Business Environment
Introduction
y Business Environment means ´the aggregate of all the forces,
factors and institutions which are external to and beyond the control of an individual business enterprise but which exercise a significant influence on the functioning and growth of individual enterprisesµ.
y Business Environment means all those factors that have an
impact on business.
Nature of Business Environment
y Aggregative y Inter-related y Relative y Inter-temporal y Uncertain y Contextual
Significance of Business Environment
y First Mover Advantage y Early Warning Signal y Customer Focus y Strategy Formulation y Change Agent y Public Image y Continuous Learning
Types of Business Environment
Internal Environment
Business Firm
External Environment
Environmental Forces Influencing Business Firm
Internal Environment
y
y y y y y y
Culture The strong culture have contributed to the success of Infosys Technology, Wipro Corporation, TISCO and many others. Mission and Objectives The mission of Dhirubhai Ambani to make Reliance the biggest group in private sector. Top Management Structure Power Structure Company Image and Brand Equity Human and other Resources Also Financial Position & capital structure, distribution system, marketing competence, R&D
External Environment
Elements of External Environment Two major components
Micro Environment
Macro Environment
External Environment ( Micro Environment)
Financiers
Micro Environment
External Environment ( Macro Environment)
y Political and Legal Environment y Social and Cultural Environment y Economic Environment y Financial Environment y Technological and Physical Environment y Natural Environment y Global Environment
Macro Environment
y
Political and Legal Environment
Social and Cultural Environment
Micro Environment
Customers
Internal Environment Culture Mission &Objectives Management Structure Business Firm Power Structure Company Image &Brand Equity Human &other Resources
Competitors
Financiers
Natural Environment
Economic Environment
Publics
Suppliers
Marketing Intermediaries Technological and Physical Environment Financial Environment
Impact of Environment
1.The general level of development of the economy influences the nature and size of demand. The structure of the economy in terms of contributions of agriculture ,industry and services indicates the prospects for different types of business. y For example, decline in interest rates has reduced the cost of capital for business firms in India. y Reforms in industrial and fiscal policies have led to the growth of new businesses such as venture capital funds, mutual funds, leasing companies etc.
Contd..
2. Social and Cultural Environment
Customer service and labour welfare: Demand for reservation in jobs for minorities and women ,equal pay for equal work, rise in middle class are some of the social changes affecting business. 3.Technological,Physical & Natural Environment For example ,cable TV has adversely affected radio and cinema. Xerography has damaged carbon paper business. 4.The supportive political climate made Bangalore and Hyderabad as the hub of Information Technology firms.
Coping with Environmental Changes
y Buffering y Levelling y Anticipation y Rationing y Dominating y Changing
Political & Legal Environment
y The constitution of the country y Political organisation- organisation and philosophy of political
parties, ideology of the govt, nature and extent of bureaucracy, influence of primary groups, business donations to political parties, political consciousness etc. y Political stability- structure of military and police force, election system, law and order situation, President·s Rule, foreign infiltrations etc. y Image of the country and its leaders y Foreign policy
Contd..
y Defence and military policy y Laws governing business and legal system y Flexibility and adaptability of laws- constitutional
amendments and direction of public policies y The judicial system- implementation and effectiveness of laws.
Social and Cultural Environment
y Demographic forces ² size, composition, mobility and y y y y y
geographical dispersal of population. Social institutions and groups Caste structure and family organization Educational system and literacy rates Customs, beliefs, values and life styles. Tastes and preferences of people.
Economic and Financial Env.
y The nature of economic system ² capitalist, socialist or
mixed economy. y Economic structure- occupational distribution of labour force, structure of national output, capital formation, investment pattern, composition of trade, balance/imbalance between different sectors y Economic policies ² industrial policy, export- import policy, monetary policy, fiscal policy etc. y Organisation and development of the capital market ² banking system, securities market etc.
Contd..
y Economic indices ² gross national product, per capita
income, rate of savings and investment, price level, balance of payment positions etc. y Economic infrastructure y Product market and factor market- degree of competition.
Technological and Physical Env
y Rate of technological change y Approaches to production of goods and services y New processes and equipment. y Research and Development systems.
Natural Environment
y Climatic conditions y Agricultural, commercial and other natural resources. y Ecological system. y Levels of pollution.
Global Environment
y The state of the world economy and distribution of world y y y y y y y
output. International economic cooperation. International market structure and competition. Barriers to international trade and investment. National economic policies of different countries. Role of multilateral economic institutions. International economic laws, treaties, agreements, codes and practices. Political system and conditions in different countries.
