The document discusses challenges faced by Demak Lanka Sales & Services, a motorcycle company in Sri Lanka. It analyzes how internal and external environmental factors affect the company. Internally, management changes led to issues with employee morale and cultural changes. Externally, economic changes from inflation, strong competition, and government regulations impacted sales. The company addressed these challenges through motivational programs, price adjustments with promotions, strengthening dealer relationships, and customizing offerings for different market segments. Managing environmental factors and continuously solving problems is key to business success.

1. The Open University of Sri Lanka
Bachelor Management Studies,
Academic Year 2015/2016,
Management theory and Practice
MUC1201.
Assignment No 301
Student Name : M Dharshan
Registration No : 515428795
ID No : 820753429v
Date Of submit : 14th of August, 2015.

2. Organizations are depending on environment
irrespectiveof their size and type. As environment can
cause for favorableand unfavorableeffects to the
smooth functioning, organizationhave to respondto
environment changes?
An organization must have the ability to examine and make changes based on
environmental factors that affect its performance. The use of tools to analyze these
environmental factors is the key to a successfulorganization.
There are two types of environmental factors: internal environmental
factors and external environmental factors. Internal environmental factors are
events that occurwithin an organization. Generally speaking
Internal environmental factors
Internal environmental factors are easier to control than external environmental
factors.
 Management changes
 Employee morale
 Culture changes
 Financial changes
External environmental factors
External environmental factors are events that take place outside of the
organization and are harder to predict and control.
 Changes to the economy
 Threats from competition
 Political factors and Government regulations
 Technology improvement
 The industry itself

3. 1. Identify a business organization and explain how
environment affects to the activities of the selected
originations.
In 2013 under DNC Asiatic holding sdn, Bhd the company’s 1st motorcycle
assembly plant expansions in Sri Lanka.
The purposeof this assignment is to critically analyze the context within which the
company operates by analyzing the external and internal environment. In order to
achieve this different analytical tools and models will be applied. Then the
objectives and strategy of Demak Lanka Sales & services (PVT) Ltd will be
identified and evaluated.
1.1 Internal environmental factors
1.1.1 Management change
The Demak Lanka’s history they started the business on middle of the 2013 those
day company managed by Malaysian management, they sell motor bikes to Sri
Lanka the overall market per month was 13000 units including Bajaj, TVS, Hero,
Yamaha and Honda as per Registration Motor vehicles departments Repots .
From June 2013 to December 2013 Demak Motor cycles was contribute just
only 2% Market share,

4. June 2013 to December2013.
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Jan Feb Mar Apr May Jun Jul
Total sales
Demak sales
Bajaj
41%
Honda
24%
TVS
11%
Hero
13%
Yamaha
4%
Demak
4%
Others
3%
Total

5. When the New Year stared 2014 Malaysian top management decide to
change the business for local manager, they done well most of experience players
were knowledgeable about completion, culture and geographical situation also they
implement some good process delivery system and fill the channel gaps from this
process Demak capture the 4 % of market share on overall sales.
January 2014 to July 2014.
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Jan Feb Mar Apr May Jun Jul
Total sales
Demak sales
Bajaj
41%
Honda
24%
TVS
11%
Hero
13%
Yamaha
4%
Demak
4%
Others
3%
Total

6. 1.1.2 Employment morale.
As per above management changes of Demak Lanka employees morale got
effected. Some of the middle managers and executives had some issues to work
with new process.The reason was they already reported to Malaysian top
management on past, Now they feel uncomfortable to work under new manager
they had a prestige problems.
1.1.3 Cultural changes.
The inter company culture was change by new Local managers they kicked of the
Malaysian processes in company.
Following the Malaysian management process and culture to organization it
similar to international business environment very tuff to follow but neat and
accurate for run the business well.
But now local managers just chase the sales only, they never think about
organizational ethics and rules. After six month the Demak Lanka were got
complicated culture it seems like a puzzle.
1.1.4 Financial changes.
Financial mentioned organization was got some changes after the new
management they follow the costcutting in every part of organization, it reduce the
10% of lose in financial quarter, limited resources only to be use to achieve the
company goals.

7. 1.2 External environmental factors.
1.2.1 Economical changes.
Economical changes can find by 2 models Micro economical and Macro
economical.
Micro Economicalfactors
 Market size
 Demands
 Supply
 Competitors
 Distribution chains
Macro economicalfactors
 Interest rate
 Taxes
 Inflations
 Currency exchanges

8. Micro Economicalfactors
The micro economical was highly effect the Demak Lanka Marketsize was
13,000 to 15,000 units’ motor cycles per month, the former Malaysia team was not
create a good Demand for the relevant product.
Competition was highly influence in the market.
Bajaj 46%, Honda 22%, TVS 10%, Hero 12% but Demak was contributing just 4%
only, the reason was they didn’t fill the channel gap and Distribution chain all
over the country.
Bajaj
46%
Honda
22%
TVS
10%
Hero
12%
Yamaha
3%
Demak
4%
Others
3%
Total

