Explain the term environment with reference to business: The term environment refers to the totality of all the

factors which are external to & beyond the control of individual business enterprises and their managements. The environment furnishes the macro-context, the business firm is the micro unit. Understanding the environment within which the business operates is very important for running a business unit successfully at any place because the environmental factors influence almost every aspect of business, its nature, location and prices of products. Sometimes the environment maybe classified into market environment and non market environment, depending on whether a business firm s environment is influenced by market forces like demand, supply, no. of other firms resulting in price competition, etc. or by non market forces like government laws, social traditions, etc. We may classify the environment into economic and non-economic. Non- economic environment refers to social, political, legal, educational and cultural factors that affects business operations. Economic environment on the other hand is given shape and form by factors like fiscal policy, the monetary policy, industrial policy resolutions, physical limits on output, the price and income trends, the national economic plan, etc. The non economic environment has economic implications just as the economic environment may have non-economic implications. The environment is the outside world; it encompasses everything outside the organization. Hence, it is unlikely that we can be right about the future all the time and in every detail. Environmental analysis is the process by which strategists monitor the environmental factors to determine opportunities and threats to their firms. The factors which constitute the external environment can be divided into three interrelated sub categories: Factors in the remote environment i.e. social, political, technological and economical factors. Factors in the industry environment i.e. competition, entry of competitors, threat of substitutes, etc. Factors in the operating environment (internal environment)

Discuss the importance of environmental scanning is Strategic Management: This factor takes into consideration ecological and environmental aspects cud b either economic or social in nature. These include temp, monsoons, natural calamity, access by rail, air and road, ground conditions, ground contamination and so forth. It s a part of the external analysis when doing market research and gives a certain overview of the different macroenvironmental factors that the company has to take into consideration. Political factors include areas such as tax policy, employment laws, environment regulations, trade restrictions and tariffs and political stability. the economic factors are the economic growth, interest rates, exchange rates and inflation rates. Social factors often look at cultural aspects & include health consciousness, growth rate, age distribution, career attitudes and emphasis on safety. The techno factors include ecological & environmental aspects and can determine the barriers to entry, minimum efficient production level and influence outsourcing decisions. It looks at elements such as R&D activity, automation,etc. Environment scanning; Determining opportunities and threats: the interaction between the business & its environment would identify opportunities for & threats to the business. It helps the business enterprises for meeting the challenges successfully. Giving directions for growth: the interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables businesses to identify the areas for growth and expansion of their activities. Continuous learning: environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously upgrade their knowledge, understanding & skills to meet the predicted changes in the realm of business. Image building: environmental understanding helps the business organizations in improving their image by showing their sensitivity to the environment within which they are working. Eg. In view of the shortage of power, many companies have set up power plants in their factories to meet their own requirements of power. Meeting competition: it helps the firms to analyse the competitors strategies and formulate their own strategy accordingly. Identifying firms strengths and weaknesses: business environment helps to identify the individual strengths and weaknesses in view of the technological & global developments.

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Business must run in socially responsible manner . Comment on the statement: Business should operate in such a way as to fulfill the public needs or expectations. It should do so for a very pragmatic reason: business functions with the consent of society and therefore must be sure to satisfy the needs of society. A social responsibility role should be undertaken in order to prevent some public critism and discourage further government involvement or regulation. This is a defensive approach designed to offset possible government action against those in the business system who use their power irresponsibly. Social responsibility is in the stockholder s interest that is, being socially responsible will simply be profitable especially in the long term.

A poor social responsibility role on the part of the corporation means poor management to some investors. They view failure to perform in society s interest in much the same way as they view the corporation s failure to perform in financial matters. A company considered socially responsible can attract more capital from the public and business community and also attract trading partners. Business must realize that social problems can become opportunities, or can lead to profits. Expenditures on pollution abatement may result in retrieval of materials that were formerly disposed of as waste, or may allow for equipment to operate more efficiently, therefore generating more profits on future operations. With regard to social responsibility matters, business should take a long run as opposed to a short run view. Profits may increase in the long run as a result of actions taken at the present time. Companies that display a greater sense of social responsibility, in many cases are subject to fewer inspections by the regulatory authorities and may be given fast track treatment while applying for governmental permits. Companies perceived to have strong CSR find it easier to recruit and retain employees in tight labour markets.

Enumerate the impact of technology on business with suitable examples. Technological improvement can reduce the cost of production and improve the quality of the product. Hence, a firm can improve the market share by technological innovations. A technological breakthrough can have a sudden and dramatic effect on the firm s environment. The influence of technology on a company s products, services, markets, suppliers, distributors, competitors, customers, manufacturing processes, marketing practices and competitive position is phenomenal. Further technological improvements can create new markets, result in proliferation of new and improved products, change the relative competitive cost position in an industry and make existing products and make existing products and services obsolete. Technology is a major stimulus for change and has become synonymous with economic progress. Mankind has made quantum leaps in living standards and economic levels through the use of specific technologies in the past. Countries which dominate the global scene today are the ones which also happen to be technology leaders. Technology has been responsible for bringing about major changes in agriculture, health, transportation, communication, and general industrial development to varying degrees. Technological environment exerts significant influence on business. Technological change can make established products obsolete overnight. At the same time, it can create a host of new product possibilities. Thus, it is both creative and destructive both an opportunity and a threat. One of the most important impacts of technological change is that it can affect barriers to entry and as a result, radically reshape industry structure. The degree to which technology plays a role in a company s strategy varies from one company to another. For some, technology plays a major role, for another it may be minor. However, every company employs technology of some sort which has to be managed. It is one resource which influences the entire business management operations i.e. hrm, financial management, manufacturing, marketing, etc. more intensively than any other single factor.