Assignment-Ver1.0 Course Title Unit Unit Number Batc No Assessor Semester !

earning #utcomes $ssued Submission BTEC HND Business Management Business Environment Unit 1 BM 6 & 7 Rishardh &1 1' (' )' * %t %
t

Student Name Edexcel No Reg. No E-mail !earner "eclaration Signature I con irm that the !or" su#mitted or this assignment is m$ o!n%

No&ember '01( "ecember '01(

Recei&ed B) * "ate

+eedbac, -rom t e Assessor.

General Comments

Key Strength

To Improve

/rade. $nternal Veri-ier 1$V2. "ate.

Assessor0s Signature.

$V Signature.

BUSINESS ENVIRONMENT CONTENTS PAGE

Introduction..............................................................................................................................02 A Brief Overview of Toyota Motor Cor oration.....................................................................02 A Brief !i"tory........................................................................................................................02 Section #O$ % Or&ani"ation 'ur o"e"......................................................................................0( 'ur o"e" of different ty e of Or&ani"ation...........................................................................0( Sta)e*o+der" e, ectation and Or&ani"ationa+ "trate&ie".......................................................0Re" on"i.i+itie" of Or&ani"ation and "trate&ie" to /eet t*e/..............................................00 Section #O2 % Nature of t*e natura+ environ/ent...................................................................01 Econo/ic "y"te/ and re"ource"...........................................................................................01 2i"ca+ and /onetary o+icie" effect on Or&ani"ation activitie"............................................03 Co/ etitor "trate&y...............................................................................................................03 Section #O( % Or&ani"ationa+ Be*aviour in /ar)et environ/ent...........................................$$ 'ricin& and out ut deci"ion...................................................................................................$$ Mar)et force" and effect" for an Or&ani"ation......................................................................$$ Bu"ine"" and cu+tura+ environ/ent.......................................................................................$$ Section #O- % Si&nificance of &+o.a+ factor" affectin& a .u"ine""..........................................$( Internationa+ trade.................................................................................................................$( 4+o.a+ factor" inf+uence on a .u"ine""..................................................................................$( Su//ary and conc+u"ion.........................................................................................................$Credit" and reference"..............................................................................................................$-

BUSINESS ENVIRONMENT INTRODUCTION My ai/ in writin& t*i" a""i&n/ent i" to de+ve into t*e "u.5ect of Business Environment and de"cri.e it" )ey function". I *ave c*o"en to re"earc* and "u./it /y findin&" .a"ed on t*e co/ any Toyota Motor Corporation6 and +oo) into way" in w*ic* t*e "u.5ect" covered in t*i" a""i&n/ent a +y to t*i" cor oration. A REI! O"ER"IE# O! TO$OTA MOTOR CORPORATION Toyota Motor Corporation co//on+y )nown "i/ +y a" Toyota and a..reviated a" TMC6 i" a 7a ane"e /u+tinationa+ cor oration
There would hardly b anyone that does not recognize this logo!

*ead8uartered in Toyota6 Aic*i6 7a an. In 20036 Toyota Motor Cor oration e/ +oyed 1$6$$9 eo +e wor+dwide :tota+ Toyota (206;0;<. TMC i" t*e wor+d=" +ar&e"t auto/o.i+e /anufacturer .y "a+e" and roduction. T*e co/ any wa" founded .y >iic*iro Toyoda in $3(1 a" a " inoff fro/ *i" fat*er=" co/ any Toyota Indu"trie" to create auto/o.i+e". T*ree year" ear+ier6 in $3(-6 w*i+e "ti++ a de art/ent of Toyota Indu"trie"6 it created it" fir"t roduct6 t*e Ty e A en&ine6 and6 in $3(96 it" fir"t a""en&er car6 t*e Toyota
>ic*iiro Toyoda6 T*e face .e*ind t*e fa/e

AA. Toyota Motor Cor oration &rou co/ anie" are Toyota :inc+udin& t*e Scion .rand<6 #e,u"6 ?ai*at"u and !ino Motor"6 a+on& wit* "evera+ @non% auto/otive@ co/ anie". TMC i" art of t*e Toyota 4rou 6 one of t*e +ar&e"t con&+o/erate" in t*e wor+d.

Toyota Motor Cor oration i" *ead8uartered in Toyota City6 Aic*i and in To)yo. In addition to /anufacturin& auto/o.i+e"6 Toyota rovide" financia+ "ervice" t*rou&* it" Toyota 2inancia+ Service" divi"ion and a+"o .ui+d" ro.ot".

BUSINESS ENVIRONMENT A RIE! %ISTOR$ Toyota "tarted in $3(( a" a divi"ion of Toyoda Auto/atic #oo/ Aor)" devoted to t*e roduction of auto/o.i+e" under t*e direction of t*e founder=" "on6 >iic*iro Toyoda. It" fir"t ve*ic+e" were t*e A$ a""en&er car and t*e 4$ in $3(0. Toyota Motor Co. wa" e"ta.+i"*ed a" an inde endent co/ any in $3(1.

