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1. Business Environment Unit -1

2. Classroom Code qt44egv

3. Books: Text Books: Business Environment: Francis Cherunilum Economic Environment of business- A.J. Ahuja Reference Books: Essentials of Business Environment: K. Ashwathappa -- Indian Economy – S.K. Puri

4. Unit - 1 Introduction to Business Environment Concept Definition Importance of Business Environment Internal & External Environment of Business Economic Environment Reforms in Indian Money Market Primary Capital Market Secondary Capital Market

5. Unit 2 Union Budget: Concept, Main constituents of Budget, Various types of Budgetary Deficits. Price & Distribution controls: Objectives, Price controls;   Direct Vs Indirect, Administered prices, Dual pricing, Subsidization, Public Distribution System.

6. Unit 3 Global Environment Globalisation : Definition, Meaning indicators of Globalisation Foreign Investment Flows: Concepts of FDI, FPI & Role of Foreign Investments. Introduction of GATT - WTO Origin & Objectives of WTO, Impact of WTO on Indian Economy. MNCs: Meaning of MNC & TNC, Benefits from MNCs, Problems brought by MNCs. EXIM Policy (Latest)

7. Unit 4 Social Environment: Meaning of Social Responsibility of Business various social responsibility of Business. Business Ethics : Meaning Its importance Consumerism: Concept, Consumer Rights Consumerism in India Technological & Natural Environment Concept of Technology & Innovation, Sources of Technology Dynamics Concept of Natural Environment & its impact on Business

8. Business ? “Business is an economic activity because it includes all those activities whose purpose is to earn profit by transfer of goods & services.” “ Business may be defined as human activity directed towards producing or acquiring wealth through buying or selling of goods”.

9. Characteristics/ Nature of Modern Business Large size Oligopolistic Character Diversification Global Reach Technology Orientation Change Government control

10. Environment Surroundings, external objects, influences, or circumstances under which someone or something exists.

11. Business Environment Business Environment refers to all those internal & external factors which impact the functioning/performance of a firm and/or its decision making, particularly strategies. Business Environment consists of all factors that have a bearing on the business, such as the strength, weakness, internal power relationships and orientations of the organizations, governmental policies and regulations, nature of economy and economy conditions, socio-cultural factors, demographic trends, natural factors and global trends and cross-border developments.

12. Features of Business Environment Business environment is the sum total of all factors external to the business firms and that greatly influences their functioning. It covers factors and the forces like customers, competitors, suppliers, government and the social , cultural, political , technological and legal conditions. The business environment is dynamic in nature, that means, it keeps on changing. The changes in business environment are unpredictable . It is very difficult to predict the exact nature of future happenings and the changes in economic and social environment. Business Environment differs from place to place , region to region and country to country . Political conditions in India differ from those in Pakistan. Taste and values cherished by people in India and China vary considerably.

13. Factors Influencing Business Environment

14. Internal Environment The internal Environment of a business consists of the factors that arise from within the organisation . They are considered controllable to an extent. It includes value system, vision, Mission and objectives, Management structure and nature , internal power relationship , human resources, company image and brand equity and some other misc. factors. Basically: ( i ) Man, (ii) Machine , (iii) Material , (iv)Management

15. External Environment The micro Environment refers to such players whose decisions and actions have a direct bearing on the company. Since modern business broadly has two aspects, viz , Production and selling of goods. Macro Environment of a company refers to all those economic and non- economic factors which exercise their influence on the business activity in general and thus determine opportunities that a company may have to promote its business.

16. Micro Environment Suppliers- They provide the supply of inputs ( raw material, spare parts etc ) Assurance of timely & adequate supply of these inputs at competitive prices is one of the pre-requisites for the smooth functioning of the enterprise. Any type of uncertainty in this sphere compels the firms to build up high inventories resulting in cost escalation.

17. 2. Customers A firm may have different categories of customers like individuals, households, industrial and commercial establishments etc. It has been well said that one of the important task of a business enterprise is ‘ to create and sustain its customers’. A business exists primarily because of its customers. Thus, monitoring and caring for the customers sensitivity is an essential pre-requisite for the success of a business enterprise.

