1.

0 Introduction The environment which the business has to conduct is very significant for running an organization to achieve its goals, all feature of business, such as its nature, its position, the prices of products, the distribution system, or the personnel policies can be influenced by the environment. Thus it is imperative to study about the various features of the external business environment, which includes the economic phase, the socio-cultural aspects, the political outline, the legal aspects and the technological aspects. (VED PRAKASH, 2005) There are number of world documented models that designed to assist managers to direct and monitor business environment, decrease risk and harmful influence of those impacts. In this manner, managers role at this point is to apply those models competently so as to attain a competitive advantage, models includes PESLE, SWOT, and Porters Five Forces Model.

2.0 Business Environmental Scan The phrase Business Environment refers to the combined of all forces, factors and institution which are external and internal that influences implementation toward the control and monitoring of individual business enterprises and their organization; In short Business environment can be described as those internal and external to a business unit under which it operates. Internal environment: This is kind of business environment that has an immediate and firsthand impact upon the organization, main internal influences that present in each organization consist internal customers, infrastructure, and business core competencies. External environment are those trends and forces that are essentially outside the control of organizational members and cannot be controlled, however external environmental scans are conducted to identify important factors in the external environment. This analysis is often a critical aspect in all business or strategic plans ( Capon,2009). The external environment is divided into two parts macro and micro environment.

3.0 External Factors of Business Environment 3.1 Macro Environment This includes all factors can influence an organization however, that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization) it is continuously changing and the company needs to be flexible to adapt. (Dr. NAIR 2007) 3.1.1 Political and Legal Regulations Factors

This refers to set of laws, regulations, which influence the business organizations and their Operations. Every business organization has to obey, and work within the framework of the law, since political and legal regulations varies in any country and even cities then regulations and legislations tend to adjust from time to time. Political environment of the country involve elements such as corruption practice, government relations with the private sectors. Each of those elements has significant influence on the business performance. Managers however have to put on consideration while operating the business for example in countries where political system is unstable and corruption rate is high, businesses may face problems with bribes, illegal activities from the government. (Gitman & McDaniel 2008 p, 8) 3.1.2 Economic Factors Economic environmental forces have vital impact on business performance whether its local business corporation or internationally categorized business, since businesses rely on general facts that probably may represent positive economic condition of the chosen country., then Managers have to consider leading indicators such as rate of inflation, corruption rate, exchange rate, industrial production rate, rate of unemployment, balance of payment, customer expenditure and so on,forexample an increase in corruption rate to a country would lead to effects of business operations within the country (Mukherjee & Chakrabort 2010).

3.1.3 Social Factors

The social dimension or environment of a nation determines the value system of the society which affects the functioning of the business. Sociological factors such as costs structure, customs, cultural heritage, income and scientific methods, mobility of labour etc. have a great impact impact on the business. These factors determine the work culture and mobility of labour, work groups etc; therefore, managers have to provide services based on social and cultural background. For instance one of the world largest fast-food manufacturers McDonald always changing their variety of offered products from country to country, in US market McDonald fastfood outlets serve pork and alcoholic drinks, whereas in Malaysia they dont serve pork and alcoholic drink due to the dominant religion in the country.

3.1.4 Technological Factors Technological environment include the methods, techniques as well as approaches adopted for production and its distribution of goods and services. The varying technological environments of different countries affect the designing of products. Technology in organizations plays an important role, today lots of companies are becoming more dependent on technologies that support their operations and provide competitive advantage, in the modern competitive age, the pace of technological changes is very fast. Another example is reflected in education industry APIIT University, keeping up the technological changes by upgrading hardware as well as software. This trend provides APIIT competitive advantage not only within a local market, but also in international market. Those innovative technologies attracting student from overseas, especially from poor countries in which technologies do not developed up to this level. (Ohmae, 2011 p,30)

