Introduction to business environment

1. INTRODUCTION
TO BU SI N ESS EN V I RO N M EN T

2. BUSINESS ENVIRONMENT
Environment is everything that is
around us. It can be living or non-
living things. It includes physical,
chemical and other natural forces.
Business environment consists of all
external and internal factors that’s
influence the complex interaction of
marker, product, finance. The basic
components of the business world.
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3. CHARACTERISTIC
OF BUSINESS
ENVIRONMENT
• Business Environment is compound in nature
• It is constantly Changing Process
• It may be favorable or unfavorable
• It is different for different Business unit
• It has both long term and short-term impact
• Unlimited influence of external environment factors
• It is very uncertain
• It is multidimensional
• Inter-related components
• It includes both internal and external environment
• It demands a high degree of adaptability
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4. CONSTITUTION OF
BUSINESS ENVIRONMENT
Business environment consists
of two sets of factors :
Internal factors
External factors
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5. INTERNAL FACTORS
The internal factors consist of forces operating within
the organization such asquality and quantity of
manpower organizational structure etc. The Internal
Factors are :-
Value system vision mission and objectives
Organization structure
Company image and brand equality
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6. EXTERNAL FACTORS
External factors can impact the ability of a
business or investment to achieve its
strategic goals and objectives.
– External micro environment
– External macro environment
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7. MICRO ENVIRONMENT
Microeconomics environment is the
study of the behavior of individual
consumes and firms. Microeconomics
factors influencing a business include:
– Market Size
– Demand
– Supply
– Competitors
– Suppliers
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8. MACRO ENVIRONMENT
Macro Environment consists of those factors that mayhot
have an immediate direct affect on operation but
nevertheless influence the activities of the firms. There are
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many elements of macro environment. There are given
below:
A. Physical Environment
B. Demo graphical Environment
C. Economic Environment
D. Political Environment
E. Socio-cultural Environment
F. Technological Environment
G. Natural Environment
H. International Environment

9. Types Of Environment

10. Components of
Business
Environment
transformation
process
internal environment
the organisation
industry environment
customers
suppliers
competitors
market
regulatory and professional groups
inputs outputs
Technological and eco-
environmental forces
social and legal forces
economic forces
political forces
macro environment

11. Business Environment

12. PHYSICAL
ENVIRONMENT
Physical Environment includes natural
resources, weather climatic conditions. Port
facilities, topographical factors such as soil,
sea, river, rainfall etc. Every business unit
must look for these factors before choosing
the location for their Business.
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13. DEMOGRAPHICAL ENVIRONMENT
Demographical environment is a study of
perspective of population i.e. its size, standard
of living, growth rate, age, sex, composition,
family size. Income level (Upper level, Lower
level, Midlevel) Education level etc. density the
reason is that changing demographics mean
changing markets. Further, changing markets
mean a need for adjusted marketing strategies.
Every Business unit must influence by this
environment indirectly. Or every business unit
must see these features of population and
recognize their various need and produce
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14. ECONOMIC
ENVIRONMENT
Economic environment relates to factors that affect consumer
purchasing and spending patterns. For instance, a company
should never start exporting to a country be for having
examined how mush people will be able to spend. Important
criteria are: GDP,GDPreal Growth rate, GNI, import duty rate
and sells tax. It is very complex and dynamic in Nature that
keeps in changing with the change in policies or political
situations. That changes extensively.
• Economic Conditions of public
• Economic Policies of the Country
• Economic system
And other economic factors: Infrastructural facilities Banking,
Insurance Companies, Money Markets, Capital Market etc.
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15. POLITICAL
ENVIRONMENT
Government actions which affects the
operations of a company or business.
these actions may be on local, regional
national or international level. Business
owners and managers pay close attention
to the political environment to gauge how
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government actions will affect their
company. Political components are
Political belief of government
Political strength of the country
Relation with other countries
Defense and military policies
Central state relationship in the
country
Thinking opposition parties towards
business unit.

16. SOCIO CULTURAL ENVIRONMENT
A set of beliefs, customs, practices and behavior that exists within a population. International
companies often include an examination of the socio-cultural environment prior to entering their
target markets
• Socio cultural environment includes the social and cultural forces that shape and influence the
business firm
• Social environment consists of factor relate to human relationship that affects business
• All the business organization operates within the society to satisfy the social need.
• Different social factor influences the policy practices and activities of business
• Impotent social factor including social environment are demographic, social institution, social
changes.
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17. TECHNOLOGICAL
ENVIRONMENT
A business may have to dramatically change their
operating strategy asa result of changes in the
technological environment.
• A systematic application of scientific knowledge
to practical task is known as technology
• Everyday there has been vast changes in
products, services lifestyles and living conditions,
these changes must be analyzed by every
business unit and should adapt these changes
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18. INTERNATIONAL ENVIRONMENT
International business environment is
multidimensional including the political
risks, cultural differences, change risk, legal
and taxation issues.
– It is particularly important for industries directly
depending on import or export
– The factors that affect the business
• Globalization
• Liberalization
• Foreign business policies
• Cultural exchange
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19. COMPONENT OF
BUSINESS
Business may be classified into
three categories:
– Industry
– Commerce
– Service /Direct Service.
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20. INDUSTRY
PRIMARY INDUSTRY SECONDARYINDUSTRY
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INDUSTRY MEANS ALL FACTORIES OR COMPANIES, OR PROCESS INVOLVED IN THE
MANUFACTURING OF PRODUCT. INDUSTRY IMPLIES THE PRODUCTION OF GOODS WITH
THESTUDYAPPLICATION OFHUMAN LABOR.

21. COMMERCE
Commerce is concerned with the distribution and exchange
of commodities. Commerce is the sum total of those process
which are engaged in the removal of hindrances of person,
place, risk, time and finance in exchange of commodities. On
the other word we can say that commerce means distribution
of goods. It embraces all such activities and services that are
required for bringing the goods from the producer to the
hands of the ultimate consumers. It has five branches like :
– Transportation
– Warehousing
– Insurance
– Banking and finance
– Trade
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22. SERVICE
Service cannot be assessed felt, measured or
moved because it has no physical substance.
There are also performed with an aim to earn
point.
Service Sectors are: -
• Administration
• Health and social service
• Transportation
• Electricity
• Hospital
• Medicine service
• Education service
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23. THANK YOU
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