Business Environment

UNIT I
 What is Business?
• It is a continuous production and
distribution of goods and services with
the aim of earning profits under
uncertain market conditions.
• It is a form of regular activity conducted
with an objective of earning profits for
the benefit of those on whose behalf the
activity is conducted.
 Nature of Business

 An activity to earn profit by providing

goods/services
 No limit of partners (can be 1 or 10,000)
 Main purpose should be earning i.e.
economic activity
 Economic/Non-Economic Activity
 An activity is said to be economic, if the
purpose is to earn profit not social service.
– e.g.
• Running a restaurant: Economic Activity
• Cooking at home : Non-Economic
 Features/Characteristics of Business

1. Exchange of goods and services 7. Connected with production

2. Deals in numerous transactions 8. Marketing and Distribution of goods

3. Profit is the main Objective 9. Deals in goods and services

4. Business skills for economic success Consumer goods Producer

5. Risks and Uncertainties goods

6. Buyer and Seller 10. To Satisfy human wants

Objectives of Business
1. Profit
2. Growth
3. Customer Satisfaction
4. Employee Satisfaction
5. Quality products and services
6. Market Leadership
7. Employment creation
8. Service to Society…..
 Scope of Business
The scope of business is very broad.
It covers a large number of activities which
may be looked into from two perspectives,
namely: Industry and Commerce
(A) Industry: The activities of extraction, production, conversion,
processing or fabrication of products are described as
industry.
(B) Commerce: It is an interchange of goods or commodities,
especially on a large scale between different countries
(foreign commerce) or between different parts of the same
country (domestic commerce) trade; business.
 Essentials of successful business

Setting Objectives
Right Product
Business Plan
Sales and marketing plan
Adequate capital
Knowledge Management
Account Management
Resources
Location
Advertisement
Research
 What is Business Environment?
It consists of all those factors that
have bearing on the business…..
A set of conditions – Social, Legal,
Economical, Political or Institutional
that are uncontrollable in nature and
affects the functioning of organization.
 Types of Business Environment

• Mainly Business Environment divided into two

types. These are:
1. Internal Environment
2. External Environment
 Internal Environment
The factors which can be controlled by
company or
Primary factors which directly affects the
growth of organization….. man, material,
money, machinery and management.
Types of Internal Environment
1. Value System
2. Objectives
3. Management Structure
4. Internal Power relationship
5. Human Resources
6. Company Image & Brand Equity
 External Environment
• Those factors which are beyond the control of
business enterprise are included in external
environment.
• External Environment is divided into two parts
1. Micro Environment: The environment which
is close to business and affects its capacity to
work is known as Micro Environment.
2. Macro Environment: It includes factors that
create opportunities and threats to business
units. Following are the elements of Macro
Environment.
 Micro Environment
• Suppliers
• Customers
– Wholesalers
– Retailers
– Industries
– Government and Other Institutions
– Foreigners
• Market Intermediaries
– Middleman
– Marketing Agencies
– Financial Intermediaries
• Competitors
• Public
 Macro Environment
• Economic Environment: It is very complex and dynamic in nature
keeps on changing with the change in policies or political situations
– Economic Conditions of Public (present state of the economy in a
country or region)
– Economic Policies of the country (setting tax rates, setting interest
rates, and government expenditures.)
– Economic System (system of production, resource allocation and
distribution of goods and services within a society or a given
geographic area)
– Other Economic Factors: Infrastructural Facilities, Banking, Insurance
companies, money markets, capital markets etc.
 Macro Environment
• Non-Economic Environment: Following are
included in non-economic environment:
1. Political Environment: It affects different business units
extensively. Components are
• Political Belief of Government
• Political Strength of the Country
• Relation with other countries
• Defense and Military Policies
• Centre State Relationship in the Country
• Thinking Opposition Parties towards Business Unit
 Macro Environment
2. Socio-Cultural Environment
– Influence exercised by social and cultural factors, not within the
control of business, is known as Socio-Cultural Environment.

– These factors include: attitude of people to work, family

system, caste system, religion, education, marriage etc.
3. Technological Environment
– A systematic application of scientific knowledge to practical
task is known as technology.
– Everyday there has been vast changes in products, services,
lifestyles and living conditions, these changes must be analysed
by every business unit and should adapt these changes.
 Macro Environment
4. Natural Environment
– It includes natural resources, weather, climatic conditions,
port facilities, topographical factors such as soil, sea, rivers,
rainfall etc.
– Every business unit must look for these factors before
choosing the location for their business.
5. Demographic Environment
– It is a study of perspective of population i.e. its size,
standard of living, growth rate, age-sex composition, family
size, income level (upper level, middle level and lower
level), education level etc.
– Every business unit must see these features of population
and recognize their various needs and produce accordingly.
 Macro Environment
6. International Environment
– It is particularly important for industries directly
depending on import or exports.
– The factors that affect the business are
• Globalization
• Liberalization
• Foreign business policies
• Cultural exchange
Components of Business Environment
 Characteristics of BE
• Business environment is complex in nature.
• It is constantly changing process.
• It is different for different business units.
• It has both long term and short term impact.
• Unlimited influence of external environment
factors.
• Inter-related components.
• It includes both internal and external
environment.
RECENT TRENDS IN BUSINESS
RECENT TREND IN BUSINESS SYSTEM IN INDIA

E-COMMERCE

E-BRANDING

DIGITAL SIGNATURE

MOBILE COMMERCE

RECENT TRENDS IN ADVERTISING

E-COMMERCE
 E-COMMERCE
• It is commonly known as electronic marketing.

