Understanding the Business Environment: Key Concepts and Applications
Explore the essence of business environment analysis, its significance for decision-making, and the various dimensions impacting business operations. Delve into macro and micro factors, external and internal influences, and the dynamic nature of today's business landscape. Uncover the interrelatedness, complexity, and uncertainty inherent in the business environment, with real-world case studies and practical insights enhancing your comprehension.
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MODULE 1: A GLIMPSE OF BUSINESS ENVIRONMENT Nature and Significance of environmental analysis for business decisions. Dimensions of Business Environment. Economics Technological Socio-Cultural Political Legal-Regulatory Demography Environmental and Societal Environment DR.(CS) USHA SRIVASTAVA
LEARNING OUTCOME OF MODULE I After Studying this module you will be able to: Explain the meaning and importance of Business Environment, Describe the various elements of Business environment. Understand the external and internal factors affecting Business Environment. Differentiating Macro and Micro environment affecting Business Environment.
BOOKS TO BE REFERRED Author Publisher Book / Journal title Business Environment Essentials of Business Environment Dasgupta & Sengupta Francis Cherunilam Aswathappa, K Himalaya Publication Himalaya Publications Government and Business in India Allied Book Agency
Flow of Presentation Concept of Business Environment Nature of Business Environment Scope of Business Environment Importance of Business Environment Components of Business Environment. Relation between Strategic Management and Business Environment Case study. Major Development in India s Business Environment since last 10 years.- Project by student in groups.
Concept of Business Environment Business environment is the aggregate of all conditions, events and influences that surround and affect it. Keith Davis The environment of business consists of all those external things to which it is exposed and by which it may be influenced directly or indirectly . Reinecke and Schoell. On the basis of the above definitions, it is very clear that the business environment is a mixture of complex, dynamic and uncontrollable external factors within which a business is to be operated.
Nature of Business Environment Social Responsibility approach Nature of Business Environment System Approach Creative Approach
Nature of Business Environment-case of Steel Industry Internal & External Environment Dynamic & Ever changing Complexity of the Environment Interrelatedness Uncertainty Impact Interdependence
Objective/Significance of Business Environment Identification of Business Opportunities Optimum Utilisation of resources Identification of threats and early warning signals Coping with rapid changes Meeting competition Planning & policies Formulations Identifying Firms strength & Weakness
Components of Business Environment Business Environment External Environment Internal Environment Micro-Environment Macro-Environment Value System Mission/Objectives Management Structure/Nature Internal power Relationship Brand Equity Physical Assets R & D and Technological Capabilities Human Resources Marketing Capabilities Economic Factors Social/Cultural Factors Demographic Factors Political/Govt. Factors Natural Factors Technological Factors Global Factors Customer Suppliers Competitors Public Financiers Marketing Intermediaries
Internal Environment Value System:- The ethical beliefs that guide the organisation in achieving its mission and objectives. It is framed by top level of managers and the extent to which it is shared by all in organisation is an important factor in contributing to its success. Mission-Objectives: The business domain of the company, direction of development, business policy etc. are guided by the objectives of the company. Management structure: The organisational structure , company policy, extent of professionalism etc. are important factor influencing business decisions. Internal Power relationship: The amount of support the top management enjoys from different levels of employees, shareholders and Board of Directors have important influence business decisions. Human Resources: The characteristics of human resources like, skill, quality, moral, commitment etc. contribute to the strength and weakness of an organization. Brand Equity: The image of the company matters while raising finance, forming joint venture, or other alliances, soliciting marketing intermediaries, entering purchase or sale contract. R & D and Technological capabilities: It determine companies abilities to innovate and compete.
External Environment-Micro factor The factors which are close to the company and affects its ability to work constitutes micro-environment. It is also known as Task Environment and Operating Environment. Suppliers: Uncertainties regarding the supply constraints the company to maintain high inventories causing cost increase. Customers: The major task of business is to create and sustain customers. A business exists only because of its customer Competitors: A firm s competitors include not only the other firms which market the same or similar products but also who compete for the discretionary. Market intermediaries: vital link between company and the final consumers. Public: public or groups such as an environmentalist, media groups, women's associations, consumer protection groups are important factors that contribute in business performance. Financiers: Along with the financing capabilities of the financiers, their policies, strategies, attitude and ability to provide non-financial assistance etc. are also important.
External Environment-Macro factor These are the factors or conditions which are general to all business and are uncontrollable. Because of this a firm needs to adapt or adjust it to these external forces. Economic: Socio-cultural: Demographic: Political: Natural: Technological: Global:
Case Studies TRANSFORMATION OF INDIAN TWO WHEELER MARKET
Project: To List the Major Factors that affected Business Environment in India since last 10 years. and its impact on: Steel Industry Automobile Industry Food Industry Education Industry Agriculture Service Industry Other as per your choice.
