Business

Environment
(Lingkungan Bisnis)
Oleh: Dr. Chandra Utama, SE., MM., MSc.
What is business
environment?
Business Environment implies the
combination of all individual, firms,
forces and factors which may or may
not be under the control of the
business organization, and has a direct
or indirect impact on its survival,
growth, performance, and profitability.
 The Features of Business Environment (7 Features)

Dynamic: Business environment is highly flexible and keep changing. It is not static or rigid that is why it is essential to monitor and scan the business
environment continuously.
All the external forces: Business Environment includes all the forces, institutions and factors which directly or indirectly affect the Business
Organizations.
Specific and general forces: Business environment includes specific forces such as investors, customers, competitors and suppliers. Non-human or
general forces are Social, Legal, Technological, Political, etc. which affect the Business indirectly.
Relativity: The impact of Business environment may differ from company to company or country to country. For example, when consumer organization
CES published the report of finding pesticides in cold drinks, resulted in decrease in sale of cold drinks, on the other hand it increased the sale of juice
and other drinks.
Complex: It is very difficult to understand the impact of Business environment on the companies. Although it is easy to scan the environment but it is
very difficult to know how these changes will influence Business decisions. Some-time change may be minor but it might have large impact. For example,
a change in government policy to increase the tax rate by 5% may affect the income of company by large amount.
Uncertain: It is very difficult to predict the changes of Business Environment. As environment is changing very fast for example in IT, fashion industry
frequent and fast changes are taking place.
Inter-relatedness: All the forces and factors of Business Environment are inter-related to each other. For example with inclination of youth towards
western culture, the demand for fast food is increasing.
 Component of Business Environment

Internal Environment is the environment that contains those factors which effect the business
enterprise directly. These factor can be controlled by the firm, as well as firm can modify so as to
be in sync with the overall business environment.

External environment refers to the environment which can effect the business enterprise directly
or indirectly, as it contains those elements which are not under the control of the business.
Micro environment: Those factors which fall under the immediate periphery of the
business enterprise.
Macro Environment: Those factors which are outside the control of business and can
directly affect its functioning, efficiency, strategies, performance and profitability.
Component of Business Environment
Internal Environment
Component of Business Environment
External environment
ECONOMIC ENVIRONMENT
(Lingkungan Ekonomi)
What is economic Environment ?
The factors of economic environment
The variables of macroeconomic environment
Notes:

Macroeconomic and microeconomic

environment is different from macro and
micro environment.

Macro and micro environment has a

broader meaning than macroeconomic
and microeconomic environment
How firms make profit?
 How firms make profit? Market for
Market for output
input
Money Firms:
Firms: Money supply (ss)
demand (dd) Firms
Households:
Households: Buy factors of Change factor of Demand
Supply (ss) productions or production to goods and Sell output (dd)
input services (output) (supply)
Interaction (demand) Interaction
dd and ss Objectives: profit dd and ss
result Cost result
Price of Revenue Price of
for for firms
input firms output

External factor is supply External factor is demand of goods

of input Profit=Price of output x output – Price of input x input and services.
What factors determine Profit= Revenue - cost What factors determine demand of
supply of inputs? output?
 expenditure Households
$ consume goods and services
and sell factor of production

Revenue
$ Production
of output There are 3 approchs how to measure
GDP: Income approach, expenditure
approach, and production approch
Income: Wage, rent, $
dividend, interest rate,
etc.

Firms Input
consume factor of production
and sell goods and services $
Pay input
How economy work?
The role financial market and rest of the world to economic activities
The role financial market and rest of the world to economic activities
Central
bank
Regulator International
Financial
sector sector

Real sector

Regulator

Real sector
 Macroeconomic factors determine business
Financial sector
Interest rate, money in
economy, credit, etc.

Regulation
Government: tax, deficit
budget, etc. International sector
Central bank: policy rates, Expectation Exchange rate, capital flow,
export-import, BOP, etc.
money supply, macroprudential
policy, etc.

Real sector
Income (GDP), Inflation,
unemployment rate, etc.
Notes:

There are interdependency between variables within same sector or in other

sectors. The interdependence of variables makes the analysis complex.

There are 3 concepts in expectation: (1) Adaptive expectation, (2) rational

expectation; (3) the combination of adaptive and rational expectation.

There are delay (lag) one variable influences the others.

There are coordination between policy makers.

 Note: Interconeksi antar sektor
Inflasi
pendapatan
Pengangguran

Neraca
pembayaran Defisit

Sumber:
Suku
bunga
Koordinasi
kebijakan
ekonomi
antar
lembaga
Lanjut ke materi2…