This action might not be possible to undo. Are you sure you want to continue?
“Business is the organised efforts of enterprises to supply consumer with goods and services for a profit” “Business refer to any commercial activity which is aimed at making profit” • These two definitions make a fundamental assumption that profit maximization is the basic objective of every firm • This concept was very old • The modern outlook of the business is completely different.
According to the Davis and Blomstorm “A business is a social institution, performing a
social mission and having broad influence on the way people live and work together”
Characteristics of Modern Business
GOVT. INTERFERENCE CHANGE BIGNESS
• This change makes the companies spend substantially on R&D to survive in the market.1. • Business has to change according to the environmental changes. CHANGE • Modern Business is Dynamic. .
2. • Diversification may be in the form of(i) Concentric Diversification (ii) Horizontal Diversification (iii) Conglomerate Diversification . Diversification • Diversification is the process of introducing new product line in the market to satisfy the new customers needs.
labour etc. Globalisation country is known as Globalisation” “Globalisation is a borderless world where there is free exchange of money. global flow of capital and technology. • In the modern business world production facilities are being set-up in different countries and products are being sold through a global network.3. information explosion. • Globalisation is becoming imperative for modern business due to technological innovations. business . changing life styles. “Moving beyond the political boundaries of the .
• The development of atomic power. . • Scientific developments will offer attractive opportunities to alert businessmen. Science • Science is the integral part of the business. space age programmes application of mathematics in managerial decision making are contributions being made to business by science.4.
• Quick distribution and gathering information is necessary to run the business.5. . Information • Today business are operating in different places.
to protect SSI units Govt.6. imposes restrictions on business. Govt. Interference • In order to reduce inequalities of income concentration of economic power. .
Competition • Today market place become battle field for all companies. • Businessmen have to workout strategies to compete with rivalaries to survive in the market.7. .
Bigness • Mass production and Mass marketing are the norms followed by business enterprises. . • Today most companies speak about huge investment projects.8.
growth. The organic objectives of a business firm are * Survival * Growth * Prestige or Reputation . Organic Objectives • • Just like human being business is an organic entity. It has its own introduction. maturity and declining stages.Objectives of Business 1.
• Human objectives include* Providing job satisfaction * Providing opportunity for workers participation in management. Economic Objectives • Profit making • Creation of customers • Innovation 3. • It is necessary for business to look after the interest of those who make business successful.2. * Providing good working condition * Providing fair wages . Human Objectives • The success of any business is depends on its human resources.
4. and general public. • The economic objectives of business can be realised only by social objectives. supplies. Social Objectives • Business is a social institution and it is a part of the society. investors. • The social objectives of business are * Quality goods at fair prices * Providing employment opportunities *avoiding anti-social practices . govt. • Each and every business has its obligation towards – customers.
5. * Ensuring social justice. . * Production according to national priorities. * Export promotion. • In India business organisations have to fulfill the following obligation* Contributing to economic growth of the country. National Objectives • These are the specific business obligations towards national needs and aspirations. * Development of small scale and cottage industries.
” “Business environment consists of all those factors that have a bearing on the business” INTERNAL ENVIRONMENT MICRO BUSINESS EXTERNAL ENVRONMENT MACRO BUSINESS ENVIRONMENT .Business Environment “ Business environment refers to all external forces which have a bearing on the functioning of business.
.Internal Environment • • • • These are controllable factors. workers of the organisation has important bearing on the strategies of the organisation. Value System • The value system of the founders. managers. Internal environment factors can divided as follows1. Board of directors. Lies inside the organisation Under the control of the organisation.
development. Mission Statement of the HLL “Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition. hygiene. polies are guided by the mission and objectives of the organisation • Mission and objectives are the first steps in the development of the organisation. Mission and Objectives • Firms philosophies. and personal care with brands that help people feel good. priorities.” . look good and get more out of life.2.
intellectually satisfying and professionally rewarding to the employees . profitable and financially sound growth with prudent risk management systems • To fulfill national and social obligations as a responsible Corporate citizen • To create an environment.Class Financial Services • To meet Customer expectations through Innovation and Technological Initiatives • To emerge as a Role Model with distinct culture identity. ethical values and Good Corporate Governance • To enhance Shareholder's Wealth by sustained.Mission Statement of the HLL • To become a provider of World .
3. morale. knowledge etc could contribute to the strength and weakness of an organisation. • Some organisations find difficult to carryout restructuring or modernisation because of resistance by employees. • Some management structures and styles delay decision making and while others facilitate quick decision making 4. . Organisational Structure • Organisational hierarchy where authority flows from top to bottom. quality. Human Resources • The characteristics of the human resources like skill. attitude. commitment.
formatting joint ventures or other alliances. selecting marketing intermediaries. . launching new products etc. are affecting corporate strategies and decisions.5. financial position and capital structure etc.Company Reputation • The goodwill of the company matters while raising finance. 6. Financial Factors • Financial factors like financial policies.
External Environment Classified into two categories viz. Macro Environment . Micro Environment 2. 1.
competitors. • Known as task environment or operating environment • Include suppliers. marketing intermediaries.Micro Environment • The micro environment is a company’s immediate environment and that affect the company’s ability to produce goods and services and serve consumers. customers and the publics. .
A company may have different categories of customer like individuals. Reliable sources of supply are necessary for smooth functioning of business. A business exits only because of its customers. Industries and other institutions. households.1. lockout or any other production problem with supplies may seriously affect the company. Depending on a single customer is risky because it may place company in poor bargaining position. Customers • • • Suppliers are those who supply the raw material and components to the company. . It is very risk to depend on a single supplier because a strike. Suppliers • • • 2.
