Business Environment

Team Members
• • • • • • • Anshuman singh Bhawana singh Upendra singh Chandrakant Richa Rani Swapnesh Patel

Definition of business
• Business includes all activities connected to production, trade ,banking, insurance, finance, advertising ,packaging and numerous other related activities. • • • It also includes all efforts to comply with the legal restrictions and govt. requirements for discharging of obligations to consumers , employees, owners and other interest groups who may or may not have stakes directly or indirectly with the organization.

Characteristics of business
• • • • • • • • • • •

Transistion Competition Opportunity Globalization Technology Information

What is business environment?
• Business Environment is individual and organization that exist outside the business and have influence direct and indirect to the business. • • Types of business environment Business environment may be classified into internal and external environment. • • External environment: • Internal environment: •

Goals of business
• Vision and mission statements

• “… and mission alone enables a business to set objectives ,
develop strategy, to concentrate its resources and go to work .it alone enables a business to be managed by performance” Peter Drucker • • “ A mission statement is an enduring statement of purpose that distinguishes one business from other similar firms. a mission statement identifies the scope of a firms operation in product and market terms.” John A Pearce • • “A mission statement reveals the long term vision of an organisation in terms of what it wants to be and whom it wants to serve. it describes an organisations purpose, customer, products or services, markets, philosophy and basic technology as well as strategy formulation, strategy implementation and strategy evaluation. -Fred David

Objectives and Goals
• Objectives are defined as the long term results which the organization wishes to achieve by pursuing its basic mission and operations. It pertains to a wide or narrow part of an enterprise and it may be either long range or short range. • • Goals are defined as the intermediate results to be achieved by the firm at a certain time as part of a grand plan. it is the short term milestones or bench marks that organizations must achieve in order for reaching long term objectives. • 1.Goals must be measurable, challenging, consistent , realistic and prioritized. • 2.They should be established at corporate, divisional and functional levels. • 3.It should be stated in terms of management, marketing, finance, production , research and development.

Benefits of Environmental Analysis
• Development of broad strategies & long term policies of firm. • • Development of action plans to deal with technological advancements • • Analysis of competitors’ strategies & formulation of effective counter measures. • • To foresee the impact of socio economic changes at the national & international levels on the firm’s stability. • To seek oneself dynamic.

External environment may be further classified into micro and macro environment: • • Micro environment: • • Macro environment: •

External environment
Micro (task environment) • Customers • Suppliers • Competitors • Publics • Financiers • Marketing intermediaries •

• Macro (general environment) • Economic factors • Socio/cultural factors • Demographic factors • Political/govt factors • Natural factors • Technological factors • Global factors •

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Economic factors
• • • • Economic system Industry Agriculture Money and capital markets • Per capita and national income • Population • New economic policy • • • • •

Socio/cultural factors

• Culture creates people • Culture and globalization • Culture determines goods and services • Peoples attitude to business and work • Education • Family and marriage • Authority • Ethics in business • Social responsibility • Social audit

Demographic factors

Political/govt factors

• Size of the population • • Composition of the population • • Male female ratio •

• • • • • • • • • • •

Role of legislature Role of executive Role of judiciary Constitution of India New direction for governments role

Natuaral factors
• • Manufacturing depends on physical inputs • Mining and drilling depend on natural deposits • Agriculture depends on nature • Trade between two regions • transport and communication •

Technological factors

• Technology reaches people though business • Increased productivity • Need to spend on r and d • Fast changing technology • Rise and decline of products and organizations • High expectations of consumers • Demand for capital • Social change •

Global factors
Increased opportunity as the world has become one market Improving quality Competition from MNC Capital and technology transfers Deciding which markets to enter and how to enter Adjusting the management process India and WTO
  

Internal environment
• • • • • • • • • • Promoters/shareholders value Mission /objectives Management structure/nature Internal power relationship Company image/brand equity Physical assets/facilities R&D and technological capabilities Human resources Marketing capabilities

Stages of environmental analysis
• • • • • • • • • •

Scanning Monitoring Forecasting Assessing

Limitation of environmental analysis
1. Environment analysis doesn’t foretell the future, nor does it eliminate uncertainty for any organization. 2. 3. Environmental analysis on and off itself, is not a sufficient guarantor of organizational effectiveness. 4. 5. The potential of environmental analysis is often not realized because of how it is practiced. 6. 7. Too much reliance is often placed on the information collected through environmental scanning.


• Environmental Scanning is a process of gathering, analyzing and dispensing information for tactical or strategic purposes.

There are three ways of scanning the business environment
1. Ad – hoc scanning – short term, infrequent examinations usually initiated by a crisis. 2. Regular scanning – studies done on a regular schedule (say once a year) 3. Continuous scanning (also called continuous learning) – continuous structured data collection and processing on a broad range of environmental factors. •

Steps of Environmental scanning
• 1) Identification of environmental variable • • 2)collection of data • • 3) Monitoring

Scanning improves an organization’s abilities to deal with a rapidly changing environment in a number of ways: • • 1. It helps an organization capitalize on early opportunities rather than lose these to competitors. • • 2. It provides an early signal of impending problems, which can be defused if recognized well in advance. • • 3. It sensitizes an organization to the changing needs and wishes of its customers. • •

• 4. It provides a base of objective qualitative information about the environment that strategists can utilize. • • 5. It provides intellectual stimulation to strategists in their decision making. • • 6. It improves the image of the organization with its publics by showing that it is sensitive to its environment and responsive to it. • • 7. It is a means of continuing broad-based education for executives, especially for strategy developers. •

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