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Business environmrnt

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  • 1. BUSINESS ENVIRONMENT compiled by Vusumuzi Lungelo Khanyile department of education, University of Johannesburg
  • 2. WHAT IS BUSINESS ENVIRONMENT ? • Business Environment is a relationship between a business’s actions and its environment. Environment is the surroundings of a business by which business influenced directly or indirectly. Where the political, economic, social and technological factors shopping a business environment are assessed by a business so as to devise future strategy.
  • 3. BUSINESS ENVIRONMENT ENVIRONMENT REFERS TO ALL FACTORS WHICH HAS A BEARING ON THE FUNCTIONING OF A BUSINESS UNIT. IT MAY BE INTERNAL AND EXTERNAL
  • 4. Environment • The environment is the result of changing social and economic and political forces which creates challenges, opens up new opportunities and affects the strength and weaknesses of various business segment.
  • 5. DEFINATION OF BUSINESS • A business firm is an economic unit which is engaged in the production or distribution, or both the production and distribution of goods and services for the purpose of earning profits
  • 6. Characteristics of Business
  • 7. BUSINESS OBJECTIVES
  • 8. Elements of Business Environment Business Environment consists of all those factors that have a bearing on the business.
  • 9. LEVELS OF ENVIRONMENT • INTERNAL ENVIRNONMENT Promoters’ / shareholders’ values Mission / objectives Management structure Internal power relationship Physical assets and facilities Company image / brand equity Hr, Marketing, technological, financial capabilities. Cont…….
  • 10. LEVELS OF ENVIRONMENT • MICRO (TASK / OPERATING) ENV Suppliers Publics Marketing intermediaries Competitors Customers financiers Cont…….
  • 11. LEVELS OF ENVIRONMENT • MACRO (GENERAL / REMOTE) ENV Global environment Technological / natural environment Social / cultural environment Political environment Demographic environment Legal environment.
  • 12. Types of Environment Internal Environment External Environment Micro environment Macro environment Economic Non Economic
  • 13. ECONOMIC ENVIRONMENT • Recently it is complex. Determined by government, capital market, household sector, global market etc. It consists of economic conditions, economic systems, economic policies, economic growth, interest rates, currency exchange rates
  • 14. ECONOMIC CONDITIONS • Determined by national income, percapita income, economic resources, distrn of income and assets, economic development etc. business cycles and economic growth are also important in the eco.conditions and in turn environment
  • 15. Social Environment • • The social environment of business includes social factors like customs, traditions, values, beliefs, poverty, literacy etc. For example: During festive seasons there is an increase in the demand for new clothes, sweets, fruits, flower, etc.
  • 16. POLITICAL ENVIRONMENT • Legislature • Executive • Judiciary • Impact of defence and military policy, Political stability, President’s rule, emergency, philosophy of political parties, Foreign policy, like allignment of non allignment policy, loan from IMF, ADB, ASSEAN agreement etc.
  • 17. Legal Environment • This refers to set of laws, regulations, which influence the business organizations and their operations. • Every business organization has to obey, and work within the framework of the law. Eg: Factory act 1948.
  • 18. Domestic Business Environment • The domestic factors that affects the firm situated in a domestic country.
  • 19. Global Business Environment •The Global Business Environment is that the business carried on globaly.It is influenced by the World Trade Organisation, principles and agreements.
  • 20. Overview of Business Environment MACRO ENVIRONMENT ECONOMIC Environment MICRO ENVIRONMENT BUSINESS Internal Environment TECHNOLOGICAL FACTORS Values, Mission & Objectives. Human Resources, Co. Image & Brand Equity DEMOGRAPHIC FACTORS MARKETING INTERMEDIARIES Non - Economic Environment SOCIAL CULTURAL FACTORS
  • 21. NATURE OF BUSINESS ENVIRONMENT  Risk and uncertainty  Profit Maximisation  Competition  Technology  Change oriented
  • 22. COMPONENTS OF BUSINESS ENVIRONMENT
  • 23. Internal Environment • The internal factors are generally regarded as controllable factors because the company has control over these because the company has central over these factors; it can alter or modify such factors as its personnel, physical facilities, organization and functional means, such as marketing mix to suit the environment.
  • 24. Determinants of internal environment • Mission and vision of the organization • Management philosophy and strategy • Industrial relations • Corporate culture and values • Line and staff relations • Governance standards and codes • Quality central system • Team spirit among employees • Work culture and socio-economic background of employees • Job design and coordination • Quality of internal communication • Compensation system and career progression of employees • Central system of the organization
  • 25. External Environment • External environment of business consist of institutions, organizations and forces operating outside the Company. All these individually as well as collectively exercise their influence on the latter. Broadly external environment of business may be classified into • (A) Micro Environment and • (B) Macro Environment
  • 26. The most prominent performs in the micro environment are the following • Suppliers of inputs • Workers and their unions • Customers • Market intermediaries • Competitors • Public
  • 27. Micro Environment
  • 28. Macro Environment
  • 29. DETERMINANTS OF BUSINESS ENVIRONMENT Economic policies : Industrial Policy . Political Conditions Political Stability Resources Natural resources Trade Policy Monetary Policy Fiscal Policy Corruption rule of law and governance including business law and regulations Human resources
  • 30. Bibliography • Ashumali Singh. (2009).business environment. Available: http://www.slideshare.net/singhanshu21/first-chapter • Babasab Patil (karrisate). (2012). Introduction to business environment. Available: ://www.slideshare.net/BabasabPatil/business-environment-pptdom-s-11362732?qid=2c2d8a8e-e4bf-4962-84c703b2356965cc&v=qf1&b=&from_search=6 • Jithin Clashes Zcs. (2013). Business environment basics. Available: http://www.slideshare.net/jithinclashes/businessenvironment-basics • Pankaj Kumar. (2011). Elements of business management. Available: http://www.slideshare.net/birubiru/elements-ofbusiness-environment-7051392 • R.Paul Godwin. (2013). Domestic and global business environment. Available: http://www.slideshare.net/paulpaul11/domestic-and-globalbusiness-environment

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