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Srilanka (Tea Sector) A GLOBAL/COUNTRY STUDY AND REPORT ON SRILANKA (TEA SECTOR) Submitted to: GUJARAT TECHNOLOGICAL UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF Masters of Business Administration UNDER THE GUIDANCE OF Ms. Shyma Gokul Assistant Professor Submitted by: Shri H.D. Gardi MBA College, Nyara, Rajkot. College Code: 780 Affiliated to Gujarat Technological University Ahmedabad May, 2012 [1] Chapter-I Introduction [2] Country Selection Sri Lanka is a neighbor country of India. Sri Lankan culture is match with Indian culture. Because of major population of Sri Lanka are Indian people. The environment of Sri Lanka is match with Indian environment. The official name of Sri Lanka is a Democratic Socialist Republic of Sri Lanka. GEOGRAPHY OF SRI LANKA [3] Area 65,610 sq. km. (25,332 sq. me.). Population 21.30 million of the Sri Lanka. Annual population growth rate 0.9% of the Sri Lanka. Cities: Capital- Colombo population 1.30 million, Sri Jaywardenepur Kotte is the officially designed capital and is the site of the parliament. Other major cities are Kandy with 1,50,000 population, Galle with 1,10,000, and Jaffna with 1,00,000. Terrain is a coastal plains in the northern side of the Sri Lanka. Hills and Mountains in southern & central Sri Lanka. It is high at 2,133 meters (7,000 ft.) Climate of Sri Lanka: Tropical, Rainy seasons light in northeast, fall and winter, with average rain fall of 50 inch. Heavy rains fall in south-west Sri Lanka i.e. average 200 inch. Religion wise division of people in Sri Lanka: Sinhalese 74% of the total population. Tamils 18% of the total population. Muslims 7% of the total population. Other 1% of the total population. Languages speak in Sri Lanka: Sinhala and Tamil (official), English. Educational details of the Sri Lanka: There is compulsory education up to 14 years children’s. The primary school attendance is 96.50%. In Sri Lanka, Their literacy ratio is very high i.e. 91% literacy rate in Sri Lanka. Health of the Sri Lankan people: [4] The infant mortality rate of the Sri Lankan people is 18.57 per 1000. The life expectancy of men in Sri Lanka is 73 years. The life expectancy of women is 77 years. ECONOMY OF SRI LANKA Sri Lanka has mostly had strong growth rates in previous years. Sri lanka economy has worth $ 59 billion, and per capita GDP of about $7000 (PPP). In GDP per capita terms, it is ahead of other countries in the South Asian region. Tea export, Apparel, textile, Rice production and other Agricultural products, Tourism are the country’s main economic factor. After 2004 the government has concentrated on mass production of goods for domestic consumption such as rice, grain and other Agricultural products. Economic growth suffered in the following years as the economy faced many global and domestic economic and political challenges. Overall, average annual GDP growth was 5.2% over 1991-2000. In 2001, however, GDP growth was negative 1.4%--the first negative growth since independence. The economy was badly affected by a series of global and domestic economic problems and affected by terrorist attacks in Sri Lanka and the United States. The crisis bare the fundamental policy failures and structural imbalances in the economy and the need for reforms. Parliamentary elections were held in December, a pro-capitalist party was elected to Parliament, while the socialism oriented Sri Lanka Freedom Party retained the Presidency. [5] The government of Ranil Wickremasinghe of the United National Party has indicated a strong commitment to economic and social sector reforms, deregulation, and private sector development. In 2002, the economy experienced a slow recovery. Early signs of a peace dividend were visible throughout the economy—Sri Lanka has been able to reduce defense expenditures and had started to focus on getting its large, public sector debt under control. Also, the economy has benefited from lower interest rates, a recovery in domestic demand, increased tourist arrivals, a revival of the stock exchange, and increased FDI. In 2002, economic growth reached 4%, helped largely by strong service sector growth. The agricultural sector of the economy staged a partial recovery. Total FDI inflows during 2002 were about $246 million. [6] Chapter-II Factors Affecting Selection of the country [7] PESTLE ANALYSIS PESTLE is an analytical tool which considers external factors and helps to think about their impacts. Is a useful tool for understanding the “big picture” of the environment in which we are operating By understanding our environment, we can take advantage of the opportunities and minimize the threats. This provides the context within which more detailed planning can take place to take full advantage of the opportunities that present themselves. THE FACTOR