The people of some regions translated the slogan of "Come Alive" used by Pepsi company as " Come out of the grave." As a result company lost its market share rather than picking up. This is the effect of which environment and how does this dimension of environment affect the business?

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Solution

This is the effect of social environment. As people misunderstood the meaning of slogan and it hurt their sentiments so they decided to stop the use of this product which is playing with their sentiments.

The social environment has great influence over the demand of customers because social environment constitutes taste, preference, tradition and expectations of customers, the customer is the king pin in present day market and you can win over your competitor only by winning large segment of customers. Although changes in the social environment may affect the business slowly or quickly but the cost of ignoring the customs, traditions, tastes and preferences of the people could be very high.

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Questions
What organisation structure changes should the company bring about in order to retain its market share?
How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.

A company manufacturing consumer goods has grown in size. It was a market leader but with changes in the economic environment and with the entry of MNCs its market scheme is declining. The company was following a centralised business model as even the minor decisions were in the hands of the top level. Before 1991 this model was suitable for the company but now the company is under pressure to reform.

What organisational structure changes should the company bring about in order to retain its market share?

A company X Ltd. manufacturing cosmetics, which has enjoyed a pre-eminent position in a business, has grown in size. Its business was very good till 1991. But after that, a new liberalised environment has seen an entry of many MNC's in the sector.

With the result, the market share of X Ltd. has declined. The company had followed a very centralised business model with directors and divisional heads making even minor decisions. Before 1991, this business model had sewed the company very well as consumers have no choice. But now, the company is under pressure to reform.

What organisation structure changes should the company bring about in order to retain its market share?

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