BUSINESS ENVIRONMENT ppt.ppsx

8/9/2019 BUSINESS ENVIRONMENT ppt.ppsx

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BUSINESSENVIRONMENT

Prof S R Rawat


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Understanding the environment withinwhich the business has to operate is veryimportant for running a business unitsuccessfully at any place.

The environmental factors in uence almostevery aspect of business, be it its nature, itslocation, the prices of products, the

distribution system, or the personnelpolicies

BUSINESS ENVIRONMENT-Introduction


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Business environment may be de ned as the totalsurroundings , which have a direct or indirectbearing on the functioning of business .!t may also be de ned as the set of externalfactors such as economic factors, social factors,political and legal factors, demographic factors,technical factors etc., which are uncontrollable innature and a"ects the business decisions of a rm.!t also includes the internal factors of the

business i.e. owners , employees and theirrelationship with each other which can becontrolled to some e#tent

BUSINESS ENVIRONMENT-!e"nition


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The features of business environment canbe summari$ed as follows.%a& Business environment is the sum total ofall factors e#ternal to the business rm and

that greatly in uence their functioning.%b& !t covers factors and forces li'ecustomers, competitors, suppliers,government, and the social, cultural,political, technological and legal conditions.

#eatures of businessenviron$ent


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%c &!t also includes the internal factors of thebusiness i.e. owners , employees and theirrelationship with each other .

Business (nvironment di"ers from place toplace, region to region and country tocountry. Political conditions in !ndia di"erfrom those in Pa'istan.

Taste and values cherished by people in!ndia and )hina vary considerably.

#eatures of businessenviron$ent


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Macro External Business Environ$ent

Businesenv

(conomic*actors

Socialfactors

Political*actors

+egal*actors

emographic*actors

Technological*actors


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The social environment of business includessocial factors li'e custo$s traditionsvalues beliefs %overt& literac& lifeex%ectanc& rate etc.

The social structure and the values that asociety cherishes have a considerablein uence on the functioning of business rms.*or e#ample, during festive seasons there isan increase in the demand for new clothes,sweets, fruits, ower, etc.

Social Environ$ent


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ue to increase in literacy rate the consumersare becoming more conscious of the -uality ofthe products.ue to change in family composition, morenuclear families with single child conceptshave come up.

!t has lead to the increases in the demand for thedi"erent types of household goods.

The consumption patterns, the dressing andliving styles of people belonging to di"erentsocial structures and culture vary signi cantly.

Social Environ$ent


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This includes the political system, thegovernment policies and attitude towardsthe business community and the unionism.

ll these aspects have a bearing on thestrategies adopted by the business rms. The stability of the government alsoin uences business and related activities to

a great e#tent.

'b( )olitical Environ$ent


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!t sends a signal of strength, con dence tovarious interest groups and investors.!deology of the political party alsoin uences the business organisation and itsoperations.

Eg *oca-*ola , a cold drin' widely used

even now, had to +ind u% operations in!ndia in late seventies



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The trade union activities also in uence theoperation of business enterprises./ost of the labour unions in !ndia are a0liatedto various political parties.

Stri'es, loc'outs and labour disputes etc. alsoadversely a"ect the business operations.1owever, with the competitive businessenvironment, trade unions are now showing

great maturity and started contributingpositively to the success of the businessorganisation and its operations through wor'ersparticipation in management.



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This refers to set of laws, regulations, whichin uence the business organisations and theiroperations.(very business organisation has to obey, andwor' within the framewor' of the law.

The important legislations that concern thebusiness enterprises include2%i& )ompanies ct, 3456%ii& *oreign (#change /anagement ct, 3444%iii& The *actories ct, 3478%iv& !ndustrial isputes ct, 349:

'c( ,egal Environ$ent


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%v& Payment of ;ratuity ct, 349:%vi& !ndustries % evelopment andRegulation& ct, 3453%vii& Prevention of *ood dulteration ct,3457%viii& (ssential )ommodities ct, :


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%#& /onopolies and Restrictive TradePractices ct, 3464%#i&Trade /ar's ct, 3444

%#ii& Bureau of !ndian Standards ct, 3486%#iii& )onsumer Protection ct, 3486%#iv& (nvironment Protection ct%#v& )ompetition ct, :


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)rovisions of the *onstitution

The %rovisions of the .rticles of the Indian)onstitution, particularly directive principles,rights and duties of citi$ens, legislative powers ofthe central and state government also in uencethe operation of business enterprises.

