SYLLABUS

1. Business and its Environment

Meaning Scope and Characteristics
Significance for economic policies and
decisions in Organisation
2. Global Environment
Nature of Globalisation Manifestations of
globalisation Challenges of international
business Strategies for going global India,
WTO and trading blocks.
3. Technological Environment

Meaning features Impact of Technology

Technology and Society Management of
Technology
4. Political Environment
Political institutions Legislature Executive
Judiciary The Constitution of India The
Preamble The fundamental rights Rationale
and extent of state intervention Role of
Government in business.
5. Economic Environment
Characteristics of Indian Economy, Factors
affecting economy, Economic resources
(natural, industrial and technological)

Impact of Liberalisation, Privatisation and

Globalisation on Indian Business.
6. Government Policies: Impact of Fiscal,
Monetary, EXIM policy and Industrial policy
on Business (Latest policy measures).
7. Natural Environment: Meaning and influence
on business.

Business & its Environment An

Introduction

Nature of Business

Purpose of Business

Scope of Business

Characteristics of Contemporary business

Business Objectives

Critics of Business

Meaining of Environment

Objectives & uses of Business environment

study

The process of Environmental Analysis

Limitation of Environmental analysis

Nature of Business
Business may be understood as the organised
efforts of enterprises to supply consumers with
goods and services for a profit.
CHARACTERISTICS OF CONTEMPORARY
BUSINESS

Business in Transition: The Indian business leaders

find totally a new environment characterised by
competition, both from within and from foreign
business.
Pressure of Competition: Indian businesses are
facing competition.

Competition though unwelcome to managers, is a

boon to customers.
Immense Opportunities: Indian business has
plenty of opportunities which can be exploited
to one's advantage.
Globalisation: Modern business necessitates
globalisation. Internationalisation or
globalisation is fast becoming imperative for
modern business due to technological
innovations; crumbling trade barriers; global
flow of capital and technology; information
explosion; intensity of market competition;
changing life styles & the demand for new

Technology: Business is characterised by

increasing use of technology. The impact of
technology on business is pervasive.
Information: Another characteristic of
contemporary business is the recognition of and
the need for information. The whole area of
retrieving & extending information, including
data processing, information systems analysis &
preparation of effective records & reports, has
achieved a major status.

Business objectives
Before we describe business objectives, it is
desirable to be clear about related concepts,
viz.,

Vision

Mission &

Objectives

VISION: A Vision is a broad explanation of

why the firm exists and where it is trying to
lead.

Business Vision

Creating the
Vision

Establishing Goals

Visioning

One of the most important things to

do in the preparation stage is to
VISUALIZE things in your mind.
Mayor

Rudolph Giuliani

Visioning vs. Planning

Visioning

proactive plan for

the future.

It is a view of the
future that everyone
can believe in.

Planning

process that provides

specific direction and
meaning to the day-today activities.
strategic planning
places the strategic
vision into motion.

A Vision Statement

Says what you want out of Business.

Details principles and beliefs.
Gives you the power to create and
design your business around your
values.

In Summary
You have to have a plan for success!

It starts with a vision.

You get the vision by reaching each

goal.

You reach goals by hard work,

dedication, and perseverance.

Mission
A Mission statement outlines the
fundamental purpose of the organisation.
A Mission statement incorporates four
elements:
1. Customer needs, or what is being
satisfied.
2. Customer groups, or who is being
satisfied.

3. The companys activities, technologies, and

competencies, or how the firm goes about
creating and delivering value to customers and
satisfying their needs.
4. The companys concern for survival, its
philosophy, its self-concept and its concern for
public image.

Our Mission

Dayananda sagar Institutions

MISSION
To achieve our objectives in an environment
that enhances creativity, innovation and
scholarly pursuits within the stated values.
VISION
To be a centre of excellence in education,
research & training and to produce human
resource of exceptional leadership quality
to serve national needs

Growth has no limit at Reliance.

I keep revising my vision.
Only when you can dream it, you
can do it.
Dhirubhai H. Ambani

Founder Chairman Reliance Group

December 28, 1932 - July 6, 2002

Objectives
Objectives render mission statements more
concrete.
Mission statements seek to make a vision more
specific and Objectives are attempts to make
mission statements more concrete.
Objectives therefore, represent the operational
side of an organsiation.

