2. BUSINESS ENVIRONMENT
The term Business Environment is composed
of two words „Business‟ and „Environment‟.
Theword Business in its economic sense
means human activities like production,
extraction or purchase or sales of goods
that are performed for earning profits.
„Environment‟ refers to the aspects of
surroundings.
3. BUSINESS ENVIRONMENT
Business environment may be defined as
the set of external and internal factors which
affects the decisions of business.
“Comprises of the complex factors, largely if not
totally beyond the control of management in
which a particular enterprise operates”.
The firms Success and survival is dependent on
its inter-linkages, synergy and its adaptability to
the environment.
4. Nature of Business Environment
Dynamic
Uncertain
Opportunity & Threat
Internal & External factors
Economic and Non Economic factors
5. Business Environment-
We can divide business environment into
two parts:
Internal Environment
External Environment
6. Influencing Business
Environment
Internal Business External
Environment Environment Environment
Regarded as controllable Regarded as uncontrollable
factors factors
7.
8. The Micro Environment
These are powers which are deeply related
with company and company can control
these type of environment by improving its
capacity and efficiency.
9. Micro Environment
Suppliers
Suppliers are the persons who supply raw
material to company.
If uncertainty (regular supply, quality, price)
about suppliers exists, high inventory cost.
Egs- JIT, WalMart
Suppliers as partners
Vertical integration
11. Micro Environment
Market Intermediaries
Market intermediaries are those person
who helps company to sell its products.
Distribution channels
Logistics, Warehouse
Ad agencies, Market research firm,
Consultancy
13. Micro Environment
Competitors
Competitors are those who also sell
same product as the company.
Mono/Duo/Oligopoly/Perfect
competition
Desire/Generic/Product form/Brand
competition
14. Micro Environment
Public
Public is that group of people who
can buy or who can show their
interest to buy the products of
company.
Media
Citizen
NGOs
Local public
15. Micro Environment
More controllable than the macro
environment
May be firm specific
More intimately linked with firm than the
macro environment
16. The Macro Environment
Macro environment of business
means all external factors which
affects company and its business and
there is no control of company on
these factors.
17. Macro Environment
Economic
We can introduce economic environment as all
the factors which affect business due to changing
the economic policies, economic system and
economic conditions.
Stage of economic cycle, Growth rate
National Income-GDP, GNP, Per capita
Income, Income distribution
Inflation- CPI, WPI
18. Macro Environment
Political environment
Political environment also affects business
with different business laws. These laws
controls all the activities of business.
Political system (forms of govt)- Pure
democracy, Republic, Theocracy,
Totalitarianism
Political philosophy- LPG, Political stability,
Institutions
Regulations and laws for general
Code of conduct of business, Govt. policies.
19. Macro Environment
Demography
In demographic environment of business,
we can include following things.
Size of population
Growth rate
family size
Educational level
Age composition
Sex composition
20. Macro Environment
Technological Environment
efficiency of infrastructure, including: roads, ports,
airports, rolling stock, hospitals, education,
healthcare, communication, etc.
industrial productivity
new manufacturing processes
new products and services of competitors
new products and services of supply chain
partners
any new technology that could impact the
company
21. Status of Technological
Environment or Technology in
India :-
Establishment of technological and research
institute
Positive Technical policy
High Growth Rate of Information Technology
in India.
Incentive for promoting Technology in India
22. Significance of B.E.
Facilitates operations of the organization.
Form the basis of long term policies, plans and
strategies of organization.
Help organization in identifying &
understanding its competitors.
Help the firms to expand & grow.
In-cashing business opportunities
Affect internal control
23. Significance of B.E.
Optimize scare resources
Market relevant technology development
Avoiding threats
Competitors analysis, Sustainable competitive
advantage
Monitoring and forecasting
Strategy formulation
Power relationships and lobbying
International trade
Notes de l'éditeur
We can control them, if we pay them on the time. We should also keep contacts with multiple sources because it is very less risky. If one supplier stops to supply us, we can get raw material from other supplier.
If the customers do not feel delighted they will buy from other sources leading to decline in sales.hence we should maintain good relations with our customers.
Middlemen, physical distribution firms and marketing service agencies are main market intermediaries. We should choose best market intermediaries for fast distribution of our products.
. If company has to win competition, it has to sell good quality product at lower price.
In big companies, there may be large number of economist whose work is to make economic policies and economic planning They monitor all external economic factors and to reduce company's economic weaknesses and risks.
In India, there are lots of laws which has been made by Indian Govt. In these laws, we can add company law 1956 and Factory act 1948. For controlling stock exchanges,Govt. has made SEBI. For controlling banking business, Govt. has made RBI.
1. Size of population- All these elements are relating to business. If size of population is increasing with high growth rate, demand is increased.2. Growth rate- High growth rate of population is also tells us high rate of supply of laborers. Many companies motives to invest money in developing countries due Cheap labor power and developing market. 3. family size:Suppose, we are making residential rooms. For making residential rooms, we should study the number of family members who will live in it4. Educational level-Educational level of our customer may also affect our marketing techniques. If our customers are very educated, we can use online advertising, if they are not educated we have to use old means of advertising.5 Age composition- Before producing the product, we see what age group will use this. For example, young population are interested to wear jeans but old age population are interested to wear kurta and pajama.6. Sex composition-Sex composition are two one is male and other is female. We also study the number of our customers who are female and no. of our customers are female. If female are more than male, we will care their need specially in making of our products.
We can include ecommerce technology, online payment, Internet technology, mobile banking and 3G technology and all other new technology which affect company's business.New inventions to produce the products.New inventions relating to marketing like BPO for selling online in international market