3.1.5 Natural Environment The natural environment includes geographical as well ecological factors that influence the business undertaking. These factors include the availability of natural resources, weather and climatic condition, etc. Business however, is greatly influenced by the nature of natural environment. For example, sugar factories are set up only at those places where sugarcane can be grown. It is always vital to establish manufacturing unit near the sources of input, therefore Managers have to look upon the strategic location for the business so to perform the operation effectively and efficiently. (Sikkim Manipal Universit, 2011, p,405)

3.2 Micro environment This environment influences the organization directly. It consist supplier that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small , but this can be misleading. (Dr. K. S. CHNDRASEKHAR NAIR 2007) Inner environment
(microenvironment) This is the environment that an organization can influence. It may not be able to correct all flaws in the microenvironment, but it has a much better control over it than the macro environment. The microenvironment consists of seven larger parts:

3.2.1 Competitors Competitors present a threat when joins the market due to provision of similar products or services, consequently as companies go deeper into business environment, usually they face problems not only from government but also from their competitors in same market, competitors create a particular extend of rivalry; since companies usually make their strategic decision on future direction based on competition analysis. Therefore it is crucial for managers to conduct constant analysis of competitors in order to succeed in their future.

3.2.2 Customers

Customers are the main focus of every company; companies who have created brand awareness have a very strong competitive advantage and market position. It is important to realize that customers preferences changing rapidly due to high technological development. The unsatisfaction of customers can lead to decrease of companies reputation, for instance, the world largest manufacturer of soft drinks Coca Cola had introduced a new product in 23 April, 1985, whereas production of original taste is ended in the same week. According to press releases of New York Time, New Coke product failed to meet customers requirements due to unfavorable customer feedbacks.( Froneman , 2004)

3.2.3 Suppliers These are people who require attentive communication, payment, and a strong working

relationship to provide needed resources., managers should choose appropriate suppliers who are more consistent so as to smooth run the business, this will help the company to prevent (reduce) cost in maintaining inventories, forexample Taylors university college have suppliers dealing with electronic equipments which has increased effectiveness and efficiency in providing services to the students.

4.0 Internal factors in Business Environment

4.1 Employees Organizations have to find the right people for each job. This means finding some highly specialized people and generally trained workers. Organizations are limited by their money supply and the constraints of the general workforce. Employing the correct staff and keeping these staff

motivated is an essential part of the strategic planning process of an organisation. Training and development plays an essential role particular in service sector marketing in-order to gain a competitive edge. This is clearly apparent in the airline industry.
4.2 Owners and the board

The investment mood is a primary question for every organization. A positive mood means funds, while a negative mood means extra costs. It is important that the owners are satisfied with the company, but this doesnt always mean large profits have to be shown all the time. Many companies can choose between keeping profits and investing them. It is the managers job to balance the aims if the company and the owners (although many times this can be the same). As organisation require greater

inward investment for growth they face increasing pressure to move from private ownership to public. However this movement unleashes the forces of shareholder pressure on the strategy of organisations. Satisfying shareholder needs may result in a change in tactics employed by an organisation. Many internet companies who share prices rocketed in 1999 and early 2000 have seen the share price tumble as they face pressures from shareholders to turn in a profit. In a market which has very quickly become overcrowded many havel failed

4.3 Brand Awareness

If a company undertakes a SWOT analysis and identifies brand awareness as an internal strength, it then could develop a marketing strategy for a product it expects to launch. The company could decide to play off its positive brand awareness during the launch. One way to tap brand awareness is to give out samples of the new product to consumers who use the company's existing brands. If consumers have an awareness of existing brands, they may be more likely to buy new products from the same company. For instance, the company may decide to hire salespeople to hand out samples of the new product to shoppers at stores that stock its other products.

