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8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 1/21
“ Business is an economic activity because it
includes all those activities whose purpose is
to earn profit by transfer of goods & services.”
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 2/21
Business
Business enterprises cannot function in isolationOpen systems interact with their environment
Business enterprises exist in and are surrounded by
an ‘environment’ – the business or organisationalenvironment
Society and business enterprises are mutuallydependent
Business enterprises satisfy societal needsRelationship between society and business
enterprises takes place in a changing environment
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 3/21
COMPONENTS OF THE BUSINESS
ENVIRONMENT
Different environmental variables exist internally andexternally to the business enterprise
Environmental variables have a positive or negativeinfluence on the enterprise
Business environment consists of two sub-environments: Internal (micro) environment External environment
Market environment Macro environment
Mutual relationships exist between theseenvironments
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 4/21
ENVIRONMENTAL SCANNING
Identification and forecasting phenomena in theenvironment
Ongoing environmental scanning is essential for
strategy formulation Enterprises continuously engage in identifying andforecasting opportunities and threats
Enterprises need to proactively or reactively respond tochanging conditions in the environment
Various sources of information are available to assistwith scanning
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 5/21
Nature
1. Interdependence
2. Dynamic
3. Unlimited effect of uncontrollable factors.
4. Media & Social Change
5. Uncertainties & Restrictions.
6. Adverse conditions
7. To keep regular vigil on the changing environment.8. Danger of casual change
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 6/21
ANALYSIS OF THE BUSINESS
ENVIRONMENT
S t r e n
W e a k
I n t e r n a l E
O p p o r
T h r e
E x t e r n a l E
B u s i n e s s
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 7/21
Business Decisions
Internal Environment
External Environment
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 8/21
INTERNAL
BUSINESS
ENVIRONMENT
ATTITUDES INTERNAL POWER
RELATIONSHIP
MISSION
&
OBJECTIVE
VALUE
SYSTEM
MANAGEMENT
STRUCTURE &
NATURE
HUMAN
RESOURCE
COMPANY
IMAGE &
BRAND EQUITY
OTHER
FACTORS
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 9/21
Internal Environment
Miscellaneous Factors
Physical Assets & Facilities
R&D Technological Capabilities
Marketing ResourcesFinancial Factors
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 10/21
External Environment
M i c rE n v i r M a cE n v i r
E x t e r n a l
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 11/21
Micro Environment
“Micro or task environment is more specific
and immediate environment in which an
organization conducts its business.”
-Dunham & Pierce
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 12/21
Micro Environment
1. Supplier
2. Customer
3. Market Intermediates 4. Public
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 13/21
MACRO ENVIRONMENT
Economic
Political
Social-Cultural Technological
Natural
Demographic International
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 14/21
• MACRO ENVIRONMENT means general
environment of business. Macro factors
are uncontrollable in comparison to the
micro forces of environment. The growth
and survival of business depend upon its
adaptability to macro environment factor
which include
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 15/21
1. ECONOMIC ENVIRONMENT
Economic Conditions Boom Depression
Economic System
Capitalist Socialist Mixed Economy
Economic Policies Monetary Policy Fiscal Policy Foreign Trade Policy Foreign Investment Industrial Policy
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 16/21
POLITICAL ENVIRONMENT
Political Ideology of Govt.
Political stability in the Economy.
Foreign Policy of Govt.Defense & Military Policy.
Centre state relationship.
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 17/21
Socio-Cultural Environment
Urbanization
Religion
Tastes & Preferences Customs & Tradition in Society
Health & Quality of Life
Language
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 18/21
Technological Environment
Innovation
Research & Development
Inflow of foreign Technology etc.
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 19/21
Natural Environment
Climatic & weather condition.
Availability of Natural resources.
Topographical factors: Physical features of place.
Pollution Control
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 20/21
Demographic Environment
Age Composition
Sex Composition
Education Level Family size & structure
Urban-rural population
8/3/2019 intro. of BE
http://slidepdf.com/reader/full/intro-of-be 21/21
I nternational Environment
Globalization
Oil Price hike
International Terrorism Cultural Exchange