1. Profit: Profit is the main incentive,

motivator, strong sustainer, judicious
allocator of resources, objective indicator of
productivity and a solid basis for growth,
expansion and survival.
Profits enables a businessman to realise
his other objectives too.
2. Growth: Business should grow in all
directions over a period of time.
The
strategies adopted to achieve growth are:
(a) add more products/markets;
(b) diversify into new areas;
(c) increase market share;
(d) cut down costs and increase

3. Power: Business houses have vast resources at

its command. These resources confer enormous
economic and political power on owners and
managers of business ventures.
4. Employee satisfaction & Development:
Concern for employees continues to be an
important aspect of management.
5. Quality products & services: Those who
insisted on and persisted in quality survived
competition and stayed ahead of others in the
market. Persistent quality of products earns

6. Market Leadership: To earn market

leadership, innovation is the key factor.
Innovation may be in product, advertising,
distribution, finance or in any other field.
7. Challenging: Business offers vast scope and
poses formidable challenges.
8. Joy of creation: It is through business
strategies new ideas and innovations are given a
shape and are converted into useful products
and services for the benefit of customers.

9. Service to society: Business is a part of

society and has several obligations towards it.
10. Good Corporate citizenship: It implies that
the business unit complies with the rules of the
land, pays taxes to the government regularly,
discharges its obligations to society and cares
for its employees and customers.

 The Four-Step
Pyramid of
Corporate Social
Responsibility

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CRITICS OF BUSINESS
Specific criticisms are the following:
1.Business activity has a corrosive effect on a
range of cherished cultural values.
1. Business dehumanises and expolits
workers
2. Business harms interests of consumers.
3. Business degrades nature and the
environment.
4. Business has destroyed handicraft and
rendered artisans jobless.

There are five groups of

Critics
1. Activist Reformers
2. Liberal Intellectuals
3. Marxists
4. Radical Non-Marxists.
5. Reactionaries.

Meaning of Environment
Environment refers to all external forces
which have a bearing on the functioning
of business.
Environment of a Firm
1. Technological Environment
2. Economic Environment
3. Political Environment
4. Global Environment
5. Social and Cultural Environment

Business Environment
Business environment refers to all those
internal and external factors that have a
bearing on the business.
Keith Davis defines business environment as
the aggregate of all conditions, events and
influences that surround and influence it.

Three different levels of Business Environment

are as follows:
Internal Environment
Micro Environment
Macro Environment

INTERNAL ENVIRONMENT
The important internal factors which have
a bearing on the strategy and other
decisions are:
1. Value system
2. Mission & Objectives
3. Management Structure & Nature
4. Internal Power relationship
5. Human resources
6. Company image & Brand equity

Miscellaneous factors
1.Physical assets and facilities
2.R & D and Technological capabilities.
3.Marketing resources
4.Financial factors.
EXTERNAL ENVIRONMENT
The external business environment consists
of
Micro environment and
Macro environmet

MICRO ENVIRONMENT
The micro environment consists of the actors in
the companys immediate environment that
affect the performance of the company.
Suppliers: Suppliers are the important force in
the task environment of a business.
Multiple sources of supply often help to reduce
risks.
Customers: To succeed in capturing
customers, a business must try its best to know
what people want and will buy.
Labour: The labour force is organised in the
form of trade unions. The trade unions interact

Competitors: Competitors play a vital role in

running the business enterprise. There are
various types of competitions:
Desire competition: Under this type of
competition the primary task is to influence the
basic desire of the customer.
Generic competition: The competition among
alternatives which satisfy a particular category
of desire is called generic competition.
Product form competition: In this type of
competition, the consumer has to choose
between different forms of the product.

Brand competition: The competition between

different brands of the same product.
Taking into consideration these different factors
every marketer should strive to create primary
and relative demand for his product.
Regulating agencies: The regulators include
government departments and other
organizations which monitor the activities of
business.

MACRO ENVIRONMENT
The macro forces are, generally, more
uncontrollable than the micro forces.
Important macro environment factors includes:
Economic environment
Political and Regulatory environment
Social/Cultural environment
Demographic environment
Technological environment
Natural & Global environment

ECONOMIC ENVIRONMENT
The survival & success of a business enterprise is
finally decided by the economic environment
& various market conditions. The important
external factors that affect the economic
environment of a business are as follows:

Economic conditions

Economic system

Economic policies

 Economic growth
Interest rates
Currency exchange rates.

POLITICAL & LEGAL

ENVIRONMENT
Political environment refers to the influence
exerted by the three political institutions:

Legislature

Executive

Judiciary

It provides a framework within which the

business is to function & its existence
depends on the success with which it can face
the various challenges contructed out of
political & legal framework.

SOCIO-CULTURAL
ENVIRONMENT
It is very comprehensive because it may include
the total social factors within which an
organisation operates.

