Business & Business Environment

Introduction

Self Intro

Introduction of Participants
 Presentation Outline
3

1 Entrepreneurship & Entrepreneurial Process

2 What is Business? Types?
3 Family Business: Advantages & Disadvantages
4 Components of Business Environment
5 Internal Business Environment
6 Environment Scanning
7 SWOT Analysis
8 External Business Environment
9 Macro Business Environment
 Impact of Covid-19 on Society

 Covid has upended everything. Either we wait for

normalcy to return or
 Embrace it
 Society will have to relearn things – universities
will play a role in this.
 Technology will enable this.
 Economic distress,
 Politically charged climate,
 Social discord
 Entrepreneurial Process
 Developing opportunities
 Gathering Resources
 Managing and building operations

 It will create value

 What is Entrepreneurship
 “entre- preneurship is a way of thinking, reasoning,
and acting that is opportunity obsessed, holistic in
approach, and leadership balanced for the purpose
of value creation and capture.”
 Entrepreneurship is the process of changing ideas
into commercial opportunities and creating value.
 An entrepreneur is an individual who thinks,
reasons, and acts to convert ideas into commercial
opportunities and to create value.
 Sources of Opportunities
 Societal trends or changes
 Demographic trends or changes
 Technological trends or changes
 Crises and “bubbles”
 Regulatory changes
VUCA WORLD
 VUCA World
 Volatile
Volatile
 Uncertainty
Uncertainty
 Ambiguity
Ambiguity
 Complexity
Complexity

 What
What to
to Do
Do
 EXPERIMENT
EXPERIMENT
 Open
Open Minded
Minded
 Balance
Balance Risk
Risk

 Curiosity
Curiosity

 Solution
Solution oriented
oriented
 New Ways …. VUCA World

 Startups digitally born/ adapted will win.

 If you continue with old ways , you will loose.

 Adapt and learn.

 Survival of the ones who adapt constantly.

 Evaluate Business Idea

 Passionate
 Personal traits/strengths

 Capability/skills & areas of expertise

 Capacity to solve problem

 Can it make money

 How big is the market

 Scalability
 What is Business ?
Business may be understood as the organized efforts of
enterprises to supply consumers with goods and services for a
profit.

Family Business?
Shareholders belong to same family and make key decisions
in management, operations and direction of the company

Types:
Manufacturing/Mining

Trading

Services

Agri/Dairy & Livestock/Fisheries

 Family Business: Advantages

 Quick decisions
 Unique attributes of family:
 Commitment
 Loyalty
 Emotion
 Safety
 Love
 Care & Respect
 Family Business: Disadvantages
 Shorter life span
 No Clear succession planning
 Not seeking legal/business advice
 Undefined role of family members
 Clash b/w business goals and family member goals
 Emotions versus Business
 Sustain growth
 Difficulty in retaining quality HR due to loose
organization structure/Limited Growth
 Communication Gap
 Business goals
Conventional
Profit (Bottom-line)

Growth

Market Leadership

New Approach
Customer satisfaction

Employee satisfaction

Quality Products & Services

PPP (Planet, People, Profits)…Eg. Ads on washing hands

 Top Family Owned Businesses in
Pakistan
 Nishat Group (Textile, Banking, Insurance, Cement, Dairy….)
 Hashoo Group (Hotels, Textile, Tobacco, Construction/Real Esate…)
 Schon Group (Real Estate)
 ARY Group (Gold, Media)
 Habibs (Banking, Autos, Tiles & Ceramics, Education…)
 Saigols
 Deewans
 Lakahanis
 Malik Riaz
 Dawood Group
 Younis Brothers
Characteristics of Business
 Business Environment
19

 Business enterprises cannot function in isolation

 Open systems interact with their environment
 Business enterprises exist in and are surrounded by an
‘environment’ – the business or organisational
environment
 Society and business enterprises are mutually dependent
 Business enterprises satisfy societal needs
 Relationship between society and business enterprises
takes place in a changing environment
 Why understanding Business Environment
is important?

