Business Environment :

An Introduction

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Definitions
Business is an economic act which is carried out by an organization to achieve some targets related to production, profit, diversification, technological upgradation, expansion etc. Each business requires some kinds of resources for the fulfillment of the targets . The fulfillment of targets of a business depends not only on its resources but also on the business environment Business Environment refers to all the external forces that have a bearing on the functioning of a business.
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 BE may be defined as the surroundings, external objects, influences or circumstances that surround an organisation and affect it. Business cannot exist in isolation it has a symbiotic relationship with the surrounding environment, and is directly and indirectly affected by it.
Characteristics of BE : Environment is complex. It is dynamic. It is multi faceted. It has a far reaching impact.
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 It may be an opportunity as well as a threat to expansion. Changes in environment can change the competitive scenario. Developments in the environment can be difficult to predict with any degree of accuracy e.g Interest rate and exchange rate fluctuations, rate of inflation etc. Types of Environment : 1. Internal Environment. 2. Macro Environment ( general environment) 3. Micro environment ( competitive environment )

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Internal Environment

Company Culture and value system : It is the system of shared values and beliefs that shape the companys behavioral norms. Mission and objectives : The mission and objectives guide the philosophy, policy and direction of the business. Management structure and Nature: Structure is concerned with the hierarchical relationship and the relationship between the management of different functional areas.
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 Human resource

concerns recruitment and selection, manpower planning, appraisal and compensation. Micro Environment

1. Suppliers : 2. Customers. 3. Competitors. 4. Marketing Intermediaries. 5 . Financiers.

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Macro Environment

Political Environment. Economic Environment. Socio cultural environment. Technological Environment Regulatory and Legal Environment. Global Environment.
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The Micro Environment

The micro environment consists of the actors in the companys immediate environment that affect the performance of the company. Suppliers : Those who supply the inputs like raw materials and components to the company. The importance of reliable source(s) of supply to the smooth functioning of business is obvious. Many companies give high importance to Vendor Development. Many companies around the world are resorting to partnering/ relationship marketing.
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 Customers : Customers are the main focus and the reason for the existence of a business organisation. A company may have different categories of customers like individuals, households, industries and govt. and other institutions. All major business decisions and policies are made keeping the customer in mind. Choice of customer segments should be made considering a no. of factors like profitability, dependability, stability of demand, growth prospects and extent of present competition and anticipated future competition.

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 Competitors : The extent and intensity of competition in a particular industry or segment impacts the policies and strategies of any business organisation. A company may face several types of competition including brand competition.
Marketing Intermediaries : They are the firms that aid the company in promoting, selling and distributing its goods to the final buyers. They include middlemen like agents, wholesalers and retailers. Also include logistics firms, marketing and advt. agencies, market research and media firms and financial intermediaries.
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 Financiers : The financial capabilities, policies and strategies, attitudes and ability to provide non financial assistance is very important. Publics : A public is any group that has an actual or potential interest in or impact on an organisations capability to achieve its interests. For e.g media, citizens groups, consumer rights groups, the government and the society as a whole, besides the stake holders.

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