What is Business?

According to the Chambers Dictionary, the word business

means employment, trade, profession, or occupation, a task, commercial activity, a industrial concern, etc.
All economic activities related to production and exchange

of goods or services for money or economic return.

Environment:
Environment means the surroundings, external objects, influences or circumstances under which someone or something exists. The environment of any organization is the aggregate of all conditions, events, influences that surround and affect it. Business Business Firm Economic activity Economic Unit

Business Decision Making Economic in Nature

Environment of Business
Business Environment refers to all external factors which have a direct or indirect bearing on the activities of business.
Business Environment

External Environment

Internal Environment

Micro Environment

Macro Environment

External Environment

Internal Environment Micro

Value System Goals/ Objectives Managemen t Structure Internal power Relationship Physical and technological Capabilities

Business

Macro

Human Financial & Marketing resources

Environment of Business

Political-Legal

Physical

Rival Firms
Economic New Entrants Suppliers

Cultural

Buyers Substitute Products

Global

Technological

External Environment

Internal Environment

Internal Environment
Value System:

Persons holding top positions in certain modern corporate enterprises have some values which influence their policies, practices and overall internal environment . Goals and Objectives: Sales maximization and the balanced rate of growth maximization . Management Structure: A corporate enterprise may be professionally managed or family controlled. Internal Power relationship: The strength of management depends largely on the relationship between the companys shareholders Physical resources and technology: Production technology R&D work and distribution logistics. Human Resources: The quality of human resources of a company depends largely on skills, commitment, attitude and morale of the employees.

Business Firm: Adaptability and adoptability to environment.

Managers: Capability to deal with environment.

Internal Environment

Business Environment

External Environment

Regarded as controllable Regarded as controllable factors factors

Regarded as uncontrollable factors

Macro Environment:
Economic Environment

Non Economic Environment

Social / Cultural Environment Demographic Environment Natural Environment Technological Environment Political & Legal Environment Global Environment

Industrial Production Agriculture Planning Infrastructure National Income Per Capita Income Money Supply Price Level Population Savings Trade cycles Economic System Growth Economic stability Economic policy

Social and Cultural Environment

refers to the influence exercised by the certain factors which are beyond the company gate. Culture creates people Culture and globalization Culture determines goods and services Peoples attitude to business and work Caste system Sprit of collectivism and individualism Education Family and marriage Ethics in business Social responsibility Corporate governance

Demographic Environment
Demographic trends: Changing age structure Changing family structure Geographic shifts in population Higher education level & more white collar job holders Increasing globalization of cities

Natural Environment
Manufacture depends on physical inputs. Mining and drilling depends on natural deposits Agriculture depends on Nature Trade between two regions depends on geographical factors Transport and communication depend on geographical factors

Technological Environment:
exercises considerable influences on business. It changes fast and to keep pace with it, businessmen should be ever alert to adapt changed technology in their businesses. Features: 1. Technology reaches people through business. 2. Increased productivity. 3. Need to spend on R&D. 4. Fast changing technology. 5. Rise and decline of products and organizations. 6. High expectations of consumers. 7. Demand for capital. 8. Social change

Political-Legal Environment:
refers to the influence exerted by the three political institutions, viz, legislature, executive and the judiciary in shaping, directing, developing and controlling business activities. Legislature decides on a particular course of action; the executive also called the government, implements whatever was decided by the parliament and the judiciary as the watchdog in order to ensure that both the legislature and the executive function in the public interest and with in the boundaries of the Constitution. A stable and dynamic political environment is indispensable for business growth. Role of legislature Role of executive Role of judiciary Constitution of India. New direction for government role.

Global Environment
Features:
Increasing opportunity as world has become one market. Improving quality. Competition from MNCs. Capital and technology transfers Deciding which market to enter and how to enter. Adjusting the management process India and WTO
A manager must understand that safe and protected markets are no more there; the world is becoming small in size-advanced means of transport and communication facilities; learning of foreign languages is a necessity; facing political and legal uncertainties is inevitable; and that adapting their products to different customer needs and tastes would only help companies survive amidst intense competition.

Process of Environment Analysis :

Scanning : General surveillance of environmental factors & their interactions. Monitoring : Tracking environmental trends events. Forecasting: Developing plausible projections of direction, scope & intensity of
environment changes

Assessment: Identifying & evaluating how & why current and projected environment
changes will affect strategic management of organization

Objectives of environment analysis

Analysis should provide an understanding of current and potential changes

taking place in the environment.

Environment analysis should provide inputs for strategic decision making. Environment analysis should facilitate and foster strategic thinking in organizationstypically a rich source of ideas and under standing of the context within which a firm operates.

Environment Scanning

Strategy Formulation

Strategy Formulation

Evaluation and Control

Benefits of environment analysis:

Development of broad strategies and long term policies of the firm. Development of action plans to deal with technological advancement. To foresee the impact of socio-economic changes at the national and

international levels on the firms stability. Analysis of competitors strategies and formulation of effective countermeasures. To keep oneself dynamic.

Environment Scanning
Environmental scanning is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes. The environmental scanning process entails obtaining both factual and subjective information on the business environments in which a company is operating or considering entering.
Strategic planning in which manager try to determine best fit b/w

organization and its external environment.

Important step towards corporate planning & business policy decision. Aimed at conditions improvement of the company, its policies & programs.

Monitoring

Scanning

Forecasting

Assessment Linkage among Stages

Important Information :
The size and type of sectors represented
How many people they currently employ Business expansion initiatives Employee shortages

Skills required
Business growth opportunities Gaps in the business sector

There are three ways of scanning the business environment:

Ad-hoc scanning - Short term, infrequent examinations usually

initiated by a crisis
Regular scanning - Studies done on a regular schedule (e.g.

once a year)
Continuous scanning (also called continuous learning) -

continuous structured data collection and processing on a broad range of environmental factors

SWOT analysis
Strengths: attributes of the person or company that are helpful to achieving the objective.
Weaknesses: attributes of the person or company that are harmful to achieving the objective. Opportunities: external conditions that are helpful to achieving the objective. Threats: external conditions which could do damage to the objective.

List Strengths:
Develop a list of all of the internal strengths of the agency incorporating feedback from the team members, emails and surveys. Discuss the strengths and clarify any questions or confusion. Examples of strengths could include an experienced staff or good employee training program.

Identify Weaknesses
Weaknesses are internal factors that may impact workforce planning negatively. Examples of weaknesses could include an absence of procedural manuals or lack of an employee mentoring program. It is possible that a strength could also be a weakness. For example, long-time employees could be a strength because of their experience, but may be a weakness because it might indicate a workforce close to retirement..

Identify Threats: Threats are also external factors. Threats could have a negative impact on your workforce planning and could include a projected increase in the cost of employee health insurance or an expected reduction in government funding. Again it is possible that an opportunity may also be perceived as a threat. For example, new technology tools might be an opportunity, but also threaten staffing levels. List Opportunities: Opportunities are external factors, as opposed to the internal factors of strengths and weaknesses. Opportunities could include new relevant training programs at educational institutions or an emerging diverse workforce.

SWOT Analysis

Strengths
What does your community do well? What unique resources do you have? What do others see as your strengths?

Weaknesses
L

What could you improve? Where do you have fewer resources than other communities? What do others see as your weaknesses?

Opportunities
What good opportunities are available to you? What trends would you take advantage of? How can you turn your strengths into opportunities?

Threats
What trends could affect you negatively? What are competing communities doing? How would a weakness be potential threat?

Thank You