ENVIRONMENT
UNIT 5
Environment means the surroundings within which someone or something exists. It is like a climate or culture which surrounds us. Economic, social, political, technological or other forces which operate outside the business enterprise, are part of its environment.
The term Buisness Environment refers to the totality of all relevant forces external to and beyond the control of, an individual business enterprise and its management.
William [Link] and Lawrence R. Jaunch the environment includes factors outside the firm which can lead to opportunities for or threats to the firm. Although there are many factors, the most important to the sectors are socio economic, technological, suppliers, competitors and government
FACTORS AFFECTING BUSINESS ENVIRONMENT
BUSINESS ENVIRONMENT
INTERNAL FACTORS
EXTERNAL FACTORS
FACTORS AFFECTING BUSINESS ENVIRONMENT
EXTERNAL Political Socio cultural Economic Technological Climatic
FACTORS AFFECTING BUSINESS ENVIRONMENT
INTERNAL INTERNAL POLICIES RULES AND REGULATIONS AVAILIBILITY OF TRAINED HUMAN RESOURCES FINANCIAL STABILITY
INTERNAL FACTORSControllable Strength Weakness
EXTERNAL FACTORSUncontrollable Opportunities Threats
Need for Environment studies For Business Management
Provides numerous opportunities for business success. Helps business to take advantage of such opportunities instead of losing them to competitors Helps organization to identify various threats on time and serves as an early signal. Environmental understanding makes the management sensitive to the changing needs and expectations of consumers.
Business environment getting increasingly dynamic- turbulent market conditions, less brand loyalty, more demanding customers, intense global competition. Buss. Environment helps in making plans, policies, and strategies for the future course of action. Organizations that continuously monitor their environment and adopt suitable business practices are not only in a position to improve their present performance but also continue to succeed in the competitive market.
Need for Environment studies For Business Management
Features of Business Environment
Aggregative in nature- sum total of internal and external factors Specific and general factorsSpecific- investors, customers, competitors, suppliers General- social, political, legal, technological
Features of Business Environment conti..
Business elements are many in numbers and Inter-related. Dynamic Uncertain and difficult to predict. Complex Set of PEST forces.
Environmental Factors Affecting Business
Physical factors 1- Land 2- Climate 3- Mineral 4- Water Resources
Cultural factors Culture is the integrated sum total of learned behavioural traits that is absorbed and shared by members of society.
1- Impact due to GlobalizationWith many MNCs operating in India, there are many employees from other countries who work here. Similarly there are larger no. of employees who are working outside India. When people from diverse cultures work together , the mngt. Of the organization has to respect this diversity. People earlier used to face the cultural shock.
2- Impact on Organizational Culture Culture differ from Organization to Organization. In tradition Indian Companies, all the powers vested in the Head of the Organization. In more professionally managed companies, authority is distributed horizontally at many levels. Large business organization works as a mini society within the society. Strong Culture- TATA group
3- Impact Of Language-: All cultures communicate through language. Communication is both verbal and nonverbal. In traditionally managed organizations, higher authority is often referred as Sir/ Madam whereas in more liberal culture higher authority are called by their first names.
4- Impact on Goods and Services: Culture directly impacts goods and services a country produces. Eg- dishwasher. The dishwasher was not popular in India as many felt that hands could wash better.
5- Family : In India, Family plays an important role in life of an individual. His/ her education, career prospects, choice of job, place of job is often a decision taken collectively by the family. Some business organizations recognize this role of the family and offer opportunities for them to socialize in specially organized family functions, this also acts as an incentive for employees to work well.
Technological Factors
Business and technology now cannot be separated from one another. The way we do business today is different than 30 years ago. Technology has evolved around the areas of telecommunication, travel, stock market, shipping etc. Today e-commerce allows us to purchase goods and avail service without going out of home and at any time.
The major advances in technology are The World Wide Web (Internet) Easy connectivity globally through advanced telecommunication systems. Use of information technology to create better quality of life. Continuous innovation and inventions. Advanced technology in transportation and logistics.
Use of technology in improving financial systems. Use of technology in small business. Reduced time lag in introduction and implementation of new ideas.