The document discusses the business environment and its internal and external factors. It defines the business environment as the aggregate of all conditions, events, and influences that surround and affect a business. The internal environment includes factors like management, goals, resources that are under a business's control, while the external environment includes socioeconomic forces like the economic system, legal regulations, and cultural aspects that are beyond a business's control. It then provides details on the key elements of the micro external environment like suppliers, customers, competitors and the macro external environment like economic, political, technological and socio-cultural forces that influence business decisions.

1. BUSINESS ENVIRONMENT
PRESENTED BY-ANIL
KUMAR SINGH (45567)
MOHAMMAD HAMZA (45569)
SIDDHARTH SINGH (45559)
SWATI BHARDWAJ (38113)

2. Business Environment :
Business Environment is the
aggregate of all conditions, events
and influences that surround and
affect it.

3. Business Decision depends on : Internal environment
External environment
Internal
environment
Business
Decision External
environment
Controllable Beyond the
Factors control

4. Internal Environment
 Management Structure
 Stakeholders
 Relationships
 Physical Assets
 Technology Resources
 Human Resources
 Financial Resources
 Firm’s Goals and Objectives
 Value System

5. External
Environment
Micro environment Macro environment

6. Micro Environment
Suppliers
Workers & unions
Customers
Marketing Intermediaries
Competitors & Public

7. Suppliers:
Who supplies inputs/raw
materials for smooth functioning
of company
Top priority for Vender
development
Not to depend on one suppliers

8. Workers & Unions
Very risky
Lockouts Strikes Production problems
Maintaining stocks/inventories
due to uncertainties
Supply management Scarcity
Environment

9. Customers: Major task create and sustain customers
Individual
House holds Do not depend on one customer
Industries
Other commercial establishment Poor Bargaining Very Risky
Government
Other institution
Competitors: Competitors of same products
Compete for discretionary incomes
of the consumer
Desired Generic Product forms Brand competition
competition competition competition

10. Market intermediaries
Consist of number of firms that helps the company in promoting,
selling and distribution of goods to final buyers.
Market Intermediaries
Link between company and the consumer
Middlemen
(Agents and
Merchants
to final
customers)
Physical
distributing firms
(storing & moving
goods from origin
to distribution i.e.
warehouses and
transportation)
Market service
Agencies
(Targeting and
promoting
products)
Final Intermediaries
(Finance market &
Insurance Business
Risks)

11. Publics
Any group that has an actual or potential interest in or
impact on an organization’s ability to achieve its
interests.

12. Macro Environment
Demand-Price
Savings/ Investment
Monetary/ Fiscal
Balance of Payments
Situations
Overall Growth Activity

13. Economic Environment
Economic Condition
Structure Equilibrium
Money & Capital Market
Size Of the Market
Income Distribution
Purchasing Power
Economic Policies
Banking & Monetary
Policy
Fiscal Policy
Economic System
Capitalist
Socialist
Mixed

14. Economic System
• The Economic System that has been adopted in a
country is basically influenced by the philosphy,
history, aspirations & attitudes of its people & the
system which they put in use to achieve their goals.
• Prevalent Economic Systems :
 Capitalist
 Socialist
 Mixed
• Economics Systems all over the world while being
implemented have not retained their theoritical
purity.

15. Structure Equilibrium
 It is based on national output, structure of
occupations, productivity, capital formation,
consumption & foreign trade.
 Changes in the production structure must be
synchronized & balanced with the changes in the
consumption structure.

16. Banking & Monetary Policy
Its main objective is to ensure that there is
sufficient amount of money available at an
affordable cost to business for its transaction.
Neither too much Nor too little

17. Fiscal Policy
It is a policy dealing with receipts & expenditures of
the government to achieve certain socio-economic
objectives.
Exercise of Annual Budgets.
Economic & Price Stability
Economic stability refers to an absence of excessive
fluctuations in the macroeconomy. An economy with
fairly constant output growth and low and stable
inflation would be considered economically stable.
Price stability refers to a situation where prices are
stable over time.

