Introduction
to
Business Environment
What is Business???
Business may be understood as the organized
efforts of enterprises to supply consumers with
goods and services for a profit
Contemporary Business
goals
Profit (Bottom-line)
Growth
Market Leadership
Customer satisfaction
Employee satisfaction
Quality Products & Services
Service to Society
Characteristics of
Business
Change
Govern
Large
ment
Size
Control
Character
Compe istics Diversi
of
tition Business fication
Inform Globali
ation zation
Technol
ogy
Nature of Competition
Monopoly
Duopoly
Monopolistic competition
Oligopoly
BUSINESS CHALLENGES
Managing Bottom line
Meeting stakeholders expectations
Developing and retaining top talent
Creating a customer responsive organization
Diminishing time to market
Market agility
Pricing and quality
What do you mean by Business
Environment???
The environment of any organization is the
aggregate of all conditions, events and
influences that surround and affect it.
Characteristics of Business Environment:
Complex
Dynamic
Multi-faceted
Far- reaching impact
Why Study Business Environment
Development of broad strategies to ensure
sustainability
To foresee the impact of socio-economic
changes at the national and international
levels on firms ability
Analysis of competitors strategies and
formulation of effective counter measures
To keep oneself dynamic
Types of Environment
Internal Environment
External Environment
Micro environment
Macro environment
Economic
Non Economic
Internal Environment
Refers to all the factors that are within an organization which
impart strengths or cause weaknesses of strategic
nature.
Controllable factors. These include:
Value system
Mission and Objectives
Management Structure and Nature
Components of Internal
Environment
Human Resources
Company Image and Brand Equity
Other Factors
Physical Assets and Facilities
R & D and Technological Capabilities
Marketing Resources
Financial Resources
External Environment
Includes all factors outside the organization
which provide opportunities or pose threats
to the organization
Uncontrollable factors
Consists of Micro and Macro
environment
Micro Environment
It consists of the factors in the
companys immediate environment
that affect the performance of the
company.
Micro Environment Factors
Suppliers
Customers
Marketing Intermediaries
Competitors
Publics
Financial Community
Micro Environment of a typical car
manufacturer
Potential
Supplier
Components
Supplier
Local Potential
Communities Customers
Stakeholders Customers
Customers
Pressure
Car
Groups Manufacturer
Government Competitors Car Dealers
Potential
Dealers
For For
Customers Supplies
Macro Environment
It comprises general trends and
forces that may not immediately
affect the organization but sooner
or later will alter the way
organization operates.
Macro Environment :-
Economic
Non Economic
Economic Environment
Economic stages that exists at a given time in a
country
Economic system that is adopted by a country for
example. Capitalistic, Socialistic or Mixed Economy
Economic planning, such as five year plans, budgets,
etc.
Economic policies for example, monetary, industrial
and fiscal policies
Economic Indices such as National Income, Per
Capital Income, Disposable Income, Rate of growth
of GNP, Distribution of Income, Rate of savings,
Balance of Payments etc.
Economic Problems
Functioning of economy
Non Economic Environment
Regulatory Environment
Socio- Cultural Environment
Demographic Environment
Technological Environment
Political Environment
Non- Economic Environment
Cultural Environment
Social Customs & Rituals and practices
Lifestyle patterns
Family structure
Role & position of men, women, children and
aged in family & society
Non- Economic Environment
Demographic Environment
Growth of population
Age Composition
Life Expectancy
Sex Ratio
Fertility and Mortality rates
Inter-state migration
Macro Environment
Technological Environment
Sources of technology
Technological development
Impact of technology
Political Environment
Political parties in power
Political Philosophy
Macro Environment
Regulatory Environment
Constitutional framework
Policies relating to pricing and foreign
investment
Policies related to the public sector, SSIs,
development of backward areas and control of
environmental pollution
International Environment
Important factors that operate at global level which have an impact on
organization are:
Growth of world economy
Distribution of world GDP
International institutions IMF,WTO ILO
Economic relations between nations
Global human resource-nature and quality of skills, mobility of labor
Global technology and quality standards
Global demographic patterns
WTO and its relevance for Indian
companies
The main guidelines of WTO are:
Trade without discrimination
Growing market access
Promotion of fair competition
The response of Indian government to WTO
constitutes the following actions
Reduction of tariffs
Opening Indian markets for Global Players
Rationalizing industrial licensing and removal
of controls on the size of operations
WTO and its relevance for Indian
companies
The impact of WTO on Indian companies is likely
to include the following :
Increasing competition
Consolidation of activities in core competence
areas
Improvements in infrastructure to negate
structural disadvantages.
Shake out of minor players and M&As to gain
global scale.
Overview of Business Environment
MACRO ENVIRONMENT
ECONOMIC
Environment
MICRO ENVIRONMENT
BUSINESS
Internal Environment
Values,
Mission & Objectives.
TECHNOLOGICAL Human Resources,
FACTORS Co. Image & Brand Equity
DEMOGRAPHIC
FACTORS
MARKETING
INTERMEDIARIES SOCIAL
CULTURAL
FACTORS
Non - Economic
Environment
Thank You