• It consist of buying and selling goods and

services over an electronic system such as
the internet..
The process of E-commerce
Types of e- commerce
B2C E-commerce
B2B E-commerce
B2G E-commerce
C2C E-commerce
 ADVANTAGES OF E-COMMERCE
 Faster buying/selling procedure, as well as easy to
find products.
 Buying/selling 24/7.
 No geographic limitations.
 Low operational costs and better quality of
services.
 No need of physical company set-ups.
 New market
 Employment opportunity
 DISADVANTAGES OF E- COMMERCE

1. Unable to examine products personally

2. Social division
3. Security problem
4. Bargaining
5. Cost of internet.
e – BRANDING
“e-branding "is the creation and developmentofcommunications
strategies specifically for brands to have meaning for brands to have
meaning and context on the web.
 Merit Of E-branding

 Helps to build familiarity and loyalty from consumers

 Reputation amongst customers

 E-brand becomes the digital asset for a company

 Easy to expand customer relationship

DIGITAL SIGNATURE
 WHAT IS DIGITAL SIGNATURE ?
• Digital signature are used not only to verify
the authenticity of message and claimed
identity of sender but also to verify message
integrity.
M-COMMERCE
 M-commerce
• It refers buying and selling of goods and
services through wireless hand held devices
such as cellular phone.
 ADVANTAGES OF M-COMMERCE

• Cover wild distance

• Helps in comparison
• Save cost and time
• Easy to use
RECENT TRENDS IN ADVERTISING
RECENT TRENDS IN ADVERTISING

Email advertising
Social media advertising
Web banner advertising
Public relation advertising
Mobile advertising
WHAT IS COMMERCE

 Commerce is a division of trade or production which

deals with the exchange of goods and services
from producer to final consumer
 It comprises the trading of something of economic
value such as goods, services, information, or
money between two or more entities.
 WHAT IS E-COMMERCE
 Commonly known as Electronic Marketing.
 “It consist of buying and selling goods and services over
an electronic systems Such as the internet and other
computer networks.”
 “E-commerce is the purchasing, selling and exchanging
goods and services over computer networks (internet)
through which transaction or terms of sale are performed
Electronically.
 TRADITIONAL BUSINESS
MANF. UNIT DISTRIBUTOR WHOLESALER RETAILER CUSTOMER
20% 10% 10% 10% 100%

ADVERTISEMENT
50%

DIRECT SELLING
COMPANY CUSTOMER
Why
Use
E-Commerce

…….?
 LOW ENTRY COST
 REDUCES TRANSACTION COSTS
 ACCESS TO THE GLOBAL MARKET
 SECURE MARKET SHARE
 Brief
History
Of
E-Commerce
 1970s: Electronic Funds Transfer (EFT)
 Used by the banking industry to exchange account
information over secured networks
 Late1970s and early 1980s: Electronic Data
Interchange (EDI) for e-commerce within
companies
 Used by businesses to transmit data from one
business to another
 1990s:the World Wide Web on the Internet
provides easy-to-use technology for information
publishing and dissemination
 Cheaper to do business (economies of scale)
 Enable diverse business activities (economies of
scope
THE PROCESS OF
E-COMMERCE
 A consumer uses Web browser to connect to the home
page of a merchant's Web site on the Internet.

 The consumer browses the catalog of products featured

on the site and selects items to purchase. The selected
items are placed in the electronic equivalent of a
shopping cart.

 When the consumer is ready to complete the purchase of

selected items, she provides a bill-to and ship-to address
for purchase and delivery
 When the merchant's Web server receives this
information, it computes the total cost of the order--
including tax, shipping, and handling charges--and then
displays the total to the customer.

 The customer can now provide payment information,

such as a credit card number, and then submit the order.
 When the credit card number is validated and the order is
completed at the Commerce Server site, the merchant's
site displays a receipt confirming the customer's
purchase.

 The Commerce Server site then forwards the order to a

Processing Network for payment processing and
fulfillment.
TYPES

OF

E-COMMERCE
BUSINESS-TO-BUSINESS (B2B)

 B2B stands for Business to Business. It consists of largest

form of Ecommerce. This model defines that Buyer and
seller are two different entities. It is similar to manufacturer
issuing goods to the retailer or wholesaler.
E.g.:-Dell deals computers and other associated accessories
online but it is does not make up all those products. So, in
govern to deal those products, first step is to purchases them
from unlike businesses i.e. the producers of those products.
BUSINESS-TO-CONSUMER (B2C):
 It is the model taking businesses and consumers
interaction. The basic concept of this model is to
sell the product online to the consumers.
 B2c is the direct trade between the company and
consumers. It provides direct selling through online.
For example: if you want to sell goods and services
to customer so that anybody can purchase any
products directly from supplier’s website.
BUSINESS-TO-EMPLOYEE (B2E)

 Business-to-employee (B2E) electronic

commerce uses an intrabusiness network which
allows companies to provide products and/or
services to their employees. Typically,
companies use B2E networks to automate
employee-related corporate processes.
CONSUMER-TO-CONSUMER (C2C)
 There are many sites offering free classifieds, auctions,
and forums where individuals can buy and sell thanks to
online payment systems like PayPal where people can
send and receive money online with ease. eBay's auction
service is a great example of where person-to-person
transactions take place everyday since 1995.
PROS AND CONS
OF
E-COMMERCE
PROS
 No checkout queues

 Reduce prices

 You can shop anywhere in the world

 Easy access 24 hours a day

 Wide selection to cater for all consumers

CONS
 Unable to examine products personally

 Not everyone is connected to the Internet

 There is the possibility of credit card number theft

 On average only 1/9th of stock is available on the net