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Macro Environment Analysis: PESTEL Analysis


Discuss About The FMCG Competitors Western Suburbs Of Mumbai?

Patanjali Ayurved Limited (PAL) is an Indian FMCG company that is based out in Haridwar and has a market valuation of approximately ?30 billion (US$470 million) (Patanjali Ayurved 2017). The organization saw its origin way back in 1995 when Yoga guru Baba Ramdev set up the Divya Yog Mandir Trust with assistance from Acharya Balkrishna and Acharya Karamveer under the supervision of Swami Shankardevji. The organization went on to become a private limited company in 2006, with registrations of remarkable y-o-y growth with appreciable top and bottom lines. It has turned out to be the fastest growing Indian FMCG organization till record and their growth rate has established high benchmarks for their competitors to emulate. The main idea behind the establishing of the company was propagating the science of Ayurveda and put both Yoga and Ayurved on the world map. The company got registered under the Companies Act, 1956 and their registered office is in Bijwasa, New Delhi, with three more offices in Haridwar. The company started out with a vision of supporting and pushing the lives of Indian farmers by means of locally sourcing raw materials from them so that they get a better chance at a better live, all the while simultaneously offering the Indian masses with an opportunity of getting to lead a healthy lifestyle (Patanjali Ayurved 2017). This report would be carrying out a thorough strategic analysis of Patanjali Ayurved Limited and through that come to conclusions and provide recommendations accordingly. Organizational research would be carried out to find out growth opportunities for the organization.

The macro environment of an organization is comprised of forces that have the capacity of shaping the future course of action for it. A complete awareness of these forces would assist in analyzing the strengths and weaknesses in the current environmental context and accordingly strategize. It is imperative for PAL to understand and then accordingly formulate the necessary objectives and strategy, basing them on the same. The macro environmental forces that have an impact on Patanjali Ayurved are discussed below:




v  The current scenario in this context is conducive for the development of PAL in the country. His support for the current PM is high.

v  The current central government is stable and helps PAL in moving on a fast growth track.

v  A challenge faced by PAL from state government is that they are expanding operations out of Uttarakhand due to lack of cooperation (Aradhak 2017).


v  The inflation rate in a moderate dose is there in the customer’s minds while looking out for value-for-money products.

v  Increase rate of taxes and interests have an adverse influence on the cost of capital and therefore increases manufacturing cost, thus increasing the product’s market cost.

v  PAL gets benefitted from the implementation of GST.

v  PAL procures their raw materials locally and there is minimal thrust on export, so no significant impact is felt on currency exchange rates (Thomas 2016).


v  With time people are becoming more health conscious and they are spending more on health and awareness products and programs.

v  There is a growth in lifestyle diseases in the Indian society, like cancer, heart attacks, diabetes, and BP. The most driving cause behind this is the presence of chemicals in the food that we consume and the products that we are using, apart from our lifestyle (Chaubey 2016).


v  The Indian government has established a favorable R&D environment. Through Patanjali Yogpeeth Trust at Haridwar, PAL is involved with the R&D of different herbal and ayurvedic products. There are claims that some PAL products have the capacity of curing even cancer.

v  The inclusion of automation in drug production has helped in the mass production of different ayurvedic drugs, all the while maintaining efficacy.

v  Better means of communication (Ghosh 2015).


v  There is no presence of harmful chemicals, giving it a direct advantage over the allopathic medicines that have different types of side effects.

v  India as a country is an affluent source of different herbs that might not be found anywhere else in the world.

v  Ayurvedic product manufacturing residues are less damaging than that of allopathic ones.

v  In comparison, Ayurvedic products are more environment-friendly (Basu and Ghosh 2015).


Ayurved is a vast turf and many government acts apply to it. Some of these acts are: the drugs and cosmetics act 1940 and rules made thereunder, the medicine central council act-1970, and the drugs and magic remedies act 1954 and the rules made thereunder (Anand 2015).

Table 1: PESTEL Analysis

To identify the main opportunities and threats facing the company, the following table can be referred to:



1.      Patanjali has the opportunity of expanding widely in the rural markets.

2.      Different types of tie-ups like something in the form of Future Group would assist PAL in being more successful.

3.      Diversifying their product base into other retail sections would also assist PAL in acquiring an overall Indian presence in the industry.

4.      The company has the potential of increasing their global market just because Ayurveda is slowly gaining prominence all across the globe.

1.      FMCG competitors of PAL are coming up with different Ayurvedic product variants.

2.      PAL business can get heavily affected during poor farming seasons as their whole business is based on the natural ingredients for their products.

3.      Any amount of negative word of mouth publicity over social media sites can become detrimental for the sales of the brand.

Table 2: Opportunities and Threats

Source: (Kumar et al. 2014)




Bargaining Power of Buyers

Buyers always look for reliable ayurvedic compositions. The major determinants of the product are price and quality. There is no hesitance from the side of the buyers in shifting to a parallel quality product is obtainable at a lesser price from another manufacturer.


Bargaining Power of Sellers

As these kinds of businesses are extremely reliant on the appropriate component, suppliers or sellers possess a good bargaining power. The bargaining power of the sellers and suppliers get organized by backward integration i.e. by the establishment of personal herbal gardens and the planting of herbs. Patanjali got into control the bargaining power of the suppliers and the sellers by turning into a completely integrated organization. PAL is providing end to end solutions in Ayurved.

Moderate to High

Threat of Substitutes

The substitute products are dependent on the respective product category, however, normally the sector in which PAL is present has a low to moderate threat of substitute ranges.

Low to Moderate

Threat of New Entrants

The barriers to entry in this industry are quite significant as it asks for large capital investment for setting up networks and brand promotion. Current players are already using up the existing distribution channels. Only those few with expertise can leverage the economies of scale. For building brand equity, the established brands carry out a lot of marketing, making it harder for them to be beaten in their game. The newer companies do not have the option of sparing money on promotion and therefore cannot offer unsustainable prices.

Moderate to High

Competitive Rivalry

This force has a high impact as there are private labels that provide heavy discounts in comparison with established brands. Therefore, the weak players get ousted from the market, which is already extremely fragmented with the presence of a large number of players. More MNCs are joining the bandwagon, with established brands investing in branding for demanding higher prices, making the overall situation difficult for gaining market share.


Table 3: Porter’s Five Forces Analysis

Source: (Singh and Gopal 2016)

With ideally around 600 products dispersed in various FMCG arrangements, the product portfolio of Patanjali is broad and has ended up being clashing, which is causing disorder among customers and besides moving a long way from its middle-value proposition. For instance, the noodles or move class falls neither under the Ayurveda segment nor it is an Indian sustenance or recipe, both of which were the focus to Patanjali. Furthermore, just by saturating the market at first with the absolute volume of their different products, now it is acting test to the association to keep up demand and supply, to evade stock-out of top-notch products and clearing the less selling products (Rajeev et al. 2015).

Opportunities and Threats: SWOT Analysis

The supply and distribution of Patanjali are deficient and sporadic. Various a times, there is more supply than required and now and again, there is low supply. In accordance to one source, the fill rates of Patanjali products are to the extent of 40%. Conversely, multinational consumer goods associations, for instance, Nestlé and HUL have a fill rate of 85-90%. The distributor edges are as low as 5% stand out from 8-10% as presented by other FMCG associations. A vast segment of Patanjali products is in this way sold on MRP inferable from low edges (Raizada 2016).

Scenario A: The economy would suffer with the wastage of products

Scenario B: The supply remains stable, but there is no demand due to competitiveness

Scenario C: The excessive battle for supplying products would not present products to consumers

Scenario D: Excessive supply would lead to wastage of raw materials

Patanjali has grown up to become a big organization in the Indian FMCG sector, possessing a lot of resources and capabilities. For understanding, if all those are a good source of sustainable competitive advantage, a VRIN analysis can be performed on them. Each of the company's capabilities is discussed below:



Competitive advantage

Production plant

PAL have their main production plant cum headquarters in Haridwar. It contains world-class state-of-the-art facilities of their manufacturing needs, increasing its overall value the value is acquired not just from production but from the production of natural and herbal products. It is rare and the scale of production is unprecedented. It is neither an expensive part nor is it inimitable. It is, however, substitutable as the production cannot be conducted without the plant.


Technology and knowledge application

All raw materials are Ayurveda derived and naturally available. PAL has expertise in arriving at the magic product with the means of herbs, medicinal knowledge, and mixing. Herbal product competitors like Dabur do not do so on a scale like PAL. There is no other solution to this, thus making it inimitable and non-substitutable.


Brand image

Patanjali piggybacks on Baba Ramdev’s image, him being the brand ambassador of the brand and projecting the brand as a natural, organic and healthy option to all problems. His easily adoptable yoga lessons gave him enough credibility for relaunching Patanjali and associating it with better health. He is the reason for the brand’s success and the sleepless nights of the other FMCG brands. A brand ambassador of such a stature is rare, making the brand image non-imitable. But, it is substitutable as brand image and credibility can be built in other ways too. 


Government and social affiliations

Baba Ramdev boasts of having strong associations with ruling parties and the brand is Swadeshi in essence, completely in alignment with the national political party tone. Thus, the brand relishes strong bond and reputation with authority. This resource might be valued but is not rare, as other companies also have ties and effect with the political parties. It is, however, non-substitutable as Patanjali boasts of access to land for establishing food parks, result of good relations with governments. Nevertheless, provided the ruling party changes, the situation for PAL might become difficult for them in obtaining such benefits.


Arogya Kendras and chikitsalayas

Patanjali has their own way of building brand credibility, different from other FMCG brands, which at the end of the day distinguishes it from other others. There are certified ayurvedic doctors who have assisted in increasing the trust factor for PAL. Positive word of mouth publicity has turned the brand into something rare, valuable and non-substitutable. Other FMCG giants cannot go for this strategy as they do not have the option of hiring ayurvedic doctors for recommending their products and cosmetic products, nor do they have the option of hiring doctors with MBBS degrees as that would be a costly value proposition.