4. • A firms competitors include not only the other firms which are marketing same products but also those who compete for the discretionary income of the consumer. . Competitors • In general competitors are those who sell the goods and services of the same and similar products in the same market. assortment. place. selling and distributing the goods and services to ultimate customers.3. Marketing Intermediaries • Every producer has to appoint a number of intermediaries in assisting him in promoting. • Marketing intermediaries help the firm in overcoming the discrepancies in quality .
it is necessary for the firm to satisfy the needs of the public as well. which is necessary for future stay and growth. • In order to build goodwill and seek favorable response from the public. Publics • A public is any group that has actual or potential interest in or impact on company’s ability to achieve its objectives. • It is the duty of the company to satisfy the people at large.5. .
. 1. Economic environment 2.Macro Environment • Refer to those factors which are not concerned to the firm’s immediate environment. • These factors are external to the firm and are quite uncontrollable • The macro environment generally consists of two factors viz. Non-economic environment .
economic policies of a country and includes structure of economy.1. agriculture. • Favorable monetary policies like credit sanction. transportation etc • The economic policy of the govt. policy and some are adversely affected by the govt. policy . Economic Environment • This comprises all those factors relating to the economic conditions. like tax policy has its influence ion the pattern of business . systems. industrial sectors. Some business are favorably affected by govt. interest rate influence the business unit. • The fiscal policy of the govt. has a greater impact on business.
policies like industrial policy. Certain changes in the Govt. Non-Economic Environment Non-economic factors consists of following factors a) Political Environment • • • The nature of policies and the type of the govt. is unstable and doubtful. fiscal policy may have profound impact on business .2. in economy have considerable influence over the business environment. in the economy on the other hand if the Govt. it will demoralise the business and may adversely effect on its performance. The business activities flourish when there is a stable govt.
b) Education and Cultural Environment • The attitude towards education and training helps business and industry to avail services of efficient. languages etc. are the factors that affect the strategy of the business. trained and labour. tastes and preferences. . c) Legal Environment • The vital aspect like of business like who should own? What should be the size of business? And what should be happen to the earnings? Can be decided by legal rules and regulations. customs and traditions. • The cultural factors like buying and consumption habit of the people.
d) Natural Environment • The natural factors like weather climate.• Threre are number of legislations formed by the Govt. availability of land. . forest resources etc. • The ecological factors like depletion of natural resources. to regulate the business. have influence on the business activities. so that preservation of physical environment is becoming important factor of management of modern business. environmental pollution have cost grater concern to the business field. • It is stated that difference in geographical conditions may call for changes in production. marketing activities in the economy. • It is said that the stable Govt will protect the business by formulating effective legislation .
family size. • Increasing population also indicates that availability of surplus labour which affects the wage rates. and occupation is known as demography. size of the population.e) Demography • Study of the population in terms of age. • Rapidly increasing population indicates a growing demand for many products. . sex.
• The changes in technology also create problem for business enterprises as they are subject to obsolescence quickly G) International Environment • It refers to those global factors which have impact on business and economy. • Technology is a systematic application of scientific knowledge to practical task. • It is important for industries which are directly depending on imports and exports. • Export market enables a firm to develop more profitable product mix . • The business prospects largely depend upon the technological aspects in connection with production and marketing of products.f) Technological Environment.
Environmental Analysis “Process of collecting information about the forces in the business environment and assessing. interpreting the information to take effective managerial decision” • It Includes SWOT analysis S Strengths W Weaknesses O Opportunities T Threats S+W= Internal environment analysis O+T+ External environment analysis .
Objectives and uses of E. • Analysis of competitors strategies and formulation of effective counter measures.A • Development of broad strategies and long-term policies of the firm. • To forsee the impact of socio-economic changes at the national and international levels. • So it is said that “ firms which systematically analyse and diagnose the environment are more effective than those which don’t” . • Development of action plans to deal with technological advancements.
selection of methods of data collection etc. determination of the types of information to be collected. • • • 2. It is essential to identify the critical environmental variables and to predict their future trends.Process of Environmental Analysis 1. • Identification of relevant environmental variables All environmental variables do not have the same relevance to all the industries. Collection of Information Involves identification of sources of information. A variable that is relevant to one industry may not be relevant for another. .
4.3. Monitoring • The characteristics of the variables or their trends may undergo changes. • Some time it is necessary to re-collection of information and re-forecasting . • It is necessary to monitor such changes. scope and intensity of environmental change. • New variables may emerge as critical or the relevance of certain variables may decline. • Forecasting is concerned with developing projections of the direction. Forecasting • Decision making requires a future orientation.
Business Planning Formulation of Mission and Objectives Evaluation and Control SWOT Analysis Implementation Identifying strategic alternatives .
Formulation of Mission and Objectives • To formulate the clear objectives. it is essential to get answers to certain questions like What is the company is in? What should the company’s business be? What will the company's business be? • Objectives help define the organization in its environment 2.1. weaknesses. and threats is known as SWOT analysis. • It is a cornerstone of business planning . opportunities. SWOT Analysis • Analysis of company’s Strengths.
. Should it acquire other units in the industry. Should the company continue in the same business. • The environmental opportunities and threats should be evaluated in the light of the strengths and weaknesses of the internal factors. Should the company diversify its business.• It is determining the course of action to ensure the survival and growth of the firm. 3. Strategic alternatives and choice of strategy • After the SWOT analysis the next task in the business planning process is consideration of strategic and the choice of the most appropriate strategy • Available alternatives are. Should it integrate with others.
it should take corrective actions to correct it. • It is necessary to formulate a detailed plan to achieve the objectives by means of chosen strategy 5. Implementation • Many good strategies fail to achieve the results because of poor implementation. Control • After implementation company has to measure the performance of the strategies and it should compare actual performance of the strategies with standard performance.4. . • If there is any deviation.