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Amity Business School
BUSINESS ENVIRONMENT
Presented By
`Naga S Sridhar N (A-34)
Venkatesh Ravada (A-17)
Neha Sharma (A-39)
Kapil Sharma (A-20) Abhishek Verma (A-42)
Sandeep Dasmanthrao (A-19)
Amity Business School
Business Environment• Business Environment is a direct relationship
between successful management and the influence and impact of environmental change.
Amity Business School
External business environment: • External Business environment is a set of political,
economic, social and technological (PEST) forces that are largely outside the control and influence of a business, and that can potentially have both a positive and a negative impact on the business.
Amity Business School
Factors influencing the business environment : • Technological innovation• Globalization• Growth of poverty• Collapse of emerging markets• Shift from manufacturing jobs to service jobs• New methods of manufacturing
Amity Business School
Internal Business Environment• Internal Business Environment is the set of
elements or forces which affects a organization's or firm’s behaviour.
• Examples are like personnel, finance, marketing, production, operational research and so on.
Amity Business School
MICRO ENVIRONMENT
Amity Business School
Micro environment is the environment that an
organization can influence. It may not be able to
Correct all flaws in the microenvironment, but it
has a much better control over the macro
environment.
Amity Business School
Factors Influencing Micro –Environment
• Consumers – needs , purchasing power and behavior• Suppliers• Market intermediaries• Competitors
Amity Business School
I. Micro environment of business.
1) Suppliers
Supply raw materials and other components (Inputs)
Importance
- Reliable supply – continuous supply for smooth functioning
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2) CUSTOMERS
Different categories of customers
i. Industrial customers
ii. Wholesale customers
iii. Retail customers
iv. Government customers
v. Foreign customers
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3) Market intermediaries
i. Middlemen.
ii. Physical distribution Firms: (warehouses and transport firms)
iii. Marketing service agencies (Advertising agencies market research firms, media firms, consulting firms)
iv. Financial intermediaries
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4. Competitors:
The Threat of entry of new firms The Power of Buyers The Power of Suppliers The Power of Substitutes The Intensity of Rivalry among existing firms
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MACRO ENVIRONMENT
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• Macro Environment are major external and
uncontrollable factors that influence an
organization's decision making, and affect its
performance and strategies.
Amity Business School
These factors include :-• Sociological Factors• Political Factors• Legal Factors• Educational Factors• Technological Factors• Economical Factors• Natural Factors• Historical Factors
Amity Business School
SOCIOLOGICAL FACTORS
It concerns with society as a whole; it covers health, media, education,
minorities, women, organized labour , legal system and demographics.
The biggest challenge to firms is the society's changing demands.
POLITICAL FACTORS
Political environment gives shape to business. Political stability, Government
administration, Philosophy of the political parties are some of political factor which
affects the business environment
Amity Business School
LEGAL FACTORS
Legal Environment has a permanent and lasting impact in shaping business .
Labour law act, Industrial dispute act, Minimum wages act, Law of contract,
Import & Export control act and tax law act are few legal factors.
EDUCATIONAL FACTORS
Educational cum cultural environment affects business activities and managerial skills.
These factors include literacy, attitude toward training and skill required for a business
like specialized, vocational and technical training
Amity Business School
TECHNOLOGICAL FACTORS
Technology is about application of tools, methods and techniques to improve
production and processes. Technology is life for growth and competitiveness of
Business.
ECONOMICAL ENVIRONMENT
Economic environment conditions such as business cycle, unemployment, Inflation,
monitory policies, Industrial policies, trade policies etc also affects the business
environment.
Amity Business School
NATURAL & ECOLOGICAL FACTORS
Use of modern technology sometimes involves huge social cost in term of
Deterioration of environmental pollution and ecological balance. So business
environment should also consider about natural resources, weather & climatic
conditions, health hazards etc.
HISTORICAL FACTORS
Business Environment is also affected by historical factors. Business environment in a
number of newly independent countries has been determined by their past colonial
status.
Amity Business School
• The Determinants of Business Performance
• Structure - conduct - performance
– relationship between business structure and business conduct (behaviour)
• competitive markets and competitive behaviour
• limited competition and collusion
– relationship between business conduct and business performance
• different indicators for measuring performance
• profitability, market share, growth, etc.
Amity Business School
• Internal aims and organisation– profit maximisation as the prime goal– distinction between owners and managers– importance of managers’ own objectives
Amity Business School
• Other factors affecting performance– internal structure– information– competence of management– quality of the workforce