The document discusses the business environment and factors that influence businesses both externally and internally. It defines business environment as the sum of all external and internal factors influencing a business. Some key external factors discussed include political, economic, social, technological, environmental, and legal (PESTEL) factors. Internal factors include a company's operations, ethics, and workforce. The document also outlines strategies for businesses to improve their environmental practices such as implementing energy efficiency measures, evaluating energy sources and supply chains, reducing packaging and pollution, and encouraging sustainable transportation.

1. The Business Environment
Prepared by:
Hamdoon Hussain
B.Sc (Economics), MBA HRM
Karachi University Business School (K.U.B.S)

2. Businesses do not operate in a vacuum they operate in an
environment.

3. What is Business Environment
 Business environment is the sum total of all external and internal
factors that influence a business. You should keep in mind that
external factors and internal factors can influence each other and
work together to affect a business.

4. Business Environment
 A health and safety regulation is an external factor
that influences the internal environment of business
operations. Additionally, some external factors are
beyond your control. These factors are often called
external constraints.
 Business ethics refers to contemporary
organizational standards, principles, sets of values
and norms that govern the actions and behavior of
an individual in the business organization.

5. Two Dimensions of Business Ethics
 Business ethics have two dimensions, normative business ethics
or descriptive business ethics.
 As a corporate practice and a career specialization, the
field is primarily normative.
 Academics attempting to understand business
employ descriptive methods.
 The range and quantity of business ethical issues
the interaction of profit-maximizing behavior with non-
economic concerns.

6. Key Environment of Business

7. Demographic
 It refers to the human population characteristics that surround a firm or nation
and that greatly affect markets. The demographic environment includes such
factors as age distributions, births, deaths, immigration, marital status, sex,
education, religious affiliations, and geographic dispersion characteristics that
are often used for segmentation purposes

8. PESTEL
 It is a framework or tool used to analyses and monitor the macro-environmental
factors that may have a profound impact on an organization’s performance.

9. Political Factor
 Political factors are governmental activities and political conditions
that may affect your business. Examples include laws, regulations,
tariffs and other trade barriers, war, and social unrest.

10. Economical Factor
 Macroeconomic Factors are factors that affect the entire economy, not just your
business. Examples include things like interest rates, unemployment rates,
exchange rates, consumer confidence, consumer discretionary income,
savings rates, recessions, and depressions.

11. Economical Factor
 Microeconomic Factors are factors that
can affect your business, such as market
size, demand, supply, relationships with
suppliers and your distribution chain, such
as retail stores that sell your products, and
the number and strength of your
competition.

12. Social Factors
 Social factors are basically sociological
factors related to general society and social
relations that affect your business. Social
factors include social movements, such as
environmental movements, as well as
changes in fashion and consumer
preferences. For example, clothing fashions
change with the season, and there is a
current trend towards green construction
and organic foods.

13. Technological Factors
 This refers to technology incentives,
the level of innovation, automation,
research and development (R&D)
activity, technological change and the
amount of technological awareness
that a market possesses. These factors
may influence decisions to enter or
not enter certain industries, to launch
or not launch certain products or to
outsource production activities
abroad.

14. Environmental Factors
 Environment have become important
due to the increasing scarcity of raw
materials, pollution targets and carbon
footprint targets set by
governments. These factors include
ecological and environmental aspects
such as weather, climate, environmental
offsets and climate change which may
especially affect industries such as
tourism, farming, agriculture and
insurance.

15. Legal Factors
 Legal factors are external factors which refer
to how the law affects the way businesses
operate and customers behave. It includes
more specific laws such as discrimination
laws, antitrust laws, employment laws,
consumer protection laws, copyright and
patent laws, and health and safety laws.
 It is clear that companies need to know what
is and what is not legal in order to trade
successfully and ethically.

16. Ethics at Workplace
 Workplace ethics also referred to as
business ethics.
 It describes the ethical dimensions of
organizations and company activities. The
term comprises every issue that may arise
in a business, including production,
distribution, marketing, sale, and
consumption of the goods and services
being offered.

17. Ethics at Workplace
 Workplace ethics are the rules and procedures that
should be carried out in an office by the employer
and the employees to maintain a professional
company culture and to build a better relationship
with their customers by providing better services.
 Ethical lapses of any kind have the tendency to
snowball in a work environment. Once employees see
others breaking the rules without repercussions, they
may start to think it’s excusable for them to do so as
well.

18. The Role of Work Ethic
 Managerial style can work to improve an employee’s work ethic by establishing systems and habits for
accomplishing tasks efficiently and interacting effectively in the workplace.
 The 8 main characteristics of strong employee work ethic are as follows:
I. Punctuality
II. Accountability
III. Focus
IV. Initiative
V. Productivity
VI. Professionalism
VII. Dedication
VIII. Desire to Improve

19. The Role of Work Ethic
 Punctuality: Completing projects when due,
Showing up on time, Following break-time
protocol, and Informing supervisors of challenges
in a timely manner are all efforts that respect the
value of time in the workplace.
 Accountability: Employees and employers both
should be accountable in their work efforts, It
means they shoulder the responsibility for
ongoing projects and take the blame for errors
when necessary.

20. The Role of Work Ethic
 Focus: An employee must remain focused
and avoid the distractions of chatter, social
media, technology, etc. in order to
efficiently accomplish a task.
 Initiative: This is when an employee does
something productive or useful to the
company without being asked. Showing
initiative in work efforts indicates to
management that an employee values
success.

21. The Role of Work Ethic
 Productivity: Productivity hinges upon an
employee’s ability to overcome distractions,
ignore external influences, and conquering
obstacles that inhibit them from performing
their task.
 Professionalism: Employees who exhibit
professionalism show up and take their work
seriously, staying respectful of others and
dressing appropriately.