BUSINESS ENVIRONMENT SECTION &O' ( ORGANISATION PURPOSES Purposes of Different Types of Organisation An or&ani"ation i" a "ocia+ arran&e/ent w*ic* ur"ue" co++ective &oa+"6 w*ic* contro+" it" own erfor/ance and w*ic* *a" a .oundary "e aratin& it fro/ it" environ/ent. Boundarie" can .e *y"ica+ or "ocia+. 2or a co/ any6 Or&ani"ation or .ein& or&aniBed i" a /ean" to ac*ieve it" &oa+"6 w*ic* are to create va+ue for it" "ta)e*o+der" :"toc)*o+der"6 e/ +oyee"6 cu"to/er"6 "u +ier"6 co//unity<. T*e u+ti/ate ur o"e of .ein& or&aniBed in any w*ic* /anner t*at i" /o"t fea"i.+e6 i" to &enerate rofit". T*e different ty e" of Or&ani"ation /ay .e &rou ed into ( /ain cate&orie"C $. So+e trader D 'artner"*i A Sole Tra)er or "i/ +y a )nown a" a Proprietorship i" a ty e of .u"ine"" entity t*at i" owned and run .y one individua+ and in w*ic* t*ere i" no +e&a+ di"tinction .etween t*e owner and t*e .u"ine"". T*e owner receive" a++ rofit" :"u.5ect to ta,ation " ecific to t*e .u"ine""< and *a" un+i/ited re" on"i.i+ity for a++ +o""e" and de.t". Every a""et of t*e .u"ine"" i" owned .y t*e ro rietor and a++ de.t" of t*e .u"ine"" are t*e ro rietor=". It i" a @"o+e@ ro rietor"*i in contra"t wit* artner"*i ". A "o+e ro rietor /ay u"e a trade na/e ot*er t*an *i" or *er +e&a+ na/e after fi+in& a doing business as "tate/ent wit* t*e +oca+ aut*oritie"6 w*erea" a Partnership i" an arran&e/ent w*ere entitie" andDor individua+" a&ree to coo erate to advance t*eir intere"t". In t*e /o"t fre8uent in"tance6 a artner"*i i" for/ed .etween one or /ore .u"ine""e" in w*ic* Partners :owner"< co% +a.our to ac*ieve and "*are rofit" or +o""e". 2. 'rivate #i/ited Co/ any A Private &imite) Company6 a+"o )nown a" &imite) &ia*ility Company :&&C<6 i" a f+e,i.+e for/ of enter ri"e t*at .+end" e+e/ent" of artner"*i and cor orate "tructure". It i" a +e&a+ for/ of co/ any t*at rovide" +i/ited +ia.i+ity to it" owner" in t*e va"t /a5ority of United State" 5uri"diction". ##C" do not need to .e or&aniBed for rofit.

BUSINESS ENVIRONMENT (. 'u.+ic #ia.i+ity Co/ any A P+*li, &ia*ility Company or P+*li,ly Tra)e) Company i" a co/ any t*at *a" er/i""ion to offer it" re&i"tered "ecuritie" :"toc)6 .ond"6 etc.< for "a+e to t*e &enera+ u.+ic6 ty ica++y t*rou&* a "toc) e,c*an&e6 or occa"iona++y a co/ any w*o"e "toc) i" traded over t*e counter :OTC< via /ar)et /a)er" w*o u"e non%e,c*an&e 8uotation "ervice". A P+*li, &imite) Company :+e&a++y a..reviated to pl,< on t*e ot*er *and i" a +i/ited +ia.i+ity co/ any t*at /ay "e++ "*are" to t*e u.+ic in United >in&do/ co/ any +aw6 in t*e Re u.+ic of Ire+and and ot*er Co//onwea+t* 5uri"diction". It can .e eit*er an un+i"ted or +i"ted co/ any on t*e "toc) e,c*an&e". Toyota is a p+*li, ,orporation and t*e co/ any=" "*are" are traded on t*e To)yo6 New Eor) and #ondon Stoc) E,c*an&eF"G.

Stakeholders Expectation and Organisational Strategies To .e a.+e to a""e"" a "ta)e*o+derH" e, ectation"6 and arrive at an Or&ani"ationH" "trate&ie" to /eet t*e"e e, ectation"6 we /u"t fir"t identify w*o a Sta)e*o+der i". Accordin& to E. 2ree/an6 a "ta)e*o+der i" any &rou or individua+ w*o can affect or .e affected .y t*e ac*ieve/ent of t*e fir/H" o.5ective", and t*ere.y w*o"e "u .e "ucce""fu+. T*e"e ort t*e .u"ine"" need" if it i" to eo +e6 in turn6 *ave certain e, ectation" fro/ t*e co/ any6 and

a""e""in& t*e de&ree to w*ic* t*e"e e, ectation" are current+y .ein& "ati"fied in a .a+anced fa"*ion rovide" a va+ua.+e indicator of current and future erfor/ance. Sta)e*o+der" wi++ a+/o"t a+way" inc+ude t*e @.i& t*ree@C Cu"to/er"6 E/ +oyee"6 and Owner". 2or /o"t co//ercia+ enter ri"e"6 t*e"e t*ree are .y far t*e /o"t i/ ortant6 and t*e "co e of t*e erfor/ance /ea"ure/ent i" u"ua++y focu"ed on t*e/. In ot*er "ituation"6 t*e "co e /ay need to .e .roadened. Sta)e*o+der" "*ou+d .e c+ear+y defined6 articu+ar+y if t*ere i" any otentia+ 8ue"tion of w*o i" inc+uded or e,c+uded in eac* &rou .

BUSINESS ENVIRONMENT In order for t*e Or&ani"ation to co/e u wit* "trate&ie" to /eet "uc* e, ectation"6 one of t*e )ey tenet" i" a .a+anced a roac*6 and t*e awarene"" t*at over t*e +on& run6 you cannot "ati"fy one "ta)e*o+der at t*e e, en"e of anot*er. Ee"6 cu"to/er" are very i/ ortant6 .ut in t*e +on& run if your e/ +oyee" are di"&runt+ed6 t*ey wi++ not rovide t*e +eve+" of "ervice nece""ary to "ati"fy t*e cu"to/er". Si/i+ar+y6 /ere+y +owerin& cu"to/er" /ay not .e "u"taina.+e fro/ t*e owner"H view oint. T*e ne,t "te i" to deter/ine t*e e, ectation"6 or @"ati"faction attri.ute"6@ of eac* rice" to attract /ore

"ta)e*o+der. T*e /o"t i/ ortant a" ect of t*i" ana+y"i" i" t*at it /u"t .e o.5ective and fact% .a"ed6 not .a"ed on reconceived 5ud&/ent" or a""u/ tion". T*e e, ectation" of cu"to/er"6 e/ +oyee"6 and owner" need to .e e/ irica++y verified .y "urvey6 focu" &rou "6 or t*rou&* ot*er /et*od". Many Or&ani"ation"6 inc+udin& Ac/e6 /a)e t*e "eriou" /i"ta)e of a""u/in& t*ey )now and under"tand t*e "ta)e*o+der"H e, ectation" w*en in fact t*ey do not. T*i" i" articu+ar+y true of e/ +oyee"C Senior /ana&e/ent fre8uent+y a""u/e" it )now" w*at t*e e/ +oyee" want fro/ t*eir 5o."6 and t*ey are often 8uite /i"ta)en. Moreover6 a" t*e e,terna+ wor+d c*an&e" :e.&.6 co/ etitor" .e&in to "ati"fy /ore of t*e cu"to/er=" e, ectation"I ot*er co/ anie" in t*e area offer i/ roved wor)in& condition"I etc.<6 "ta)e*o+der e, ectation" c*an&e.

