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Oxford Strategy Diploma Develop Effective Strategic Decisions For Your Business. www.sbs.ox.ac.uk/strategydiploma Intrinsic Impact A Free Resource on Impact Assessment for the Arts Sector IntrinsicImpact.org Innovation Beyond Borders Best practices from thought leaders Enroll now for November, 2011 www.rhsmith.umd.edu/BeyondBor

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n Tc e Th .qtw- dvRtp- qmt- ma vBpqgBBme q' pw- qx gqt The formula for

The formula for business success requires two elements - the individual and the environment. Remove either value and success becomes impossible. Business environment consist of all those factors that have a bearing on the business The term

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'business environment implies those external forces, factors and institutions that are beyond the control of individual business organisations and their management and affect the business enterprise. It implies all external forces within which a business enterprise operates. Business environment influence the functioning of the business system. Thus, business environment may be defined as all those conditions and forces which are external to the business and are beyond the individual business unit, but it operates within it. These forces are customer, creditors, competitors, government, socio-cultural organisations, political parties national and international organisations etc. some of those forces affect the business directly which some others have indirect effect on the business.m

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Totality of external forces: Business environment is the sum total of all things external to business firms and, as such, is aggregative in nature.

Specific and general forces: Business environment includes both specific and general forces. Specific forces affect individual enterprises directly and immediately in their day-to-day working. General forces have impact on all business enterprises and thus may affect an individual firm only indirectly.

Dynamic nature: Business environment is dynamic in that it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market.

Uncertainty: Business environment is largely uncertain as it is very difficult to

predict future happenings, especially when environment changes are taking place too

frequently as in the case of information technology or fashion industries.

Relativity: Business environment is a relative concept since it differs from country to country and even region to region. Political conditions in the USA, for instance, differ from those in China or Pakistan. Similarly, demand for sarees may be fairly high in India whereas it may be almost non-existent in France.

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On the basis of the extent of intimacy with the firm , the environmental factors may be classified into different types-internal and external.

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The internal environment is the environment that has a direct impact on the business. Here there are some internal factors which are generally controllable because the

company has control over these factors. It can alter or modify such factors as its personnel, physical facilities, and organization and functional means, like marketing, to suit the environment.

The important internal factors which have a bearing on the strategy and other decisions of internal organization are discussed below.

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The value system of the founders and those at the helm of affairs has important bearing on the choice of business, the mission and the objectives of the organization, business policies and practices.

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Vision means the ability to think about the future with imagination and wisdom. Vision is an important factor in achieving the objectives of the organization. The mission is the medium through which the objectives are achieved.

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The structure of the organization also influences the business decisions. The organizational structure like the composition of board of directors , influences the decisions of business as they are internal factors . The structure and style of the organization may delay a decision making or some other helps in making quick decisions.

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The relationship among the three levels of the organization also influences on the business. The mutual co-ordination among those three is a an important need for a business. The relationship among the people working in the three levels of the

organization should be cordial.

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The human resource is the important factor for any organization as it contributes to the strength and weakness of any organization . the human resource in any organization must have characteristics like skills, quality, high morale, commitment towards the work ,

attitude, etc. T he involvement and initiative of the people in an organization at different

levels environment may vary have from bearing organization on them. to organization. The organizational culture and overall

The image of the company in the outside market has the impact on the

internal environment of the company. It helps in raising the finance , making joint

ventures , other alliances, expansions and acquisitions , entering sale and purchase

contracts , launching new products, etc. Brand equity also helps the company in same way.

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The other factors that contribute to the business success or failure are as follows:

SCGBpRykmyBBgtBmyqdmIyRpkptpgB:- facilities like production capacity, technology are among the factors which influences the competitiveness of the firm. The proper working

of the assets is indeed for free flow of working of the company.

 

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external

environment but it has a direct impact on the organization. This aspect mainly

determine the company¶s ability to innovate and compete.

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the marketing men, brand equity and distribution network have direct bearing on marketing efficiency of the company.

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pqyqRpykmIyRt- wB:- factors like financial policies . financial positions and capital

structure

are also important internal environment affecting business performances ,

strategies and decisions.

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It refers to the environment that has an indirect influence on the business. The factors are uncontrollable by the business. There are two types of external environment.

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The micro environment is also known as the task environment and operating environment

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³The micro environment consist of the actors in the company¶s immediate environment that affect the performance of the company. These include the suppliers, marketing

intermediaries, competitors, customers and the public´

The micro environmental factors are more intimately linked with the company than the macro factors. The micro forces need not necessarily affect all the firms in a particular industry in the same way. Some of the micro factors may be particular to a firm. When the competing firms in an industry have the same micro elements, the relative success of the firms depends on their relative effectiveness in dealing with these elements

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An important force in the micro environment of a company is the suppliers, i.e., those who supply the inputs like raw materials and components to the company. The importance of reliable source/sources of supply to the smooth functioning of the business is obvious.

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The major task of a business is to create and sustain customers. A business exists only because of its customers. The choice of customer segments should be made by considering a number of factors including the relative profitability, dependability, stability of demand, growth prospects and the extent of competition.

Competition not only include the other firms that produce same product but also those firms which compete for the income of the consumers the competition here among these products may be said as desire competition as the primary task here is to fulfill the desire of the customers. The competition that satisfies a particular category desire then it is called generic competition

The marketing intermediaries include middlemen such as agents and merchants that help the company find customers or close sales with them. The marketing intermediaries are vital links between the company and the final consumers .

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The financiers are also important factors of internal environment. Along with financing

capabilities provide non-financial of the company assistance their etc. policies are very and important. strategies, attitudes towards risk , ability to

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Public can be said as any group that has an actual or potentialinterest in or on an organization¶s ability to achieve its interest. Public include media and citizens. Growth of consumer public is an important development affecting business.

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Macro environment is also known as General environment and remote environment. Macro factors are generally more uncontrollable than micro environment factors. When the macro factors become uncontrollable , the success of company depends upon its adaptability to the environment. Some of the macro environment factors are

discussed below:

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Economic environment refers to the aggregate of the nature of economic system of the country, business cycles, the socio-economic infrastructure etc. The successful businessman visualizes the external factors affecting the business, anticipating

Internal and External Business Environment

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This is interesting though the name of the author is not mentioned and the yr=ear of publication. It's very useful!

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of publication. It's very useful! 06 / 09 / 2011 Reply Hasinur Rahman Hasu left a

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Good

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thank u it very useful to everyone

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