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means Surroundings Something external to individual / organization.


BUSINESS ENVIRONMENT refers to all external

factors which have a direct /indirect bearing on the activities of business. Certain Aspects internal external threat to business growth.



MICRO: Players - whose decisions and actions have a direct bearing on the company

MACRO: Economic and non-economic factors which exercise their influence on the business.


Values, Goals, Structure, Resource, HR, etc.

DIFFERENT ASPECTS: 1. Value System of Corporate policies

employees, customers, etc).

(acknowledgement towards

2. Goals and objectives Sole Profit (traditional) / sales / 3.

5. 6.

balanced growth maximization. Structure of Management - Professionally managed / family controlled. (dynamic, conservative / bureaucratic). Power Relationship: Relationship (unity / conflict / confidence) between company shareholders / BoD / seniors executives. Resources and Technology: Physical resources (also intellectual capital), production technology, R & D work, Distribution logistics. Human Resources: Quality, skill, commitment, attitude, morale etc.

Classified Into: 1. MICRO ENVIRONMENT 2. MACRO ENVIRONMENT Micro Environment refers to such players whose decisions and actions have a direct bearing on the company. In production & selling of goods. (It is different in all the countries). Macro Environment of a company refers to all those economic and non-economic factors which exercise their influence on the business activity in general determine opportunities for promoting the business.

The Prominent players in the micro environment are: (the size, capacity and strategies are
different for different companies and micro environment respond to such situations)

1. Input suppliers,

(influence the production)

2. Workers and their unions, (influence the production) 3. Customers, (affect sales operations) 4. Market intermediaries,(affect sales operations) 5. Competitors, 6. Publics, (affect
(affect sales operations) production and also sales operations)

success - low cost of production sufficient raw materials single supplier risk multiple sources. Workers and their unions: Labor input - organized / unorganized subsistence wages union collective bargaining management policy of hire and fire - be counter productive. Customers: (not homogeneous) Important Input loyalty (good will) demand from all quarters customers from different groups and regions - COPRA target customers change as per the need (recession, etc). (recession proof basic
Input suppliers:

Micro Environment:

Micro Environment:
Marketing Intermediaries: Distribution channels (wholesalers,

retailers, distribution firms, agents, etc) important element. To reach customers useful network- if popular direct. Example: Nestle in France in mid-1990s. .Competitors: monopoly no companies (strategies) durable goods competition brand competition product form competition challengers. If Non-price competition advertising avoid price war. Public: Philip Kolter public term in different sense. (any group that has an actual or potential interest in or impact on companys ability to achieve its objective). Environmentalists, consumer protection groups (in case of price hike in essentials), media, local lobbyists are termed as Public . (they pose a threat).

Macro Environment helps business grow. Example: Prior to liberalization (1951 to 1991) regulations (MRTP, FERA, IDRA, Factory Acts, Labor Acts, etc - powerful) . Strategies: Nehruvian socialism - Planned economic development emphasis to public sector equitable distribution of income and wealth neglect private sector. Growth rate: 3.5 % prior 1991. 9 % Post 1991 (due to liberalized industrial policy). MACRO ENVIRONMENT is Classified into:
1. 2.


To be continued: