Economic Environment Of

Business
Introduction
Macro/General/Remote Environment

SBU/Internal
Environment

External Environment
 Introduction to EEB
Definition-
Business Environment refers to all those
internal or external factors which impact the
functioning/performance of a firm and its
decision making particularly strategies.
 Internal Environment
• Contents-
• Promoters/shareholders
• Mission /objective
• Management structure
• Co. image /brand equity
• Marketing channels
• Human resources
• Physical assets
• R&D
 External Environment

Micro Macro
(Task/Operating (General/Remote
Environment) Environment)
 Micro (Task/Operating
Environment)
• Contents-
• Customers
• Suppliers
• Competitors
• Public
• Financiers
• Marketing Intermediaries
 Macro
(General/Remote Environment)
• Contents-
• Economic factor
• Social/cultural factor
• Demographic factor
• Political/Govt factor
• Natural factor
• Technological factor
• Global factor
 Business Environment
Interrelationship
• The firms Success and survival is
dependent on its inter-linkages, synergy
and its adaptability to the environment.
• The organisation is dependent on two
factors-
a) External Environment- It has two
components : Opportunities & Threats
b) Internal Environment- Strengths &
weakness
 SWOT ANALYSIS
• S – STRENGTHS
• W- WEAKNESSES
• O-OPPORTUNITIES
• T- THREATS

STRENGTH WEAKNESS

OPPORTUNITY THREAT
 Competitive Structure of
Industries
Porter’s Model-
1. Rivalry among existing firms
2. Threat of new entrants
3. Threat of substitutes
4. Bargaining power of suppliers
5. Bargaining power of buyers