Contd..
y Cultural factors in different countries. y Growth and transfer of technology. y Growth and spread of MNCs.
doc_504091633.ppt
Introduction
y Business Environment means ´the aggregate of all the forces,
factors and institutions which are external to and beyond the control of an individual business enterprise but which exercise a significant influence on the functioning and growth of individual enterprisesµ.
y Business Environment means all those factors that have an
impact on business.
Nature of Business Environment
y Aggregative y Inter-related y Relative y Inter-temporal y Uncertain y Contextual
Significance of Business Environment
y First Mover Advantage y Early Warning Signal y Customer Focus y Strategy Formulation y Change Agent y Public Image y Continuous Learning
Types of Business Environment
Internal Environment
Business Firm
External Environment
Environmental Forces Influencing Business Firm
Internal Environment
y
y y y y y y
Culture The strong culture have contributed to the success of Infosys Technology, Wipro Corporation, TISCO and many others. Mission and Objectives The mission of Dhirubhai Ambani to make Reliance the biggest group in private sector. Top Management Structure Power Structure Company Image and Brand Equity Human and other Resources Also Financial Position & capital structure, distribution system, marketing competence, R&D
External Environment
Elements of External Environment Two major components
Micro Environment
Macro Environment
External Environment ( Micro Environment)
Financiers
Micro Environment
External Environment ( Macro Environment)
y Political and Legal Environment y Social and Cultural Environment y Economic Environment y Financial Environment y Technological and Physical Environment y Natural Environment y Global Environment
Macro Environment
y
Political and Legal Environment
Social and Cultural Environment
Micro Environment
Customers
Internal Environment Culture Mission &Objectives Management Structure Business Firm Power Structure Company Image &Brand Equity Human &other Resources
Competitors
Financiers
Natural Environment
Economic Environment
Publics
Suppliers
Marketing Intermediaries Technological and Physical Environment Financial Environment
Impact of Environment
1.The general level of development of the economy influences the nature and size of demand. The structure of the economy in terms of contributions of agriculture ,industry and services indicates the prospects for different types of business. y For example, decline in interest rates has reduced the cost of capital for business firms in India. y Reforms in industrial and fiscal policies have led to the growth of new businesses such as venture capital funds, mutual funds, leasing companies etc.
Contd..
2. Social and Cultural Environment
Customer service and labour welfare: Demand for reservation in jobs for minorities and women ,equal pay for equal work, rise in middle class are some of the social changes affecting business. 3.Technological,Physical & Natural Environment For example ,cable TV has adversely affected radio and cinema. Xerography has damaged carbon paper business. 4.The supportive political climate made Bangalore and Hyderabad as the hub of Information Technology firms.
Coping with Environmental Changes
y Buffering y Levelling y Anticipation y Rationing y Dominating y Changing
Political & Legal Environment
y The constitution of the country y Political organisation- organisation and philosophy of political
parties, ideology of the govt, nature and extent of bureaucracy, influence of primary groups, business donations to political parties, political consciousness etc. y Political stability- structure of military and police force, election system, law and order situation, President·s Rule, foreign infiltrations etc. y Image of the country and its leaders y Foreign policy
Contd..
y Defence and military policy y Laws governing business and legal system y Flexibility and adaptability of laws- constitutional
amendments and direction of public policies y The judicial system- implementation and effectiveness of laws.
Social and Cultural Environment
y Demographic forces ² size, composition, mobility and y y y y y
geographical dispersal of population. Social institutions and groups Caste structure and family organization Educational system and literacy rates Customs, beliefs, values and life styles. Tastes and preferences of people.
Economic and Financial Env.
y The nature of economic system ² capitalist, socialist or
mixed economy. y Economic structure- occupational distribution of labour force, structure of national output, capital formation, investment pattern, composition of trade, balance/imbalance between different sectors y Economic policies ² industrial policy, export- import policy, monetary policy, fiscal policy etc. y Organisation and development of the capital market ² banking system, securities market etc.
Contd..
y Economic indices ² gross national product, per capita
income, rate of savings and investment, price level, balance of payment positions etc. y Economic infrastructure y Product market and factor market- degree of competition.
Technological and Physical Env
y Rate of technological change y Approaches to production of goods and services y New processes and equipment. y Research and Development systems.
Natural Environment
y Climatic conditions y Agricultural, commercial and other natural resources. y Ecological system. y Levels of pollution.
Global Environment
y The state of the world economy and distribution of world y y y y y y y
output. International economic cooperation. International market structure and competition. Barriers to international trade and investment. National economic policies of different countries. Role of multilateral economic institutions. International economic laws, treaties, agreements, codes and practices. Political system and conditions in different countries.
Contd..
y Cultural factors in different countries. y Growth and transfer of technology. y Growth and spread of MNCs.
doc_504091633.ppt