IN PESTLE ANALYSIS P – Political (The current and potential influences from political pressures) Government type and stability Freedom of the press, rule of law and levels of bureaucracy and corruption Regulation and de-regulation trends Social and employment legislation Tax policy, and trade and tariff controls Environmental and consumer-protection legislation Likely changes in the political environment E – Economic (The local, national and world economic impact) [8] Stage of a business cycle Current and projected economic growth, inflation and interest rates Unemployment and supply of labor Labor costs Levels of disposable income and income distribution Impact of globalization S - Sociological (The ways in which changes in society affect the project) Cultural aspects, health consciousness, population growth rate, age distribution, Organizational culture, attitudes to work, management style, staff attitudes Education, occupations, earning capacity, living standards Ethical issues, diversity, immigration/emigration, ethnic/religious factors Media views, law changes affecting social factors, trends, advertisements, publicity Demographics: age, gender, race, family size T - Technological (How new and emerging technology affects our project / organization) Maturity of technology, competing technological developments, research funding, technology legislation, new discoveries Information technology, internet, global and local communications Technology access, licensing, patents, potential innovation, replacement technology/solutions, inventions, research, intellectual property issues, advances in manufacturing [9] Transportation, energy uses/sources/fuels, associated/dependent technologies, rates of obsolescence, waste removal/recycling L - Legal (How local, national and global legislation affects the project) Current home market legislation, future legislation European/international legislation Regulatory bodies and processes Environmental regulations, employment law, consumer protection Industry-specific regulations, competitive regulations E - Environmental (Local, national and global environmental issues) Ecological, environmental issues, environmental regulations Customer values, market values, stakeholder/ investor values Management style, staff attitudes, organizational culture, staff engagement [10] SWOT ANALYSIS of Sri Lanka Strengths: • Low operational costs • Presence of established distribution networks in both urban and rural areas • Presence of well-known brands in sector Weaknesses: • Lower scope of investing in technology and achieving economies of scale, especially in small sectors • Low exports levels •"Me-too products, which illegally mimic the labels of the established brands. These products narrow the scope of products in rural and semi-urban market. Opportunities: • Untapped rural market • Rising income levels, i.e. increase in purchasing power of consumers • Large domestic market- a population of over one billion. • Export potential • High consumer goods spending Threats: • Removal of import restrictions resulting in replacing of domestic brands • Slowdown in rural demand [11] • Tax and regulatory structure DEMOGRAPHIC PROFILE OF SRILANKA Geography Sri Lanka is an island in the Indian Ocean off the southeast tip of India. Most of the land is flat and rolling; mountains in the south-central region rise to over 8,000 ft. Government Republic. [12] History Indo-Aryan emigration from India in the 5th century B.C. came to form the largest ethnic group on Sri Lanka today, the Sinhalese. Tamils, the second-largest ethnic group on the island, were originally from Tamil region and emigrated between the 3rd century B.C. and A.D. 1200. Until colonial powers controlled Ceylon, Sinhalese and Tamil rulers fought for dominance over the island. The Tamils, mostly Hindus, claimed the northern section of the island and the Sinhalese, who are predominantly Buddhist, controlled the south. In 1505 the Portuguese took possession of Ceylon until the Dutch India Company took control (1658–1796). The British took over in 1796, and Ceylon became an English colony in 1802. The British developed coffee, tea, and rubber plantations. On Feb. 4, 1948, after pressure from Ceylonese nationalist leaders, Ceylon became a self-governing dominion of the Commonwealth of Nations. S.W.R.D. Bandaranaike became prime minister in 1956 and championed Sinhalese nationalism, making Sinhala the country's only official language and including state support of Buddhism, further marginalizing the Tamil minority. He was assassinated in 1959 by a Buddhist monk. His widow, Sirimavo Bandaranaike, became the world's first female prime minister in 1960. The name Ceylon was changed to Sri Lanka on May 22, 1972. The Tamil minority's resentment toward
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