COMMERCE PROJECT

BUSINESS
ENVIRONMENT

NAME- JAYESH AGARWAL

CLASS- XII C
ROLL NO.- 31
 INTRODUCTION
• WHAT IS BUSINESS ENVIRONMENT?

The term 'business environment' refers to the totality of all people,

organizations, and other forces that are not under the control of industry yet may
have an impact on its output. It is a set of elements closely involved with a
business activities. These factors have an internal or external influence over the
company’s results, performance and growth.

• COMPONENTS OF BUSINESS ENVIRONMENT:

The business environment consists of internal and external factors classified as

follows:
• Internal - It combines the factors that exist within the company. These
factors are controllable to a large extent and impart strength and weakness
to a company. These are –
o Human resources
o Value system
o Vision and mission
o Labour union
o Corporate culture
• External - An external environment includes those outside factors that
exercise an influence on a business’s operations. These impart
opportunities and threat to the business firm. It is further classified into
two segments.

• Macro - Factors like socio-cultural, political, legal, global fall into

this category. These factors do not come in direct contact with the
business regularly and influence an indirect control over the business.
• Micro - This environment has a direct and immediate impact on a
business. It consists of customers, investors, suppliers, etc.
 • IMPORTANCE OF BUSINESS ENVIRONMENT:

1.) Determining Business Opportunities and Threats: - One of the most

important advantages of a business environment is that the interaction between a
business and its environment usually highlights the company's opportunities and
threats.
2.) Giving Direction for Growth: - When a business interacts with its
environment, it becomes easier to determine areas for expansion and growth. Is
there a shift in consumer preferences for certain goods or services? Are there any
features that your competitors offer that you should incorporate in your products
as well? By connecting into its business environment, a company can acquire
answers to comparable inquiries.
3.) Continuous Learning: - Since environment is essentially dynamic, the
environment is always changing. This keeps managers motivated to maintain
their knowledge and abilities up to date. This aids them in preparing for both
anticipated and unanticipated changes in the corporate world.
4.) Image Building: - When a company shows environmental sensitivity, its
image might increase significantly. In order to accomplish so, the company needs
also have a thorough understanding of its environment. Many factories, for
example, consider power shortages to be a problem in their operations. As a
result, several businesses have installed captive power plants (CPPs) in their
factories to satisfy their power requirements.
5.) Meeting Competition: - It is vital to be informed of your competitors'
actions and strategy in any business. Firms can study their competitors' tactics
and behaviours in a business environment. They might also devise their own
techniques in this regard.

6.) Coping with Changes:- The business must be aware of the ongoing changes
in the business environment, whether it be changes in customer requirements,
emerging trends, new government policies, technological changes. If the business
is aware of these regular changes then it can bring about a response to deal with
those changes.
If you take a quick look at the telecom sector, almost all providers offer similar
services at similar prices. The reason is that most telecom organizations ensure
that they are abreast of the strategies and actions of their competitors.

IMPORTANCE OF BUSINESS ENVIRONMENT

CONCEPT AND MEANING OF SWOT
ANALYSIS
• WHAT IS SWOT ANALYSIS?

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a

SWOT analysis is a technique for assessing these four aspects of a business.

SWOT analysis is a technique developed at Stanford in the 1970s, frequently

used in strategic planning. SWOT is an acronym
for Strengths, Weaknesses, Opportunities, and Threats and is a structured
planning method that evaluates those four elements of an organization, project
or business venture. A SWOT analysis is a simple, but powerful, framework for
leveraging the organization's strengths, improving weaknesses, minimizing
threats, and taking the greatest possible advantage of opportunities.

SWOT ANALYSIS
 • TERMS INVOLVED:

Strength: Strengths describe what an organization excels at and what separates

it from the competition: a strong brand, loyal customer base, a strong balance sheet,
unique technology, and so on. Strengths are internal, positive attributes of your
company. These are things that are within your control.
For example, a hedge fund may have developed a proprietary trading strategy that
returns market beating results. It must then decide how to use those results to
attract new investors.

Weakness: Weaknesses stop an organization from performing at its optimum

level. They are areas where the business needs to improve to remain competitive.
Weaknesses are negative factors that detract from your strengths. These are things
that you might need to improve on to be competitive.
For example, a weak brand, higher-than-average turnover, high levels of debt, an
inadequate supply chain, or lack of capital.

Opportunity: Opportunities refer to favourable external factors that could give

an organization a competitive advantage. Opportunities are external factors in your
business environment that are likely to contribute to your success.
For example, if a country cuts tariffs, a car manufacturer can export its cars into
a new market, increasing sales and market share.