Relations with Customers Addressing Diversifying Customer Needs Based on the "Customer First !uality First" "olicy

Global Society / Local Communities Toward Achieving a #ustainable #ociety and Being a $ood Cor%orate Citizen

Relations with Employees &es%ecting Diversity and Develo%ing 'uman &esources (hile #haring the Toyota (ay $lobally

Relations with Shareholders &ealizing #table $rowth

Relations with Business Partners #ustainable #ociety Achieved in Collaboration with Business "artners

BUSINESS ENVIRONMENT In order to contri.ute to t*e "u"taina.+e deve+o /ent of "ociety and t*e eart*6 Toyota .e+ieve" t*at /ana&e/ent e/ *a"iBin& a++ "ta)e*o+der" i" of con"idera.+e i/ ortance6 in addition to environ/enta+ initiative". Toyota /aintain" "incerity in it" action"6 *onour" it" ro/i"e" and act" in a " irit of &ood fait* in "ee)in& to .eco/e a &+o.a+ enter ri"e re" ected .y a++ eo +e" around t*e wor+d6 a" we++ a" wor)in& con"cientiou"+y to rovide va+ue to "ta)e*o+der" t*rou&* t*e .u"ine"" it conduct". In Au&u"t 200;6 Toyota revi"ed it" CSR 'O#ICEC Contri.ution toward" Su"taina.+e ?eve+o /ent t*at ta)e" into con"ideration Toyota=" re+ation" wit* "ta)e*o+der". In addition to a +yin& t*i" "u ort it" rinci +e". o+icy to a++ of it" con"o+idated "u."idiarie" t*rou&*out t*e wor+d6 Toyota e, ect" it" .u"ine"" artner" to a+"o

T*i" "ection rovide" an introduction to Toyota=" "tance on re" ondin& to t*e diver"e need" of it" "ta)e*o+der"6 rovidin& .ac)&round a" we++ a" a "u//ary of it" a"t and re"ent activitie" % .ot* wit*in 7a an and over"ea". 2urt*er detai+" can .e found .y c+ic)in& on t*e +in)" for eac* year=" environ/enta+ re ort andDor .y acce""in& detai+ed a&e" found wit*in t*i" "ite. Responsibilities of Organisation and Strategies to meet them Increa"in&+y6 cor oration" are /otivated to .eco/e /ore "ocia++y re" on"i.+e .ecau"e t*eir /o"t i/ ortant "ta)e*o+der" e, ect t*e/ to under"tand and addre"" t*e "ocia+ and co//unity i""ue" t*at are re+evant to t*e/. Under"tandin& w*at cau"e" are i/ ortant to e/ +oyee" i" u"ua++y t*e fir"t riority .ecau"e of t*e /any interre+ated .u"ine"" .enefit" t*at can .e derived fro/ increa"ed e/ +oyee en&a&e/ent :i.e. /ore +oya+ty6 i/ roved recruit/ent6 increa"ed retention6 *i&*er roductivity6 and "o on<. >ey e,terna+ "ta)e*o+der" inc+ude cu"to/er"6 con"u/er"6 inve"tor" : articu+ar+y in"titutiona+ inve"tor"<6 and co//unitie" in t*e area" w*ere t*e cor oration o erate" it" faci+itie"6 re&u+ator"6 acade/ic"6 and t*e /edia.

BUSINESS ENVIRONMENT An Or&ani"ation can fu+fi+ it" re" on"i.i+itie" toward" it" "ta)e*o+der"6 and i/ +e/ent "trate&ie" to /eet t*e/ .y ayin& attention toC Re" on"ive CSR :Cor orate Socia+ Re" on"i.i+ity< J J Bein& t*e &ood citiBenC addre"" a "ocia+ i""ue t*at doe"nHt "i&nificant+y affect a co/ anyH" o eration" or co/ etitivene"" Miti&ate *ar/ fro/ co/ anyH" activitie"

Strate&ic CSR J J J Tran"for/" )ey .u"ine"" activitie" to .enefit "ociety at t*e "a/e ti/e reinforcin& t*e .u"ine"" "trate&y Si&nificant+y affect" co/ etitivene"" Can inc+ude Re" on"ive CSR

Toyota-s CSR Poli,y. Contri*+tion to/ar)s S+staina*le Development TO$OTA MOTOR CORPORATION and t*eir "u."idiarie"6 ta)e initiative to contri.ute to *ar/oniou" and "u"taina.+e deve+o /ent of "ociety and t*e eart* t*rou&* a++ .u"ine"" activitie" t*at t*ey carry out in eac* country and re&ion6 .a"ed on t*eir 4uidin& 'rinci +e". Toyota co/ +ie" wit* +oca+6 nationa+ and internationa+ +aw" and re&u+ation" a" we++ a" t*e " irit t*ereof and conduct" it" .u"ine"" o eration" wit* *one"ty and inte&rity. In order to contri.ute to "u"taina.+e deve+o /ent6 t*ey .e+ieve t*at /ana&e/ent interactin& wit* it" "ta)e*o+der" a" de"cri.ed .e+ow i" of con"idera.+e i/ ortance6 and t*ey endeavour to .ui+d and /aintain "ound re+ation"*i " wit* t*eir "ta)e*o+der" t*rou&* o en and fair co//unication. T*ey e, ect t*eir .u"ine"" artner" to "u accordance wit* it. T*ey a+"o artici ated in t*e for/u+ation of and o."erve t*e "tandard" out+ined in t*e C*arter of Cor orate Be*aviour of t*e Ni on >eidanren :7a an Bu"ine"" 2ederation<6 an a++iance of 7a ane"e +eadin& cor oration". ort t*i" initiative and act in