Socio-cultural environment may include

expectations of the society from business,
attitudes of society towards business & its
management, views towards achievement of
work, views towards structure, responsibility
& organisational positions, views towards
customs, & labour mobility & level of
education.

NATURAL ENVIRONMENT
It includes geographical & ecological factors.
Almost every aspect of business depends
upon natural environment.

Manufacturing depends on physical inputs.

Mining depends on nature

Agriculture depends on nature.

Trade between two regions depends on

geographical factors.

Topographical factors may affect the demand

pattern.

DEMOGRAPHIC
ENVIRONMENT
It includes:

Size, growth rate, age composition, sex

composition etc., of population

Family size

Caste, religion,

Educational level...etc

TECHNOLOGICAL
ENVIRONMENT

Business has to adopt technological changes

from time to time. Every business enterprise
has two basic functions i.e.,

Marketing &

Innovation.

Technological environnment also includes

research base decisions.
The fast changes in technology also create
problems for enterprises as these render
plants and products obsolete quickly.

International Environment
Implications of global or international
environment are as follows:

Indian companies are forced to view business

issues from a global perspective.

Safe & protected markets are no longer there.

Learning of foreign languages is a must for

every business manager.

Acquiring familiarity with foreign currencies

is also a must.

Thus, business is the product of the technological,

political-legal, economic, socio-cultural, global
& natural factors amidst which it functions.

Environmental Analysis

Environmental Analysis
Environmental analysis is the process by`
which strategist monitors the
Environmental sectors to determine
opportunities for threats to their firms.

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Conducting Environmental Analysis

Identifying threats and opportunities
Gathering of information about
competitors intelligence
Forecasting future direction of
environmental changes

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Key Environments

Marketing Environment
The actors and forces that
affect a firms ability to build
and maintain successful
relationships with
customers.
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Key Environments

Aspects of the marketing

environment:
Microenvironment:
Actors close to the
company

Macroenvironment
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Larger societal forces

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Actors in the
Microenvironment

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Figure 4-2:

Major Macroenvironmental
Forces

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The Macroenvironment

Key Demographic Trends

World population
growth
Now 6.2 billion
Projected to
reach 7.9 billion
by 2025
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The Macroenvironment

The Economic Environment

Affects consumer
purchasing power
and spending
patterns.

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The Macroenvironment

The Political Environment

Includes laws,
governmental
agencies, and
pressure groups
that impact
organizations and
individuals.
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The Macroenvironment

The Cultural Environment

Is composed of institutions and
other forces that
affect a societys
basic values,
perceptions,
preferences,
and behaviors.
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The Macroenvironment

The Cultural Environment

Core beliefs are
persistent
Secondary cultural
values change and
shift more easily

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Societys cultural
values are expressed
through peoples views
of:
Themselves

Others
Organizations
Society
Nature
The Universe

Techniques of environmental scanning

Send the researchers, technicians, engineers to international
and national conferences and trade shows
Visit the global competitors in trade fairs and exhibitions.
Systematically gather data on the result of government funded
research in other nations.
Carefully review technical and scientific journal and newspaper
published in another country and home country.
Developing management information system in each and
every department and ultimately for the whole organization.

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Develop a strategic management information system at all

levels of management in collaboration with customers, peers
(office people), suppliers, and other middleman, sales officers.
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NEED FOR ENVIRONMENTAL ANALYSIS

Increases managerial awareness of
environmental changes.
Increases understanding of the context in which
industries and markets functions.
Increases understanding of multilateral
settings;
Improves resource allocation decisions;
Facilitates risk management;
Focuses attention on the primary influences on
strategic changes;
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Acts
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warning system to anticipate

opportunities and threats and devise

The Process of Environmental

analysis
Environmental analysis is a challenging, time
consuming and expensive affair. The
analysis consists of four sequential steps:
1. Scanning
2. Monitoring
3. Forecasting
4. Assessment

Five stages of environmental analysis

Audit of environmental influences
Assessment of the nature of the environment
Identification of the key environmental forces
Identification of the principal Os and Ts
Strategic Position
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SIGNIFICANCE OF BUSINESS
ENVIRONMENT
The significance of business environment is
that business decisions in general and
strategies in particular are moulded by the
business environment.
The importance of environmental anlaysis
from the fact that strategy is some times
referred to as a proper firm environment fit.
An analysis of the strengths and weaknesses
of the organisation and opportunities and
threats in the environment (SWOT analysis)
is, in fact, one of the first steps in the
strategic management process.