Macro BusinessMacro BusinessEnvironment in IndiaEnvironment in India
???????:- What is Business ? What is Environment ? What is Business Environment ? What is macro business ? What is strengths of macro business environment ? What is weakness of macro business environment ? What is opportunities of macro business environment ?
Introduction to Business:Business is the organized efforts of enterprises to supplyconsumers with goods and services. Businesses vary in sizeas measured by number of employees or by sales volume.All businesses share the same purpose to earn Profits.However, the purpose of business goes beyond earningprofits.
Business is an important institution in society and therole of business is crucial. Be it for the supply of goods and services Creation of job opportunities Offer of better quality of life Contributing to the economic growth of the country.
Scope of Business Business included all activities connected withproduction, trade, banking, insurance, finance, agency,advertising, packaging and numerous other relatedactivities. Businesses include all efforts to comply withlegal restrictions and government requirements anddischarging obligations to consumers, employees,owners and to other interest groups which have stakesin business directly or indirectly.Society cannot do without business and vice versa.
Characteristics of Today’s Business:-InformationCompetitionChange - TransitionOpportunitiesDiversificationGlobalisationTechnology
Environment:• Environment refers to all external forces which have a bearing onthe functioning of business.“Environment are largely if not totally external, and beyond thecontrol of individual industrial enterprises and their management.These are essentially the givers within which firms and theirmanagements must operate in a specific country and they vary,from country to country”.• However, the term business environment refers to the ExternalFactors. The external environment has two components1. business opportunities2. threats to business.
Business DecisionInternal Environment External EnvironmentFactors influencing Business DecisionSimilarly, the organizational environment has two components1.Strengths2.Weaknesses of the organization.A SWOT analysis is thus the first step in strategy formulation
The term ‘Business Environment’ is used to describethe general conditions for doing business that arepresent in an economy. we will be using the word ‘business environment’ torefer to those factors which influence business decisionssuch as investment decisions, privateinvestment, etc. in an economyBUSINESS ENVIRONMENT
• Environment within the organization• Internal factors of the business which can be controlled by business
• Refers to external aspects of the surroundings of businessenterprise which have influence on the functioning of business.• These factors beyond the control of business.• External environment has two types :-i) Micro Environment ii) Macro Environment
Micro Environment:The Micro environment consists of different types ofstakeholders - customers, employees, suppliers,marketing intermediaries, competitors.It is also known s the “Task Environment andOperating Environment” and has a direct bearing onthe operations of the firm. hanges in the microenvironment will directly affect and impinge on thefirm‘s activities.
Macro Environment:The macro environment consists of factors which arebeyond the control of the business. There is a symbioticrelationship between “business and the environmental”factors, environmental factors are dynamic and aparticular business firm, by itself, may not be in a positionto change it’s environment. Macro Environment includes:
Being exposed to the news allows you a higherlevel of awareness of the business environment. Certain environments influence your businessmore than others.Macro Business environmental analysis:
-There are several “models” that comprise the abbreviations ofthe following environments: Political Economical Legal (or Regulatory) SocialEcological Technological-:Among the titles of the same “model” are:PEST, PESTLE, SLEPT & STEER, PESTOWe prefer PESTO
PESPoliticalEconomicalSocialTechnologicalOthers“PESTO sauce is easy to remember and is bestwhen it’s fresh - the same goes for your news.”Legal Legal EcologicalTO
You should evaluate the level of dependencyof your business to each PESTO environment. You should briefly describe the top two relevantenvironments as per their level of influence. Examples:importer of branded fashion = social & economicaldeveloper of email marketing software = tech & legaldistributor of drip irrigation = political & ecological
In the past few years, India has proved to be thenectar for major MNC’s around the world.With favorable policies, India is now one of themost favorable destination for FDI (ForeignDirect Investment).
Economic growthRobust GDP growthReal GDP growth (%)5.39.4012345678910FY96FY97FY98FY99FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY1275.1510.91102468101214FY96FY97FY98FY99FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY12Industry growth (%) Services growth (%)
Economy – high growth rates & increasing FDI:Increasing FDI trendSource: RBI, DIPP Source: Reserve Bank of IndiaUSDmillion9715726020004000600080001000012000140001600018000FY96FY97FY98FY99FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY12Svgs & Cap Formation % of GDP ( Current prices)23.126.333.832.40510152025303540Goss domestic savings Gross domestic capital formationFY96FY97FY98FY99FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11
Trade liberalization and reductionin tariffsSource: Reserve Bank of IndiaDespite a secular reduction in peak tariffs, the tax to GDP ratio is still showing an upward trendTrend in Peak Custom DutyASEAN levels committed to be reached by 2013(%)14.213.3814.5216.9515.4312131415161718FY96FY97FY98FY99FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY12Tax/ GDP ratio(%)150110856550454035302012.5 10020406080100120140160FY96FY97Fy98FY99FY00FY11FY12FY08FY09FY10FY01FY02FY03FY04FY05FY06FY07Source: Reserve Ban of IndiaSource: FICCI conference, March 14 – 15th 2012
Credible independent Central Bank Sound professional managementHigh Degree of autonomy of India’s Central BankMacroeconomic stability - Stable currency:Rupee exchange rateSource: RBI(INR/USD)INR/ USD17.9431.3935.4742.0447.68 45.94 45.290102030405060FY96FY97FY98FY99FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY12
Strengths:• Strengths—internal to the unit; are a unit’s resources and capabilities that canbe used as a basis for developing a competitive advantage; strength should berealistic and not modest.Your list of strengths should be able to answer:• What are the unit’s advantages?• What does the unit do well?• What relevant resources do you have access to?• What do other people see as your strengths?• What would you want to boast about to someone who knows nothing about thisorganization and its work?• Examples: good reputation among customers, resources, assets, people, :experience, knowledge, data, capabilities
Weaknesses:• Weaknesses—internal force that could serve as a barrier to maintain or achieve acompetitive advantage; a limitation, fault or defect of the unit;• It should be truthful so that they may be overcome as quickly as possible.Your list of weaknesses should be able to answer:• What can be improved?• What is done poorly?• What should be avoided?• What are you doing as an organization that you feel could be done moreeffectively/efficiently?• What is this organization NOT doing that you feel it should be doing?• If you could change one thing that would help this department function moreeffectively, what would you change?• Examples: gaps in capabilities, financial, deadlines, morale• lack of competitive
Opportunities:• Opportunities—any favorable situation present now or inthe future in the external environment.Examples: unfulfilled customer need, arrival of new technologies,loosening of regulations, global influences, economicboom, demographic shift• Where are the good opportunities facing you?• What are the interesting trends you are aware of?• Think of: market developments; competitor;vulnerabilities; industry/lifestyle trends;; geographical; partnerships
Threats:• High fiscal deficit• Threat of government intervention in some states• Growing import bill• Population explosion, rate of growth of population• Agriculture excessively dependent on monsoon
POSITIVE/ HELPFULto achieving the goal NEGATIVE/ HARMFULto achieving the goal INTERNAL Originfacts/ factors of theorganizationStrengthsThings that are good now, maintain them, build on them and use as leverage WeaknessesThings that are bad now, remedy, change or stop them. EXTERNAL Originfacts/ factors of theenvironment in whichthe organizationoperatesOpportunitiesThings that are good for the future, prioritize them, capture them, build on them and optimizeThreatsThings that are bad for the future, put in plans to manage them or counter them