Welcome in

Semester-II

Business
Environment

Introduction

Business Environment
Global

External
*Competition
*Economic
*Techninological
*Political/Legal
*Demographic
*Cultural
*Ecosystem
Internal
*Money
*Material
*Equipment
*Labor

Organization

Introduction
Interact & transact
Business environment
Business
Organization-Direct Relationship
Imposes several constraints, Impact &
influence on the scope & direction of
activities.
Very little control over the envt.
Ideal way- identify with the envt. & formulate
the policies accordingly.
Internal Environment-Strength & Weaknesses
External Environment- Opportunities & Threats

Meaning & Definition

Layman language-surroundings, external
objects, influences or circumstances under
which someone or something exists.
The aggregate of all conditions, events &
influences that surround & affect it.-Davis
Keith
Two Factors-Internal (Controllable) (SW)
-External (Uncontrollable) (OT)
Strength-an inherent capacity used to gain
strategic advantage over competitors.
Weakness-an inherent limitation/constraint
creating a strategic disadvantage.

Meaning & Definition

Internal Factors:
Organizational resources
R & D and technological capabilities (e.g. NOKIA)
Financial Capability (e.g. RELIANCE)
Marketing Capability (e.g. UNILEVER)
Operations Capability
External Factors:
Economic
Government
Legal
Technological
Geographical
Social

Features of Business Environment

Public policies
Rapid social change
Industrialization
Urbanization
Newer technologies

Importance of the study

Helps to develop broad strategies, longterm policies.
Enables to analyze its competitors
strategies & thereby formulate effective
counter strategies.
Keep the organization dynamic in its
approach.
Enables to foresee the impact of socioeconomic changes at the national &
international level on its stability.

Political/Legal

Political climate
Political stability & risk
Govt Debt
Budget deficit/surplus
Tax policy-corporate/personal
Trade restrictions-import tariffs &
quotas, export restrictions
Restriction on international financial
flows

 Employment laws-minimum wage

laws,restricted work hours, mandatory
employee benefits, worker safety laws,
union laws
Environmental regulations
Intellectual Property Rights (IPRs)copyright & patent laws
Permits & licences
Laws that favor business investment

Economic Factors

Economic growth-GNP/GDP per capita, growth

Monetary & fiscal policies
Unemployment rate
Currency exchange ratio
Merchandise trade balance
Balance of Payments
Consumer & investor confidence
Inventory levels
Financial & political health of trading partners
Stage of business cycle
Future trends

Social & Cultural Factors

Demographic factors:
Population size & distribution
Age distribution
Educational levels
Income levels
Ethnic origins & religious affiliations

Social & Cultural Factors

Labor:
Availability of labor
Quality of labor availability
Stability of labor supply
Labor mobility
Wage expectations
Employee turn over rate
Strikes & labor relations

Educational facilities

Social & Cultural Factors

Attitudes towards:
Materialism
Capitalism
Free enterprise
Foreign products
Consumerism
Role of Govt

Social & Cultural Factors

Cultural structures including:
Roles of men & women within society
Housing conditions
Culinary habits
Lifestyle

Technological Factors
Efficiency of infrastructure, including roads,
ports, airports, rolling stock, cost & accessibility
of electrical power, hospitals, education,
healthcare, communication etc
Industrys focus on technological effortsresearch spending
New inventions & developments-new
manufacturing processes, new products &
services of competitors
Rate of technology transfer
Life cycle & speed of technological
obsolescence
Any new technology that could impact the
company

Que-Ans
What is urbanization? How does it affect
Indian Color TV industry?
Social changes bring certain opportunities
for business.
PEST Analysis
Environmental analysis of a business

Thank You