Академический Документы
Профессиональный Документы
Культура Документы
ENVRONMENT
Environment means the surroundings, external
objects, influences or circumstances under which
someone or something exists.
The environment of any organisation is the aggregate
of all conditions, events & influences that surround &
affect it.
BUSINESS ENVIRONMENT
Business firm is micro economic unit
Business environment furnishes macro economic
context for its operation
Environment in which business operates
Includes conditions, events, factors that influence the
working of business
INTERNAL
ENVIRONMENT
BUSINESS DECISIONS
EXTERNAL
ENVIRONMENT
INTRNTNL ENVRNMT
DOMESTIC MACRO
ECNMC ENVRNMNT
GRWTH
ECNMC
&DIST
SYSTM
GOVT
CUST
INTERNAL
OMR
ENVRNMNT
RIVAL
ECO
ECMNC
INPUT
STBLTY
FINANCIE POLICY
PRVIDER
RS
EXTERNAL
SOCIAL
DEMGRPHC
CULTRL
NON ECNMC MACRO
ENVRNMNT
INTRNTNL ENVRNMT
INTERNAL ENVIRONMENT
POLLUTANTS OF INTERNAL
ENVIRONMENT
Conflict b/w different owner groups
Conflicts b/w workers & managers
Inter departmental conflicts
Unhealthy competition & conflict among employees
Office politics
Discrimination at work place
Absenteeism
EXTERNAL FACTORS
Regarded as uncontrollable factors: by and large
beyond the control of company.
EXTERNAL ENVIRONMENT
Suppliers
Customers
Competitors
Financiers
Society
DETERMINANTS OF INTERNATIONAL
ENVIRONMENT FOR BUSINESS
State of world economy
International economic cooperation
Role of multilateral economic institutions
International economic laws, agreements, codes
Political condition & system in different countries
Cultural factors across countries
Growth & spread of MNCs
Technology growth & transfer
International market structure & competition
Barriers to international trade & investment
P -Political factors
Political stability- changes in the form & structure of
government administration
Political organisation- ideology of ruling government;
conflicting role of public & private sector; influence of
premier groups
Business managers must understand the political
system and realities of the country in which they operate
(including the state level political environment) and also
the international political relations.
Example:
Transformation of agrarian economy into industrialised
economy during Nehruji era.
State became active in agriculture sector (subsidised
fertilisers, expansion of institutional credit); tightening of
state control over industrial finance, foreign investment,
trade when Smt. Indira Gandhi was in power.
In 1977, Janata govt came to power: Coca cola, IBM
had to leave country. All liquor cos had to close
operations.
Since 1990-91, political environment
economy increasingly being liberalised.
changed-
E - Economic factors
Economic factors include all the determinants of an economy
and its condition.
The inflation rate, the interest rates, the monetary or fiscal
policies, the foreign exchange rates that affect imports and
exports, all these determine the direction in which an
economy might move.
Therefore businesses analyze this factor based on their
environment so as to build strategies that fall in line with all
the changes that are about to occur.
Unemployment
Unemployment is an economic factor that affects
business activity by influencing the amount of
disposable income that consumers have available, and
also by affecting wage scales.
Because unemployed people subsist on less than a full
income, they spend less money than if they were fully
employed. A high unemployment rate slows business
activity by cutting into consumer spending.
In addition, a high unemployment rate creates market
conditions where the supply of labor is greater than the
demand of businesses for labor, enabling businesses to
pay lower wages.
Interest Rates
Interest rates determine the cost of borrowing money. It
costs more to borrow at a high interest rate than at a
lower one.
Because most businesses borrow money in order to
expand, and even to finance day-to-day business
activities, high interest rates can slow the growth of
business activity. But low interest rates can increase the
risk of inflation by making capital so easily available that
it isn't worth as much.
Shrewd monetary policy involves keeping interest rates
low when it is more important to stimulate economic
growth, and raising them when there is danger of
inflation.
Example:
Nike was subject to activist accusations
regarding the ethics of its operations in Vietnam.
Subsequently, NGOs put a lot of energy in
mobilizing consumer boycotts against Nike.
Companies have to change their product portfolio
because of cultural differences as McDonald and
KFC did when they launched their restaurant
chain in India.
T- TECHNOLOGICAL FACTORS
Refers to body of skills, knowledge & procedures for
making, using & doing useful things.
Technology changes every minute and therefore
companies need to stay connected along the way and
integrate as and when needed.
Also, these factors are analyzed to understand how the
consumers react to technological trends and how they
utilize them for their benefit.
Example:
Retailing has been transformed by the web:
Established retailers such as Walmart and
Tesco are now among the most successful
Internet companies, because they added a new
distribution channel to their traditional business
model.
FIAT was using old technology but MUL had no
option than to go for superior technology.
L- LEGAL FACTORS
Legal policies- formulation & implementation
Legislative changes occur from time to time and many of
them affect the business environment. Therefore
businesses also analyze the legal developments
happening in their environment.
Economic legislations- facilitator and/ or restrictor
Play a vital role- dictating dos & donts of business
Example:
Taxes on gas or SUVs may shift consumer demand to new
and innovative vehicles, such as hybrids or even solar
energy cars. This may even lead to an increase in the use of
the public transportation system.
The introduction of new privacy laws can make some
business models that extensively rely on customer
information without the customer's explicit accordance
illegal. Anti-spamming laws may (hopefully) wipe-out
business models based on sending out large trunks of
unsolicited mails. Regulating advertisement over mobile
phones may limit the range of possible business models in
m-commerce.
E- Environmental factors
The location of countries influence on the trades that
businesses do.
Adding to that, many climatic changes alter the trade of
industries and the way consumers react towards a certain
offering that is launched in the market.
The environmental factors include geographical location,
the climate, weather and other such factors that are not just
limited to climatic conditions. These in particular affect the
agri-businesses, farming sectors etc.
DEMOGRAPHIC ENVIRONMENT
(a) Size & growth rate of population
determines supply of human resources.
Creates demand.
Affects salary and wage structure.
Example:
Demographic environment decides the
marketing mix for an organisation. A one
rupee sachet of shampoo or a five rupee icecream cone are some examples.
CONCLUSION
Corporate managers analyse the Strengths (S),
Weakness (W), opportunity (O) & Threat (T) that
exist for their organisation in the context of its
environment.
O & T are external to the firm. With S the firm can
seize the O & captilise on it & because of its W it
becomes the victim of T in the environment.
Firms that are able to make appropriate
adjustment to business environment changes
reduce risk & uncertainty & gain competitive edge
over others. Failure in making timely adjustment
may erode profitability, competitiveness & market
share.