Table 5: VRIN Analysis

Source: (Sharma et al. 2016)

Michael Porter proposed cost leadership, differentiation, and niche as the three-rule generic competitive strategies. PAL’s strategy incorporates all these three strategies. Within every way that really matters no promotion and progression costs, stood out from contenders, and moreover, with cut down affiliation and retail costs, PAL has inbuilt cost leadership in its supply chain. The differentiation strategy is worked via the genuine Ayurvedic interface through the originator Baba Ramdev. While HUL associated with Arya Vaidya Sala for its Ayush products, it has not been progressed as a durable proposition nor has it been reproduced in product claims. The forte strategy of PAL communicates to the accentuation on prosperity mindful middle-class customers transversely finished mini-metros and critical towns. Mate has found its place in the supernatural and yogic success that Baba Ramdev carries and the ordinary, Ayurvedic prosperity perspective that the products give (Chowdhary and Gopinath 2013).

Meanwhile, PAL has picked a strategy that tries to oppose Porter's prepare on business description. Instead of portraying its business around just Ayurvedic prosperity and individual care products, the association has expanded into staple goods, for instance, atta, home care products, for instance, chemical powders and washing bars, and breakfast products, for instance, oats and noodles. The highlight is in every way on the considerable old marketing system of brand growths utilizing the umbrella brand liberality of Patanjali. Rather than generic product or business strategies, PAL is focused on working up its own 'generic home strategy', endeavoring to change over its consumer homes into Patanjali homes! While in one standpoint such a broad strategy would assist in climbing up quickly and moreover fulfill the goal of giving outrageous competition to MNCs on their home turf, the strategy has its tests (Upadhyay-Dhungel and Dahal 2014).

Porter's Five Forces Analysis

Patanjali has also familiar FMCG products with diversifying in the market. Indian FMCG market is a market which has a broad assortment of customers. There are various opponents in each one of the classes and notwithstanding the way that they all have tantamount products open at for all intents and purposes similar prices, Patanjali is attemptig to demonstrate it differing through their marketing strategies. Regardless, entry to this business is straightforward (low entry limits) and this reality has been exploited capably to achieve joint favorable position for both Patanjali and the consumers (Tripathi and Khandelwal 2016).

As observed in the above Image, the huge products of the Patanjali Food Park are sharbat (Juice concentrates), stick, salt, chyawanaprash, flour candy, washing powder, and so forward. The good position with each one of these products is that these are made of normal products and don't have any responses at all. In any case, as there are such a substantial number of players existing in the market, that Patanjali products have an extraordinary competition to look with.

As a rule, product/market strategy of the Patanjali social occasion can be fathomed through Ansoff's Matrix as demonstrated as takes after. Ansoff's matrix, paying little respect to be more than a fifty-year-old marketing tool, still has a wonderful supporter of understanding the diversification strategy of the affiliation. It can be unmistakably agreed from the matrix that Patanjali Yogpeeth is diversifying itself from ayurvedic pharmaceutical to FMCG products (Rawal 2016).

PAL can acquire growth by means of growth hacking process. It rotates around 5 fundamental stages: Acquisition, Activation, Retention, Referral, and Revenue.

Acquisition stage characterizes how to procure clients from various channels and Activation is the point at which the client chooses to make a move and utilize your product. Patanjali has a noteworthy preferred standpoint over different organizations as it is connected with an extremely well-known identity – Baba Ramdev, who has coordinate communication with the consumers that have made a positive and dependable face value of Patanjali and advanced the brand even universally. 

Digital Marketing has assumed a noteworthy part in the achievement of Patanjali as well. Patanjali is normal in advancing new products through messages with the assistance of Digital Marketing and Content Marketing Tools; Patanjali has pulled in consumers by barraging promotions and teaching them on the significance of Ayurvedic products through websites and articles. Once the client has turned into a dynamic client of your product, this stage causes the client to return and stay draw in with your product for a more drawn out run. At the point when the client begins to allude or prescribe your product to companions and offers the positive surveys. Baba Ramdev has proposed Patanjali's advancement through media and online campaigns and bolstered Indian enterprises by making demands of Swadeshi Products (Brown and Ellis 2017).

Challenges Faced by Patanjali Ayurved Limited

An essential stage for an organization, clients completely understand the value of your products and paying for it. Patanjali is one of the few companies who has focused on the groups of onlookers through two websites mediums: Corporate and E-commerce.


Baba Ramdev’s Patanjali Ayurved Limited company has been able to make a disruptive progress in the FMCG sector. Within a short span of time, the company has been able to displace market giants and has become synonymous with ayurvedic products. Even though the complete demand is not yet fulfilled, efforts are on the rise from the company’s side for increasing sourcing and maintaining a steady supply of raw materials, even in adverse situations. The company is completely focused on providing the masses with good products that do not compromise on health. The company is not just focused on selling only ayurvedic medicines, but also on diversifying their operations into the selling of FMCG products. With the discussions on the available opportunities of growth for PAL, the company can reach new heights and place India in a secure position in the global retail market. This report carried out a thorough strategic analysis of Patanjali Ayurved Limited and through that came to conclusions and provided growth recommendations accordingly. The organizational research was carried out to find out growth opportunities for the organization.


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