Britannia is an Indian based company belonging to the FMCG industry, focusing on food related products. Operating since 1892, the company has a rich history of evolving through political and social changes in the region. The PESTLE analysis of Britannia elaborates the way external environment influences the company operations.
Political Factors
The Indian political arena has faced many changes through the unpredictable course of political events. Conflict and violence are an occasional occurrence in the country, which is linked with the disruption for the food production and supply (Wischnath & Buhaug, 2014). Significant shift in food harvest can affect the volume of production of Britannia.
High corruption poses challenge for the company as India is facing corruption across different levels. Even within the company, there has been an indication of manipulation of supply chain operations (Vats, 2012). Government’s policies pertaining to export of raw materials for manufacturing of food items have the potential to influence Britannia’s productivity.
The management has to be aware of the changing government policies about the trading Indian government has banned the export of wheat, which constitutes the basic ingredient for the different food products being produced by the company. However the presence of wheat stock has reduced the threat of facing scarcity of wheat.
The sales tax imposed by the government along with the pricing decisions also carries implications for the organization. The management has to make required changes to sustain its profitability in spite of the unfavorable factors exerting pressure on the business.
Economic Factors
Britannia has been able to gain benefit from the positive trading relations of India with other countries. The company has expanded its reach to more than 60 countries where the range of products is available for the consumers. Despite the positive development of the company there are certain economic factors that have impacted its financial growth.
High inflation has made it challenging to keep up with the steady pace of profitability. By the end of 2023, inflation rate is expected to reduce which would help the firm to gain higher revenues. Rise in the price of raw material and oil caused higher production and transportation cost, which consequently resulted in increased price of the products (D’Souza, 2022).
Economic uncertainty was also triggered due to COVID which has caused significant disturbance for numerous industries. Britannia on the contrary has been able to gain benefit of the changing economic situation during pandemic. The success of the company is attributed to the effective management of the inventory and cost of production.
Social Factors
Pandemic induced changes in the consumer behavior are evident across the food sector. Instead of opting to go to restaurants, people preferred to buy packaged goods or have homemade food. The heightened importance of hygienic products has supported Britannia in gaining higher sales as the company is seen as maintaining sanitization standards (Dalmia, 2020).
Consumers have developed brand loyalty with the organization due to the well established market presence backed by the long history. Pandemic resulted in the urban consumers being more inclined to buy FMCG brands that were familiar to them and were regarded as offering good quality food items. Conversely, the rural consumers considered pricing as most important.
The management is bringing innovation to keep the products appealing for the young market as well. Another trend that the management has used to move towards business growth is the rising consumption of coffee. Biscafe has been launched to capitalize on the developing coffee market, offering the consumers with a snack to pair up with the beverage.
Technological Factors:
Britannia is using different technologies to manage the business operations. Digital presence is one such domain where use of social media and website indicates the way technology is helping the organization to attain significant level of market share. From collaboration with Accenture to jQuery, these tools have enabled the company to develop a strong position in the FMCG sector.
Another impact of digital technology is on the decision making pattern of the target market. Previously, majority of household food purchasing decisions were made by housewives. Online presence has enabled Britannia to reach a wider market including males and even the younger segment of the population.
Besides digital technology, India is making progress in technologies that aid in advancing automation and production efficiency. Britannia has been able to integrate these tools to further develop its automation capacity (Britannia, 2022). These steps have enabled the organization to further improve its manufacturing of bakery items, in terms of quality and volume.
Innovation is at the core of its growth as the fusion of technology and innovation has provided the company competitive edge over the competitors. Even the dairy segment of the business has been able to benefit from technology, which helped in managing supply chain of milk.
Legal Factors
The company is operating in the FMCG sector which has to adhere to the food safety and quality guidelines issued under the Food Safety and Standard Act of 2006. Moreover, the rules concerning investment in foreign regions, acquisition of other companies and copyright laws hold relevance for the organization.
Violation of these regulations can lead to legal case and disputes. There have been legal issues where Britannia filed cases on other companies due to trademark and copyright issues. In addition, the company itself had to face litigation due to the controversial advertisement that was targeting its competitor Parle G (Prasad, 2022).
Environmental Factors
The concerns of the government and environment related entities have pushed different FMCG brands to make changes into their business operations. Britannia has adopted energy efficiency as a part of its transformation plan, along with sustainable packaging and procurement. The company has also limited its ratio of emissions to meet the mandatory standards (Britannia, 2022).
The company has minimized the waste to zero which is a notable achievement. Another eco-friendly initiative is the Extended Producers’ Responsibility (EPR) program that focuses on lowering the volume of plastic wastage and emphasizes on becoming plastic neutral organization.
Conclusion
The FMCG segment has faced barriers to growth due to political and economic issues. However, the favorable social trends and use of technology has helped Britannia to enhance its production and achieve high profits despite these challenges. Improved economic conditions and use of innovation are likely to create further growth opportunities for the company.
References
Britannia (2022). Annual Report. Britannia Industries. Retrieved from: http://britannia.co.in/pdfs/annual_report/Annual%20Report%20for%20FY%202021-22%20of%20Britannia%20Industries%20Limited.pdf
D’Souza, S. (2022). Britannia Industries to continue raising prices in Q2 amid high inflation. Business Standard. Retrieved from: https://www.business-standard.com/article/companies/britannia-industries-to-continue-raising-prices-in-q2-amid-high-inflation-122080401388_1.html
Dalmia, N. (2020). Britannia is turning Covid-19 crisis into an opportunity: Varun Berry. Economic Times. Retrieved from: https://economictimes.indiatimes.com/markets/expert-view/britannia-is-turning-covid-19-crisis-into-an-opportunity-varun-berry/articleshow/76176961.cms?from=mdr
Prasad, M. (2022). Delhi HC temporarily restrains Britannia from republishing ‘disparaging’ print ads against Parle G, refers parties to mediation. Indian Express. Retrieved from: https://indianexpress.com/article/cities/delhi/delhi-hc-temporarily-restrains-britannia-republishing-disparaging-print-ads-against-parle-g-8295419/
Vats, R. (2012). Britannia investigating supply-chain ‘corruption’. Hindustan Times. Retrieved from: https://www.hindustantimes.com/business/britannia-investigating-supply-chain-corruption/story-4LLb3T3AymbP4WBTBhmZzH.html
Wischnath, G., & Buhaug, H. (2014). Rice or riots: On food production and conflict severity across India. Political Geography, 43, 6-15.