BUSINESS ENVIRONMENT(NMBA014)

Syllabus

UNIT 1

Business Environment-Meaning, Importance, Environmental

Factors, Recent Political Environment, Recent Economic and

Financial Environment, Planning In India-Planning Commision-

Liberalisation and Planning, Industrial Policy: New trade policy-

1991 onwards, Industrial Licensing in India

Introduction to

Business Environment

UNIT 1

Business may be understood as the organized efforts of enterprises to supply consumers with goods and services for a profit

What is Business???

Contemporary Business goalsProfit (Bottom-line)GrowthMarket LeadershipCustomer satisfactionEmployee satisfactionQuality Products & ServicesService to Society

Why Study Business Environment

Development of broad strategies to ensure sustainability

To foresee the impact of socio-economic changes at the national and international levels on firm’s ability

Analysis of competitor’s strategies and formulation of effective counter measures

To keep oneself dynamic

What do you mean by Business Environment???The environment of any organization is “ the aggregate of all conditions, events and influences that surround and affect it.”Characteristics of Business Environment: Complex Dynamic Multi-faceted Far- reaching impact

FEATURES OF BUSINESS ENVIRONMENT

(a) Business environment is the sum total of all factors external to the business firm and that greatly influence their functioning.

(b) It covers factors and forces like customers, competitors, suppliers, government, and the social, cultural, political, technological and legal conditions.

(c) The business environment is dynamic in nature, that means, it keeps on changing.

(d) 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.

(e) Business Environment differs from place to place, region to region and country to country. Political conditions in India differ from those in Pakistan.

IMPORTANCE OF BUSINESS ENVIRONMENT(a) Determining Opportunities and

Threats(b) Giving Direction for Growth(c) Continuous Learning(d) Image Building(e) Meeting Competition(f) Identifying Firm’s Strength and

Weakness

Factors of Business EnvironmentInternal Factors External Factors

Micro environmentMacro environment

Economic Non Economic

Internal Factors

Refers to all the factors that are within an

organization which impart strengths or cause

weaknesses of strategic nature.

Controllable factors. These include:

Value system

Mission and Objectives

Management Structure and Nature

Internal factors includes: Human Resources

Company Image and Brand Equity

Other Factors

Physical Assets and Facilities

R & D and Technological Capabilities

Marketing Resources

Financial Resources

External Factors

Includes all factors outside the organization which provide opportunities or pose threats to the organization

Uncontrollable factors

Consists of Micro and Macro environment

Micro Environment

“It consists of the factors in the company’s immediate environment that affect the performance of the company”.

Micro Environment Factors

SuppliersCustomersMarketing IntermediariesCompetitors

PublicsFinancial Community

Macro EnvironmentIt comprises general trends and forces that may not immediately affect the organization but sooner or later will alter the way organization operates.

Macro Environment :- Economic Non Economic

Economic Environment Economic stages that exists at a given time in a

country Economic system that is adopted by a country for

example. Capitalistic, Socialistic or Mixed Economy Economic planning, such as five year plans, budgets,

etc. Economic policies for example, monetary, industrial

and fiscal policies Economic Indices such as National Income, Per

Capital Income, Disposable Income, Rate of growth of GNP, Distribution of Income, Rate of savings, Balance of Payments etc.

Economic Problems Functioning of economy

Non Economic Environment

Regulatory Environment

Socio- Cultural Environment

Demographic Environment

Technological Environment

Political Environment

Non- Economic Environment Cultural Environment

Social Customs & Rituals and practices

Lifestyle patterns

Family structure

Role & position of men, women, children and aged in family & society

Non- Economic Environment Demographic Environment

Growth of population

Age Composition

Life Expectancy

Gender Ratio

Fertility and Mortality rates

Inter-state migration

Macro Environment Technological Environment

Sources of technology

Technological development

Impact of technology

Political Environment

Political parties in power

Political Philosophy

Macro EnvironmentRegulatory Environment

Constitutional framework

Policies relating to pricing and foreign investment

Policies related to the public sector, SSIs, development of backward areas and control of environmental pollution

Overview of Business Environment

MACRO ENVIRONMENT

ECONOMIC Environment

MICRO ENVIRONMENT

BUSINESS

Internal Environment

Values, Mission & Objectives.

Human Resources,Co. Image & Brand Equity

TECHNOLOGICAL FACTORS

MARKETING INTERMEDIARIES

DEMOGRAPHIC FACTORS

SOCIAL CULTURAL FACTORS

Non - Economic Environment