L 1 business environment

1. Nature,Nature,
Components,Components,
Dynamics &Dynamics &
Importance ofImportance of
Business Environment.Business Environment.
shifali Gargshifali Garg
MBAMBA
NCCENCCE

2. ““Business is an economic activity because itBusiness is an economic activity because it
includes all those activities whose purpose isincludes all those activities whose purpose is
to earn profit by transfer of goods &to earn profit by transfer of goods &
services.”services.”

3. “Environment consists atoms & molecules
agglomeration of things in motion, alive of men
emotions, or force & resistances. There numbers are
infinite & they are always present; they are always
changing.
-Chester Bernard
“Business, Like weather is with us everyday.”
-Wheeler
“Business may be defined as human activity
directed towards producing or acquiring wealth
through buying or selling of goods.
-C.H.Haney

4. NatureNature
1. Interdependence
2. Dynamic
3. Unlimited effect of uncontrollable factors.
4. Media & Social Change
5. Uncertainties & Restrictions.
6. Adverse conditions
7. To keep regular vigil on the changing
environment.
8. Danger of casual change

5. Business EnvironmentBusiness Environment
S t r e n g t h s W e a k n e s s
I n t e r n a l E n v i r o n m e n t
O p p o r t u n i t i e s T h r e a t s
E x t e r n a l E n v i r o n m e n t
B u s i n e s s E n v i r o n m e n t

6. ComponentsComponents
ofof
Business EnvironmentBusiness Environment

7. ““The process by which strategist monitors theThe process by which strategist monitors the
economic, legal, governmental, market,economic, legal, governmental, market,
competitive supplier, technological, geographic &competitive supplier, technological, geographic &
social setting to determine opportunities &social setting to determine opportunities &
threats of their firm.”threats of their firm.”
-William F Gluicck

8. Business
Decisions
Internal
Environment
External
Environment

9. INTERNAL
BUSINESS
ENVIRONMENT
ATTITUDES
INTERNAL
POWER
RELATIONSHIP
MISSION
&
OBJECTIVE
VALUE
SYSTEM
MANAGEMENT
STRUCTURE &
NATURE
HUMAN
RESOURCE
COMPANY
IMAGE &
BRAND EQUITY
OTHER
FACTORS

10. Internal EnvironmentInternal Environment
Physical Assets & Facilities
R&D Technological Capabilities
Marketing Resources
Financial Factors
Miscellaneous Factors

11. External EnvironmentExternal Environment
M ic r o
E n v ir o n m e n t
M a c r o
E n v ir o n m e n t
E x t e r n a l E n v i r o n m e n t

12. Micro EnvironmentMicro Environment
“Micro or task environment is more specific and
immediate environment in which an organization
conducts its business.”
-Dunham & Pierce

13. 1. Supplier1. Supplier
 Reliability
 Multiple Supplier

14. 2. Customer2. Customer
Types of Customers
◦ Industrial Customers
◦ Institutional Customer
◦ Foreign Customer
◦ Retail Customer
Multiple Customer
Globalization
Customer Segmentation

15. 3. Market Intermediates3. Market Intermediates
Types of Market Intermediates
◦ Middlemen
◦ Marketing Agencies
◦ Financial Institution
◦ Physical Intermediates

16. 4. Public4. Public
Media Publics
Local Public

17. MACRO ENVIRONMENTMACRO ENVIRONMENT
Economic
Political
Social-Cultural
Technological
Natural
Demographic
International

18. • MACRO ENVIRONMENT means general
environment of business. Macro factors are
uncontrollable in comparison to the micro forces
of environment. The growth and survival of
business depend upon its adaptability to macro
environment factor which include

19. 1. ECONOMIC ENVIRONMENT1. ECONOMIC ENVIRONMENT
Economic Conditions
•Boom
•Depression
Economic System
•Capitalist
•Socialist
•Mixed Economy
Economic Policies
•Monetary Policy
•Fiscal Policy
•Foreign Trade Policy
•Foreign Investment
•Industrial Policy

20. 2. POLITICAL ENVIRONMENT2. POLITICAL ENVIRONMENT
Political Ideology of Govt.
Political stability in the Economy.
Foreign Policy of Govt.
Defense & Military Policy.
Centre state relationship.