BUSINESS ENVIRONMENT

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BUSINESS ENVIRONMENT SECTION &O0 ( NATURE O! T%E NATURA& EN"IRONMENT Economic systems and resources An e,onomi, system i" t*e "tructure of roduction6 a++ocation of econo/ic in ut"6 di"tri.ution of econo/ic out ut"6 and con"u/ tion of &ood" and "ervice" in an econo/y. It i" a "et of in"titution" and t*eir "ocia+ re+ation". A+ternative+y6 it i" t*e "et of rinci +e" and tec*ni8ue" .y w*ic* ro.+e/" of econo/ic" are addre""ed6 "uc* a" t*e econo/ic ro.+e/ of "carcity t*rou&* a++ocation of finite roductive re"ource". T*e econo/ic "y"te/ i" co/ o"ed of eo +e and in"titution"6 inc+udin& t*eir re+ation"*i " to roductive re"ource"6 "uc* a" t*rou&* t*e convention of ro erty. E,a/ +e" of conte/ orary econo/ic "y"te/" inc+ude ca ita+i"t "y"te/"6 "ocia+i"t "y"te/"6 and /i,ed econo/ie". @Econo/ic "y"te/"@ i" t*e econo/ic" cate&ory t*at inc+ude" t*e "tudy of re" ective "y"te/". Today t*e wor+d +ar&e+y o erate" under a &+o.a+ econo/ic "y"te/ .a"ed on t*e ca ita+i"t /ode of roduction. 2o++owin& are "o/e "tandard" u"ed to di"tin&ui"* a/on& econo/ic "y"te/". #etH" ana+yBe t*e/6 one .y oneC A*o own" t*e re"ource"K Econo/ic re"ource" are t*e a""et" :t*in&" of va+ue< w*ic* an econo/y :or .u"ine""< /ay *ave avai+a.+e to "u +y and roduce &ood" and "ervice" to /eet t*e ever%c*an&in& need" and want" of individua+" :in t*e ca"e of a .u"ine""< and "ociety :in t*e ca"e of "ociety a" a w*o+e.< T*i" can vary de endin& on t*e .ac)&round and nature of t*e .u"ine""6 or t*e de art/ent .ein& con"idered. 2or e,a/ +e6 in financia+ accountin&6 assets are econo/ic re"ource". T*erefore6 anyt*in& tan&i.+e or intan&i.+e t*at i" ca a.+e of .ein& owned or contro++ed to roduce va+ue and t*at i" *e+d to *ave o"itive econo/ic va+ue i" con"idered an a""et.

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BUSINESS ENVIRONMENT Si/ +y "tated6 a""et" re re"ent owner"*i of va+ue t*at can .e converted into ca"*

:a+t*ou&* ca"* it"e+f i" a+"o con"idered an a""et<. T*e .a+ance "*eet of a fir/ record" t*e /onetary va+ue of t*e a""et" owned .y t*e fir/. It i" /oney and ot*er va+ua.+e" .e+on&in& to an individua+ or .u"ine"". Two /a5or a""et c+a""e" are tan&i.+e a""et" and intan&i.+e a""et". Tan&i.+e a""et" contain variou" "u.c+a""e"6 inc+udin& current a""et" and fi,ed a""et". Current a""et" inc+ude inventory6 w*i+e fi,ed a""et" inc+ude "uc* ite/" a" .ui+din&" and e8ui /ent. Intan&i.+e a""et" are non *y"ica+ re"ource" and ri&*t" t*at *ave a va+ue to t*e fir/ .ecau"e t*ey &ive t*e fir/ "o/e )ind of advanta&e in t*e /ar)et +ace. E,a/ +e" of intan&i.+e a""et" are &oodwi++6 co yri&*t"6 trade/ar)"6 atent" and co/ uter ro&ra/"6 and financia+ a""et"6 inc+udin& "uc* ite/" a" account" receiva.+e6 .ond" and "toc)".

A*at deci"ion%/a)in& roce"" i" u"ed to a++ocate re"ource" and roduct"K Eac* oint a+on& t*e econo/yH" roduction o""i.i+itie" frontier i" an efficient

co/.ination of out ut". A*et*er t*e econo/y roduce" efficient+y and *ow t*e econo/y "e+ect" t*e /o"t referred co/.ination de end" on t*e deci"ion%/a)in& ru+e" e/ +oyed. But re&ard+e"" of *ow deci"ion" are /ade6 eac* econo/y /u"t an"wer t*ree funda/enta+ 8ue"tion"C A*at &ood" and "ervice" are to .e roducedK !ow are t*ey to .e roducedK 2or w*o/ are t*ey to .e roducedK An econo/ic "y"te/ i" t*e "et of /ec*ani"/" and in"titution" t*at re"o+ve t*e what, how, and for who 8ue"tion". So/e criteria u"ed to di"tin&ui"* a/on& econo/ic "y"te/" are :$< w*o own" t*e re"ource" :w*ic* we *ave a+ready "een a.ove<6 :2< w*at deci"ion%/a)in&