 Development of broad strategies to ensure sustainability

 To foresee the impact of socio-economic changes at the

national and international levels on firm’s ability

 Analysis of competitors’ strategies and formulation of

effective counter measures

 To keep oneself dynamic

 COMPONENTS OF THE
21
BUSINESS ENVIRONMENT
 Different environmental variables exist internally and
externally to the business enterprise
 Environmental variables have a positive or negative
influence on the enterprise
 Business environment consists of two sub-environments:
 Internal (micro) environment
 External environment
 Market environment
 Macro environment

 Mutual relationships exist between these environments

 Internal Environment
 Refers to all the factors that are within an organization which
impart strengths or cause weaknesses of strategic nature.
 Controllable factors. These include:
 Value system
 Mission and Objectives
 Management Structure and Nature
 culture
 Components of Internal
Environment
 Human Resources
 Company Image and Brand Equity
 Other Factors
 Physical Assets and Facilities
 R & D and Technological Capabilities
 Marketing Resources
 Financial Resources
SWOT Analysis
ENVIRONMENTAL SCANNING
 The process by which organizations monitor their opportunities
and threats affecting their business is known as environmental
scanning
 Identification and forecasting phenomena in the environment
 On-going environmental scanning is essential for strategy
formulation
 Enterprises continuously engage in identifying and forecasting
opportunities and threats
 Enterprises need to proactively or reactively respond to
changing conditions in the environment
 Various sources of information are available to assist with
scanning 25
 Challenges/Problems
 Covid-19…global challenge
 Floods
 Power Load shedding
 Low quality public education & Health Services
 Unreliable postal services
 Unhygienic raw/semi-processed fruits& vegetables/milk/chicken/food
 Law & Order/Street Crime
 Ban of on Billboards
 Poor & Unreliable public transport
 Limited Recreation/Tourism Facilities
 High energy consuming appliances/savers, fans etc
Product Innovation
Urban Transportation
Market Penetration/New Markets
Changing Retail Market of
Pakistan
Changing Retail Market of
Pakistan
Changing Retail Market of
Pakistan
Changing Retail Market of
Pakistan
Changing Retail Market of
Pakistan
Changing Retail Market of
Pakistan
Changing Retail Market of
Pakistan
Changing Retail Market of
Pakistan
 Retail Market of Pakistan
 2 million retail outlets in Pakistan…US % 50 billion
market (around 18-20 percent of GPD)
 (Traditional stores, super stores, departmental stores, super
markets, company stores, convenience stores, e-stores)
 0.8 million ….FMCG (Kiryana stores etc)
 More & More people shopping from super markets
 More & More females doing groceries shopping
 Super stores also opening in low-income areas
 Increasing bargaining power of super markets
 Nature of Competition
 Monopoly, Duopoly, Monopolistic competition,
Oligopoly
 If you cant take initiative, follow the competitors:
 SHELL…..PSO
 TCS……OCS
 Service…BATA
 Pepsi Versus Coke……launching of 300 ml bottles
 What competitors are doing?
 PRAL, Exhibitions, Machinery Suppliers, Customers
Diversification as a growth
strategy
 Diversification strategies are used to expand firms'
operations by adding markets, products, services, or
stages of production to the existing business.
 When the new venture is strategically related to the
existing lines of business, it is called Concentric
diversification.
 Conglomerate diversification occurs when there is no
relationship between the new and old lines of business;
the new and old businesses are unrelated.
 Diversification: Vertical or Horizontal?

 Vertical integration occurs when firms undertake operations

at different stages of production.

 When a firm diversifies closer to the sources of raw

materials in the stages of production, it is following a
backward vertical integration strategy.

 Forward diversification occurs when firms move closer to

the consumer in terms of the production stages.
BUSINESS CHALLENGES

 Managing Bottom line

 Meeting stakeholders expectations

 Developing and retaining top talent

 Creating a customer responsive organization

 Diminishing time to market

 Market agility

 Pricing and quality

 External Environment

 Includes all factors outside the organization which

provide opportunities or pose threats to the organization

 Uncontrollable factors

 Consists of Micro and Macro environment

 Micro Environment

“ It consists of the factors in the company’s

immediate environment that affect the
performance of the company”.
Micro Environment Factors

 Suppliers
 Customers
 Marketing Intermediaries
 Competitors
 Publics
 Financial Community
Micro Environment of a typical car manufacturer

Potential
Supplier

Components
Supplier

Local Potential
Communities Customers

Stakeholders Customers

Car
Pressure
Manufacturer
Groups

Government Competitors Car Dealers

Potential
Dealers

For For
Customers Supplies
 Macro Environment

It comprises general trends and forces that may not

immediately affect the organization but sooner or
later will alter the way organization operates.

