Amity Business School

BUSINESS ENVIRONMENT

Presented By `
Naga S Sridhar N Venkatesh Ravada Neha Sharma Kapil Sharma Abhishek Verma Sandeep Dasmanthrao (A-34) (A-17) (A-39) (A-20) (A-42) (A-19)

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Business Environment
Business Environment is a direct relationship between successful management and the influence and impact of environmental change.

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External business environment: External Business environment is a set of political, economic, social and technological (PEST) forces that are largely outside the control and influence of a business, and that can potentially have both a positive and a negative impact on the business.

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Factors influencing the business environment :

Technological innovation Globalization Growth of poverty Collapse of emerging markets Shift from manufacturing jobs to service jobs New methods of manufacturing

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Internal Business Environment

Internal Business Environment is the set of elements or forces which affects a organization's or firms behaviour. Examples are like personnel, finance, marketing, production, operational research and so on.

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MICRO ENVIRONMENT

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Micro environment is the environment that an organization can influence. It may not be able to Correct all flaws in the microenvironment, but it has a much better control over the macro environment.

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Factors Influencing Micro Environment

Consumers needs , purchasing power and behavior Suppliers Market intermediaries Competitors

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I. Micro environment of business.

1) Suppliers

Supply raw materials and other components

(Inputs)

Importance

Reliable supply continuous supply for smooth functioning

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2) CUSTOMERS

Different categories of customers

i. Industrial customers

ii. Wholesale customers

iii. Retail customers iv. Government customers v. Foreign customers

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3) Market intermediaries
i. Middlemen.
ii. Physical distribution Firms: (warehouses and transport firms) iii. Marketing service agencies (Advertising agencies market research firms, media firms, consulting firms) iv. Financial intermediaries

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4. Competitors:
The Threat of entry of new firms The Power of Buyers The Power of Suppliers The Power of Substitutes The Intensity of Rivalry among existing firms

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MACRO ENVIRONMENT

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Macro Environment are major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies.

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These factors include : Sociological Factors Political Factors Legal Factors Educational Factors Technological Factors Economical Factors Natural Factors Historical Factors

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SOCIOLOGICAL FACTORS
It concerns with society as a whole; it covers health, media, education, minorities, women, organized labour , legal system and demographics. The biggest challenge to firms is the society's changing demands.

POLITICAL FACTORS
Political environment gives shape to business. Political stability, Government administration, Philosophy of the political parties are some of political factor which affects the business environment

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LEGAL FACTORS
Legal Environment has a permanent and lasting impact in shaping business . Labour law act, Industrial dispute act, Minimum wages act, Law of contract, Import & Export control act and tax law act are few legal factors.

EDUCATIONAL FACTORS
Educational cum cultural environment affects business activities and managerial skills. These factors include literacy, attitude toward training and skill required for a business like specialized, vocational and technical training

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TECHNOLOGICAL FACTORS
Technology is about application of tools, methods and techniques to improve production and processes. Technology is life for growth and competitiveness of Business.

ECONOMICAL ENVIRONMENT
Economic environment conditions such as business cycle, unemployment, Inflation, monitory policies, Industrial policies, trade policies etc also affects the business environment.

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NATURAL & ECOLOGICAL FACTORS

Use of modern technology sometimes involves huge social cost in term of Deterioration of environmental pollution and ecological balance. So business environment should also consider about natural resources, weather & climatic conditions, health hazards etc.

HISTORICAL FACTORS
Business Environment is also affected by historical factors. Business environment in a number of newly independent countries has been determined by their past colonial status.

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The Determinants of Business Performance Structure conduct performance relationship between business structure and business conduct (behaviour) competitive markets and competitive behaviour limited competition and collusion relationship between business conduct and business performance different indicators for measuring performance profitability, market share, growth, etc.

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Internal aims and organisation

profit maximisation as the prime goal distinction between owners and managers importance of managers own objectives

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Other factors affecting performance

internal structure information competence of management quality of the workforce