Threat: Threats refer to factors that have the potential to harm an organization.
Threats are external factors that you have no control over. You may want to
consider putting in place contingency plans for dealing with them if they occur.
For example, a drought is a threat to a wheatproducing company, as it may destroy
or reduce the crop yield. Other common threats include things like rising costs for
materials, increasing competition, tight labour supply and so on.
SWOT TABLE
 CASE STUDY
NIKE INC:
Nike, Inc. is an American multinational corporation that is engaged in the design,
development, manufacturing, and worldwide marketing and sales
of footwear, apparel, equipment, accessories, and services. In addition, the
company offers sports-inspired lifestyle apparel, athletic bags, and accessory
items. Nike also provides a line of performance equipment and various types of
equipment designed for sports activities under its brand name, as well as markets
apparel with licensed college and professional team and league logos. It is the
world's largest supplier of athletic shoes and apparel and a major manufacturer
of sports equipment, with revenue in excess of US$37.4 billion in its fiscal year
2020.

NIKE BRAND LOGO

 Name of the
company NIKE INC.

Founded Time
January 25, 1964

Serving Sectors • Athletic footwear & apparel

• Athletic & recreational products
• Sports equipment

Areas Covered
Geographically All over the world

Headquarters
Beaverton, Oregon, U.S.

CEO and President

John Donahoe

Total Number of
Employees 75,400

Competitors of Adidas, Reebok, Puma and Asics.

Nike Company
 • SWOT ANALYSIS OF NIKE :

Nike’s Strengths – Internal Strategic Factors:

1. Strong Brand Awareness – Nike is one of the most recognizable brands in
the world as its name alone is memorable, easy to pronounce, and very
unique. Its swoosh symbol is easily recognized by everyone. Nike
has captured approx. 31% of the global athletic footwear market.

2. Huge Customer base – Nike has millions of customer from around the
world who loyally follow Nike’s trends, participate in Nike events, and
even provide customer feedback. Due to its huge customer base, Nike’s
market cap has grown to $224 billion as of Feb 2021.

3. Aimed For Sustainability – Nike’s CEO Mark Parker has addressed that
they will continue to acknowledge the environmental issues in the
communities. The CEO ensures that Nike will help to contribute in finding
a solution against these environmental issues.

Nike’s Weaknesses – Internal Strategic Factors:

1. Poor Labour Conditions in Foreign Countries – In the last 20 years, Nike

has been consistently targeted regarding their poor labour conditions. These
issues include forced labour, child labour, low wages, and horrific working
conditions that were deemed “unsafe”.

2. Retailers Have a Stronger Hold – Nike’s retail sector makes Nike weak due
to its sensitivity against pricing. 65% of Nike products are sold directly to
wholesalers or retailers. With retailers serving as their core customers, Nike
does not put up a fight against their pricing structures whatsoever.
3. Pending Debts – Although Nike’s income statements prove to be prosperous,
a quick glance at their balance sheet could paint a different picture. Nike is still
facing financial threats. As of Aug 2020 Nike’s total long term debt was $9.54
billion.

Nike’s Opportunities – External Strategic Factors:

1. Emerging Markets – Although Nike already has a presence in many foreign

countries, there is still plenty of opportunities for Nike. This is
because emerging markets like India, China, and Brazil are gradually
flourishing.

2. Innovative Products – Although Nike has produced many products, there is

still a lot to innovate. Nike has extended its reach in technology in association
with fitness and health. Products like wearable technology that monitors
physical activities, is the first step in building innovative technology products.
Combining technology with athletic wear can prove to be beneficial as it is an
aspect of the fashion industry that still hasn’t been explored much.

3. Efficient Integration – The supply and production of Nike’s products depend

on independent manufacturers. The brand can either acquire a few of these or
make some of its own for a more efficient and streamlined supply chain.

Nike’s Threats – External Strategic Factors:

1. Counterfeit Products – Counterfeit products can significantly affect the

revenue and reputation of Nike. The company deals globally and the risk of
counterfeit products has become higher. A number of merchandisers and
retailers offer counterfeit Nike products at lower prices. The low-priced
products are made from low-quality materials but still have the Nike label. This
can tarnish the image of the brand as the customers might feel that Nike has
started producing low quality products.
2. Increased competitive pressure – Although, Nike is a dominating the athletic
industry, competition, and new emerging brands are still potential threats to the
company. With higher competition ratio, Nike has to spend more money on
marketing and advertising. Nike spent $3.5 Billion specifically on marketing
and demand generation in fiscal year 2020. To overpower competition, Nike’s
safest bet is to design innovative products that are tailored according to the
needs of athletes.

