intro. of be

8/3/2019 intro. of BE

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“ Business is an economic activity because it

includes all those activities whose purpose is

to earn profit by transfer of goods & services.”



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



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



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



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



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



Business Decisions

Internal Environment

External Environment



INTERNAL

BUSINESS

ENVIRONMENT

ATTITUDES INTERNAL POWER

RELATIONSHIP

MISSION

&

OBJECTIVE

VALUE

SYSTEM

MANAGEMENT

STRUCTURE &

NATURE

HUMAN

RESOURCE

COMPANY

IMAGE &

BRAND EQUITY

OTHER

FACTORS



Internal Environment

Miscellaneous Factors

Physical Assets & Facilities

R&D Technological Capabilities

Marketing ResourcesFinancial Factors



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



Micro Environment

“Micro or task environment is more specific

and immediate environment in which an

organization conducts its business.”

-Dunham & Pierce



Micro Environment

1. Supplier

2. Customer

3. Market Intermediates 4. Public



MACRO ENVIRONMENT

Economic

Political

Social-Cultural Technological

Natural

Demographic International



• 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



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



POLITICAL ENVIRONMENT

Political Ideology of Govt.

Political stability in the Economy.

Foreign Policy of Govt.Defense & Military Policy.

Centre state relationship.



Socio-Cultural Environment

Urbanization

Religion

Tastes & Preferences Customs & Tradition in Society

Health & Quality of Life

Language



Technological Environment

Innovation

Research & Development

Inflow of foreign Technology etc.



Natural Environment

Climatic & weather condition.

Availability of Natural resources.

Topographical factors: Physical features of place.

Pollution Control



Demographic Environment

Age Composition

Sex Composition

Education Level Family size & structure

Urban-rural population



I nternational Environment

Globalization

Oil Price hike

International Terrorism Cultural Exchange

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