unit 5 Introduction to Business Environment.ppt
- 2. Business is an economic activity, which is related with continuous and regular production and distribution of goods and services for satisfying human wants. What is business?
- 3. "The regular production or purchase and sale of goods undertaken with an objective of earning profit and acquiring wealth through the satisfaction of human wants.“ Stephenson Definition of Business
- 4. "Business refers to a form of activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted.“ Dicksee Continued…
- 5. “Human activity directed towards producing or acquiring wealth through buying and selling of goods.” Lewis Henry Continued…..
- 6. Profit (Bottom-line) Growth Market Leadership Customer satisfaction Employee satisfaction Quality Products & Services Service to Society Contemporary Business goals
- 7. Environment refers to all external forces which have a bearing on the functioning of the business What is Environment
- 8. The term ‘business environment’ connotes external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise. These include customers, competitors, suppliers, government, and the social, political, legal and technological factors etc. What is business environment
- 9. “Business Environment encompasses the -climate’ or set of conditions, economic, social, political or institutional in which business operations are Conducted.”—Arthur M. Weimer Definitions
- 10. “The environment includes factors outside the firm which can lead to opportunities for or threats to the firm. Although there are many factors, the most important of these factors are socio-economic, technological, supplier, competitors, and government.” William F. Glueck Definition of Business Environment
- 11. ‘‘Business environment is the aggregate of all conditions, events and influences that surround and affect it.” Keith Davis Continued…
- 12. “Business environment is the climate or set of conditions-economic, social, political or institutional in which business operations are conducted.” Arthur M. Weimer Continued…
- 13. Business Decision Internal Environment Mission / Objectives Management Structure Internal Power Relationship Physical Assets & facilities Company image Human resources Financial Capabilities Technological Capabilities Marketing Capabilities Financiers Suppliers Customers Competitors Public Mktg Intermediaries Micro Environment Economic Technological Global Demographic Socio-Cultural Political Macro Environment BUSINESS ENVIRONMENT
- 14. Environment is inseparable part of business Business enterprises continuously interacts with its environment for taking inputs like raw materials, capital, labour, energy etc. and transform them into goods and services and then send them back to the environment. Environment is Dynamic No environment remains constant or static for a longer period of time. Business cannot work without environment. It cannot directly influence the changes in external environment Features of Business environment
- 15. Internal and external factors Internal environment includes plans and policies, employees, business objectives etc. The external environment is again subdivided into micro factor and macro factor. Environment is complex Business environment is growing extremely complex due to government interventions and social consciousness. Environment is multifaceted Environmental changes may bring opportunities to some people and obstacles to others.
- 16. Opportunities and obstacles Opportunities for growth and expansion is created when the environment is favourable, on the other hand it creates problems and obstacles when it is unfavorable. Regulates the scope of business Environment provides a framework within which business organisation has to operate. Long lasting impact Changes in the environmental factors have long lasting effects on the functioning of the business. Uncertainty Business environment is very difficult to predict future happenings, especially when environmental changes take place too frequently.
- 17. 1. Demographic Environment: Refers to study of the population 2. Economic Environment: Constitutes of economic conditions, economic policies, and the economic system 3. Political-Legal Environment: Refers to political, government and legal environment 4. Socio cultural Environment: Consists of factors which are related to human relationships and the impact of social attitudes and cultural values 5. Global: Global Environment treated as whole world just as village and has changed how individuals and organisations relate to each other 6. Technological: how the rapid pace of change in production processes and product innovation affect a business. Macro Environment
- 18. Micro environment factors, are factors close to a business that have a direct impact on its business operations and success. Micro Environment
- 20. 1. Determining Opportunities and Threats 2. Giving Direction for Growth 3. Continuous Learning 4. Image Building 5. Meeting Competition 6. Identifying Firm’s Strength and Weakness 7. Keeping Business Enterprise Alert 8. Keeping Business Flexible and Dynamic Significance of Business Environment
- 21. Economic environment After the new economic policy of 1991, lots of opportunities are offered to businessmen. Banking sector reform has led to many attractive schemes of deposits and lending money. The Banks are offering loans at very nominal rate of interest and with minimum formalities to be completed. Recent changes in economic and fiscal policy of country have encouraged NRIs and foreign investors to invest in Indian companies. Examples
- 22. Social Environment (Example of companies) Pepsi The Pepsi slogan, “Come alive with the Pepsi Generation” translated in Taiwanese became, “Pepsi will bring your ancestors back from the dead”. Not only a bit creepy by culturally, it was an insult. Kentucky Fried Chicken In China, the Kentucky Fried Chicken slogan “finger-lickin' good” became “eat your fingers off”. Again, implying an action considered rude and uncivilized in Chinese culture. General Motors When General Motors introduced the Chevy Nova in South America, the company was unaware that “No Va” meant “It won't go”. Continued…..
- 23. In India also, there are many Social reforms taking place and the common factors of Indian Social Environment are: (a) Demand for reservation in jobs for minority and women (b) Demand for equal status of women by paying equal wages for male and female workers (c) Demand for automatic machines and luxury items in middle class families (d) The social movements to improve the education level of girl child. (e) Health and Fitness trend has become popular. Continued….
- 24. Recent discussions have blamed the increase in violence seen in society on television and violent programs, according to the Guardian. Some studies have shown that violent shows have an impact on behavior and can desensitize people to violence. This is especially true of young children who watch a great deal of violent shows. The Guardian cautions that exposing children to television at a young age may cause them to have a short attention span. Television has also been linked to the obesity epidemic in America, according to the website How Stuff Works. Not only are children and adults moving less and spending more time in front of the TV, they tend to snack more while watching their favorite shows. Many commercials are also geared toward unhealthy junk foods, which may lead to indulging in unhealthy snacks. Continued…
- 25. The common factors and forces which have influenced the Indian political environment are: (a) The government in Hyderabad is taking keen interest in boosting I.T. industry, as a result the state is more commonly known as Cyber bad instead of Hyderabad. (b) After the economic policy of liberalisation and globalisation, the foreign companies got easy entry in India. As a result the Coca Cola which was sent back in 1977 came back to India. Along with Coca Cola, Pepsi Cola and many other foreign companies are establishing their business in India. Continued…