The document discusses the business environment and factors that influence it, including internal organizational factors, government policies, economic conditions, and global trends. It also discusses Porter's five forces model of competition - the threat of new entrants, rivalry among existing competitors, the threat of substitutes, bargaining power of buyers, and bargaining power of suppliers. Additionally, it covers topics like competitor analysis using Porter's framework, the value chain, SWOT analysis, organizational theories including classical, human relations, systems and contingency theories, and theorists like Taylor, Fayol, Maslow and McGregor.

1. BUSINESS ENVIRONMENT
Anjali Sharma
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2. Business Environment
 It consists of all those factors that have a bearing on the business,
 the strengths, weaknesses, internal power relationships and
orientations of the organisation;
 government policies and regulations;
 nature of the economy and economic conditions;
 socio- cultural factors;
 demographic trends;
 natural factors; and,
 global trends and
 cross-border developments
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4. Forces Driving Industry Competition
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5. Threat of Entry
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 Government Policy
 Economies of Scale
 Cost Disadvantages Independent of Scale
 Product Differentiation
 Monopoly Elements
 Capital Requirements

6. Rivalry among Existing Competitors
 Number of Firms and their Relative Market Share,
Strengths etc.
 State of Growth of Industry
 Fixed or Storage Costs
 Indivisibility of Capacity Augmentation
 Product Standardisation and Switching Costs
 Strategic Stake
 Exit Barrier
 Diverse Competitors
 Switching Costs
 Expected Retaliation
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7. Threat of Substitutes
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8. Bargaining Power of Buyers
 The volume of purchase relative to the total sale of the seller
 The importance of the product to the buyer in terms of the total
cost.
 The extent of standardisation or differentiation of the product
 Switching costs
 Profitability of the buyer (low profitability tends to pressure costs
down).
 Potential for backward integration by buyer
 Importance of the industry’s product with respect to the quality of
the buyer’s product or services.
 Extent of buyers’ information
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9. Bargaining Power of Suppliers
 Extent of concentration and domination in the supplier industry
 Importance of the product to the buyer
 Importance of the buyer to the supplier
 Extent of substitutability of the product
 Switching costs
 Extent of differentiation or standardisation of the product
 Potential for forward integration by suppliers
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10. Competitor Analysis
Competitor analysis seeks to find answers to certain basic
questions such as:
 Who are the competitors of the firm?
 What are the current strategies of the competitors?
 What are their future goals and likely strategies?
 What drives the competitor?
 Where is the competitor vulnerable?
 How are the competitors likely to respond to the strategies
of others?
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11. Porter’s Framework for Competitor Analysis
 Future Goals
 Assumptions
 Current Strategy
 Capabilities
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12. Value Chain
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13. SWOT Analysis
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14. Organizations and Organizational
Theories
‘Organisations are social arrangements for the controlled
performance of collective goals.’
 People
 Perform
 Collective goal
 Expertise, interest, specialism
 Hierarchy of authority
 Borders are clearly defined
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15. Overview of organizational
theories
 Classical theories
 Human relations’ theories
 Systems theories
 Contingency theories
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17. F. W. Taylor & Scientific Management
Principles of Scientific Management, 1911

18. Henri Fayol – 14 principles

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23. Maslow’s ‘hierarchy of needs’

24. McGregor’s Theory ‘X’ and
Theory ‘Y’

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27. Thank you.
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