18. Money & Capital Market
The growth of money market is required for
orderly functioning of industrial & commercial
organizations that require working capital.
Income distribution & Purchasing Power
How the income is distributed among various
sections of people like affluent, rich, middle
income & poor.
Purchasing power depends on disposable incomes,
prices, taxation, savings, debt & availibility of
credit.

19. Foreign Trade
The primary function of foreign trade is to :
• Procure plant & machinery
• Facilitate the flow of technology
• Encouraging Competetion
• Full capacity utilization of domestic industries.
Size of the Market
Division of labour is limited by the size of the
market & vice-versa.

20. Non-Economic Environment
Political-legal
Socio-cultural
Natural
Demographic
Educational

21. Political Environment
Political environment means the situation & circumstances
relating to the government, politics & public affairs of the
country.
Ideology of ruling government & influence of premier groups.
Example:
Nehru: transformation of agrarian economy into industrialised
economy
Indira Gandhi: state became active in agriculture sector
(subsidised fertilisers, expansion of institutional credit);
tightening of state control over industrial finance, foreign
investment & trade.

22. Legal Environment
Plays a vital role- dictating dos & don’ts of business
It covers :
Laws Foreign Policy
FDI in Retail

23. Socio-Cultural Environment
Made up of attitude, desires, expectations, education, beliefs
& customs of people.
CULTURAL ENVIRONMENT
Culture is the customary or tradition always on thinking &
doing things, which are shared to a greater or lesser extent by
all the members of the organisation, which new members must
learn & atleast partially accept in order to be accepted into the
community.
If the society is multi- cultural, then the firm cannot meet the
demands of different groups with a uniform product.
Example:
Companies have to change their product portfolio because of cultural
differences as McDonald and KFC did when they launched their
restaurant chain in India

24. DEMOGRAPHIC
ENVIRONMENT
 Size & growth rate of population
 Growing population
 Urban- rural population
Example:
Demographic environment decides the marketing mix for an
organisation. A one rupee sachet of shampoo or a five rupee ice-cream
cone are some examples

25. TECHNOLOGICAL
ENVIRONMENT
Refers to body of skills, knowledge & procedures for making,
using & doing useful things
Positive effects of technology:
 Increased productivity
 Production of new & better goods of standardised quality with more
efficient use of raw materials
 Basis for fast growing urban & industrial system
Negative effects of technology:
 Displacement of labour
 Environmental pollution
 Switching over might be costly

26. EDUCATIONAL ENVIRONMENT
 Illiteracy is closely related to poverty.
 Close relationship between education & income.
 University & College training is useful to firms.
 Educational match with skill requirement

27. Natural Environment
Geographic and ecological factor are very important in business
 Climate, weather, topography, location
 Difference in geographic condition
 Ecological factors: Pollution, Degradation of forest i.e. use of wooden boxes,
polythine bags
International Environment:
Important for industries depending on import or exports and import competing
industries
(Hike in oil prices Increase the cost of production and
prices of certain products such as fertilizers, synthetic fibers etc.)

28. Economic and Non-economic
Environment : The Interaction
Politica
l-Legal
Economic
Environment
Socio-
Cultura
l
Educati
onal
Techno
logical
Natural

29. Interaction Matrix
Economic
Env.
Non-economic
evn.
Economic
system
Economic
structure
Functioni
ng of the
economy
via
sectors
Economic
planning
(Long
term)
Economic
programs
(Short
term)
Economic
policies
fiscal and
monetary
Economic
control
and regu
lations
Economic
growth
and deve
lopment
Socio
logical
Education
al culture
Political
legal
Historical
Physical
Geograph
ical

30. Interaction Matrix
Economic
Env.
Non-economic
evn.
Economic
system
Economic
structure
Functioni
ng of the
economy
Economic
planning
(Long
term)
Economic
programs
(Short
term)
Economic
policies
fiscal and
monetary
Economic
control
and regu
lations
Economic
growth
and deve
lopment
Socio
logical
Education
al culture
Political
legal
Historical
Physical
Geograph
ical