$2

BUSINESS ENVIRONMENT roce"" i" u"ed to a++ocate re"ource" and roduct" :w*ic* we *ave 5u"t di"cu""ed<6 and :(< w*at ty e" of incentive" &uide econo/ic deci"ion /a)er" :w*ic* we wi++ "ee ne,t<. A*at ty e" of incentive" &uide econo/ic deci"ion /a)er"K In econo/ic" and "ocio+o&y6 an in,entive i" any factor :financia+ or non%financia+< t*at ena.+e" or /otivate" a articu+ar cour"e of action6 or count" a" a rea"on for referrin& one c*oice to t*e a+ternative". It i" an e, ectation t*at encoura&e" eo +e to .e*ave in a certain way. Since *u/an .ein&" are ur o"efu+ creature"6 t*e "tudy of incentive "tructure" i" centra+ to t*e "tudy of a++ econo/ic activity :.ot* in ter/" of individua+ deci"ion%/a)in& and in ter/" of co%o eration and co/ etition wit*in a +ar&er in"titutiona+ "tructure<. Econo/ic ana+y"i"6 t*en6 of t*e difference" .etween "ocietie" :and .etween different Or&ani"ation" wit*in a "ociety< +ar&e+y a/ount" to c*aracteriBin& t*e difference" in in,entive str+,t+res faced .y individua+" invo+ved in t*e"e co++ective effort". U+ti/ate+y6 incentive" ai/ to rovide va+ue for /oney and contri.ute to Or&ani"ationa+ "ucce"". Incentive" can .e c+a""ified accordin& to t*e different ways in w*ic* t*ey /otivate a&ent" to ta)e a articu+ar cour"e of action. One co//on and u"efu+ ta,ono/y divide" incentive" into t*ree .road c+a""e"C $. Rem+nerative in,entives :or 1inan,ial in,entives< are "aid to e,i"t w*ere an a&ent can e, ect "o/e for/ of /ateria+ reward % e" ecia++y /oney % in e,c*an&e for actin& in a articu+ar way. 2. Moral in,entives are "aid to e,i"t w*ere a articu+ar c*oice i" wide+y re&arded a" t*e right thing to do6 or a" articu+ar+y ad/ira.+e6 or w*ere t*e fai+ure to act in a certain way i" conde/ned a" indecent. A er"on actin& on a /ora+ incentive can e, ect a "en"e of "e+f%e"tee/6 and a rova+ or even ad/iration fro/ *i" co//unityI a er"on actin& a&ain"t a /ora+ incentive can e, ect a "en"e of &ui+t6 and conde/nation or even o"traci"/ fro/ t*e co//unity.

$(

BUSINESS ENVIRONMENT

(. Coer,ive in,entives are "aid to e,i"t w*ere a er"on can e, ect t*at t*e fai+ure to act in a articu+ar way wi++ re"u+t in physical force .ein& u"ed a&ain"t t*e/ :or t*eir +oved one"< .y ot*er" in t*e co//unity % for e,a/ +e6 .y inf+ictin& ain in uni"*/ent6 .y i/ ri"on/ent6 .y confi"catin& or de"troyin& t*eir o""e""ion". T*ere i" anot*er co//on u"a&e in w*ic* incentive i" contrasted with coercion6 a" w*en econo/ic /ora+i"t" contra"t incentive-driven wor)C "uc* a" entre reneur"*i 6 e/ +oy/ent6 or vo+unteerin& /otivated .y remunerative6 moral6 or personal incentive" % wit* coerced wor) % "uc* a" "+avery or "erfdo/6 w*ere wor) i" /otivated .y t*e t*reat or u"e of vio+ence. In t*i" u"a&e6 t*e cate&ory of @coercive incentive"@ i" e,c+uded. 2or t*e ur o"e" of t*i" artic+e6 *owever6 @incentive@ i" u"ed in t*e .roader "en"e defined a.ove.< ompetitor strategy A co/ etitive advanta&e i" an advanta&e over co/ etitor" &ained .y offerin& con"u/er" &reater va+ue6 eit*er .y /ean" of +ower rice" or .y rovidin& &reater .enefit" and "ervice t*at 5u"tifie" *i&*er rice". T*e fir"t "te to .ui+din& a co/ etitor "trate&y i" to deve+o t*e "trate&ic +annin& &ood co/ etitor ana+y"i" *a.it". Co/ etitor Ana+y"i" i" an i/ ortant art of roce"". Ae wi++ now out+ine t*e /ain ro+e of6 and "te " in6 co/ etitor ana+y"i". But you /ay wonder6 /hy /aste time analysing ,ompetitors2 So/e .u"ine""e" t*in) it i" .e"t to &et on wit* t*eir own +an" and i&nore t*e co/ etition. Ot*er" .eco/e o."e""ed wit* trac)in& t*e action" of co/ etitor" :often u"in& under*and or i++e&a+ /et*od"<. Many .u"ine""e" are *a *a" "evera+ i/ ortant ro+e" in "trate&ic +annin&C L To *e+ /ana&e/ent under"tand t*eir co/ etitive advanta&e"Ddi"advanta&e" y "i/ +y to trac) t*e co/ etition6 co yin& t*eir /ove" and reactin& to c*an&e". Co/ etitor ana+y"i"

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BUSINESS ENVIRONMENT L L L To &enerate under"tandin& of co/ etitor"H a"t6 re"ent :and /o"t i/ ortant+y< future "trate&ie" To rovide a .a"i" to deve+o co/ etitive advanta&e ac*ieve/ent "trate&ie" To *e+ foreca"t t*e return" t*at /ay .e /ade fro/ future inve"t/ent" :e.&. *ow wi++ co/ etitor" re" ond to a new roduct or ricin& "trate&yK Toyota-s prin,ipal ,ompetitors are 2ord Motor Co/ anyI 4enera+ Motor" Cor oration and !onda Motor Co.6 #td. A++ or&ani"ation" wou+d do we++ to fo++ow S+n T3e-s )e1ensive strategyC Do not assume the enemy will not come but be prepared for his coming Do not presume he will not attack, but instead make your own position unassailable. %ere are some 4+estions to as5. Before e/.ar)in& on a co/ etitor ana+y"i" ro&ra//e6 it wou+d .e u"efu+ to .ear t*e fo++owin& in /indC L L L L L L A*o are our co/ etitor"K A*at t*reat" do t*ey o"eK A*at i" t*e rofi+e of our co/ etitor"K A*at are t*e o.5ective" of our co/ etitor"K A*at "trate&ie" are our co/ etitor" ur"uin& and *ow "ucce""fu+ are t*e"e "trate&ie"K A*at are t*e "tren&t*" and wea)ne""e" of our co/ etitor"K !ow are our co/ etitor" +i)e+y to re" ond to any c*an&e" to t*e way we do .u"ine""K