9. Macro economicalfactors
Macro economy factor was not affected that much to Demak Lanka customer’s to
buy a motor bike, the leasing companies was provide the same Interest rate to
Demak Lanka also as usual competition.
Taxes will not effect to Demak Lanka because they are brought to Sri Lanka
by Board of Investments (BOI) project of government terms and conditions.
Inflation affected the business smaller percentages to Demak Lanka, by dollars
rate changes they have to change the Prices as per the money Inflations.
1.2.2 Threat from competition.
Demak Lanka’s competitors become highly Problems to company, they
approached the Demak dealers to sell them productand they give some good offers
to Demak Lanka’s middle managers and took them to work with competition
organizations.
1.2.3 Political and Government regulations.
Political and Government regulations not impact to Demak Lanka highly, the
business was brought to Sri Lanka by Government from Malaysian investments.
But the political parties can be a threat to them, if Government got change may be
new Government can cancel all international investment in Sri Lanka.

10. 1.2.4 Technological Improvement.
On the 21st century is a Technology world basically the competition they introduce
to market by new technologies.
Bajaj - DTSI
Hero – FI
TVS – CCVTI
Honda- HTC
These all technologies improve by competitors to give better performance and for
the good millage, but Demak Lanka still pending on them technological
improvements.
1.2.5 Social and Geographical interference.
In Sri Lanka geographical and social cultural was different by town to town. It
affected to Demak Lanka to sell motor bikes, they mostly focus on premium bike
segments those kinds products is not useful to Famers and fisher men’s
They need some think with carriers to improve the business and incomes,
basically city people like Demak motor bikes who works in executive levels in
market mostly 80% of people who are live in 3rd classes they are famers,
fishermen’s, carpenters, and black smiths.
The Demak Lanka need to bring some bikes to 3rd class people use also.

11. 2. Explain with exemplas how managers would face the new
challenges of today’s business environments.
Growing businesses face a range of challenges. As a business grows, different
problems and opportunities demand different solutions - what worked a year ago
might now be not the best approach. All too often, avoidable mistakes turn what
could have been a great business.
2.1 Internal business environmental.
2.1.1 Management changes.
As per Demak Lanka management changes made many things in organization the
process, culture and systems also.
The solution can be only one as a manger we need to co-operate with them and we
need to practice to new management’s theory.
2.1.2 Employee’s morel.
Mention organization was had a problem one of the sales staff on his past he
work well and he achieves the target. after 2 years he got fade up and his
preferment’s was gone down the management set him for a motivational program
and changed his area to work, he stared his work freshly and new area gives him
new view to work, after he achieve his organization targets.
2.1.3 Financial changes.
The Demak Lanka management change was financially made big threat to
organization, they work for costcutting stopped the promotions and ATL activities
press ads, TV commercials and the sponsorships.
At this situation the sales team was struggle to achieve the target without the
ATL campaigns. The sales team set for a discussionand they try it in other way for
small BTL activities and for institutional sales (group sales) on that way they prove
the achievement to organization and make them profit.

12. 2.2 External environmental factors.
2.2.1 Changes to economy.
Basically Demak Lanka was depending on Malaysian Branded Motorcycles. On
2014 part of the inflation the US dollars was gone up it interfere Demak Lanka’s
productPrices they had to increase the prices for 3%.
The management handle the situation perfectly they tookup the price for 5%
and they give some free attachments to customers.
E.g. Fora motorbike customer get free Registration, free insurance or additional
helmets.
2.2.2 Threat of competitors.
The Demak Lanka’s competitors was very strong in this business on Jaffna Demak
Lanka with a strong dealer to sell motorbikes some of the market leaders were
approachDemak Lanka’s dealer to sell those motor bikes.
On this situation Demak Lanka made for Jaffna dealer for a better
commission structure and keep with them.
2.2.3 Political and government regulation.
The government can interfere to any business, recently the project was
started for 50,000/= rupees government organization employee’s got motorcycles,
the tender got by Hero motor bikes and Baja, at this situation Demak Lanka lost
the sales bay 75% market share,
But Demak Lanka discus with Malaysian management and they arranged a
promotion Plane to Privet sectors employee’s 20,000/= rupees discount, they grow
the sales to 50% and went away from break even points.

13. Creating a startup, or managing any business, is all about problem
solving. Some people are good at it and some are not – independent of
their IQ or their academic credentials (there may even be an inverse
relationship here). Yet I’m convinced that problem solving is a learnable
trait, rather than just a birthright.
Entrepreneurs who are great problem solvers within any business
are the best prepared to solve their customers’ needs effectively as well.
In fact, every business is about solutions to customer problems – no
problems, no business. Problems are an everyday part of every business
and personal environment.