Business environment by prof anil pande mfm2 sem1

BUSINESS
ENVIRONMENT BY
PROF ANIL PANDE
MFM2SEM1-2007

BUSINESS
ENVIRON
MENT
Business
Environment

mainly refers to
external forces
that impact
business. Such
forces include
political-legal
,technological
,cultural

,economic and
physical.
Factors under
External
Environment
All the factors
that provides
opportunities or

pose threats to
an organization
make upits
external
environment.
•

DEMOGRAPHIC
ENVIRONMENT
•

SOCIAL
ENVIRONMENT
•

CULTURAL
ENVIRONMENT
•

POLITICAL
ENVIRONMENT
•

ECONOMIC
ENVIRONMENT
•

FINANCIAL
ENVIRONMENT
•

TRADE
ENVIRONMENT
•

TECHNOLOGICA
L
ENVIRONMENT
•

LEGAL
ENVIRONMENT

•

REGULATORY
ENVIRONMENT
•

TAX
ENVIRONMENT
•

ETHICAL
ENVIRONMENT
External
environment

consists of 1.
Micro
Environment 2.
Macro
Environment1.
Micro
Environment
•

Micro
environment is
called as the
task
environment and
operatingenviro
nment.
•

Micro
environment
forces have a
direct bearing of
the operation of
the firm.
•

These factors
are present in

companies
environment and
affect on the
performance of
the companies.
•

Includes –
suppliers
,marketing

intermediaries
.competitors,cus
tomers and
public.Micro
environment are
more intimately
linked to

company than
macro.

Suppliers :
o

Those who
supply
inputs,raw

material and
components
o

Uncertainty in
supply compels
high inventory
cost.
o

India maintains
stocks of 3 to 4
months were as
Japanmaintains
for few hours.
o

Eg : Nirma –
believes of the
logic that

captive
production
plantfor raw
material is best
for cost control.
(backward
integration)
o

Co feel
outsourcing is
more beneficial
o

Risk to depend
on single
supplier
o

Globally
companies are
resorting to
partenering
relationshipmar
keting.1

Customers:
o

Business exists
because of
customers
o

Monitoring
customers
sensitivity is
perquisite
o

The choice of
customer by the
firm can be
ona.Relative
profitability
b.Dependabilit
yc.Stability of

demandd.Gro
wth prospects
o

Today customer
is global
customer as
exposed to
global products.


Competitions:
o

Competition
includes not
only with
competitors of
same product
but all those
who compete

for discretionary
income of
consumers.
o

Eg : the
competiton for
T V firm may
not be only from
other T V

manufacturing
but also from
2wheelers
,refrigerators,co
oking
ranges,stereo
sets etc,bank
schemes.
o

To influence
basic desire of
customer
o

Generic
competition: If
the customer
decides to
spenddiscretiona

ry income on
recreation , he
come
acrossalternative
s like, TV
,stereo ,2 in 1,3
in 1 P C etc.
o

It is competition
among
alternative.

Marketing
Intemediary:
o

Firms that aid
the company in

promoting,sellin
g
anddistributing
its grads to final
buyers.
o

Includes
middlemen,agen
ts,merchants,dist

ributionfirms,wa
rehouses,transpo
rtation
firms,marketing,
financialinterme
diaries
,insurances etc.

Financiers

o

Financiers of the
company
o

Their financial
capability,polici
es,
strategies.attitud
es,ability to

provide non
financial
assistance.

Public
o

Public is any
group that has
actual or

potential interest
I or impact on
organizations
ability to
achieves its
interest.
o

Media
publics,citizens

action
publics,local
publicsetc,consu
mers publics
o

Issues against
companies
o

Tarnishing the
image by media
o

Environmental
pollution
o

Chills
labour,sweat

labour,cruelty
against animals.

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