Professional Documents
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BUSINESS and Its ENVIRONMENT
BUSINESS and Its ENVIRONMENT
ENVIRONMENT
Jessa Mae S. Banse, CPA, MBA
Business Environment:
Definition
beyond the control
of individual
industrial enterprises and their
managements
all
functioning of business
Business Environment
Relationship
business is influenced by its environment (vice versa)
1 23
Features of Business
Environment
1
2
3
4
changes are
UNPREDICTABLE; I nature,
and impact
COMPLEX, MULTI
FACETED,
FAR REACHING IMPACT
changes vary from region
to region
Types of Business
Environment
Internal
External
External
External
External
Micro
Macro
Economic
Non - economic
INTERNAL ENVIRONMENT
factors that are within an organization which impart
strengths or cause weaknesses of strategic nature
Value
Value system
system
Mission
Mission and
and Objectives
Objectives
Management
Management Structure
Structure
and
and Nature
Nature
Human Resources
Company Image and Brand Equity
Other Factors
Physical Assets and Facilities
R
&
D
and
Technological
Capabilities
Marketing Resources
Financial Resources
EXTERNAL ENVIRONMENT:
MACRO
MICRO
general trends
trends and
and forces
forces that
that may
may not
not immediately
immediately affect
affect the
the
general
factors
in but
thesooner
companys
environment
organization
but
sooner
or later
later will
willimmediate
alter the
the way
way organization
organization
operates
organization
or
alter
operates
economic
CONDITIONS
economic
SYSTEMS
MACRO:
economic
POLICIES
Capitalist Economy
Socialist Economy
Mixed Economy
ECONOMIC ENVIRONMENT
MACRO:
Socio - Cultural
Demographic
Growth of population
Density and distribution
Age Composition
Life Expectancy
Sex Ratio
Fertility and Mortality rates
Inter-state migration
Demographic
Political
Political
Legal
Legal
Technological
Sources of technology
Technological development
Impact of technology
Methods, techniques and approaches adopted
in the production and distributions of goods
Technological
Natural
Natural
Importance of Business
Environment
Identifying companys STRENGTH & WEAKNESSES (broad
strategies and long-term policies of the firm)
Determining OPPORTUNITIES & THREATS
Giving DIRECTION for growth
(action plans to deal with technological advancements; foresee
the impact of socio-economic changes at the national and
international levels on the firms stability)
Continuous Learning (to keep oneself DYNAMIC)
Image Building
Meeting Competition (analysis of competitors strategies and
developing countermeasures)
ENVIRONMENTAL ANALYSIS
PROCESS
Scanning
Monitorin
g
Forecasti
ng
Assessme
nt
concerned
Itsurveillance
involves
tracking
with
developing
the
environmental
plausible
trends,
projections
sequences
of of
of
the in
eneral
neralthe
the
surveillance
frame of
of
reference
of
of
all
all environmental
environmental
moves
from
understanding
factors
factors
and
and their
their
theinteractions
interactions
environmentin order
order tt
concerned
It
involves
tracking
with
developing
the
environmental
plausible
trends,
projections
sequences
of
the
frame
reference
moves
from
understanding
the
environmentdirection,
scope,
and
intensity
ofIt
environmental
change
the
focus
ofscanning,
monitoring
and
forecasting
tofollowing
identify what
what
events,
orofscanning,
streams
ofof
activities.
It
frequently
involves
following
direction,
scope,
and
intensity
of
environmental
change
Identify
dentify
early
early
signals
signals
of
possible
possible
environmental
environmental
change
change
the
focus
monitoring
and
forecasting
to
identify
events,
or
streams
of
activities.
frequently
involves
the
understanding
means already
for the
the organization.
organization.
Assessment,scanning.
tries to
to
the
understanding
means
for
Assessment,
tries
signals
or indicators
indicators
unearthed
during environmental
environmental
scanning.
Detect
Detect
environmental
environmental
change
change
already
underway
underway
signals
or
unearthed
during
answer questions
questions such
such as
as what
what are
are the
the key
key issues
issues presented
presented by
by
answer
the environment,
environment, and
and what
what are
are the
the implications
implications of
of such
such
the
issues for
for the
the organization
organization
issues