Managing Bottom line
Meeting stakeholders expectations
Developing and retaining top talent
Creating a customer responsive organization
Diminishing time to market
Pricing and quality
What do you mean by Business
The environment of any organization is “ the
aggregate of all conditions, events and
influences that surround and affect it.”
Characteristics of Business Environment:
• Far- reaching impact
Why Study Business Environment
• Development of broad strategies to ensure
• 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
Refers to all the factors that are within an organization
which impart strengths or cause weaknesses of strategic
Controllable factors. These include:
Mission and Objectives
Management Structure and Nature
Components of Internal Environment
Company Image and Brand Equity
Physical Assets and Facilities
R & D and Technological Capabilities
• Includes all factors outside the organization
which provide opportunities or pose threats
to the organization.
• Uncontrollable factors.
• Consists of Micro and Macro environment.
• “It consists of the factors in the company’s
immediate environment that affect the
performance of the company”.
Micro Environment of a typical car manufacturer
It comprises general trends and forces that may
not immediately affect the organization but
sooner or later will alter the way organization
Macro 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
– Economic planning, such as five year
plans, budgets, etc.
– Economic policies for
example, monetary, industrial and fiscal
• 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
–Socio- Cultural Environment
Non- Economic Environment
• Socio-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
Growth of population
Fertility and Mortality rates
Sources of technology
Impact of technology
Political parties in power
• Regulatory Environment
–Policies relating to pricing and foreign
–Policies related to the public sector, SSIs,
development of backward areas and control
of environmental pollution.
Important factors that operate at global level
which have an impact on organization are:
Growth of world economy
Distribution of world GDP
International institutions IMF,WTO ILO
Economic relations between nations
Global human resource-nature and
quality of skills, mobility of labor
Global technology and quality standards
Global demographic patterns
Overview of Business Environment
Mission & Objectives.
Co. Image & Brand Equity
Non - Economic Environment
1. Environmental Scanning
The process by which organizations monitor
their opportunities and threats affecting their
business is known as environmental scanning.
2. SWOT Analysis
Tools for Analyzing the Environment
– S - Social
– T - Technological
– E - Economic
– E - Environmental
– P - Political
– L - Legal
– E - Ethical