NAME :- DALWADI PRATIK

PRAVINBHAI ROLL NO. :- 12

SUBJECT :- BUSINESS
MANAGEMENT
COLLLEGE :- S.D. SCHOOL OF
COMMERCE
BUSINESS MANAGEMENT

UNIT 1
INTRODUCTION OF
MANAGEMENT
 CHAPTER 3

ORGANIZATIONAL AND
NATURAL ENVIRONMENT
Introduction :-
The success and failure of business unit depends on
environment factors affecting business unit. Business can
be successful if decision regarding business matters are
taken after the proper analysis of economic , social,
political and technological factor affecting the business.
Role of women changes in the society . Demand of fast
food increasing because of number of working women.
With the development of technology, the demand of
mobile phone increasing because of advertisement of
television the demand of modern garment butty parlour
increased. In short, changes in organizational environment
must be taken in to account.
Definition :-
• The factor which can not be avoided but
analytical study is require to take
business decision that factors means
business environment.
“ To try for success of business unit by
forecasting about economic,
social,geographical,technical,legal and other
environment at the time of establishment of
business unit is called organizational
environment.”
Definition according to ‘Richman and Co’
“Generally organizational environment
includes the matters which are not under
the control of individual firm or its
organiser. Firm or management had to
perform in this situation. This factors are
changing timely and as per the condition of
Nation”
Types of Organizational Environment
(1) Directly affecting environment

●
External Stakeholder
●
Internal Stakeholder

(2) Indirectly affecting

1. Social variables
2. Economic variables
3. Political variables
4. Technological variables
(1) Directly affecting environment
(A) External Stakeholder :-
Customers, government, traders, media, labour union,
financial institutions, competitors affecting to
business.
(1) Customers :-
Customer purchase goods and service in exchange
of money. Customer may be Institute distributor,
government producer an individual. In business
selling tactics are done according to customer
and market situation. Marketing management has
to analyse potential customers and market
conditions. According to this analysis they have
to done marketing campaign.
(2) Supplier :-
In business raw material, services, energy,
equipment and labours required for
production. After that final product is
possible. Business have to decide at what
price this resources are available and from
where. Every business dependent on labour
and raw materials supplier. If business want to
stay in competition they have to purchase at
low cost, high quality and fast delivery from
supplier. This is possible only. When business
unit’s relations are good with suppliers.
(3) Government policies :-

This is important element for affect of business. If

government change any policies related to business
or business activities that it will be Loss able
situation for business. Business have to follow
government policies. Business have to be prepared
about government policies. Ex. GST (Goods and
services tax)
(4) Media :-
In modern time media affect so much to business. Media
is responsible for success or unsuccessful of business.
Media discovered business economical and other
activities. Because this information connected with
people. On that basis people will decide that to
purchase or not to purchase that product. Business has
to provide training room employees that how to deal
with media.
(5) Labour Union :-
Personnel specialist generally supply labour in
business. In manager has to give responsibilities for
hiring and negotiation. When employee of business is
member of labour of union than he involved in
bargaining like negotiation of wages, work condition,
hours etc. If business has good relation with labor
union then employees work with good quality and it
will beneficial for business.
(6) Financial institutions :-
Organization is depend on such financial institutions. As
well as commercial bank, investment bank and insurance
company provides fund for maintaining and expansion of
business. New and well established business required
short term fund for fulfilling their current financial
requirements. Long term fund required for new building,
machine. It is an important that business has to work on
their relation with financial institutions, chief financial
officer of business has to work on maintaining good
relation with financial institutions.
(7) Competitors :-
Organizations have two opportunities for increasing
their market share 1) Increasing maximum number of
customers. So that market share is increase. e.g. Jio. 2)
To beat competitors from starting than business will
increase market share . Business have to analyze about
competition and on that basis frame marketing strategy
and to check that this strategy provides maximum
satisfaction to customers.
(B) Internal Stakeholder
Those who working in a business unit are called as internal
stakeholders .

(1) Employees :-
In many business nature of work force is changing. On
time to time skills of an employees changed. Business
always not required same skilled employees. It will
change. For that when company required they will
experiment with quality programs team approaches,
self managed team, for that they need employees who
are better educated and more flexible.
(2) Share holders and Board of Directors:-
Share holder and board of directors effect internally to
company. Shareholder have voting power. Share holder
use their rotting power and select candidate for board
of directors. Experience, skilled, who take proper
decision that person can member is Board of Directors.
Decisions taken by board of directors should be
beneficial for company. If shareholders appoint wrong
person than company have to face loss. Shareholder
have voting right, so when company have to pass any
resolution then they have to take vote of shareholders.
(2) Indirectly affecting environment

(A) Social variables

Social variable divided into three parts :-
(1) Demographics
(2) Lifestyle
(3) Social value
(A) Demographics :-
This factors affect any business industry. In
demographics person’s age, income, religion, size, of
family. Everyone income is not equal. So demand of
product will be change and it will affect business. In
India different religion are follows by people, so every
religion has different demand of product. So it is also
affect business. Small families demand is different
than big families. So company provides both type of
packing and satisfy both families.
(2) Lifestyle :-
Every person have different lifestyle. Some people
likes traditional lifestyle while some people likes
modern lifestyle. So on that basis demand of product
should be change. Ire will affect business.
(3) Social Values :-
Business have to produce those product
which is useful for social for society. In
decision making process, in business,
employee should be provide their view
point in that decision. So that their morale
will increases. Those business which are
not value of society they have to face loss.
(B) Economic Variables
Generally economic condition and trends are
important in business. Salary of an employees,
prices of product purchase form supplier and
government fiscal policies are economic
variables.
Generally nationally income and product,
savings, investments, price, salary, employment,
government activities etc are useful for
economic measurement. It will take too much
time for economic changes in business. This
changing process is complicated too.
(1) Political Variables
Political variable affect any business too much. In
business good or bad relations with political institution
affect business positively or negativity. Due to political
changes government policies should be change and it will
affect business unit.
(2) Technological Variables
In modern time technology is continuously
change. So that business have to accept all
related technology. Due to new technology
maximum production or service can be done.
Quality of product should be increases. If business
will not accept technology in time then it will
affect negatively to business.
Conclusion
Various parties are included in the factors
affecting business unit directly. Social, political,
economic and technological factors are included
in the factors affecting business indirectly. After
proper analysis of all this factors if their interest
is maintain, then development of business unit is
possible.

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