/udicial !ecisions The 0udiciar& has to

ensure that the legislature and thegovern$ent function in the interest of the publicand act within the boundaries of the constitution.

'c( ,egal Environ$ent


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Technological environment include the

$ethods techni1ues and a%%roachesadopted for production of goods and servicesand its distribution.

The varying technological environments ofdi"erent countries a"ect the designing ofproducts.

*or e#ample, in US and many othercountries electrical appliances are designedfor 33< volts. But when these are made for!ndia, they have to be of ::< volts.

'd( Technological Environ$ent


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!n order to survive and grow in the mar'et,a business has to adopt the technologicalchanges from time to time.!t may be noted that scienti"c researchfor i$%rove$ent and innovation inproducts and services is a regular activit&in most of the big industrial organisations.

>ow a days in fact, no rm can a"ord topersist with the outdated technologies.

'd( TechnologicalEnviron$ent


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This refers to the si2e densit&

distributionand

gro+th rate of%o%ulation .ll these factors have a direct bearing onthe demand for various goods and services.

*or e#ample 2 country with the large population ofchildren is bound to have $ore de$andfor bab& %roducts . country with the large population ofsenior citi2ens is bound to have $orede$and for %roducts related to the$ .

'e( !e$ogra%hic Environ$ent


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!e$ands of People from cities and ruralareas is di"erent .+arge %o%ulation in a country means the

easy availabilit& of labor force andhence the more of labour intensivetechni-ues of production./oreover, availability of s3ill labour incertain areas motivates the rms to set uptheir units in such area.

'e( !e$ogra%hicEnviron$ent


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*or e#ample, the business units frommerica, )anada, ustralia, ;ermany, U?,are co$ing to India due to easyavailability of s'illed manpower.

Thus, a rm that 'eeps a watch on thechanges on the demographic front and

reads them accurately will ndopportunities 'noc'ing at its doorsteps.

'e( !e$ogra%hicEnviron$ent


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The natural environment includesgeogra%hical and ecological factorsthat in uence the business operations.

These factors include the availabilit& ofnatural resources , +eather andcli$atic condition location as%ectto%ogra%hical factors etc.Business is greatly in uenced by the natureof natural environment.

'f( Natural Environ$ent


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#or exa$%le , sugar factories are set uponly at those places where sugarcane canbe grown.!t is always considered better to establishmanufacturing unit near the sources ofinput.;overnment@s policies to $aintain

ecological balance conservation ofnatural resources etc. put additionalresponsibility on the business sector.

'f( Natural Environ$ent


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The survival and success of each and everybusiness enterprise depend fully on itseconomic environment.

The main factors that a"ect the economicenvironment are2%a& (conomic )onditions%b& (conomic Policies

%c& (conomic System

E*ONOMI* ENVIRONMENT


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gross domestic productper capita incomemar'ets for goods and services

availability of capitalforeign e#change reservegrowth of foreign tradestrength of capital mar'etll these help in improving the pace ofeconomic growth.

'a( Econo$ic *onditionsIncludes


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These are framed by the government fromtime to time and include 2

!ndustrial policy *iscal policy /onetary policy *oreign investment policy

(#port A!mport policy %(#im policy&

'b( Econo$ic )olicies Includes


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The govern$ent 3ee%s on changingthese %olicies from time to time in view ofthe developments ta'ing place in theeconomic scenario, political e#pediency andthe changing re-uirement.Ever& business rm has to function strictly +ithin the policy framewor' and

res%ond to the changes therein.

'b( Econo$ic )olicies


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The world economy is primarily governed bythree types of economic systems, vi$.,

)apitalist economy

Socialist economy /i#ed economy.

India has adopted the $ixed econo$&s&ste$ which implies co e#istence ofpublic sector and private sector.

c( Econo$ic S&ste$


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Micro Ext Bus 4Int Env

Crgani$ation )ulture

*onsu$ersSuppliers

*o$%etitors

5overn$ent

shareholders

o+ners

E$%lo&ees

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BUSINESS ENVIRONMENT ppt.ppsx

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