Business Environment

Introduction

Present Scenario of

Importance of Study
1) To prepare long term Business Policies 2) To prepare Dynamic & Competitive strategies 3) To foresee Socio-Economic changes 4) To forecast Demand 5) To contribute to Social Responsibility

Business: Meaning & Objectives

y Economic activities related to the production and y y y y

distribution Dealings in exchange of goods and services Element of continuity of transactions Element of risk and uncertainty Profit motive

Characteristics of Modern Businesses

Large size Global Reach Technology based Diverse Government Control Oligopolistic Structure Emerging Ethical Consciousness

Out of the 100 largest economies in the world, 51 are global corporations; only 49 are countries.

Business Environment
y Business environment refer to all

the factors which affects the activities of a business.

y Business

managers as decision makers are concerned with the constraints and opportunities that a business environment offers.

y It is the responsibility of business

managers to adapt their firm to the changing business environment.

Factors Affecting Business Environment

The Internal Environment

Internal environment refers to the framework, the situation and the factors within the business organization and their impacts on its working.

Factors affecting the internal environment:

y Relationships within organization y Physical assets y Human assets y Financial Resources y Firms Goals y Organizational value system

The External Environment

y A business organization is also influenced by certain forces,

institutions and organizations operating from outside.

y The Micro-environment y The Macro-environment

The Micro-environment
Customers Suppliers of input Workers along with trade unions Market intermediaries Competitors and the public

The Macro-environment
y It is this environment that is likely to determine

to a great extent the success or otherwise of business. y Divided into y Economic Environment y Non-economic Environment

The Economic Environment

y y y y y y y y y y y

Economic Systems Structural Equilibrium Banking and Monetary Policy Fiscal Policy Economic and Price Stability Money and Capital Market Factor Endowments Size of the Market Social Overhead Capital Income Distribution and Purchasing Power External Trade/International Environment

The Non-economic Environment

y The Socio-cultural environment y The Educational environment y The Political-legal environment y The Demographic environment y Natural Environment