Description
Environmental scanning is one component of the global environmental analysis. Environmental monitoring, environmental forecasting and environmental assessment complete the global environmental analysis.
Business Environment
An Introduction
Meaning And Definition
?
Business Environment means the aggregates of all conditions, events and influences that surround and affect it. - Keith Devis
Importance of the Study of Business Environment
To develop its broad strategies and long term policies ? To analyse its competitors’ strategies and thereby formulate effective counter strategies ? Knowledge about the changing environment will keep the organisation dynamic in its approach ? Enables the firm to foresee impact of socio-economic changes
?
Factors Determining Business Environment
?
There are two sets of factors influencing business organization
? ?
Internal – Controllable Factors External – Uncontrollable Factors
Important Internal Factors
Organisational Resources ? Research and Development ? Technological Development ? Financial Capabilities ? Marketing Capabilities ? Operations Capabilities
?
External Environment
The term “Business Environment” generally refers to the external environment. ? It includes the factors outside the firm and pauses opportunities and threat for the firm.
?
Important External Factors
Economic Factors ? Social and Cultural Factors ? Political Factors ? Technological Factors ? International Factors ? Environmental and Ecological Facotrs ? Legal Factors
?
Economic Factors
Economic System ? National Income and Per Capita Income ? Distribution of Income and Wealth ? Infrastructure Development ? Exploitation of Natural Resources ? Capital Formation ? Employment
?
Economic System
?
?
Economic systems revolve around how people in those societies allocate scarce resources to satisfy competing wants and needs. An Economic System is a mechanism which deals with the production, distribution and consumption of goods and services in a particular society and comprises of people, institutions and their relationships. An economic system defines the institutional framework regulating the business environment in a country.
?
Economic Systems
? ? ?
Market Economy OR Capitalism
?
Adam Smith (Wealth of Nations-1776)
Karl Marx (Das Kapital-1886)
Planned Economy OR Communism
?
Mixed Economy
Free Market of Adam Smith
“The uniform, constant and uninterrupted effort of everyman, to better his own condition, the principal from which national and public as well as private opulence is originally derived, is frequently powerful enough to maintain the natural progress of things towards improvement, in spite both of the extravagance of government, and of the greatest errors of administration.”
How Does This Happen?
?
Buyers and sellers negotiate prices in a free market and carry out transactions of buying and selling that leave all parties mutually better off.
Capitalism
?
?
? ?
System based on Free Market Capital: Owned by a minority of individual Private Property Rights: legal right to use this capital for private gain Market System (Supply and Demand Factors)
?
? ? ?
To distribute of goods & Services To allocate resources To establish income levels, wages, rents & profits Govt. role is limited
?
Difference between market economy and planned economy lies not in the degree of government influence but in how that influence is used.
Milton Friedman
?
Economic order can emerge as the unintended consequences of the actions of many people, each seeking his own interest.
Important Merits of Capitalist System
Freedom of enterprise ? Encourage initiative and entrepreneurial skills ? Promotes R &D and innovation ? Offers choice to consumers ? Promotes fast economic Development
?
Demerits of Capitalist System
Ignores the production area with less profit possibilities. Priority area are ignored ? Leads to accumulation of wealth and so monopoly ? Causes inequality in distribution of income and wealth ? Results in degradation of natural resources
?
Communism
As Explained by Marx
The natural evolution of communism after capitalism ? State owns all factors of production and distribution ? The workers reap the profits from their labour rather than subsistence wages.
?
Important Limitations
Government ownership of factors of production. No appropriation of profit ? Limited choice to consumers ? Absence of individual freedom
?
Important Advantage
Equitable Distribution of income and wealth ? Judicious use of natural resources
?
Mixed Economy
?
Equal importance to private and public sector. However, major factors of production and distribution are owned and managed by the state.
Innovations in Mixed Economy
?
Market Socialism:
?
?
?
Market socialism refers to various economic systems where the means of production are publicly owned, managed and operated for a profit in a market economy. the fundamental difference between a traditional socialist economy and a market socialist economy is the existence of a market for the means of production and capital goods under market socialism. E.g. Systems evolved in Yugoslavia , Hungary
Innovations in Mixed Economy
?
Socialist Market Economy
?
?
