eco

1. To understand this concept, first we will go through the term
“business”
Acc. To the Chambers Dictionary, it means
employment
 trade
profession
Occupation
commercial activity

2. Business May be defined as the organized efforts of
enterprises to supply consumers with goods & services for
a profit.
The word Business in its economic sense means human
activities like production, extraction or purchase or sales of
goods that are performed for earning profits.
E.G : Retail shop, Shopping Mall, any product
manufacturing unit or company, Any service providing
company unit or company.

3. Classification of Business
1. Business which produce goods
 Commodities- produced by primary and secondary sectors
i.e. For eg Wheat, rice , vegetables , etc
 For eg wheat flour, Cars, Mobiles etc
2.Business which produce Services
 Hotels, internet , legal, courier & other producers of
services of any kind
3. Business which distribute Goods
 Wholesale merchant of various types i.e inter-mediators
 Importers & exporters
4. Business which facilitate Distribution of Goods
5. Businesses which deal in Finance & Financial Services
Commercial Banks, Cooperative banks
 NBFC& Insurance companies
 Stock exchanges
 Transportation firms

4. Classification of Industries
1. Nature of activity
Extractive ,genetic manufacturing, construction, service,etc)
2. Competitive structure
Monopoly/Duopoly/Oligopoly/perfect competition/monopolistic
competition
3 Size based classification
( small/medium/ large)
4. Used based classification
(basic industries/intermediate goods
/ capital good/ consumer goods)
5. Forms of business classification
Pvt ltd/ proprietorship/partnership/public ltd)

5. SCOPE OF BUSINESS
• Vast.
• Multiple activities from bringing raw material to factory & end
product from there to market constitute business.
(production, Trading , Retailing, Selling, Services etc)
Nature of Business
•Business may be understood as the organized efforts of enterprises
to earn profit. It may be small or big in size but all of them aim at
making profit.
•-Dynamic
-Continuous
-Unpredictable

6. CHARACTERISTICS OF INDIAN BUSINESS
• Transition ( old to new)
• Competition
• Opportunities
• Global orientation
• Technology
• Information

7. The term Business Environment is composed of two words
‘Business’ and ‘Environment’. The word Business in its
economic sense means human activities like production,
extraction or purchase or sales of goods or services that
are performed to earn profits for regular purpose. .
On the other hand, the word
‘Environment’ refers to the aspects
of surroundings.
Therefore, Business Environment may be
defined as a set of conditions – Social, Legal, Economical,
Political or Institutional that are uncontrollable in nature and
affects the functioning of organization.

8. Importance of Business Environment
Identify opportunities and getting the first mover
advantage:
Early identification of opportunities helps an enterprise to be
the first to exploit them instead of losing them to competitors.
For eg, Maruti Udyog became the leader in the small car
market because it was the first to recognize the need for
small cars in India.
Identify threats and early warning signals:
If an Indian firm finds that a foreign multinational is entering
the Indian market it should gives a warning signal and Indian
firms can meet the threat by adopting by improving the quality
of the product, reducing cost of the production, engaging in
aggressive advertising, and so on. E.g Bajaj Scoter

9. Coping with rapid changes:
All sizes and all types of enterprises are facing increasingly
dynamic environment. In order to effectively cope with these
significant changes, managers must understand and examine the
environment and develop suitable courses of action. Eg-Samsung
beating Nokia in features of m. phone
Improving performance:
the enterprises that continuously monitor their environment and
adopt suitable business practices are the ones which not only
improve their present performance but also continue to succeed in
the market for a longer period. Eg-Disel cars

10. Types of Business environment
1-Internal Environment
 -Value system
 -Vision, Mission, Objectives,
 -Management structure and nature
 -Internal power relationships,
 Human Resources
 Company image

11. 2-External Environment
Micro environment
 Suppliers,
 Customers,
 Competitors,
 Marketing intermediaries,
 Financiers,
 Publics
Macro environment
 -Political and Legal
 Economical,
 Socio-Cultural,
 Natural,
 Global ,
 Technological

12. Value system: The value system of founders has important
bearing on choice of business, its mission, vision , objectives,
policies and practices .
VISION:
 A broad explanation of why the firm exists & where it is trying
to lead.
MISSION:
 It outlines the fundamental purpose of the organization.
 A vision becomes tangible as a mission statement.
 For eg., if the vision statement answers the question ”where do
we go from here?”, the mission statement answers “what is our
business?”
 So in other words, it gives the organization its own unique
identity, business emphasis & path for development.

13. Objectives or goals
Business Objectives: Mission statements are more specific than vision
statements, but are not to be taken as concrete directions for action.
Objectives render mission statements more concrete . Objectives
represent operational side of an organization and may vary time to
time.
-are the ends toward which activity is aimed .They represent not
only the end point of planning but also the end toward which
organizing, staffing, leading and controlling are aimed. Eg-
Generating 1 billion revenue by Flipchart (2015) , Maintaining
consistent quality control, Reducing customer complaints etc)
Characteristics of Objectives
• Objectives are multiple in number.
• Objectives are either tangible or intangible
• Objectives have a priority
• Objectives are generally arranged in a hierarchy
• Objectives sometime clash with each other

14. Types of objectives
1-Nonverifiable
a) To make reasonable
profits.
b) To improve
communication
c) To install a computer
system
2- Verifiable objectives
a) a-To achieve returns on
investment of 10% at the
end of current financial
year
b) B-To issue a two page
monthly newsletter
beginning January 20,2016,
involving not more than
40 working hours of
preparation time.
c) To install 100 computer
systems in production
department by Jan 20,2016

15. Eg-BVIMR
Vision
Leadership in management education through innovation and excellence.
Mission
Fostering a conducive learning eco-system of students, faculty and industry
germinating capable upright managers and entrepreneurs who contribute
meaningfully to industry and society.
Quality Policy
State of Art Infrastructural and Instructional facilities.
Global Benchmarking
HR Synergy.
Consistent Value enhancement.
Continuous motivation and nurturing creativity.

16. Micro environment
 Suppliers,
 Customers,
 Competitors,
 Marketing intermediaries,
 Financiers,
 Publics

17. Macro environment
 Political and Legal
 Economical,
 Socio-Cultural,
 Natural,
 Global ,
 Technological
 Demographic environment

19. Macro Environment
Political Environment
It comprises political stability and the policies of the government.
Ideological inclination of political parties, personal interest on
politicians, influence of party forums etc. create political environment.
 Role of legislature
 Role of judiciary, dispute resolution mechanism
 Constitution of India
 Role of regulators
 E.g Vodafone vs Hutch M & A case
 Role of FDI , Reserved sectors
 Companies hesitate to come into Power sector due to high Govt
intervention ( price)
 Eg-Many insurance companies have come in India to tap highly
potential sector.(Fdi is 49%)
 Ban on diesel vehicles having negative impact on automobile
industry

20.  Vodafone was embroiled in a $2.5 billion tax dispute with the
Indian Income Tax Department over its purchase of Hutshison
Essar Telecom services in April 2007. It was being alleged by
the Indian Tax authorities that the transaction involved
purchase of assets of an Indian Company, and therefore the
transaction, or part thereof was liable to be taxed in India.
 Vodafone Group Plc. entered India in 2007 through a
subsidiary based in the Netherlands, which acquired Hutchison
Telecommunications International Ltd’s (HTIL) stake in
Hutchison Essar Ltd (HEL)—the joint venture that held and
operated telecom licences in India. This Cayman Islands
transaction, along with several related agreements, gave
Vodafone control over 67% of HEL and extinguished Hong
Kong-based Hutchison’s rights of control in India, a deal that
cost the world’s largest telco $11.2 billion at the time.

21.  The crux of the dispute had been whether or not the Indian Income
Tax Department has jurisdiction over the transaction. Vodafone had
maintained from the outset that it is not liable to pay tax in India; and
even if tax were somehow payable, then it should be Hutchison to
bear the tax liability.
 In January 2012, the Indian supreme court passed the judgment in
favor of Vodafone, saying that the Indian Income tax department had
"no jurisdiction" to levy tax on overseas transaction between
companies incorporated outside India. However, Indian government
thinks otherwise. It believes that if an Indian company, Hutchison
India Ltd., conducts a financial transaction, government should get
its tax out of it. Therefore, in 2012, India changed its Income Tax Act
retrospectively and made sure that any company, in similar
circumstances, is not able to avoid tax by operating out of tax-havens
like Cayman Islands or Lichtenstein. In May 2012, Indian authorities
confirmed that they were going to charge Vodafone about Rs. 20000
crore (US $4.5 billion) in tax and fines. The second phase of the
dispute is about to start.

22. Economic Environment: economic environment consists of economic
factors that influence the business in a country. It can be studied in
three parts:
A-Economic systems ( Capital, socialist, mixed)
B-Economic indicators (GDP, Per capita income, National
income, Import, export , inflation , BOP, Stock market ,
C-Economic policies
 Monetary policy
 New economic policy
eg-BMW opened very late its First manufacturing unit in
Chennai , (India) in 2007 because of Low per capita
income and purchasing power of people.

