unit 5 Introduction to Business Environment.ppt

business environment

1. Introduction: Business
Environment

2. Business is an economic activity, which is related
with continuous and regular production and
distribution of goods and services for satisfying
human wants.
What is business?

3. "The regular production or purchase and sale of
goods undertaken with an objective of earning
profit and acquiring wealth through the
satisfaction of human wants.“
Stephenson
Definition of Business

4. "Businessreferstoaformofactivityconducted
withanobjectiveofearningprofitsforthebenefit
ofthoseonwhosebehalftheactivityisconducted.“
Dicksee
Continued…

5. “Humanactivitydirectedtowardsproducingor
acquiringwealththroughbuyingandsellingof
goods.”
Lewis Henry
Continued…..

6. Profit (Bottom-line)
Growth
Market Leadership
Customer satisfaction
Employee satisfaction
Quality Products & Services
Service to Society
Contemporary Business goals

7. Environment refers to all external forces which
have a bearing on the functioning of the business
What is Environment

8. The term ‘business environment’ connotes external
forces, factors and institutions that are beyond the
control of the business and they affect the
functioning of a business enterprise. These include
customers, competitors, suppliers, government,
and the social, political, legal and technological
factors etc.
What is business environment

9. “BusinessEnvironmentencompassesthe-climate’
orsetofconditions,economic,social,politicalor
institutionalinwhichbusinessoperationsare
Conducted.”—ArthurM.Weimer
Definitions

10. “The environment includes factors outside the firm
which can lead to opportunities for or threats to the
firm. Although there are many factors, the most
important of these factors are socio-economic,
technological, supplier, competitors, and
government.”
William F. Glueck
Definition of Business Environment

11. ‘‘Business environment is the aggregate of all
conditions, events and influences that surround and
affect it.”
Keith Davis
Continued…

12. “Business environment is the climate or set of
conditions-economic, social, political or institutional
in which business operations are conducted.”
Arthur M. Weimer
Continued…

13. Business
Decision
Internal Environment
Mission / Objectives
Management Structure
Internal Power Relationship
Physical Assets & facilities
Company image
Human resources
Financial Capabilities
Technological Capabilities
Marketing Capabilities
Financiers
Suppliers
Customers
Competitors
Public
Mktg Intermediaries
Micro Environment
Economic
Technological
Global
Demographic
Socio-Cultural
Political
Macro Environment
BUSINESS ENVIRONMENT

14. Environment is inseparable part of business
Business enterprises continuously interacts with its
environment for taking inputs like raw materials, capital,
labour, energy etc. and transform them into goods and
services and then send them back to the environment.
Environment is Dynamic
No environment remains constant or static for a longer
period of time.
Business cannot work without environment.
It cannot directly influence the changes in external
environment
Features of Business environment

15. Internal and external factors
Internal environment includes plans and policies,
employees, business objectives etc. The external
environment is again subdivided into micro factor
and macro factor.
Environment is complex
Business environment is growing extremely complex
due to government interventions and social
consciousness.
Environment is multifaceted
Environmental changes may bring opportunities to
some people and obstacles to others.

16. Opportunities and obstacles
Opportunities for growth and expansion is created
when the environment is favourable, on the other hand
it creates problems and obstacles when it is
unfavorable.
Regulates the scope of business
Environment provides a framework within which
business organisationhas to operate.
Long lasting impact
Changes in the environmental factors have long lasting
effects on the functioning of the business.
Uncertainty
Business environment is very difficult to predict future
happenings, especially when environmental changes
take place too frequently.

17. 1.Demographic Environment: Refers to study of the population
2.Economic Environment: Constitutes of economic conditions,
economic policies, and the economic system
3.Political-Legal Environment: Refers to political, government
and legal environment
4.Socio cultural Environment: Consists of factors which are
related to human relationships and the impact of social
attitudes and cultural values
5.Global: Global Environment treated as whole world just as
village and has changed how individuals and organisations
relate to each other
6.Technological: how the rapid pace of change in production
processes and product innovation affect a business.
Macro Environment

18. Micro environment factors, are factors close to a
business that have a direct impact on its business
operations and success.
Micro Environment

20. 1.Determining Opportunities and Threats
2.Giving Direction for Growth
3.Continuous Learning
4.Image Building
5.Meeting Competition
6.Identifying Firm’s Strength and Weakness
7.Keeping Business Enterprise Alert
8.Keeping Business Flexible and Dynamic
Significance of Business
Environment

21. Economic environment
After the new economic policy of 1991, lots of
opportunities are offered to businessmen.
Banking sector reform has led to many attractive
schemes of deposits and lending money. The Banks are
offering loans at very nominal rate of interest and with
minimum formalities to be completed.
Recent changes in economic and fiscal policy of country
have encouraged NRIs and foreign investors to invest in
Indian companies.
Examples

22. Social Environment (Example of companies)
Pepsi
The Pepsi slogan, “Come alive with the Pepsi Generation”
translated in Taiwanese became, “Pepsi will bring your ancestors
back from the dead”. Not only a bit creepy by culturally, it was an
insult.
Kentucky Fried Chicken
In China, the Kentucky Fried Chicken slogan “finger-lickin'
good” became “eat your fingers off”. Again, implying an action
considered rude and uncivilized in Chinese culture.
General Motors
When General Motors introduced the Chevy Nova in South
America, the company was unaware that “No Va” meant “It
won't go”.
Continued…..

23. In India also, there are many Social reforms taking place
and the common factors of Indian Social Environment are:
(a) Demand for reservation in jobs for minority and women
(b) Demand for equal status of women by paying equal
wages for male and female workers
(c) Demand for automatic machines and luxury items in
middle class families
(d) The social movements to improve the education level of
girl child.
(e) Health and Fitness trend has become popular.
Continued….

24. Recent discussions have blamed the increase in violence seen in society
on television and violent programs, according to the Guardian. Some
studies have shown that violent shows have an impact on behavior and
can desensitize people to violence. This is especially true of young
children who watch a great deal of violent shows. The Guardian cautions
that exposing children to television at a young age may cause them to
have a short attention span.
Television has also been linked to the obesity epidemic in America,
according to the website How Stuff Works. Not only are children and
adults moving less and spending more time in front of the TV, they tend
to snack more while watching their favorite shows. Many commercials
are also geared toward unhealthy junk foods, which may lead to
indulging in unhealthy snacks.
Continued…

25. The common factors and forces which have influenced the
Indian political environment are:
(a) The government in Hyderabad is taking keen interest in
boosting I.T. industry, as a result the state is more commonly
known as Cyber bad instead of Hyderabad.
(b) After the economic policy of liberalisationand
globalisation, the foreign companies got easy entry in India.
As a result the Coca Cola which was sent back in 1977 came
back to India. Along with Coca Cola, Pepsi Cola and many
other foreign companies are establishing their business in
India.
Continued…