18. 3. Competitors The competitors of a firm include not only the rival firms which produce and market similar products but also those firms which compete for the disposable income of the consumers.

19. 4. Marketing Intermediaries Marketing Intermediaries are an important link between the firm and the customers. These include middle men such as agents, market-representatives, market consultants etc. They help the business firm in sales promotion and reaching out its products to the final customers. These intermediaries also provide assistance to the firm in stocking and moving goods from their origin to their destination. A wrong choice of this link or a dislocation or disturbance of this link may jeopardise the interest of the company. It is , therefore, necessary that the business enterprise should exercise utmost care and caution in selecting market- intermediaries & assigning them their duties and responsibilities.

20. 5. Publics ‘ A public is any group that has an actual or potential interest in or impact on an organisations ability to achieve its interests. Eg : Media public, citizens action forum , local public etc The operations of a business enterprise are affected by such publics. Media public – Help in building up or furnishing the image of the company in the society. Local Publics – They may take up environmental pollution issues which may compel the firm to suspend its operations or force it to adopt adequate anti- pollution measures . Media public- they may be used to provide valuable and useful information about the product of the company.

21. Macro Environment Economic Environment- - The economic environment constitutes of economic conditions, economic policies, and the economic system that is important to external factors of business. The economic conditions of the country include • Nature of the economy of the country. • The general economic situation in the region, conditions in resource markets like money,material , market raw material components, services, supply markets and so on which influence the supply of inputs to the organisation , their costs, quality, availability and reliability of supply of products and services • It determines the economic strength and weakness in the market • Purchasing power of the individual depends upon the economic factors like current income, price, savings, circulation of money, debt and credit availability • People income distribution pattern analyses the market possibilities and impacts on enterprise. • Development process of the country. • Availability of economic resources of the country • The level of the economic income of the country • The distribution of income and assets of the country • Public finance of the country. These are the very important determinants of business strategy in the organisation for formulating, implement and controlling of economic policies.

22. 2. Political- Government Environment Political- Government Environment – Political stability with a strong and stable government ensures smooth functioning of the business firms. If there is political instability resulting in frequent changes in the government and the breakdown of law and order, communal tensions: the smooth functioning of the business would be hampered. Likewise, the government has to play a key role in creating a conducive environment for the growth and development of the business.

23. 3. Socio- Cultural Environment While formulating the business policy and strategy, the firm has also to take into account the socio-cultural environment of the country. It has to take into considerations the social customs and traditions as also the tastes, preferences . Likings , habits etc of the people .

24. 4. Demographic Environment Factors like size & growth rate of population, its age composition , distribution , the composition of the population in terms of male & female , children and adults , rich & poor , life expectancy, size of the family , occupational status , employment pattern etc, influences the business decisions and affect the demand for goods & services.

25. 5. Natural Environment It includes factors like the existence of natural resources , climatic and weather conditions, topographical factors etc The fast depletion of our natural resources and the growing environmental pollution have become a matter of great and grave concern today. Thus, the preservation of natural environment has a direct bearing on the operations of the business.

26. 6. Technological Environment Technological factors also affect the operations of the business enterprise. The firm has to be in line and cope up with the latest technological devices just for its survival or else it will be difficult for the firm to retain its position in the market for long. Rapid advances in technology in various lines of production have facilitated product movement and the introduction of many new products. The print media & electronic media has added new dimension to product promotion.

27. Importance of Business Environment Determining Opportunities: The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises for meeting the challenges successfully. Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of growth for the business firms . It enables the business to identify the areas for growth and expansion of their activities. Continuous Learning: Environmental Analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge , understanding and skills to meet the predicted changes in realm of business

28. Cont.. D) Image Building: Environmental understanding helps the business organisations in improving their image building by showing their sensitivity to the environment within which they are working. E) Meeting Competition: It helps the firms to analyze the competitors’ strategies and formulate their own strategies accordingly. F) Identify Firm’s strength and weakness: Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments.