Business Environment, Importance and Types.

1. Business
Environment
Prof Brahmmanand Sharma

2. Introduction to Business Environment
Business
• Business may be
understood as the
organized efforts of
enterprises to supply
consumers with goods and
services for a profit.
• Any entity which is started
for the purpose of profit
making known as Business

3. Contemporary Business goals
Profit
Maximization
Sustainable
Growth
Market
Leadership
Customer
satisfaction
Employee
satisfaction
Quality
Products &
Services
Service to
Society

4. Characteristics of Business
Economic Activities
Large Size
Defined Structure
Buying and Selling
Risk & Uncertainties
Diversification
Social Activities
Continuous Process
Government Control

5. Indian companies – Fortune 500 in 2017
Indian Oil Corporation
Reliance Industries
Tata Motors
State Bank of India
Bharat Petroleum
Hindustan Petroleum
ONGC

6. BUSINESS CHALLENGES
• Managing Bottom Line
• Meeting Stakeholders expectations
• Developing and retaining performing assets
• Maintaining healthy competition among employees
• Customer Satisfaction consistently
• Globalization

7. Business Environment
• The environment of any
organization is “ the aggregate of
all conditions, events and
influences that surround and
affect it.”
• Business environment is the sum
total of all external and internal
factors that influence a business.

8. Characteristics of Business Environment
• Totality of Internal & External Factors
• Eg PEST
• Dynamic Nature-Keep on Changing
• Eg Change in consumer taste and preference.
• Uncertainty-Can not be predict.
• Eg Technology
• Complexity-Many forces Constitute Business Environment
• Eg Demand Identification based on PEST
• (PEST-Political, Economical, Social and Technological)

9. Characteristics of Business Environment (Cont..)
• Long Lasting Impact-Positive and Negative impact on Business.
• Inter-Relatedness- Change in Demand leads to change in price.
• Specific and General Forces
• Specific Forces-Customers, Competitors and Investors etc.
• General Forces-PEST.
• Inseparable part of Business
• Multifaceted-Multicultural.

10. Significance of Business Environment
• Help to understand internal Environment: Business policy,
organization structure, Effective management information system.
• Help to Understand Economic System: To know about the role of
capitalists, socialist and mixed economy.
• Help to Understand Market Conditions: To have the knowledge of
market structure, increase and decrease in demand, supply,
monopolistic practices, government participation in business etc.
• Help to Understand Economic Policy: To understand government
policies such as, export-import policy, price policy; monetary
policy, foreign exchange policy, industrial policy etc.

11. Significance……(Cont..)
• Help to identify firm’s Strength and Weakness
• Help to determine Opportunity and Threat
• Help to Meet Competitions
• Help to give direction for growth

12. Types of Business Environment
• Internal Environment- It has direct impact on business.
• Mission, Vision and Objectives
• Management Structure and Nature
• Value System
• Organization Culture
• Human Resource
• Research & Development

13. External Enviroment
• It has Indirect influence on business. And Factors are uncontrollable
for business.
• Micro Environment-
• Supplier
• Customers
• Distribution Channel
• Financial Institutions
• Public

14. Cont..
• Macro Environment-
• Political Environment
• Economical Environment
• Social Environment
• Technical Environment
• Legal Environment