BOM Chapter 2 Business Sys & Its Environ

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Business System & Its Environment

Lesson 1.2



Systems Approach

A system is a set of objects , elements or components which are interrelated & which interact with

one another

These elements operate on inputs to accomplish common objectives such as prod & satisfaction . In

simplest form a system consists of ( 1 ) environ ( 2 ) input ( 3 ) processing unit ( 4 ) output

Can be regarded as an open adaptive sys with environ acting as a supra system . There are four areas underlying business org as a system .

1 firm is Iden as a whole not collection of depts. Each being in itself a sub system of the business

concern , closely interlinked & interdependent . A business org represents an integrated united

structure

2 org closely related to the environ which assumes imp with rapid changes which force frequent

internal changes in products , processes

3 The input –processing –output mechanism is present in every system .

4 info flow enjoys a key role in system approach as we have both inflow & outflow of info

continuously in a cyclic manner . Info key to effe3ctive decision making . Planning –action –control

cycle needs continuous info flow . Hence communication info net work has unique significance in

modern business

Socio –Economic System

1 Must adjust constantly to threats & opportunities presented by environ changes . If only internal

focus ignore external like market changes , competition , tech changes bound to loose opportunity

Management of a business org through integrated business planning is involved in translating

opportunities into innovations , into satisfied customers into accomplished corporate objectives .





Tech forecasts

Innovations in machinery ,

tools , processes , inventions

/discoveries ,

New processes

Economic forecasts

Changes in competition

/demands supply prices /

lifestyles .

Change in spending , nationalincome ( GNP ) change in

market segments

Political forecasts

Legislations , Govt

Programmes , world

monetary problems ,

instability

Social Forecasts

Impact of education , knowledge

explosion , public opinion ,change in social attitudes ,

behavior change

1

2

3

4

Management through

comprehensive plans converts

disorg resources of men ,

machines materials , money

into useful effective enterprise

welcome to the enterprise

resources drawn from environ

are integrated into a total sys

for accomplishment of goals

Elements of business

environment

Every business org must

be aware of environ

elements which are

numerous & changing

Internal are controllable

external not ?

Healthy enterprise adapts

responds & shape own

environ –Mutual advantage

for org & environ



Elements of business environment

1 Business environment represents a complex of shifts in the structure of the economy & society , in

the state of technology , in the customer demand & market place , in short all factors outside the

control of the management

Changes of environ constitutes the starting point of the process of growth . Major environmental

forces influencing the business are1 Demographic & Economic environ

Market means people with money & spending capacity . Demographic is used in Market Analysis &

Segmentation & formulation of marketing mix

Market represents variety of consumers & can be divided into a number of segments based on age ,

income , social status etc . We have shifting consumer tastes & preferences

Peop0le constitute only one element of a market . Second element is purchasing power &

willingness .

Economy also plays a major role like inflation , recession tax policies

2 Social & cultural Environment

Business unit has to make necessary adjustments in marketing plans to cater for changing social

trends

There are three aspects of social environ ( 1 ) changes in life style & social values ( 2 ) major social

concerns like pollution policies , demand for socially responsible marketing policies & emphasis on

safety in occupations & products ( 3 ) growing consumerism indicating consumer dissatisfaction on

a large scale against unfair trade practices –consumerism is becoming increasingly imp to

marketing decision process .



3 political & legal Environment

Becoming increasingly imp . Business systems are affected by Govt monetary & fiscal policies ,

import /export policies , custom d

Legislation controlling physical environ ( pollution laws ) influence business plans /policies .

Legislation also tries to protect consumer interests by controlling marketing .

We have regulations to control & regulate trade practices in many countries . Business managemencannot ignore the legislation regulating & protecting consumers . Public policies affects marketing

management

Business enterprises may not be allowed to resort to price discrimination , false /misleading

advertisement , exclusive distribution ships & tying agreements & other unfair trade practices

Science & technology

Phenomenal development of science & tech has completely transformed life & living conditions .

Ever expanding markets create conditions that lead to tech progress . Most case market was the

mother to inventions

Basic incentive for inventions through R & D is profit seeking through meeting marketing needs .

New tech offer a main source of economic growth e. g . Computers digital tech etc

Consumer purchase & manner of consumption reflect a societies life style . Tech forces help to

shape changes in the life style of consumers .

Business management with the help of tech can create, deliver & change standards & styles ,

values & converting technology to market opportunities for profitable sales to particular market

segment .

Of all changes in business environ tech developments are faster as well as far reaching & either

--



Implications

1 need for accurate forecasts to meet the challenges due to rate of tech change in products

/processes

2 scientists/engineers included in basic planning

3 R & D integral part

Fundamental environ change problems can be partially solved by using market focus in

formulating corporate plans

Customer oriented marketing considerations can act as a basis for strategic planning .

In order to meet technological . Social , business changes , customer oriented marketing org &

customer oriented business planning can be considered as the best alternative approach to be

adopted by the top management

Ecology or Natural environment

Wider concept of marketing eco environ has assumed a unique imp in prod & marketing in modern

economies .

Pollution is an inevitable by product of high consumption economic systems . Marketing system has

now to satisfy not only the buyers ( consumers ) but also social wants which may be adversely

affected by its activities . Only than it is entitled to achieve its profit objective

Future attention to Quality of life & preservation of environment

6 Customer Demand

Customer needs & desires act as the centre of marketing universe . Business plans , policies ,

Programmes are planned , org & executed with main objective of customer satisfaction & service



N i i t i l lt l l l liti l & t h f hi h



Non economic environment covers , social , cultural , legal , political & tech forces which are

dynamic & uncontrollable by an enterprise

Economic & non economic constantly interact & together create the business environ















































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BOM Chapter 2 Business Sys & Its Environ

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