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37354982 Global Business Environment

37354982 Global Business Environment

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Published by: Rajesh Mg on Aug 07, 2011
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 NSS College..
1
GLOBAL BUSINESS ENVIRONMENT
Module 1.Introduction to Business Environment. Internal and external environment. Macro and Microenvironment- economic-political- legal- cultural and technological environment.
Introduction.
Man always keeps himself engaged in some kind of activity to satisfy his needs and wants. Allhuman activities may be broadly divided into two categories: (i) economic activities, and (ii) non-economic activities. Economic activities are undertaken to earn one’s living and for theproduction of wealth. Non-economic activities are undertaken for one’s happiness, pleasure orsatisfaction. Economic activities may be classified into three categories —(i) Profession - An activity, which requires special knowledge and skill to be applied byan individual to earn a living
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 (ii) Employment - When a person works regularly for others and gets wages/salary inreturn.(iii) Business
Business:
Activities connected with the production or purchase and sale of goods or services with the objectof earning profit are called business activities. Manufacturing, trade, transportation, insurance,banking etc are business activities. Thus business may be defined as an economic activityinvolving regular production or purchase and distribution of goods and services with the object of earning profits.According to Urwick and Hunt, “ A business is an enterprise which makes, distributes orprovides an article or service which other members of the community need and are able andwilling to pay for it”. Business is an activity that involves many activities like production financemarketing trade packaging etc. all business carried out to earn a profit by fulfilling the needs of consumers.We may classify business activities on the basis of functions into two broad categories. (a)Industry and (b) Commerce.Industry is concerned with the production and processing of goods. This type of businessunits is called ‘industrial enterprises’ which produce consumer goods as well as machinery andequipments. On the other hand, ‘commerce’ includes all those activities, which are necessary forthe storage and distribution of goods. Such units are called ‘commercial enterprises’ whichinclude trading and service activities like transport, banking, insurance and warehousing.
Characteristics of business.
1. Exchange of goods and services:- business is an economic activity, which is concernedwith exchanging goods and services to satisfy human wants. It means if an individual purchases athing for his personal use, it will not be called a business. But if he purchase the same material;for selling, it will be a business activity.2. Profit Motive:- the prime consideration in a business is to earn profit which represents a
 
 NSS College..
2fair return on capital employed and reasonable reward for risk taken. Business provides a way of living to the businessman because he intends to earn profit.3. Continuity in dealing:- Usually the term business refers to a series of dealings in regularsequence. Business activities are recurring in nature. Recurring purchase and sales are regarded asidentifying marks of the business.4. Creation of utility:-An important characteristic of business s the creation of utilities. The businessmen transportsgoods from a place where it is less needed to a place where it is more required place utilitythrough transportation. He also converts raw material into semi finished and finished goods inorder to make them useful for the consumers (Form utility through processing).5. Customer satisfaction. The aim of business is profit earning but it is not possible withoutcustomers satisfaction. Hence business man should make goods and services according to theneed and taste of the consumers.6. Human Activity:- Business is ahuman activity because human resourse is needed to utilisevarious resources. The success of business depends on optimum utilisation of resources by thehuman.Significance of Business in Modern Society.Business is an integral part of modern society. It is an organized and systematized activity forprofit. It is concerned with activities of people working towards a common goal. The modernsociety cannot exist without business. The need and importance of business in society can bedescribed as follows:1. Improvement in standard of living:Business helps people in general to improve their standard of living.2. Proper utilization of resources:It leads to effective utilization of the scarce resources of society. It provides facility of massproduction.3. Better quality and large variety of goods and services:It involves production, purchase and sale of goods and services for price. Customer’ satisfactionis the backbone of modern business. Services such as supply of water, electricity etc. may beconsidered highly significant for the community.4. Creates utilities:Business makes goods more useful to satisfy human wants. It adds to products the utilities of person, time, place, form, knowledge etc. Thus, people are able to satisfy their wants effectivelyand economically.5. Employment opportunities:It provides employment opportunities to large number of people in society.6. Workers' welfareBusiness organizations these days take care of various welfare activities for workers. Theyprovide safer and healthier work environment for employees.Profit is not the sole objective of the business. It may have other objectives like promotionof welfare of the workers and the general public. Business activities include production anddistribution of goods and services, which can satisfy human wants.
 
 NSS College..
3
Business Environment
Environment means surrounding. Business environment means the factors/activities thosesurround the business. In other words, business environment means the factors that affect orinfluence the business.Business Environment refers to those aspects of the surroundings of business enterprise,which have influence on the functioning of business. An organization can survive and grow onlywhen it continuously and quickly adapts to changing environment. We are living in the dynamicworld, which is undergoing a rapid change, because of coming up of new ideas, economicchanges, political changes and new technology.
Keith
Davis has observed that businessenvironment is the aggregate of all conditions, events and influences that surround and affect thebusiness.A business firm gets human resources, capital, technology, information, energy, and rawmaterials from society. It follows government rules and regulations, social norms and culturalvalues, regional treaty and global alignment, economic rules and tax policies of the government.Thus, every business organization has a direct relation with its environment. The success orfailure of a business depends upon the effectiveness of interaction of a business with itsenvironment.
Business Environment Meaning:
Business environment refers to all those internal and external factors, which impact thefunctioning/performance of a firm and/or its decision making particularly strategies. There areinternal as well as external factors, which affect the success of a business firm.According to Gerald Bell: “An organization’s external environment consists of those thingsoutside an organization such as customers, competitors, government units, suppliers, financialfirms and labour pools that are relevant to an organization’s operations” Thus, it can be saidenvironment as “the set of external factors such as the economic factors, socio-cultural factors,and government factors demographic factors geophysical factors, which are uncontrollable innature and affects the business decisions of a firm or company.Importance of the study of Business environment.1. Helps the business in developing its strategies and policies2. Can understand and analyses its competitors strategies; and can also formulate its counterstrategies.3. Helps to foresee the impact of socio economic changes in the national and internationallevel.4. Managers can adjust themselves to the prevailing conditions and can influence theenvironment as far as possible.Components of Business Environment.A manager must follow a change in his or her structure, strategy and policies in responseto the changing environmental forces. Thus, a business firm exists in two level of businessenvironment a) Internal and b) External. Internal business environment comprises internalstructure, system, culture, staff, and resources of the organization. This is sometimes identifiedinto the internal functional areas such as marketing-distribution, finance accounting, humanresources, production-operation, and research-development.

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