So+r,es o1 in1ormation 1or ,ompetitor analysis ?avid"on :$331< de"cri.e" *ow t*e "ource" of co/ etitor infor/ation can .e neat+y &rou ed into t*ree cate&orie"C L Re,or)e) )ata. t*i" i" ea"i+y avai+a.+e in u.+i"*ed for/ eit*er interna++y or e,terna++y. 4ood e,a/ +e" inc+ude co/ etitor annua+ re ort" and roduct .roc*ure"I L O*serva*le )ata. t*i" *a" to .e active+y "ou&*t and often a""e/.+ed fro/ "evera+ "ource". A &ood e,a/ +e i" co/ etitor ricin&I L Opport+nisti, )ata. to &et *o+d of t*i" )ind of data re8uire" a +ot of +annin& and or&ani"ation. Muc* of it i" Manecdota+N6 co/in& fro/ di"cu""ion" wit* "u cu"to/er" and6 er*a "6 reviou" /ana&e/ent of co/ etitor". $0 +ier"6

BUSINESS ENVIRONMENT

SECTION &O6 ( ORGANISATIONA& E%A"IOUR IN MARKET EN"IRONMENT Pricing and Output Decisions Pri,ing i" t*e roce"" of deter/inin& w*at a co/ any wi++ receive in e,c*an&e for it" roduct". 2actor" invo+ved in deter/inin& ricin& "tructure" areC /anufacturin& co"t6 /ar)et +ace6 co/ etition6 /ar)et condition6 and 8ua+ity of roduct. 'ricin& i" a funda/enta+ a" ect of financia+ /ode++in& and i" one of t*e four '" of t*e /ar)etin& /i,. T*e ot*er t*ree a" ect" of ricin& are roduct6 ro/otion6 and +ace. 'rice i" t*e on+y revenue &eneratin& e+e/ent a/on&"t t*e four '"6 t*e re"t .ein& co"t centre". 'ricin& i" t*e /anua+ or auto/atic roce"" of a +yin& rice" to urc*a"e and "a+e" order"6 .a"ed on factor" "uc* a"C a fi,ed a/ount6 8uantity .rea)6 ro/otion or "a+e" ca/ ai&n6 " ecific vendor 8uote6 rice revai+in& on entry6 "*i /ent or invoice date6 co/.ination of /u+ti +e order" or +ine"6 and /any ot*er". Auto/ated "y"te/" re8uire /ore "etu and /aintenance .ut /ay revent ricin& error". T*e need" of t*e con"u/er can .e converted into de/and on+y if t*e con"u/er *a" t*e wi++in&ne"" and ca acity to .uy t*e roduct. T*u" ricin& i" very i/ ortant in /ar)etin&. T*e Mar5(+p r+le i" u"ed in econo/ic" to e, +ain fir/ ricin& deci"ion". It "tate" t*at t*e rice a fir/ wit* /ar)et ower wi++ c*ar&e i" e8ua+ to a /ar)%u over t*e fir/=" /ar&ina+ co"t6 e8ua+ to one over one /inu" t*e inver"e of t*e rice e+a"ticity of de/and. A rofit /a,i/iBin& fir/ c*oo"e" t*e 8uantity of out ut to "e++ w*ic* e8ua+iBe" it" /ar&ina+ revenue :t*e c*an&e in revenue fro/ one e,tra unit "o+d< to it" /ar&ina+ co"t :t*e c*an&e in tota+ co"t due to one e,tra unit roduced<. T*i" re"u+t" in t*e /ar)%u ru+e w*ic* ca ture" t*e fact t*at t*e fir/=" a.i+ity to rice it" &ood" over co"t de end" on t*e e,tent of it" /ar)et ower. T*i" in turn de end" on t*e rice e+a"ticity of de/and faced .y t*e fir/.

$9

BUSINESS ENVIRONMENT

!arket "orces and Effects on Organisations Or&ani"ationa+ "tructure"6 ay/ent6 and a""ociated roce""e" o erate wit*in t*e conte,t of /ar)et force"6 "uc* a" increa"in& /ana&ed care6 incentive driven .e*aviour6 and &enera+ /ar)et co/ etition. #e&i"+ative6 re&u+atory6 and ot*er u.+ic "ector activitie" :e.&.6 decrea"ed fundin& for 2edera+6 State and +oca+ rovider" and re&u+atory and +e&a+ action"< interact wit* /ar)et force" to rovide additiona+ environ/enta+ effect" on t*e *ea+t* care "y"te/. Business and ultural Environment PESTE& analysis "tand" for @Po+itica+6 Econo/ic6 Socia+6 Tec*no+o&ica+6 Environ/enta+ and &e&a+ ana+y"i"@ and de"cri.e" a fra/ewor) of /acro%environ/enta+ factor" u"ed in t*e environ/enta+ "cannin& co/ onent of "trate&ic /ana&e/ent. It i" a art of t*e e,terna+ ana+y"i" w*en conductin& a "trate&ic ana+y"i" or doin& /ar)et re"earc*6 and &ive" an overview of t*e different /acro%environ/enta+ factor" t*at t*e co/ any *a" to ta)e into con"ideration. T*e &rowin& i/ ortance of environ/enta+ or eco+o&ica+ factor" in t*e fir"t decade of t*e 2$"t century *ave &iven ri"e to &reen .u"ine"" and encoura&ed wide" read u"e of an u dated ver"ion of t*e 'EST fra/ewor). STEER ana+y"i" "y"te/atica++y con"ider" Socio%cu+tura+6 Tec*no+o&ica+6 Econo/ic6 Eco+o&ica+6 and Re&u+atory factor".

