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BE Notes1

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59 views

BE Notes1

Uploaded by

sonikac2
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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What is Business?

: “Business comprises of diverse set of activities to be carried out in planned manner and with a purpose like to earn profit by selling goods
and services, to satisfy customers’ need/ want/ demand, to discharge obligation to employees and stakeholders, to return something worth to the society”

What is Environment? : Environment means the surroundings, external objects, influences or circumstances under which someone or something exists. The
environment of any organization is the aggregate of all conditions, events, influences that surround and affect it.

What is Business Environment? : “Comprises of the complex factors, largely if not totally beyond the control of management in which a particular enterprise
operates”.

Components of Business Environment:


1) Internal Environment
2) External Environment (Micro & Macro Environment)

INTERNAL ENVIRONMENT: Generally regarded as the set of controllable factors, because a good management can alter or modify such
factors. A no. of such internal factors influences the organizational decision. It could be the potential source of differentiation.
1. VALUE SYSTEM: Value system of founders and directors affect a business firm in following ways-
- Nature of business.
- Policies
- Objectives
- Guidelines & Priorities

2. MANAGEMENT STRUCTURE & NATURE:


- Organizational Structure
- Responsibilities of Board of Directors
- Extent of professionalism
- Share holding pattern

3. INTERNAL POWER RELATIONSHIP:


-Level of support enjoyed by the top management
-Board of Directors relationships

4. HUMAN RESOURCE: -- Quality -- Quantity

5. MISCELLANEOUS:
-R&D capabilities
-Marketing resources
-Financial resources

MICRO ENVIRONMENT: Consists of the factors in firm’s immediate external environment affecting performance of that firm. It is more
controllable than the macro environment. It may be firm specific. It is more intimately linked with firm than the macro environment.

1. CUSTOMERS
- Profile
- Customer switching

2. COMPETITORS
- Mono/Duo/Oligopoly/Perfect competition

3. MARKETING INTERMEDIARIES
- Distribution channels
- Logistics, Warehouse
- Ad agencies, Market research firm, Consultancy

MACRO ENVIRONMENT: Part of external environment mainly responsible for creating opportunities as well as threats for the firm,
and is more uncontrollable than micro environment.

1. ECONOMIC ENVIRONMENT:
• GDP per capita
• Economic growth
• Unemployment rate
• Inflation rate
• Consumer and investor confidence
• Inventory levels
• Currency exchange rates
• Merchandise trade balance
• Financial and political health of trading partners
• Balance of payments
• Future trends

2. POLITICAL ENVIRONMENT:
• Political climate - amount of government activity
• Political stability and risk
• Government debt
• Budget deficit or surplus
• Corporate and personal tax rates
• Payroll taxes
• Import tariffs and quotas
• Export restrictions
• Restrictions on international financial flows

3. LEGAL ENVIRONMENT:
• Minimum wage laws
• Environmental protection laws
• Worker safety laws
• Union laws
• Copyright and patent
• Anti- monopoly laws
• Municipal licenses
• Laws that favour business investment

4. TECHNOLOGICAL ENVIRONMENT:
• Efficiency of infrastructure, including: roads, ports, airports, rolling stock, hospitals, education, healthcare, communication, etc.
• Industrial productivity
• New manufacturing processes
• New products and services of competitors
• New products and services of supply chain partners
• Any new technology that could impact the company

5. SOCIO-CULTURAL ENVIRONMENT:

• Demographic factors such as:


o Population size and distribution
o Age distribution
o Education levels
o Income levels
o Religious affiliations
• Attitudes towards:
o Materialism, capitalism, free enterprise
o Individualism, role of family, role of government, collectivism
o Role of church and religion
o Consumerism
o Environmentalism
o Importance of work, pride of accomplishment
• Cultural structures including:
o Diet and nutrition
o Housing conditions
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