Macro Environment :-
 Economic

 Non Economic
Macro Economic Environment
Macroeconomic Environment of Business : National
 Economic System
 Market, Control, Mix
 Economic Fluctuations
 Exchange Rate
 Balance of Payment
 Inflow & Outflow
 Interest rate
 Foreign exchange reserves
 Economic Indicators
 GPD Growth, Exports, PSX, Trade deficit, Remittances, Inflation,
Unemployment
 Macroeconomic Policies:
 Fiscal (Government Spending & Taxation)
 Monetary (SBP influence money supply)
 Federal Budget
 Banking systems
 Non Economic Environment

 Regulatory Environment

 Socio- Cultural Environment

 Demographic Environment

 Technological Environment

 Political Environment
 Regulatory Environment

 Constitutional framework
 NFC Award changes
 Royalty on natural resources
 Gas/Oil control

 Policies relating to pricing and foreign investment

 Policies related to the public sector, development of backward

areas and control of environmental pollution
 Regulatory Environment
 To create stable business conditions
 Individual countries use legal and regulatory policies
to affect the businesses
 100% cash margin on import of certain items
 Increase in duty on import of steel items
 If a country is perceived to engage in unfair trade
practices (WTO and similar agreements)
 Government support (subsidies)
 Special Economic Zone (free land for foreigners)
 Response may be
 Retaliatory tariffs * Restrictive trade regulations
Socio-Cultural Environment

 Social Customs & Rituals and practices

 Most of gatherings are done outside/Halls
 Trend of celebrating birthdays, wedding anniversary etc
 Lifestyle patterns
 Eating out, convenience, comfort, easiness
 Family structure
 Joint family versus single family
 Role & position of men, women, children and aged in family
& society
 Decisions are taken by females and youngsters
 Groceries purchase being done by females
Demographic Environment in Pakistan

 Population Growth Rate

 Around 2%

 Age Groups
 15-64…..53%, above 64….3.5% (1998)

 Life Expectancy
 66.5 (2015)

 Male to Female Ratio

 58% male, 48% female (1998)

 Fertility and Mortality rates

 Rural to urban migration

 32% urban 68% rural (1998)
 Political Environment
 Ideologies (ideas reflecting beliefs and values
influencing behavior/culture of nations and political
systems) underlie the actions of governments.
 Political parties in power
 Mindset/Approach of political parties
 Change in political parties at Federal, Provincial
 Conflict in Provincial & City Government
 Establishment & Civilians conflict
 Agriculture pro parties versus Industrialists pro parties
 Role of Judiciary
 Technological Environment
 Sources of Technology
 Technology Development

 Impact of Technology

 E-business
 Business-to-business (B2B)
 Business to consumer (B2C) transactions
 e-tailing
 Financial services (e-cash)
Top Technological Innovations
New Technologies Obsolete Products
Hot Solar Cells Drones Dot Matrix Printers Pagers
Reversing paralysis Auto driving cars Floppy Disk/CDs Walkman
Playing with your 3-D Printing Camera & Rolls Library Catalog
face cards
Quantum Smart watches Audio & Video
Computers Cossets/VCR
360 degree selfie Temporary Answering
SocialMedia/Snapc Machines
hat
Gene Therapy Cloud steaming Cathode Ray Tube
TV
Cell Atlus Bio-technology Public Pay Phones
Reinforcement AI Type Writers
learning
Technological Environment in
Pakistan
 30 million FB users in Pakistan and 70% access FB
through mobile
 Assan Mobile Account (AMA)
 Mobile payment system
 40 million broadband users
 Successful ecommerce sites:
 www.aliexpress.com
 www.daraz.pk www.foodpanda.pk
 Use of apps for Food, Taxi & other stuff
 Low price machinery from China, Turkey, India etc
 High Growth Sectors
 Retail
 Dairy & Agro Processing and Food
 Packaging
 Education
 Health Services
 Financial & IT Services
 Construction
 Engineering/Automotive & auto parts
 Home Appliances/Electronics
 Business Environment

MACRO ENVIRONMENT

ECONOMIC
Environment

MICRO ENVIRONMENT

BUSINESS

Internal Environment

Values,
Mission & Objectives.
TECHNOLOGICAL Human Resources,
FACTORS Co. Image & Brand Equity

DEMOGRAPHIC
FACTORS
MARKETING
INTERMEDIARIES SOCIAL
CULTURAL
FACTORS

Non - Economic
Environment
Challenges
 Governance
 Relations with Neighbors/Regional Instability
 Law & Order
 Poverty/ growing income gap in rich & poor
 Low level of Education & Unskilled Youth/Work
force
 Poor Infrastructure (Particularly in Karachi)
 Inconsistent policies
 Rapid Technological changes
Thank You