Politi,al factor" are *ow and to w*at de&ree a &overn/ent intervene" in t*e econo/y. S ecifica++y6 o+itica+ factor" inc+ude area" "uc* a" ta, o+icy6 +a.our +aw6 environ/enta+ +aw6 trade re"triction"6 tariff"6 and o+itica+ "ta.i+ity. 'o+itica+ factor" /ay a+"o inc+ude &ood" and "ervice" w*ic* t*e &overn/ent want" to rovide or .e rovided :/erit &ood"< and t*o"e t*at t*e &overn/ent doe" not want to .e rovided :de/erit &ood" or /erit .ad"<. 2urt*er/ore6 &overn/ent" *ave &reat inf+uence on t*e *ea+t*6 education6 and infra"tructure of a nation. E,onomi, factor" inc+ude econo/ic &rowt*6 intere"t rate"6 e,c*an&e rate" and

t*e inf+ation rate. T*e"e factor" *ave /a5or i/ act" on *ow .u"ine""e" o erate and /a)e $1

BUSINESS ENVIRONMENT deci"ion". 2or e,a/ +e6 intere"t rate" affect a fir/=" co"t of ca ita+ and t*erefore to w*at e,tent a .u"ine"" &row" and e, and". E,c*an&e rate" affect t*e co"t" of e, ortin& &ood" and t*e "u +y and rice of i/ orted &ood" in an econo/y

So,ial factor" inc+ude t*e cu+tura+ a" ect" and inc+ude *ea+t* con"ciou"ne""6 o u+ation &rowt* rate6 a&e di"tri.ution6 career attitude" and e/ *a"i" on "afety. Trend" in "ocia+ factor" affect t*e de/and for a co/ any=" roduct" and *ow t*at co/ any o erate". 2or e,a/ +e6 an a&in& o u+ation /ay i/ +y a "/a++er and +e""%wi++in& wor)force :t*u" increa"in& t*e co"t of +a.our<. 2urt*er/ore6 co/ anie" /ay c*an&e variou" /ana&e/ent "trate&ie" to ada t to t*e"e "ocia+ trend" :"uc* a" recruitin& o+der wor)er"<. Te,hnologi,al factor" inc+ude tec*no+o&ica+ a" ect" "uc* a" RO? activity6 auto/ation6 tec*no+o&y incentive" and t*e rate of tec*no+o&ica+ c*an&e. T*ey can deter/ine .arrier" to entry6 /ini/u/ efficient roduction +eve+ and inf+uence out"ourcin& deci"ion". 2urt*er/ore6 tec*no+o&ica+ "*ift" can affect co"t"6 8ua+ity6 and +ead to innovation. Environmental factor" inc+ude eco+o&ica+ and environ/enta+ a" ect" "uc* a" weat*er6 c+i/ate6 and c+i/ate c*an&e6 w*ic* /ay e" ecia++y affect indu"trie" "uc* a" touri"/6 far/in&6 and in"urance. 2urt*er/ore6 &rowin& awarene"" of t*e otentia+ i/ act" of c+i/ate c*an&e i" affectin& *ow co/ anie" o erate and t*e roduct" t*ey offer6 .ot* creatin& new /ar)et" and di/ini"*in& or de"troyin& e,i"tin& one". &egal factor" inc+ude di"cri/ination +aw6 con"u/er +aw6 antitru"t +aw6 e/ +oy/ent +aw6 and *ea+t* and "afety +aw. T*e"e factor" can affect *ow a co/ any o erate"6 it" co"t"6 and t*e de/and for it" roduct".

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BUSINESS ENVIRONMENT

SECTION &O7 ( SIGNI!ICANCE O! G&O A& !ACTORS A!!ECTING A USINESS #nternational trade International tra)e i" e,c*an&e of ca ita+6 &ood"6 and "ervice" acro"" internationa+ .order" or territorie".F$G In /o"t countrie"6 it re re"ent" a "i&nificant "*are of &ro"" do/e"tic roduct :4?'<. A*i+e internationa+ trade *a" .een ri"e in recent centurie". Indu"tria+iBation6 re"ent t*rou&*out /uc* of *i"tory tran" ortation6 &+o.a+iBation6 :"ee Si+) Road6 A/.er Road<6 it" econo/ic6 "ocia+6 and o+itica+ i/ ortance *a" .een on t*e advanced /u+tinationa+ cor oration"6 and out"ourcin& are a++ *avin& a /a5or i/ act on t*e internationa+ trade "y"te/. Increa"in& internationa+ trade i" crucia+ to t*e continuance of &+o.a+iBation. Ait*out internationa+ trade6 nation" wou+d .e +i/ited to t*e &ood" and "ervice" roduced wit*in t*eir own .order". Internationa+ trade i" in rinci +e not different fro/ do/e"tic trade a" t*e /otivation and t*e .e*aviour of artie" invo+ved in a trade do not c*an&e funda/enta++y re&ard+e"" of w*et*er trade i" acro"" a .order or not. T*e /ain difference i" t*at internationa+ trade i" ty ica++y /ore co"t+y t*an do/e"tic trade. T*e rea"on i" t*at a .order ty ica++y i/ o"e" additiona+ co"t" "uc* a" tariff"6 ti/e co"t" due to .order de+ay" and co"t" a""ociated wit* country difference" "uc* a" +an&ua&e6 t*e +e&a+ "y"te/ or cu+ture. Anot*er difference .etween do/e"tic and internationa+ trade i" t*at factor" of roduction "uc* a" ca ita+ and +a.our are ty ica++y /ore /o.i+e wit*in a country t*an acro"" countrie". T*u" internationa+ trade i" /o"t+y re"tricted to trade in &ood" and "ervice"6 and on+y to a +e""er e,tent to trade in ca ita+6 +a.our or ot*er factor" of roduction. T*en trade in &ood" and "ervice" can "erve a" a "u."titute for trade in factor" of roduction. $lobal factors% influence on a business Bu"ine""e" are affected .y an e,terna+ environ/ent a" /uc* a" t*ey are affected .y t*e co/ etitor". 4+o.a+ factor" inf+uencin& .u"ine"" are +e&a+6 o+itica+6 "ocia+6 tec*no+o&ica+ and econo/ic. Under"tandin& of t*e"e factor" i" i/ ortant w*i+e deve+o in& a .u"ine"" "trate&y. $3

