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Lecture outline
Definition of business
Characteristic of business
Objective of business Business in the 21st century Environment :Political ,legal, economic, social,
international , technological Need to scan the business environment Techniques of scanning the business environment.
Introduction of business
A business (also known as enterprise or firm) is
Definition of Business
Prof.Richard Norman Owen : Business is an
enterprise engaged in the production and distribution of goods for sale in market or rendering service for a price.
Characteristics of business
Business has the following characteristics: business is dynamic. Diversification Globalisation Information Government Interference. Competition.
Objectives of business
Wealth maximisation
Growth
Efficient utilisation of resources. Employee satisfaction. Quality product and services Market leadership Services to society.
Libralisation.
Knowledge based . Information Technology . Personal income higher .
Stressful environment.
Striving of Work life balance. Customer oriented , customer focus,. Long term relationship based. Brand conscious. Outsourcing.
Environment
Environment refers to the forces that have a
Definition
The aggregate of all conditions events and
Types of Enviornment
Internal and
Internal Enviornment
Culture and Value system
Management structure
Human resource
Customers: needs and wants. Employees: correct and motivated staff is essential to strategic planning. Training and development. Suppliers: Price of raw material . Shareholders: inward investment for growth. Satisfying shareholder needs can cause a change in strategy. Media: Positive or adverse attention. Consumer programs
Micro Environement
This environment influence the organization
directly . It includes the supplier , the consumers, the competitors, the stake holders.
Macro /External
Macro environment includes all those factors that
External Enviornment
External environment can be classified into Economic environment Political / legal environment Social environment Technological environment International environment.
Legal
Employment law. Consumer protection Act. MRTP Act
Socio-cultural Environment
Socio-cultural
Education Income Lifestyle changes
Technological Environment
Technological forecasting helps protect and improve the profitability of firms in growing industries. It alerts strategic managers to challenges and promising opportunities. The key to beneficial forecasting of technological advancement lies in accurately predicting future technological capabilities and their probable impacts.
Economical Environment
Economic
Business cycle Interest rates Inflation. unemployment
International Enviornment
The world is a global village and it is getting closer
Monitoring the international environment involves assessing each non-domestic market. Economic, political, legal, and social factors are used to assess international environments.
environment.
To get an idea about business problems and its
complexities.
To study the dynamic behaviour of the external
environment.
environmental forces (economic, technological, political-legal, and social-cultural) and significant micro environmental factors (customers, competitors, suppliers) that affect its ability to earn profits
PESTL.
Porters Five Force Model. BCG Matrix
Industry Analysis
Industry
A group of firms producing a similar product or service, such as soft drinks
Suppliers exert power in the industry by: * Threatening to raise prices or to reduce quality
Suppliers products have few substitutes Buyer is not an important customer to supplier Suppliers product is an important input to buyers product
Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases
Buyer has full information Buyer presents a credible threat of backward integration
Products with similar function limit the prices firms can charge
Example:
Product differentiation.