UNIT 1

INTRODUCTION TO
BUSINESS
ENVIRONMENT
 BUSINESS

An economic system where goods or services are exchanged for a

profit.

Primary goal of a business

SURVIVAL  PROFIT  GROWTH

SUGANDHA JAIN
 ENVIRONMENT

◦ No business can function in a vacuum.

◦ Anything that we depend on.

SUGANDHA JAIN
 MEANING OF BUSINESS
ENVIRONMENT

◦ The sum total of all external and internal factors that

influence a business.

◦ Both of these factors influence each other too.

◦ Factors are not static.

SUGANDHA JAIN
NATURE OF BUSINESS
ENVIRONMENT
◦ Aggregative
◦ Inter-related
◦ Dynamic
◦ Uncertain
◦ General and Specific forces
◦ Relative
◦ Inter-temporal
◦ Contextual
SUGANDHA JAIN
IMPORTANCE OF BUSINESS
ENVIRONMENT
◦ First Mover Advantage
◦ Early Warning Signal
◦ Customer Focus
◦ Strategy Formulation
◦ Change Agent
◦ Public Image
◦ Continuous Learning
SUGANDHA JAIN
TYPES OF BUSINESS
ENVIRONMENT
BUSINESS ENVIRONMENT

INTERNAL EXTERNAL

Micro Macro
Environment Environment
SUGANDHA JAIN
SUGANDHA JAIN
ENVIRONMENTAL ANALYSIS

MONITORIN
G

SCANNING FORECASTIN
G

ASSESSMEN
T
SUGANDHA JAIN
 TECHNIQUES OF
ENVIRONMENTAL ANALYSIS
◦ SWOT
◦ ETOP
◦ PESTLE
◦ BCG Matrix

SUGANDHA JAIN
 STRENGHTS WEAKNESSES
• Brand Equity • Highly Dependent on Manpower
• Low Fixed Investment • Highly Dependent on Internet
• Emphasis on Customer Satisfaction • Caters to only Tech-Savvy
• Dynamic Pricing Strategy Individuals
SWOT •
•
Adaptive
Growth Rate
• Controversies
• Low Barriers to Entry
Analysis
OPPORTUNITIES THREATS
• Dissatisfaction with unorganized • Customer Retention and Brand
market Switching
• Increasing Internet penetration • Low Margins
• Rising Disposable Income • Revolt from Unorganized Market
• Alternate transport services

SUGANDHA JAIN
ASSESSMENT OF RISK
Technological
Risk

Social Risk

Political Risk

BUSINESS
RISKS

Economic
Risk
Legal Risk

SUGANDHA JAIN
Political Risk
◦ Economic & legal impact (taxes, currency valuation, trade barriers, labor laws,
environmental laws)

◦ Non-economic & legal impact (wars, riots, terrorism, change in ruling govt.)

How to combat: know location’s history, political institutions, and political

forces

SUGANDHA JAIN
Economic Risk
◦ Macroeconomic circumstances (inflation, exchange rates, interest rates, wage level,
taxes)

How to combat: through market intelligence, monitor local and global

markets

SUGANDHA JAIN
Social Risk
◦ Labour issues, human rights violation, animal rights, corruption, increasing health
consciousness

What can happen: risk of media backlash, public outcry, damaged public
image and standing

SUGANDHA JAIN
 Technological Risk
◦ Technological failures, increased reliance on technology, extreme dynamism in technological
environment, redundancy

What can happen: stolen customer data  damaged confidence

SUGANDHA JAIN
Legal Risk
◦ Regulatory Risk (due to dynamic behaviour of laws and regulations)

◦ Compliance Risk (due to non-compliance with statutes)

◦ Contractual Risk (failure to fulfill contractual liability  lawsuit)

◦ Dispute Risk (disputes with any stakeholder  lawsuit)

◦ Reputational Risk (malpractices, scams, criminal event, frauds: by business or stakeholders)

◦ Non-Contractual Risk (copyright/TM infringement, etc )

SUGANDHA JAIN
EMERGING SECTORS OF THE
INDIAN ECONOMY
◦ Infrastructure

◦ Financial Services (Digital India, Fintech)

◦ Automobile

◦ Technology

◦ Healthcare (Assistive technologies, Population of senior citizens expected

to grow, MODICARE)
SUGANDHA JAIN
SOCIAL RESPONSIBILITY OF
BUSINESS

WHY BE SOCIALLY RESPONSIBLE???

CASE FOR CASE AGAINST

SUGANDHA JAIN
 SOCIAL RESPONSIBILITY OF BUSINESS
TOWARDS DIFFERENT GROUPS
EMPLOYEES • Fair wages and salaries • Education, training, promotion
• Safe working conditions • Participation in decision making
• Job security • Religious, social, political
• Service benefits freedom
• Recognition of workers’ rights

SHAREHOLDE • Fair return • Steady appreciation

RS • Safety of investment • Regular, accurate and full
information

GOVERNMENT • Abide by the laws • Encourage fair trade practices

• Pay taxes • Avoid monopoly
• Avoid corruption
SUGANDHA JAIN
CONSUMERS • Regular supply
• Of right quality goods
• At the right time
• At right place
• At reasonable price
COMMUNITY • Best use of resources
• Employment opportunities
• Pollution-free environment
• Upliftment of weaker sections
• Refrain from unethical practices
• Meet needs
• Grievance redressal
• True marketing
• Avoid unethical practices
• Fair and wide distribution
• Improve public health, education
• Development of backward areas
• Provide relief
• Contribute to social causes
• Contribute to overall
development
SUGANDHA JAIN