BUSINESS ENVIRONMENT

a8 So,ial 1a,tors % T*e"e factor" are re+ated to c*an&e" in "ocia+ "tructure". T*e"e factor" rovide in"i&*t" into .e*aviour6 ta"te"6 and +ife"ty+e" attern" of a o u+ation. Buyin& attern" are &reat+y inf+uenced .y t*e c*an&e" in t*e "tructure of t*e o u+ation6 and in con"u/er +ife"ty+e". A&e6 &ender6 etc a++ deter/ine t*e .uyin& attern" and under"tandin& of "uc* c*an&e" i" critica+ for deve+o in& "trate&ie" w*ic* are in +ine wit* t*e /ar)et "ituation". In a &+o.a+ environ/ent it i" i/ ortant t*at .u"ine"" "trate&ie" are de"i&ned )ee in& in /ind t*e "ocia+ and cu+tura+ difference" t*at vary fro/ country to country. Con"u/er re+i&ion6 +an&ua&e6 +ife"ty+e "ucce""fu+ .u"ine"" /ana&e/ent. *8 &egal 1a,tors % T*e"e factor" t*at inf+uence .u"ine"" "trate&ie" are re+ated to c*an&e" in &overn/ent +aw" and re&u+ation". 2or a "ucce""fu+ .u"ine"" o eration it i" i/ ortant t*at t*e .u"ine""e" con"ider t*e +e&a+ i""ue" invo+ved in a articu+ar "ituation and "*ou+d *ave t*e ca a.i+ity to antici ate way" in w*ic* c*an&e" in +aw" wi++ affect t*e way t*ey /u"t .e*ave. #aw" )ee c*an&in& over a eriod of ti/e. 2ro/ t*e oint of view of .u"ine"" it i" i/ ortant t*at t*ey are aware of t*e"e c*an&e" in t*e area" of con"u/er rotection +e&i"+ation6 environ/enta+ +e&i"+ation6 *ea+t* O "afety and e/ +oy/ent +aw6 etc. ,8 E,onomi, 1a,tors % T*e"e factor" invo+ve c*an&e" in t*e &+o.a+ econo/y. A ri"e in +ivin& "tandard" wou+d u+ti/ate+y i/ +y an increa"e in de/and for roduct" t*ere.y6 rovidin& &reater o ortunitie" for .u"ine""e" to /a)e rofit". An econo/y witne""e" f+uctuation" in econo/ic activitie". T*i" wou+d i/ +y t*at in ca"e of a ri"e in econo/ic activity t*e de/and of t*e roduct wi++ increa"e and *ence t*e rice wi++ increa"e. In ca"e of reduction in de/and t*e rice" wi++ &o down. Bu"ine"" "trate&ie" "*ou+d .e deve+o ed )ee in& in /ind t*e"e f+uctuation". Ot*er econo/ic c*an&e" t*at affect .u"ine"" inc+ude c*an&e" in t*e intere"t rate6 wa&e rate"6 and t*e rate of inf+ation. In ca"e of +ow intere"t rate" and increa"e in de/and Bu"ine""e" wi++ .e encoura&ed to e, and and ta)e ri")". T*erefore6 .u"ine"" "trate&ie" "*ou+d *ave roo/ for "uc* f+uctuation". )8 Politi,al 1a,tors % T*i" refer" to t*e c*an&e" in &overn/ent and &overn/ent o+icie". 'o+itica+ factor" &reat+y inf+uence t*e o eration of .u"ine"". T*i" *a" &ained "i&nificant i/ ortance off +ate. 2or e,a/ +eC co/ anie" o eratin& in t*e Euro ean Union *ave to ado t directive" and re&u+ation" created .y t*e EU. T*e o+itica+ arena *a" a *u&e attern" are a++ i/ ortant infor/ation for

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BUSINESS ENVIRONMENT inf+uence u on t*e re&u+ation of .u"ine""e"6 and t*e " endin& ower of con"u/er" and ot*er .u"ine""e". e8 Te,hnologi,al 1a,tors % T*e"e factor" &reat+y inf+uence .u"ine"" "trate&ie" a" t*ey rovide o ortunitie" for .u"ine""e" to ado t new innovation"6 and invention". !u&e vo+u/e" of infor/ation can .e "ecure+y "*ared .y /ean" of data.a"e" t*ere.y ena.+in& va"t co"t reduction"6 and i/ rove/ent" in "ervice. Or&ani"ation" need to con"ider t*e +ate"t re+evant tec*no+o&ica+ advance/ent" for t*eir .u"ine"" and to "tay co/ etitive. Tec*no+o&y *e+ " .u"ine"" to &ain co/ etitive advanta&e6 and i" a /a5or driver of &+o.a+iBation. A*i+e de"i&nin& t*e .u"ine"" "trate&ie" fir/" /u"t con"ider if u"e of tec*no+o&y wi++ a++ow t*e fir/ to /anufacture roduct" and "ervice" at a +ower co"t. 2ir/" can "e+ect new /ode" of di"tri.ution" wit* t*e *e+ of tec*no+o&y. It *a" .eco/e ea"ier for co/ anie" to co//unicate wit* t*eir cu"to/er in any art of t*e wor+d. Summary and conclusion To "u//ariBe w*at we *ave ana+yBed in detai+ a.ove6 we can conc+ude t*e fo++owin&C a. Bu"ine""e" *ave di"tinct need"6 /ain+y rofit"6 and t*ey t*u" e/ +oy variou" /et*od" to ac*ieve t*i" wit*out cau"in& any *ar/ or da/a&e to any re"ource". .. A*i+e co/ etition o"e" a "eriou" t*reat to .u"ine""e"6 we++ or&aniBed co/ anie" t*at wi"e+y inve"t in /ar)et re"earc*6 find way" to turn t*e"e "tu/.+in& "tone" into "te in& "tone"6 creatin& /ore o ortunitie" for t*e/"e+ve" and t*eir "ta)e*o+der".

c. Ae con"ider t*e 'ESTE# ana+y"i" in t*e Bu"ine"" and cu+tura+ environ/ent" "ection w*ic* +ay" a ivota+ ro+e in t*e fra/ewor) of /acro%environ/enta+ factor" u"ed in t*e environ/enta+ "cannin& co/ onent of "trate&ic /ana&e/ent.

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References
///8,orporatein1ormation8,om ///8toyota8,o89p ///8/i5ipe)ia8org

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