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BUSINESS EVIRONMENT

OBJECTIVE OF
OF THE
THE PAPER:
PAPER:
OBJECTIVE
To understand
understand the
the business
business scene
scene and
and factors
factors
To
and trends
trends for
for strategic
strategic policy
policy formulations.
formulations.
and
DR. K.
K.
DR.

SASHI KUMAR
KUMAR
SASHI

BUSINESS AND ITS ENVIRONMENT AN
INTODUCTION.
What is business?
Business may be understood as the organised
efforts of an enterprise to supply consumers with
goods and services for a profit.
Nature and scope of business?
The purpose goes beyond earning profit. It is an
Important institution in the society.

CHARACTERISTS OF CONTEMPORARY BUSINESS TRANSITION INFORMATION COMPETITION BUSINESS TECHNOLOGY OPPORTUNITIES GLOBALISATION .

laid. . hierarchical and tall • to • Flexible.• TRANSITION • Rigid. Open minded and Transparent. superstitious. • Caste ridden.back styles • to • Rational thinking and vibrant. Flat and team based • Family centric and close minded • to • Dispersed ownership.

COMPETITION • Defines new ways of doing business • Helps build new capabilities • Builds new customer satisfaction standards • Makes business leaders become proactive .

Opportunities • • • • • • • BPOS IT Wealth management Risk management Private Banking Real opportunities in the traditional sector India wave .

2 mil.8mil.tons 1 • Hero cycles Cycles 5.units 1 • Essel propack Laminated packaging 4 billion units 1 • Bharat Forge Forgings102. Tons 1 • Reliance Polester 1.COMMODITY BUSINESS • Coy Product • Mittal Steel • Birla visc Capacity Rank 70 Mil.500 tons 2 • Orchid chemicals Cephalosporin 1.100 tons 5 Business today June 5. 2005 .900 tons 2 • Jubilant organosis Pyridine 22.tons 1 Viscose 251850 tons • Basell polyprop(chatterjee/Access) 1 8 mil.

Business objectives Profit Growth Power Quality product And services Employee satisfaction Business goals Market leader ship Challenges Service to society Joy of Creation .

Critics of business Liberal intellectuals Activist reformers Marxists Business Reactionaries Radical nonMarxists .

• The total environment of business includes six factors viz. technological. Political-legal.Business environment • Environment mainly refers to external forces that impact business. economic. global and natural. . (important internal factors) • Environment can create opportunities as well as threats. social cultural.

• Environmental forces are dynamic • No firm is in a position to change the environment. .Features unique to business environment • There is symbiotic relationship between business and its environment.

3. 5. It helps an organization to develop its broad strategies and long-term policies It enables an organization to analyse its competitors strategies and thereby formulate effective counter strategies Knowledge about the changing environment will keep the organisation dynamic in its approach Such a study enables the organisation to foresee the impact of socio-economic changes at the national and international level on its stability Executives are able to adjust to the prevailing conditions and thus influence the environmnmet in order to make it congenial for business . 2.Importance of the study of business environment 1. 4.

and • Contribute to the social responsibility of business. • Match the organisational policies and resources with the social needs.Business policies and environment • Perform critical function of matching the needs of the society and the capacity of the goods and services to satisfy the needs of the people • Adapt the organisation itself to the dynamic conditions of the society. .

Input suppliers Workers and Their unions Public Business Customers Competitors Marketing intermediaries .Micro and Macro environment • Micro environment – • Refers to such players whose decisions and actions have a direct bearing on the company.

Macro environment • Refers to all those economic and noneconomic factors which exercise their influence on the business activity in general and thus determine opportunities that a company may have to promote its business. • Economic and noneconomic ECONOMIC NATIONAL GLOBAL .

NON ECONOMIC NATURAL TECHONOLOGICAL DEMOGRAPHIC SOCIO CULTURAL POLITICAL .

NATURAL ENVIRONMENT • Physical inputs • Mining and drilling depend on natural deposits • Agriculture depends on Nature • Trade between two regions depends on geographical factors • Transport and communication depend on geographical factors .

Ecological factors • “Protection of the environment and the preservation of ecological balance is the responsibility of every business organisation” • Issue of pollution control and recycling • Important legislation.The water prevention and pollution control act of 1974. The air prevention and pollution control act of 1981. The environment protection act 1986 .

TECHNOLOGICAL • • • • • • • • • Technology reaches people through business Increased productivity Need to spend for R&D Rise and decline of products and oraganisations Problem of techno structure System of complexity Social change Increased regulation and stiff oppositions High expectations of consumer .

Demographic factors • • • • • • Population – land man ratio Human development index Literacy Life expectancy Child mortality Percapita income .

SOCIO CULTURAL • • • • • • • • • Attitude of people towards work and business Caste system Spirit of collectivism and individualisation Education Family and marriage Authority Scientific Social responsibility Corporate governance .

factory administration etc .Political • • • • • Role of legislature Role of executive Role of Judiciary Constitutional rights and constitution Laws relating to company formation. industrial licensing.

Main References .

August 5. Company and environmental changes Strategic responses Consequences Submission date .Case studies • Strategies in response to environment changes of any of the five Indian companies • (1) HDFC (2) Crompton Greaves • (3) UB Group (4) Asea brown • (5) Mahindra and Mahindra • • • • • • Analytical structure. 2007 Not to exeed 15 pages – Marks 10 .