22. The Role of Work Ethic
 Dedication: Dedication means consistency and
showing up ready to accomplish tasks daily
while maintaining focus and productivity.
 Desire to Improve: Employees who embrace
feedback and learning moments show that
are willing to work to grow in their careers.

23. Ethics Vary by Industry
 Business ethics differ from industry to industry and nation
to nation. The nature of a business's operations has a
major influence on the ethical issues with which it must
consider. For Example:
a) An ethical problem arises for an
investment brokerage when the best decision for a
client and their money does not agree with what
pays the brokerage the highest commission.
b) A media company that produces TV content aimed
at children may feel an ethical obligation to promote
good values and eschew off-color material in its
programming.

24. Business Ethics & Environment Protection
 The underlying principle of environmental
ethics is that nature has intrinsic value. This
means that nature and its parts are not merely
means for accomplishing one’s purposes but
are ends in and for themselves.
 Businesses are run by human beings whose
decisions and actions can create changes in
the society or sometimes be not in
accordance with the society.

25. Business Ethics & Environment Protection
 A firm might be excellent in economic
conditions such it’s financial stability, increased
profits and good revenue but poor in terms of
social performance such as not understanding
the effect of its activities and
supplying products at reasonable prices and
quality.
 A business enterprise is a part of the society
and influenced by society and should adjust to
the preferences and values of society. So the
main purpose of business ethics is to draw a
line between individual betterment and social
betterment.

26. Barriers to Considering Environmental Ethics
 One study found that 78% of small businesses had no
environmental management system. Most business
owners wanted to reduce their environmental impact
but were held back by “resource constraints” as well as
other factors like lack of support or guidance.

27. Barriers to Considering Environmental Ethics
 Competitive pressure is where If your
competitors are importing low-cost goods with
no regard for environmental sustainability.
 If a business is not all about profit, it does need
to make a profit to survive. Although some
environmental policies can also have a positive
bottom-line impact, others can add to cost.

28. Benefits of Considering Environmental Ethics
 Company may enjoy a positive brand image so
that customers will buy products even if they’re a
little more expensive than competing ones.
 Example: UK company Brothers We Stand sells
men’s clothing that comes with a full breakdown of
the social and environmental impact of its
production. Anyone can easily find cheaper shirts
from retail chains with looser standards, but plenty
of customers are willing to pay more for the peace
of mind that comes from buying something in tune
with their own values.

29. Benefits of Considering Environmental Ethics
 Reducing the environmental impact of your
business will improve the sustainability of your
business. If you are less dependent on natural
resources than your competitors and have ways
to deal with rising costs due to climate change,
your business will have a greater chance of
long-term success
 Company may also be able to attract better
employees if someone appeal to their own
values and position himself as a great place to
work for ethical as well as financial reasons.

30. Improve Environmental Practices
 Full Cost Accounting
 Full cost accounting aims to capture a business’s true costs by measuring the
resources it uses, the waste and pollution it generates, and other social and
environmental impacts.

31. Improve Environmental Practices
 Energy Efficiency
 Reducing the energy use can lower the
amount of electricity, utility needs to
produce, which can effectively reduce
personal greenhouse gas emissions and
carbon footprint with energy efficiency
measures. In addition to the direct financial
and environmental benefits of implementing
energy efficiency measures, coupling energy
efficiency with other green practices can
even further advantages

32. Improve Environmental Practices
 Energy Sources
 Company could evaluate the sources of energy as well as looking that energy
There are plenty of alternatives to fossil fuels these days, and business could
to an energy supplier that generates its energy from renewable sources.
 For example, in the UK, there are several companies, such as Ecotricity and Good
Energy, that provide electricity for homes and businesses from sources like wind
power and solar panels.

33. Improve Environmental Practices
 The Supply Chain
 When businesses look at their
environmental impact, they often focus on
their own direct contributions. An ethical
supply chain focuses on the need for
corporate social responsibility, working to
produce products and services in a way
that treats its workers and the
ethically. It can help protect brand
reputation, build long-term loyalty, and
provide a better customer experience.

34. Improve Environmental Practices
 Packaging
 In business, it is important to sell the product to
make profit, but it is also important to build
with the consumer, and be responsible in using
environmentally friendly materials. Sometimes
company might choose what is best for their
product and neglect what is good for the
environment. Unfortunately, packaging is
something that people discard of to get to the
product.
 Cut out unnecessary packaging of the products
and replace plastic packaging with eco-friendly
materials that will decompose quickly or, ideally,
durable containers that can be reused.

35. Improve Environmental Practices
 Pollution
 Pollution is the most important and most
concern today. The environment pollution
becomes a harmful level of pollutants in
natural resources – air, water, and land
(soil), which these three natural resources
the main, causes the global warming.

36. Improve Environmental Practices
 Transportation
 Transportation is a major source of
and other negative environmental effects,
examine the way people and products are
transported within the company. Reduce
need for transportation for example, by
switching to a local supplier or switch to
more eco-friendly transportation. Also
consider ways to encourage staff to use
friendly transport options.

37. Improve Environmental Practices
 Putting It Into Practice
 It means creating a clear environmental policy for
the business, incorporating all of the points
discussed, along with any others that could be
added. Then company will need to support that
with staff training and reinforce your commitment
by constantly emphasizing the importance of
environmental ethics in communication with
employees. Business can use Earth Day itself as a
great way to kick things off.
 It’s easy to say the right thing, but doing the right
thing involves embedding respect for the
environment in all aspects of the business, and
takes time, effort, and organization.