also the growth in the manufacturing sector at the rate of 8-10 % per annum in the live on few years has influenced the growth of this sector. The globalization of India economy has led to the involution of several Indian firms with global players.While some have formed joint ventures with equity participation, other overly has entered into technology tie-ups. These changes have allowed Mahindra to expand its market and grow rapidly in India as well as abroad.Hospitality sectorThe economic factors have a direct influence on the hospitality sector of a business this is because if there is inflation then the rates will rise quickly, keeping in mind there are two sides to it. The hospitality sector is directly linked with tourism industry. Tourism has become the number one export earner for India and this is only possible due to diversification of the economy. The economic growth of the country has led to the expansion of Mahindra into this sector by establishment of Mahindra holidays and resorts.Information technology sectorThe IT industry is being affected by lots of economic factors ranging from rising working pay, global recession, competition, contract availability and fee. In 2009 the domestic IT spending grew by 20 % and reached $20 billion. During the last global recession currency fluctuation caused devaluation of dollar which has affected the industry. The recession has also led to decline in jobs which has affected this sector. With the decline of banking and financial sectors, the revenue from them is expect to decline hurting the IT industry which has had its impact on tech Mahindra as well.(S)ocial factorsAutomotive, two wheeler and farm equipment sectorThe changed lifestyle of people has led to increase purchase of automobiles, so automobile sector have a large customer base to serve. The increase in the income level of consumer as increased the acquire power of people. In India, today 85% of cars are financed in India. Indian customers are highly educated and well informed. They are price sensitive as well and put lot of importance on value for money .Preference for small and compact cars in the Indian market has also increased. They are socially acceptable even amongst the well off. People these days prefer fuel efficient cars with low running costs which Mahindra has ventured into like Mahindra Renault, Scorpio, Xylo etc.Hospitality sectorThis includes all the social and cultural trends which have been affecting the industry. The changing expectation of consumers towards the hospitality experience. The consumers expect to be catered for their hospitality needs. The consumers want to feel that they are in control of their hospitality experience. Social networking plays an important part in the growth of this sector for a firm which helps the companies the companies to relate in a better way with the consumers. The increase in wealth of consumes due to increase in their income has led to change in their taste towards luxurious living and travelling which creates more business for firms operating n this sector due to which Mahindra has grown.Information technologyThere are lots of social factors affecting the IT sector which ranges from language barriers, employee rights and race reasonableness of the company and other issues. The IT industry is also affected by the change in consumer behavior which is supported by the fact that distinguishable consumers have different taste. The social issues like global warming are also concern for this industry and the shift of society towards education which includes opening up of universities and institutes in India offering IT education which produces large number of students joining IT industry which is also benefiting Mahindra and Mahindra.(T)echnological factorsAutomotive, two wheeler and farm equipment sectorThere are more emphasis laid on research and development in terms of technology in this sector which has contributed to innovation. The government of India is also promoting National Automotive testing and research and development infrastructure project. Technological solution helps in integrating the supply chain, hence reduce losses and increase profitability. With the development and evolution of alternate fuels, hybrid cars have made entry into the mar ket also global companies like Audi, BMW, Hyundai have setup their manufacturing units in India. Mahindra and Mahindra is providing customized solutions and designer cars with new technologyHospitality sector move technology has contributed a lot for the growth of firms in hospitality sector due to which the hotel receive reservations in advance through the net. People get all the information about the hotels through agents online. With the advent of computer the airlines allow the travel agents to view their flight inventories and rates in real time. Soon the airlines also added hotels and car rental companies to their computes so that agents could book the entire guest travel through their computer. Today more than 70% of hotel reservations are done electronically from which Mahindra and Mahindra has taken advantage.Information technologyThe changes in technological sector have impacted the growth and development of various companies. It has also forced other companies whose core business is not in IT sector to venture in this sector for example Mahindra and Tata. The present conditions are mainly due to the result that the masses have become techno discernment and there is a lot of potential in this sector.(L)egal factorsAutomotive sectorThe legal angle to the automotive sector has undergone a sea change during the last 50 years and Mahindra and Mahindra has been able to cope up with the same. As more and more stricter norms regarding environmental pollution has come into effect so Mahindra and Mahindra has brought new technology into their products to address to the legal applications and this constant endeavor of the Mahindra group has enabled it to constantly abide by the laws and rules and regulations of India and the worlds over.Hospitality sectorThe rules and regulations regarding the hospitality industry have also changed and as a result Mahindra and Mahindra have to adjust themselves according to the same and they have tried to adjust to the same a lsoInformation technology Sector organisation of India has opened up the IT sector in India and has made the laws very lenient so that the business community can benefit from the same. This has led the Mahindra and Mahindra to launch Tech Mahindra as their Brand and acquisition of Satyam co(E)cological factorsAutomotive sector, two wheeler and farm equipment sectorThe physical infrastructure of country such as bridge and roads affect the use of automobiles. If there are smooth roads available then it will affect the use of automobiles. The environment and weather conditions also affect the use of automobiles in the country. If the environment is pleasant then the use of automobiles will be more. The entry of global companies in the Indian environment has led to advancement in the products and the production process of Mahindra and Mahindra.Hospitality sectorThe environmental factors gained prominence because of deteriorating environmental balance which is threatening the sustainabil ity of environment and nature. Hospitality sector is very much responsible for releasing out chemical effluence drained out in water making it unfit for use and also the run out non bio degradable recourses such as polythene in the environment affecting the chain adversely. There has been many rules and act passed for this sector which the companies have to work accordingly. This industry is directly influenced by tourism. The natural and cultural sites led to attraction of tourists and also the natural landforms and environmental conditions influence the choice of destination of Mahindra hotels which has led to its growth.Information technology sectorThe ecological environment has affects and influence in IT sector in various ways. For this there have been conservation and protection issues because of deteriorating environmental balance. Largely, businesses are also held responsible for such situations as emissions from these industries pollute water, air and effect bio chain adve rsely and expose people to hazardous radiations bringing their lives in danger. These have implications for various firms in this sector and how the manufacturing process takes place in Tech Mahindra.ConclusionMahindra and Mahindra has grown steadily in size and structure and has evolved into a huge group and occupies a premium position in various key sectors of the economy. It has gained a substantial and a sustainable growth in the industry by deal up with various changes in the environment it exists in. The above mentioned factors has impacted its various business sectors and led to the formation of a highly successful company.The above psychoanalysis leads us to the conclusion that Mahindra and Mahindra have transformed themselves into a very successful business enterprise and have evolved themselves as a very important component of the Indian and the global economy. Mahindra and Mahindra have expanded themselves into various industrial sectors like defence, automobile, hospi tality etc. and have diversified at the same time. Mahindra and Mahindra has shown that how the various changes in the business environment can be explored and exploited by any business for its own gain and the gain of the economy as a whole.