23. Technological environment:
It includes the level of technology available in a
country. It also indicates the pace of research and
development and progress made in introducing modern
technology in production. Technology provides capital
intensive but cost effective alternative to traditional labor
intensive methods. In a competitive business environment
technology is the key to development.
Need to spend on R&D
Fast changing Technology
Rise & decline of products & organizations
High expectations of consumers
E.g- Electricity 220 watt in India / 110 watt in America
Camra in mobile , music in Airtel ( non core business)
-Nokia company failure due to technology

24. Social-Cultural environment
It describes the characteristics of the society in which
the organization exists. Literacy rate, customs, values,
beliefs, lifestyle, demographic features and mobility
of population are part of social environment. It is
important for managers to notice the direction in
which the society is moving and formulate
progressive policies according to the changing social
scenario.

25. Social-Cultural Environment
 Knowledge
 Ethnic composition
 Value system and belief
 Customs
 Ethics in business
 Social responsibility
 Eg- Islamic banking, KFC in India and Malaysia

26. GLOBAL ENVIRONMENT
Global Environment: It is generally understood to mean
integration of the economy of the country with the world
economy, it is a complex phenomenon. It is an outcome of the
set of various policies that are aimed at transforming the world
towards greater interdependence and integration.
Increasing opportunity
Improving Quality
Competition from MNCs
Capital & tech. Transfers ( Indo –US deal Nuclear reactor in
Power sector )
International institutions (IMF, WTO etc)
Negotiating powers of large corporations

27.  Natural environment
It is related to geographical factors which are totally based nature.
Natural resources , Temprature ,
Manufacturing depends on physical inputs eg Textiles companies
in Punjab
Mining depends on natural deposits eg- Jharkhand , Jindal streel
,Sail etc
Agriculture depends on nature, temperature
Trade between two countries/regions depend on geographical
factors
Transport & communication depends on geographical factors eg-
Mumbai –financial capital ( shipping, port biz hub)
Eg-demand in hill area vary from ground area i.e jeep , power
bikes are in demand ,)

28. Porter’s 5F model
Supplier Power: Here you assess how easy it is for suppliers to drive up
prices. This is driven by the number of suppliers of each key input, the
uniqueness of their product or service, their strength and control over you,
the cost of switching from one to another, and so on. The fewer the supplier
choices you have, and the more you need suppliers' help, the more powerful
your suppliers are.
Buyer Power: Here you ask yourself how easy it is for buyers to drive prices
down. Again, this is driven by the number of buyers, the importance of each
individual buyer to your business, the cost to them of switching from your
products and services to those of someone else, and so on. If you deal with
few, powerful buyers, then they are often able to dictate terms to you.
Competitive Rivalry: What is important here is the number and capability of
your competitors. If you have many competitors, and they offer equally
attractive products and services, then you'll most likely have little power in
the situation, because suppliers and buyers will go elsewhere if they don't
get a good deal from you. On the other hand, if no-one else can do what you
do, then you can often have tremendous strength.

29. Threat of Substitution: This is affected by the ability of your
customers to find a different way of doing what you do – for
example, if you supply a unique software product that
automates an important process, people may substitute by
doing the process manually or by outsourcing it. If substitution
is easy and substitution is viable, then this weakens your
power.
Threat of New Entry: Power is also affected by the ability of
people to enter your market. If it costs little in time or money to
enter your market and compete effectively, if there are few
economies of scale in place, or if you have little protection for
your key technologies, then new competitors can quickly enter
your market and weaken your position. If you have strong and
durable barriers to entry, then you can preserve a favourable
position and take fair advantage of it.

30. Environmental Analysis and forcasting
Evaluation of the possible or probable effects of internal and
external forces and conditions on an organization's survival
and growth strategies.
Process Of Environmental Analysis
1.Scanning:
2.Monitoring
3.Forecasting
4 Assessment
Approaches to environmental analysis
1-Outside-in (macro approach)
2.Inside-out(micro approach)

31. Techniques of environmental analysis
 1-Verbal and written information
 2-Search and scanning
 Spying
Types of forecasting
1-Econometric forecast
2-Social forecast
Political forecast
Technological forecast

32. Techniques of environmental forecasting
1-Judgment models(Delphi method and brainstorming )
2-Econometric technique( cause and effect)
3-Trend exploration (viewing past to predict future)
 Eg -Ceat exit from non tyre biz ( Glass fibre , electronics,
Photocopiers & nylon code )
 Reliance entered into many business after assessing
opportunities

33. Benefits of environmental analysis:
minimize or avoid adverse environmental effects
before they occur
incorporate environmental factors into decision
making
Limitations of environmental analysis
it does not foretell the future, nor does it eliminate
uncertainty for any organization.
it is not a sufficient guarantor of organizational
effectiveness.
the potential of EA is often not realized because of
how it is practiced.