21. Political EnvironmentPolitical Environment
L e g i s l a t u r e
E x e c u t i v e
J u d i c i a r y
P o l i t i c a l S y s t e m
P r e a m b l e
F u n d a m e n t a l R i g h t s
D i r e c t i v e s
P r i n c i p l e s o f S t a t e P o l i c y
C o n s t i t u t io n
E n v i r o n m e n t
P o l i t c a l E n v i r o n m e n t

22. 3. Socio-Cultural Environment3. Socio-Cultural Environment
Urbanization
Religion
Tastes & Preferences
Customs & Tradition in Society
Health & Quality of Life
Language

23. 4. Technological Environment4. Technological Environment
Innovation
Research & Development
Inflow of foreign Technology etc.

24. 5. Natural Environment5. Natural Environment
Climatic & weather condition.
Availability of Natural resources.
Topographical factors: Physical features of
place.
Pollution Control

25. 6. Demographic Environment6. Demographic Environment
Age Composition
Sex Composition
Education Level
Family size & structure
Urban-rural population

26. 7. I7. Internationalnternational
EnvironmentEnvironment
Globalization
Oil Price hike
International Terrorism
Cultural Exchange

27. DynamicsDynamics
ofof
Business EnvironmentBusiness Environment

28. Factors Effecting
Business Environment
1. Global Scenario
2. Indian Scenario

29. 1.Global Scenario1.Global Scenario
Political & Economic Environment
Privatization
Globalization & Internationalism

30. 2. Indian Scenario2. Indian Scenario
 Change in Govt. Policies
 Variation in Growth Performance
 Corrective Policy Actions
 Change in Market Structure & Competition
 Future Expectations & Business Speculation
 Change in Consumer attitudes, taste &
Preference
 Infrastructure

31. ImportanceImportance
ofof
Business EnvironmentBusiness Environment

32.  For incorporating dynamic behavior of environment
 Complete knowledge of internal environment
 To understand international events, pressures&
impact
 Economic policies of the govt.
 To face business problems &challenges
 Vigilant regarding dangers
 Administrative system
 Optimum utilization of resources
 Market conditions
 Scientific & industrial advancement
 Development & success of business

33. IMPORTANCE
AND
KEY INDICATORS
OF
BUSINESS
ENVIRONMENT

34. Importance
of
Business
Environment

35. ImportanceImportance
ofof
Business EnvironmentBusiness Environment
For incorporating dynamic behavior of
environment
Complete knowledge of internal environment
To understand international events,
pressures& impact

36. ImportanceImportance
ofof
Business EnvironmentBusiness Environment
To face business problems &challenges
Vigilant regarding dangers
Administrative system
Optimum utilization of resources

37. ImportanceImportance
ofof
Business EnvironmentBusiness Environment
Market conditions
Scientific & industrial advancement
Development & success of business
Economic policies of the govt.

38. KEY INDICATORSKEY INDICATORS
OFOF
BUSINESS ENVIRONMENTBUSINESS ENVIRONMENT
BY

39. KEY INDICATORS are the most
valuable variables which reflect the
overall state of economy.
They are of two types i.e.
microeconomics and
macroeconomics

40. The major key indicators areThe major key indicators are
1. GROSS DOMESTIC PRODUCT
2. SECTORAL DISTRIBUTION
3. AGRICULTURAL DISTRIBUTIONS
4. ELECTRICITY GENERATION
5. ECONOMIC INFRASTRUCTURE
6. MONEY SUPPLY

41. The major key indicatorsThe major key indicators
7. RATE OF INFLATION
8. FOREIGN TRADE
9. FOREIGN EXCHANGE
RESERVES
10. EXCHANGE RATE
11. SOCIAL INDICATORS

42. GDPGDP
GDP is generally defined as
the market value of the
goods and services
produced by a country in a
given period of time

43. SECTORAL DISTRIBUTIONSECTORAL DISTRIBUTION
It means the different components or sectors of GDP from which it is
calculated.
Such as :- A. AGRICULTURE SECTOR
B. INDUSTRIAL SECTOR
C. SERVICES SECTOR
(A+B+C) = GDP