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The business environment

is influenced by a lot of
factor both in the
microenvironment and
Natural disasters
Business Opportunities
and Threats
Political Forces
Economic Forces
Social Forces
Technological Forces
Laws, regulations and
Tax policies, labor laws,
environmental laws, trade
restrictions and tariffs.
Economic growth,
interests rates and
inflation rate.
 Age, group affiliation,
religion, civil status and the
economic status of consumers
 Buying habits, attitudes,
attitudes, ethics, personalities
and values.
 Research and development
activities, automation,
licensing, patenting,
technological shifts and
outsourcing decisions
 Developments in the global
economy are influenced by changes
in two significant aspects:
 The capacity to produce or
manufacture and
 The capacity to distribute or transport
 Mercantilism (1500-1780)
 Industrial Revolution (1780-1880)
 Fordism (1880-1970)
 Post-Fordism (1970-2010)
 Globalization (2010-present)
 The rise of European global powers
 Countries accumulated wealth through
trade relations with other countries and
 Other empires like India and China were
not as active in global trade and were
restricted to trading within their
regional markets
 Methods of production remained
unchanged, relying on the methods
and process developed during the
Middle Ages.
 Production and distribution became
 Large factories were established and
there was also an increase in
 Industrial cities emerged and trade
Transportation was
improved with the
construction of canals,
waterways, roads and
The rise of multinational
corporations through the
pioneering work of Henry
Ford of Ford Motor
Introduction of
standardized production
process for his Ford Model
T automobile which
resulted in increased
production and profit.
Introduction of the
assembly line
Introduction of
electric motor
To standardize a product
and manufacture it by
mass at a price so low that
the common man can
afford to buy it.
 Computer-controlled tools and
efficient techniques customize and
tailored the production process to a
particular location.
 The internet provided a more
convenient medium for
 Productionwas no longer confined
to manufacturing plants and could
be done anywhere in the world
through improvements in
production methods and
information technology.
 Companies are operating within a
global marketplace and economy.
 Establishment of regional economic
organizations that enable
companies from different countries
to engage in free trade with each
Stiff competition among
companies and the
constant need to maintain
quality in order to attract
Sustainability refers to the
conduct of business
operations with due regard
to its effects on the
Basically, the role of
business is to produce
goods and services
which consumers need.
 Businessfirm produce goods
and services from the factors
of production provided by

 Consumers, buy these goods

and services.
 Business
firms thus contribute
to the country’s economic

 One measure of economic

growth is the Gross National
Product (GNP)
GNP – Gross National
Product. It is defined as
the total market value of
goods and services
produced by a country in
any given period.
 To produce goods and services,
the business firm has to purchase
materials, components or semi-
finished goods from other
producers, thereby creating a
demand for the outputs of other
 Business
has to pay wages to its

 Thesewages form the income of

the workers, who in turn buy
foods, clothes and other goods
and services.