IMPACT OF BUSINESS

ENVIRONMENT ON ETHICS

Prepared by Swati Bansal

INTRODUCTION Environment Of any organization can be considered as “ the aggregate of all conditions, events and influences that surround and affect it”.

Environment Is complex as it consists of a lot of factors arising from different sources.

The nature of environment Is dynamic as it keeps changing continuously

ENVIRONMENT Environmental scanning Process of collecting information about the external marketing environment to identify and interpret potential trends. .

Environmental management Attainment of organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social- cultural environments.

Firms often create strategic alliances to combine resources and capital to compete more effectively.

CHANGE AS A 2-WAY PROCESS

Organization

Managerial actions impact

Environment

Change in Environment affects

General Environment

General Environment

Technological

Forces

Sociocultural

Forces

Demographic

Forces

Global Forces

Political &

Legal Forces

Economic

Forces

Competitors

TaskEnvironmen

t

FirmSupplier

Distributors

Customers

GeneralEnvironment

COMPETITIVE DIMENSION Competitive environment Interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power.

Companies with a monopoly usually accept regulation in exchange for the exclusive right to serve a market segment.

Oligarchy—Limited number of sellers in an industry with high start-up costs.

TYPES OF COMPETITION Direct—among marketers of similar products. Indirect—involves products that are easily substituted for each other.

Competition among all firms that compete for consumers’ purchases

POLITICAL-LEGAL DIMENSION Political-legal environment Component of the marketing environment consisting of laws and their interpretations that require firms to operate under competitive conditions and to protect consumer rights.

GOVERNMENT REGULATION Antimonopoly period of the late 19th and early 20th centuries.

Protecting competitors during the Great Depression.

Consumer protection in past 40 years. Industry deregulation began in the 1970s and continues today.

Newest regulatory frontier is cyberspace

GOVERNMENT REGULATORY AGENCIES Federal Trade Commission has broadest regulatory powers over marketing.

OTHER REGULATORY FORCES Consumer interest organizations. Self-regulatory groups. CONTROLLING THE POLITICAL-LEGAL ENVIRONMENT

Complying with laws and regulations serves customers and avoids legal problems.

Influencing the outcome of legislation through lobbying or boycotts.

ECONOMIC DIMENSION Consumer spending accounts for 70 percent of the gross domestic product.

Economic environment Factors that influence consumer buying power and marketing strategies, including stage of the business cycle, inflation and deflation, unemployment, income, and resource availability.

STAGES IN THE BUSINESS CYCLE Prosperity, recession, depression, and recovery. INFLATION AND DEFLATION Inflation—Rising prices caused by some combination of excess demand and increases in the costs of one or more factors of production.

Deflation—Falling prices

Unemployment—proportion of people actively seeking work who do not have jobs.

Income—many marketers focus on discretionary income, amount of money people have to spend after buying necessities.

Resource availability—shortages can result from lack of raw materials, component parts, and energy, or labor.

Demarketing Process of reducing consumer demand for a good or service to a level that the firm can supply.

TECHNOLOGICAL DIMENSION Technological environment Application to marketing of knowledge based on discoveries in science, inventions, and innovations.

Government and not-for-profits often contribute to research and development, which can be very costly.

APPLYING TECHNOLOGY Marketers monitor new technology to gain competitive edge.

SOCIAL-CULTURAL DIMENSION Social-cultural environment Component of the marketing environment consisting of the relationship between the marketer, society, and culture.

Increasing importance of cultural diversity and submarkets with unique values, preferences, and behaviors.

CONSUMERISM

Consumerism Social force within the environment that aids and protects the consumer by exerting legal, moral, and economic pressures on business and government.

Basic consumer rights: to choose freely, to be informed, to be heard, and to be safe.