3. Marketing Budget Pressure – Companies like Under Armour and Adidas are
spending more on marketing and advertising campaigns, increasing the pressure
on Nike.

SWOT ANALYSIS OF NIKE

 EVALUATION
• HOW DOES SWOT ANALYSIS BENEFIT AN
ORAGNISATION?

SWOT analysis analyses the tactics used to develop a specific business model
based on the company's available resources and capabilities, as well as the
operating environment. It considers both internal and external elements that
influence the company's success. The study aids the corporation in forecasting or
predicting shifting patterns, which is beneficial to any organization's decision-
making process.
• A SWOT analysis helps organizations get visibility on their current status,
letting them understand and measure overall business performance.
• It lets a business analyse their strength, which in turn can help them better
penetrate the market to meet business targets.
• It lets organizations get visibility on their weaknesses and potential areas of
improvement. This information helps them plan for and mitigate future
roadblocks, ensuring long term growth of business.
• By leveraging its SWOT analysis, a business can create a strategic plan to meet
desired objectives and adapt to changing market conditions.
• It lets businesses understand and better identify internal and external factors and
their positive and negative impacts on the business. This information can help
businesses be more proactive by helping them take appropriate actions in a
dynamic market to maintain momentum.

In conclusion, SWOT analysis is a vital tool for determining an organization's

health. It enables decisionmakers to determine not just where an organization
stands, but also where it needs to improve. This allows them to be a strategic
player in the industry while also allowing them to stay competitive.
• When should a company perform SWOT Analysis?
A company can employ a SWOT analysis before it commits to any sort of
business action, whether it is exploring new initiatives, revamping internal
policies, considering opportunities to pivot or altering a plan midway through
its execution. Sometimes it's wise to perform a general SWOT analysis just to
check on the current landscape of the business so it can improve the operations
as needed. The analysis can show the company the key areas where organization
is performing optimally, as well as which operations need adjustment.
A company should not make the mistake of thinking about the business
operations informally, in hopes that they will all come together cohesively. By
taking the time to put together a formal SWOT analysis, it can see the whole
picture of the business. From there, it can discover ways to improve or eliminate
the company's weaknesses and capitalize on its strengths.
While the business owner should certainly be involved in creating a SWOT
analysis, it is often helpful to include other team members in the process. The
owner should always ask for input from a variety of team members and openly
discuss any contributions made. The collective knowledge of the team will
allow to adequately analyse the business from all sides.

HOW SWOT TABLE IS FORMED

 CONCLUSION
• BOTTOM LINE:
Environmental Scanning & SWOT analysis are excellent tools for guiding
business strategy sessions. Having everyone in the room talk about the
company's basic strengths and shortcomings, outline opportunities and threats,
and develop ideas is extremely effective. Frequently, the SWOT analysis you
picture before the session alters during to reflect variables you were unaware of
and would never have caught if the group's participation had not been included.
A SWOT analysis can be used for a company's entire business strategy sessions
or for a specific segment like marketing, production, or sales. Before
committing to the overall plan generated from the SWOT analysis, you can see
how it will filter down to the segments below. A segment-specific SWOT
analysis that feeds into an overall SWOT analysis can likewise be used in
reverse.
Although a useful planning tool, SWOT has limitations. It is one of several
business planning techniques to consider and should not be used alone. Also,
each point listed within the categories is not prioritized the same. SWOT does
not account for the differences in weight. Therefore, a deeper analysis is needed,
using another planning technique.
Thus performing SWOT analysis is very important for the company to capitalise
on strengths and neutralise on weaknesses and take best possible use of the
opportunities in the external environment and remove the threats respectively.
 ACKNOWLEDGEMENT
I would like to express my feeling of gratitude by thanking my subject
teacher, Mrs. Maitreyee Sircar, who gave us this wonderful opportunity
of doing this project on the topic, Business Environment, which not only
enhanced my knowledge but also helped me gain interest on this topic.
This project also helped me understand the basis of doing swot analysis
of any company.
 BIBLIOGRAPHY
• S. Chand’s ISC Commerce (vol. II) by Dr. C.B. Gupta.

WEBLOGRAPHY
• www.investopedia.com
• www.wikipedia.org
• www.toppr.com
• www.economictimes.com