2. CONTENT:
Business Environment
Characteristics
Nature of BE
Types of BE
Factors affecting BE
Porter’s Five forces Model
Macro Environment
3. What is Business Environment?
• It comprises of two terms “business” and
“Environment”.
• Business is all about reaping profits from the
opportunities available in environment.
• Organized efforts of enterprises to supply consumers
with products and services for a profit.
• Business in its economic sense means human
activities like production, extraction or purchase or
sales of goods that are performed for earning profits.
5. Environment
• It refers to the aspects of surrounding.
• Surroundings, influences or circumstances
under which someone or something exists.
6. Business Environment
It may defined as a set of conditions- Social,
Legal, Economical, Political or Institutional that
are uncontrollable in nature and affects the
functioning of organization.
11. External Environment
It is of two types:
MICRO / OPERATING
MACRO/ GENERAL
The environment which is close
to the business and affects its
capacity to work.
The factors that create the
opportunities and threats to
business units.
13. Factors Affecting Business Environment
Internal Environment:
- Value System
- Mission Objective
- Management & Structure
- Internal Power Relationship
- Human Resource
- Miscellaneous Factors
14. Micro Environment
It is the environment which an organization
faces in its specific arena.
This arena may be industry or it may be what
is referred to as a strategic group.
15. PORTER’S FIVE FORCES MODEL
• Establishes state of competition in an industry
• Helpful in formulating strategies
16. THE FIVE FORCES
1.THREAT OF NEW ENTRANTS
Barriers to entry(protective shield):
a. Economies of scale
b. Government policy
c. Cost advantage independent of scale
d. Capital requirements
e. Access to distribution
f. Switching cost
17. 2.RIVALRY AMONG EXISTING FIRMS
Factors:
a. Number of firms
b. State of growth of an industry
c. Lack of differentiation opportunities
d. Product standardization and switching costs
e. Exit barriers
f. Diverse competitors
18. 3. THREAT OF SUBSTITUTES
Factors:
a. Switching costs
b. Price
c. Quality and performance
19. 4.BARGAINING POWER OF SUPPLIERS
Factors:
a. Importance of product to the buyer
b. Importance of buyer to the supplier
c. Switching costs
d. Number of suppliers
e. Extent of differentiation and standardisation
20. 5.BARGAINING POWER OF BUYERS
Factors:
a. Volume of purchase relative to total sale
b. Switching cost
c. Extent of buyer’s information
d. Product differentiation
e. Availability of substitutes
21.
22. MACRO ENVIRONMENT
1. Global Environment
Increasing opportunity
Improving quality
Competition from MNC’s
Deciding which markets to enter and
how to enter
Adjusting the management process
25. Political Environment
Role of legislature
Role of executive
Role of judiciary
Types of government structure
Parliamentary
Monarchies
Theocracy
30. What is Environmental Analysis
The purpose of environmental analysis is to
identify the existing and emerging threats &
opportunities to help formulate appropriate
strategies.
31. Environmental Analysis
Environmental Evolution
Stages of Environmental
Analysis
It includes:
-Types of Changes
- Forces Driving Change
- Types of Future
Evolution
1. Scanning
2. Monitoring
3. Forecasting
4. Assessment
32. 1. Scanning
It involves general surveillance of all
environmental factors and their interaction in
order to identify the early signals of possible
change and to detect the change that is
already underway.
It is a continuous process.
33. 2. Monitoring
• It involves tracking the environment trends,
sequence of events, stream of activities.
• The purpose is to assemble sufficient data to
discern whether certain trends and patterns
are emerging.
34. 3. Forecasting
• It is concerned with developing probable
projections of the direction, scope and
intensity of environment change.
• It tries to layout the evolutionary path of
anticipated change.
35. 4. Assessment
• The outcome of rest of the methods have to
assessed.
• It involves identifying & evaluation how &
why current and projected environmental
changes affect & will affect strategic
management of the organization.
38. What is Social Responsibility?
Conducting business in an ethical way and in
the interests of the wider community.
Responding positively to emerging societal
priorities and expectations
A Willingness to act ahead of regulatory
confrontation
Balancing shareholder interest against the
interest of the wider community
Being a good citizen of the community.
39. Dimensions of Social Responsibility
Economic
Legal
Ethical
Voluntary and Philanthropic
Being a good Corporate citizen
40. Importance of Social Responsiblity
• Social Entity
• Self Interest
• Moral Justification
• Public Image
• Avoidance of Government Intervention
• Consumer’s Awareness
42. SR towards different interest groups
1. Responsibility towards Owners/Investors
2. Responsibility towards Employees
3. Responsibility towards customers
4. Responsibility towards Suppliers
5. Responsibility towards the Government
6. Responsibility towards the community
and society
7. Responsibility towards creditors
43. FACT
India is the first country in the world to make
corporate social responsibility (CSR)
mandatory, following an amendment to The
Company Act, 2013 in April 2014. Businesses
can invest their profits in areas such as
education, poverty, gender equality, and
hunger
51. 2016 Rankings
This years top companies are:
• Tata Steel Ltd.1
• Tata Power Company Ltd.2
• Ultra Tech Cement Ltd.3
• Mahindra & Mahindra Ltd.4
• Tata Motors Ltd.5
• Tata Chemicals Ltd.6
• ITC Ltd.7
• Shree Cements Ltd.8
• Bharat Petroleum Corporation Ltd.9
• Larsen & Toubro Ltd.10
• Infosys Ltd.11
• ACC Ltd.12
• Indian Oil Corporation Ltd.13
• Ambuja Cements Ltd.14
• Steel Authority of India (SAIL) Ltd.15
• Jubilant Life Sciences Ltd.16
• Coca-Cola India Pvt. Ltd17
• GAIL (India) Ltd.18
• Tata Consultancy Services Ltd.19
• Hindustan Unilever Ltd.20
52. NOTE
To illustrate how critical CSR has become, a 2017 study by
Cone Communications found that more than 60 percent of
Americans hope businesses will drive social and
environmental change in the absence of government
regulation.
The majority of consumers surveyed (87 percent) said they
would purchase a product because a company supported
an issue they care about. More importantly, a whopping
76 percent will refuse to buy from a company if they learn
it supports an issue contrary to their own beliefs.
53. Business Ethics
It refers to the system of moral principles and
rules of conduct applied to the business.
Business should be conducted according to
certain self recognized moral standards.
54. Culture
It is a shared, learned, symbolic system of
values, beliefs and attitudes that shapes and
influences perception and behavior.
56. Layers of Culture
• National Level
• Regional level
• Gender Level
• Generation level
• Social class level
• Corporate level
N
National level
Regional level
Gender level
Generation Level
Corporate
level
Social Class level
57. Culture & Organizational Behavior
Centralized Vs
Decentralized
decision
making
Safety Vs. Risk
Individual Vs
Group Reward
Informal Vs.
Formal
Procedures
Cooperation
Vs.
Competition
Stability Vs.
Innovation