4.5 Market Share

If a company's SWOT analysis identifies market share as an internal strength--one that results in strong sales growth--this too could be used to develop a marketing strategy to launch a new product. The company could use its existing sales force to promote and sell the new product, thereby cutting down on the cost of hiring new sales staff. Similarly, it could cut down on distribution costs by tapping into its existing distribution network. Thus, the company parlays its existing strength in market share into lower marketing costs for the launch of newer product lines.

company image, market share, brand awareness,key staff, access to natural resources, operational efficiency

5.0 SWOT Analysis (External Factoes)

After analyzing external environment, managers recommended to implement SWOT analysis which acts as the managerial tool to analyze external as well as internal business environment. This tool assists managers in measuring internal and external factors that pressure decision making. Internal and external factors as explained above have a significant role in strategic planning, and must be taken into consideration by managers in order to reduce risk of failure, and avoid mistakes. SWOT analysis helps the company when stuck with success, during implementation of SWOT analysis, managers will be able to determine core competencies and capabilities of the company, and may take right course of actions in order to convert problems into solutions.

In SWOT, strengths and weaknesses are internal factors.

For example:

5.1 A strength could be:

Your specialist marketing expertise. A new, innovative product or service. Location of your business. Quality processes and procedures. Any other aspect of your business that adds value to your product or service.

5.2 A weakness could be:

Lack of marketing expertise. Undifferentiated products or services (i.e. in relation to your competitors).Location of your business .Poor quality goods or services. Damaged reputation

In SWOT, opportunities and threats are external factors.

For example:

5.3 An opportunity could be:

A developing market such as the Internet. Mergers, joint ventures or strategic alliances .Moving into new market segments that offer improved profits. A new international market. A market vacated by an ineffective competitor.

5.4 A threat could be:

A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution. Taxation is introduced on your product or service.

6.0 Conclusion Its vital for Managers to understand the external and internal environment, these factors when considered and implemented wisely, will generate a companys success in the overall performance, Managers however must understand and interpret data properly and convert into useful information and desired actions,consequently,there are alternative ways through which mangers should follow so as to successfully achieve desired objectives including make resourcing decisions based on capabilities and gaps, focus attention on core versus non-core work activities, Differentiate high (and low) performers across the organization, transfer critical knowledge and stimulate social network development, consider the use of more flexible work environments and identify opportunities to improve HR and learning efficiency . (IBM Global Service, 2008)

7.0 References

8.0 Appendix

Figure1. Resource: Business Environment By: (Dr. NAIR 2007)

Figure 2 . Resources: derek4794.xanga.com

PESTLE Analysis.

PESTLE analysis is also a tool that is used by many organizations to analyze business environment factors such as political, economic, social, technological, legal, and environmental. PESTLE is so important for many companies today as it provides a wide picture of whole situation about present state of affairs in various areas, factors such as political, economic, social, technological, legal, and environmental have a crucial advantageous to the organization performances. For instance, political environment should involve not only general information of government system, but also corruption rate, government relationships with local and international businesses, election system, government satiability, law, rules and regulation. By taking a clear picture of divisions and subdivisions of PESTLE analysis, managers will have a clear insight of what is taking place on in the countries, what technologies needed to commence operations, what legal regulations have to be considered, and will it worth to operate in this country. This model will provide fast and comprehensive information needed to business before starting operations

Figure3. PESTEL Analyis Sources: marketingminefield.co.uk

Michael Porters Five Forces Model

Michael Porters Five Forces model is another tool that helps managers to control business environment. This model provides comprehensive analysis of industry in which companies operate. Model determines five forces that have influence on company, namely bargaining power of buyers, bargaining power of suppliers, rivalry between existing companies, threat of new entrants, and threat of substitutes. Although this model doesnt determine external business environment such as economic, political, and social, the information that managers obtains during assessing and analyzing industry though this model may benefits them in many terms. Use of this model will assist managers to identify position of the company in the current industry, and they will know their pluses and minuses, also in relation to main idea of this model, companies will be able to gain competitive advantage in term of unique product, knowledge management, and eventually being a dominant player in the market will create barriers for the new entrants. All in all, comprehensive understanding of companys suppliers, buyers, and its own core competencies will reduce dependency risk of customers, suppliers, and competitors.

Figure 4. Resource: Business Environment By: (Dr. NAIR 2007)