BUSINESS ENVIRONMENT classification -internal and external

Business environment classification

1. Business environment

2. Business environment Business environment refers to the sum of all internal and external factors which affects new entrants in business to gain foothold in the industry and old business entities to survive or grow and achieve success Broad classification of Business environment : INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT Micro Environment /Task Environment/Operating Environment Macro Environment /General Environment / Remote Environment

3. INTERNAL ENVIRONMENT IINTERNAL ENVIRONMENT Encompasses factors within the organisation which are controllable Core value system : Tata group is guided by the core values : Integrity, responsibility, Excellence,pioneering and unity which represents the shared valued system of the organisation i.e the implementation of ethical practices in all their operations and pursuit of excellence Vision and Missions: The overarching vision of wipro is to become a global leader with a focus of innovation and clients. Thr vision represents the long term future goals of the business

4. INTERNAL ENVIRONMENT Organisational structure : It refers to the hierarachy , roles of each hierachy position, reporting relationship, organisational communication flow . seamless flow of communication by reducing silos is crucial for the growth of an organisation Internal power relationship Balanced power dynamics of leaders will ensure employee engagement and motivation and will strength communication with the external stakeholders Human resources : Hiring the workers with the right skill set amd retaining the talents is crucial for the sucess of business entities

5. INTERNAL ENVIRONMENT Company image and Brand equity : Perception of a brand shapes the customer’s loyalty and determines the pricing power,market share and contibutes to the company’s long run success R and D and technological capabilities : In this digital age , it is imperative that organisation must leverage innovation to successfully scale their operations . Miscellanous factors : Other internal factors like physical assets , marketing capabilities, financial sourcing contribute to the competitive davantage of the organisation

6. MICRO ENVIRONMENT Micro Environment It refers to the immediate factors which significantly affects the opertions of an business entity customers Prioritising customers is important for the business as it helps to forge customer loyalty, generate repeat purchases and help to build a long term relationship with the customers suppliers: As a result of its immense bargaining power with its suppliers, walmart is able to follow Every day low pricing strategy(EDLP) which greatly benefits customers competitors: Business entities compete to retain their customers and capture market share . Undestanding competiors is essential which helps business to redefine strategies and invent unique selling proposition

7. MICRO ENVIRONMENT Micro Environment : Public: companies face the constant scrutiny of the general public . It is imperative for any business to build trust with public . public backlash can lead to significant operational disruptions for a business causing huge financial loss Financiers :Finance is crucial for the business organisation to thrive and operate successfully. Business organisation raise external funding to expand their operations Marketing Intermediaries: Marketing Intermediaries add value by bridging the gap between producers and customers facilitating the sale and distribution of products through varios channels

8. MACRO ENVIRONMENT Macro Environment These factors are external , significantly impact a business and are uncontrollable .The factors are Political environment Economic Environment Socio cultural environment Legal environment Technological Environment Ecological Environment

9. political Environment Political environment Political Environemnt of any countly significantly affects business to a large Extent political systems : Democracy, authoritarianism , Totalitarianism political organisation , layers of political parties political ideology political stability Encouraging privitisation in industrial sectors ,liberalising FDI norms Geopolitical relations

10. Economic Environment Economic environment Economic Environment denotes the economic factors that impacts business and its operations Economic sytems :capitalism , communism/socialism ,Mixed Economy Macro economic parameters GDP Interest rates in the financial system Unemployment Levels of disposable income Inflation Demographic factors which influence Macro economic parameters like GDP, Investment and trade Density of population literacy Rate Urbanisation

11. socio cultural Environment Socio Cultural Environment Differences in culture impacts the business Cultural traits : univeralism vs particularism, Individualism vs collectivism , Monochronic vs polychronic , high-context vs low context, Affective vs Neutral culture , specific Vs diffuse culture social stratification : status , material culture, caste system Family structure Religion Etiquettes Aesthetics Language customs and traditions

12. Legal Environment Legal Environment Goverment controls business activity through various legislations Legislations to protect employees : consolidated labour laws into code on wages, Industrial relations , occupational safety , health and working conditions and social security consumer protection legislation : consumer protection Act 2019, legal Metrology Act 2009 other important legislation affecting business: competition law Intellectual propety law Data privacy law Advertising law Financial and securities law Foreign Exchange mangement Act

13. TECHNOLOGICAL ENVIRONMENT Technological Environment It refers to technological innovation which impact business Technology and changes in social expectations Technology disruptions Technology and changes in corporate culture and new age offices Rise of Technocrats and changes in organisational structure Technology and need for skilled workforce Transfer of Technology Technology and governemnt Regulations

14. Ecological ENVIRONMENT Ecological Environment It refers to natural and physical factors which affects the business opertions Green practices and business Green washing Business and adverse impact on environment Environmental regulations (Environment protection Act 1986)