In this PPT I have explained Business Environment topic, it will be useful for MBA, MCOM AND CLASS 12 students. Also teachers can use it as a teaching aid.

1. Business Environment
MBA
MCOM
CLASS 12

2. Synopsis
1. Definition
2. Components Of Business Environment
3. Overview Of Business Environment
4. Complexity In Business Environment
5. Diversity In Business Environment
6. Concept Of Business Cycle
7. Stages Of Business Cycle
8. Importance Of Scanning Environment
9. Techniques Of Scanning Environment
10. Political Environment
11. Political Institutions
12. Fundamental Rights
13. Directive Principles Of State Policy

3. Definition
Business environment means all of the internal
and external factors that affect how the
company functions including employees,
customers, management, supply and demand
and business regulations.
An example of a part of a business environment is
how well customers' expectations are met.

4. Components of Business Environment
The two components of business environment:
1) Internal Environment - Includes factors which
affects business from within. For example,
machinery, employees, company policies, etc.
2) External Environment - Includes factors which
affects business from outside and it cannot be
control as they are external.

5. Components of Business Environment
External environment is of two types:
1) Micro Environment - It consists of the factors in
the company’s immediate environment that affects
company’s performance. It includes elements like
suppliers, public, competitors, etc.
2) Macro Environment - It consists of the factors
which are uncontrollable and need proper
attention. It includes elements like political,
economic, social, technological (PEST), etc.

7. Overview of Business Environment
Changes in business
environment are
unpredictable. Business
environment differs from
place to place and country
to country.
Political conditions in India
differs from those in
Pakistan.

8. Complexity in Business Environment
Complexity is an important hallmark of the 21st
century. It is evident not only in business, but in
every area of the globalized world in which we live.
It arises due to the following reasons:
1) Interconnection of Countries
2) Interconnection of Industries
3) Interconnection of Companies
4) Interconnection of People
5) Diversity

9. Diversity in Business Environment
Diversity in business
environment can be
various types such as:
1) Diversity in
Management -
It using best practices
with proven results to
find and create a diverse
and inclusive workplace.

10. Diversity in Business Environment
2) Diversity in Employees -
Workplace diversity refers to
the variety of differences
between people in an
organization.
It includes race, gender, age,
personality, tenure,
organizational function,
education, background and
more.

11. Diversity in Business Environment
3) Diversity in Suppliers -
Supplier diversity is a
business strategy that
ensures a diverse supplier
base in the procurement
of goods and services for
any business or
organization.
Common examples are
Small Business Enterprise
(SBE), Minority-Owned
Business Enterprise
(MBE), etc.

12. Concept of business cycle
Business cycle is the periodic movement in the
economic activity measured by fluctuation in
real gross domestic product (GDP) and macro
economic variables.

13. Stages of Business Cycle

15. Need to Scan Business Environment
Environmental analysis will help the firm to understand
what is happening both inside and outside the
organization.
Environmental scanning is necessary because there are
rapid changes taking place in the environment that has a
great impact on the working of the business firm.
Analysis of business environment helps to identify
strength, weakness, opportunities and threats. SWOT
analysis is necessary for the survival and growth of every
business enterprise.

16. Need to Scan Business Environment
The following are the need to scan business environment:
1) Identification of Strength - Strength of the business
firm means capacity of the firm to gain advantage over its
competitors. Analysis of internal business environment
helps to identify strength of the firm.
2) Identification of weaknesses - Weakness of the firm
means limitations of the firm. A firm may be strong in
certain areas but may be weak in some other areas.

17. Need to Scan Business Environment
3) Identification of Opportunities - Environmental
analyses helps to identify the opportunities in the
market. The firm should make every possible effort
to grab the opportunities as and when they come.
4) Identification of threat - Business is subject to
threat from competitors and various factors.
Environmental analyses help them to identify threat
from the external environment.

19. Techniques Of Scanning The Environment
1) Executive Opinion Method - Under this
environment is forecasted on the basis of opinion
and views of top executives. A panel is formed
consisting of these executives.
2) Expert Opinion Method - Under this
environment forecasting is based an opinion of
outside experts or specialist. The experts have
better knowledge about market conditions and
customer taste and preferences.

20. Techniques Of Scanning The Environment
3) Delphi Method - It involves forming a panel
of experts and questioning each member of the
panel about the future environmental trend.

21. Techniques Of Scanning The Environment
4) Intuitive Reasoning - Under this, rational and
unbiased intuition is used for environmental
scanning. Environmental dynamics are guessed
individual judgement. Reliability of this method is
questionable.
5) Historical Method - Under this, the
environmental trends are analyzed with the help of
other trends which are parallel to historical trend.

22. 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 government
actions will affect their company.

23. Political Institution
Political Institutions includes:
1) Legislature – To create new laws.
2) Executive – To implement laws.
3) Judiciary – To interpret laws and judge whodo
not respect them.

24. Fundamental Rights
The Constitution guarantees six fundamental rights to Indian
citizens as follows:
1) Right to equality - All citizens of the country are equal in
the eyes of law.
2) Right to freedom - According to this every citizen enjoys
freedom of speech and expression, movement, profession,
etc.
3) Right against exploitation - According to this no one can
take work from others without paying the money for his
labour.

25. Fundamental Rights
4) Right to freedom of religion - India has been
declared a secular State. The State itself has no
religion.
5) Cultural and educational rights - According to
this right the people of any part of India, whose
language or culture is separate have the right to
protect and develop it.
6) Right to constitutional remedies - All the citizens
have the right to move to the Supreme Court or to
any of the High Court in India.

26. Directive Principles of State Policy
The concept of Directive Principles of state Policy
was borrowed from Irish Constitution.
These principles relate to social justice, economic
welfare, foreign policy and legal matters.
It aims to create social and economic conditions
under which the citizens can lead a good life.
The directive principles are non – justifiable rights
to people and are fundamental in the governance
of the country

28. Thank You!
Lesson by
Anjali Kaur Suri
TGT Maths, PGT Economics
M.A. Economics, M.Com (Finance), PGD Banking & Finance, B.A. Hons (Economics), B.Ed (Maths & SST), NISM,
NSDL and IELTS certified.
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