operations in Nepal in 1986. Surya Nepal is now the largest private sector enterprise in Nepal
and a subsidiary of ITC Limited, India, the balance shares are held by 20 Nepalese individual &
corporate shareholders and British American Tobacco (Investment) Limited, UK.
Surya Nepal’s business includes manufacture and marketing of cigarettes and readymade
garments in Nepal as well as exports of ready-made garments with a total turnover of over US
$100 million.
Surya Nepal’s commitment to its corporate vision “enduring value for all stakeholders” has been
uncompromising through the years and is reflected in every product, process and service
provided by the company.
The company was awarded the prestigious FNCCI National Excellence Award during 2007 for
being the best-managed corporation in Nepal. The company is also the recipient of various
national safety and environmental awards and with the constant focus on systemic work
processes, both cigarette and garment factories are ISO- 9001:2000 certified.
Surya Nepal is planning to open a new cigarette plant in Tanahu to expand its business, Indian
news agency PTI reported Friday. The company is preparing to install the cigarette production
plant in the western hilly district within two years at the cost of IRs 150 million.
Surya Nepal’s decision to establish the cigarette plant in Tanahu comes with ITC’s plan to
expand its international market. The new plant will create an additional employment for about
100 people.
Surya Nepal, the highest tax payer among Indian joint ventures, produces 15 brands of cigarettes
and enjoys about 90 percent market share in Nepal.
Questions:
a. Why do you think Surya Nepal is focusing in Nepal’s hilly area than in Terai?
b. Identify and analyze the growth model of Surya Nepal.
c. What could be the economic and social impact of the new factory in Tanahu?
(a) Why do you think Surya Nepal is focusing in Nepal's hilly area than in Terai ?
Here, Surya Nepal Private Limited is an Indo-Nepal-UK joint venture enterprises, currently the largest private sector enterprise in Nepal.It is a subsidiary of ITC Limited India. Surya Nepal Private Limited is currently involved in manufacturing, Marketing and Exports of cigarettes and readymade garments. Surya Nepal Private Limited produces 15 brands of cigarettes and holds about 90 percent market share in Nepal and exports readymade garments with a total turnover of more than US $100 million.
Now, Surya Nepal Private Limited is planning to open a new cigarette plant in Tanahu (A western hilly district of Nepal). As asked in question Surya Nepal Private Limited is currently focusing in Nepal's hilly areas than in Terai. In my opinion Surya Nepal Private Limited is focusing in Nepal's hilly areas because they are implementing the geographical segmentation model of Market Segmentation.
Generally, Companies like Surya Nepal Private Limited uses Geographic Market Segmentation strategy to target product and services to the people based on their particular geographical location. In my opinion out of various geographical variables following variables are influencing Surya Nepal Private Limited to implement geographical segmentation strategy.
1. Location
In Nepali market buying preferences of customers may differ based on the geographical location. In Surya Nepal Private Limiteds case buying preferences of hilly areas people might be in favour of company than of Terai area people so they are focusing on hilly area.
2. Climate
In Nepal climate varies depending on the geographical area. Climate of hilly area is completely different than of Terai area. Terai region experiences climate type with dry winter and hot summer where as hilly region experiences climate type with hot in summer and cold in winter. Since the main production of Surya Nepal Private Limited is focused on cigarettes and readymade garments the products might be useful in hilly region climate type than in Terai region climate type.
3. Culture
As climate varies differently in different regions culture of people also varies depending on the geographical area or regions. And buying preferences of people also varies as per their culture. I think that most of the Terai region people's have culture of consuming "Gutkha" products than cigarettes products and have culture of wearing traditional "Dhoti Kurta" instead of readymade garments, So the company is focusing more in the hilly areas market.
(b) Identify and analyze the growth model of Surya Nepal Private Limited.
Basically growth models for a specific company/enterprises refers to various strategies to attract more customers for growth of their business. Growth models for companies might differ as per their current market position and as per their stages of the establishment too.
Here, Surya Nepal Private Limited is a well established one of the top private sector enterprise in Nepal and has already made a mark in the Nepali market. Being in a strong position already they are now in a stage to focus on different growth models to enhance and expand their business such as improve in quality of the existing products, adding other varieties of the products, minimizing the production and operating cost to lower prices of the products and to increase the publicity level of the existing products through different advertisement activities.
But as mentioned in the case the Surya Nepal Private Limited is planning to open a cigarette plant in Tanahu to expand its business. The company is preparing to install the cigarette production plant in the western hilly district within two years at the cost of IRs 150 million. Considering the fact that the company is planning to install cigarette plant in Tanahu and Tanahu district being near to the Terai region. We can come to a conclusion that the company is implementing "Entering New Segment) Market" growth model.
(c) What could be the Economic and Social Impact of the new factory in Tanahu ?
Surya Nepal Private Limited being the largest private sector enterprise in Nepal. Installation of new cigarette plant in Tanahu will bring various impacts on the environment of Tanahu. Out of them the economic impact and the social impacts that the new factory may cause in Tanahu are described below.
(i) Economic Impact
As mentioned in the case the cost of installation of the new factory is about IRs 150 million and the new plant can create an additional employment for more than 100 people.Which i think will improve in personal income level of the people nearby, will help to increase and improvise standards of living through employment opportunities and other benefits from the factory. Other indirect impacts of the new factory might occur through purchase and sales of items in local markets such as selling of raw materials to the factory and might be through the purchase of produced goods from factory for business purposes.
(ii) Social Impacts
There are number of benefits for Tanahu as a result of new factory installation. Since the company is one of the largest enterprise in Nepali market. There might be huge traffic of people with different culture and different societies. Which i think will open up the local community of Tanahu to the wider world, new ideas, new experiences and various other new ways of thinking which they can use for development and uplifting of their society.