One of the major changes between the old planned economy and the socialist market model is the corporatization of state institutions. E.g Chinese model
doc_665730311.ppt
Environmental scanning is one component of the global environmental analysis. Environmental monitoring, environmental forecasting and environmental assessment complete the global environmental analysis.
Business Environment
An Introduction
Meaning And Definition
?
Business Environment means the aggregates of all conditions, events and influences that surround and affect it. - Keith Devis
Importance of the Study of Business Environment
To develop its broad strategies and long term policies ? To analyse its competitors’ strategies and thereby formulate effective counter strategies ? Knowledge about the changing environment will keep the organisation dynamic in its approach ? Enables the firm to foresee impact of socio-economic changes
?
Factors Determining Business Environment
?
There are two sets of factors influencing business organization
? ?
Internal – Controllable Factors External – Uncontrollable Factors
Important Internal Factors
Organisational Resources ? Research and Development ? Technological Development ? Financial Capabilities ? Marketing Capabilities ? Operations Capabilities
?
External Environment
The term “Business Environment” generally refers to the external environment. ? It includes the factors outside the firm and pauses opportunities and threat for the firm.
?
Important External Factors
Economic Factors ? Social and Cultural Factors ? Political Factors ? Technological Factors ? International Factors ? Environmental and Ecological Facotrs ? Legal Factors
?
Economic Factors
Economic System ? National Income and Per Capita Income ? Distribution of Income and Wealth ? Infrastructure Development ? Exploitation of Natural Resources ? Capital Formation ? Employment
?
Economic System
?
?
Economic systems revolve around how people in those societies allocate scarce resources to satisfy competing wants and needs. An Economic System is a mechanism which deals with the production, distribution and consumption of goods and services in a particular society and comprises of people, institutions and their relationships. An economic system defines the institutional framework regulating the business environment in a country.
?
Economic Systems
? ? ?
Market Economy OR Capitalism
?
Adam Smith (Wealth of Nations-1776)
Karl Marx (Das Kapital-1886)
Planned Economy OR Communism
?
Mixed Economy
Free Market of Adam Smith
“The uniform, constant and uninterrupted effort of everyman, to better his own condition, the principal from which national and public as well as private opulence is originally derived, is frequently powerful enough to maintain the natural progress of things towards improvement, in spite both of the extravagance of government, and of the greatest errors of administration.”
How Does This Happen?
?
Buyers and sellers negotiate prices in a free market and carry out transactions of buying and selling that leave all parties mutually better off.
Capitalism
?
?
? ?
System based on Free Market Capital: Owned by a minority of individual Private Property Rights: legal right to use this capital for private gain Market System (Supply and Demand Factors)
?
? ? ?
To distribute of goods & Services To allocate resources To establish income levels, wages, rents & profits Govt. role is limited
?
Difference between market economy and planned economy lies not in the degree of government influence but in how that influence is used.
Milton Friedman
?
Economic order can emerge as the unintended consequences of the actions of many people, each seeking his own interest.
Important Merits of Capitalist System
Freedom of enterprise ? Encourage initiative and entrepreneurial skills ? Promotes R &D and innovation ? Offers choice to consumers ? Promotes fast economic Development
?
Demerits of Capitalist System
Ignores the production area with less profit possibilities. Priority area are ignored ? Leads to accumulation of wealth and so monopoly ? Causes inequality in distribution of income and wealth ? Results in degradation of natural resources
?
Communism
As Explained by Marx
The natural evolution of communism after capitalism ? State owns all factors of production and distribution ? The workers reap the profits from their labour rather than subsistence wages.
?
Important Limitations
Government ownership of factors of production. No appropriation of profit ? Limited choice to consumers ? Absence of individual freedom
?
Important Advantage
Equitable Distribution of income and wealth ? Judicious use of natural resources
?
Mixed Economy
?
Equal importance to private and public sector. However, major factors of production and distribution are owned and managed by the state.
Innovations in Mixed Economy
?
Market Socialism:
?
?
?
Market socialism refers to various economic systems where the means of production are publicly owned, managed and operated for a profit in a market economy. the fundamental difference between a traditional socialist economy and a market socialist economy is the existence of a market for the means of production and capital goods under market socialism. E.g. Systems evolved in Yugoslavia , Hungary
Innovations in Mixed Economy
?
Socialist Market Economy
?
?
One of the major changes between the old planned economy and the socialist market model is the corporatization of state institutions. E.g Chinese model
doc_665730311.ppt