Presented by-

 Anjali Patel
 Naynee Kukreja
BUSINESS ENVIRONMENT

The term Business Environment is composed

of two words ‘Business’ and ‘Environment’.

 Theword Business in its economic sense

means human activities like production,
extraction or purchase or sales of goods
that are performed for earning profits.

 ‘Environment’ refers to the aspects of

surroundings.
BUSINESS ENVIRONMENT
Business environment may be defined as
the set of external and internal factors which
affects the decisions of business.

“Comprises of the complex factors, largely if not

totally beyond the control of management in
which a particular enterprise operates”.

The firms Success and survival is dependent on

its inter-linkages, synergy and its adaptability to
the environment.
Nature of Business Environment
 Dynamic
 Uncertain
 Opportunity & Threat
 Internal & External factors
 Economic and Non Economic factors
Business Environment-
We can divide business environment into
two parts:

 Internal Environment
 External Environment
 Influencing Business
Environment

Internal Business External

Environment Environment Environment

Regarded as controllable Regarded as uncontrollable

factors factors
The Micro Environment
These are powers which are deeply related
with company and company can control
these type of environment by improving its
capacity and efficiency.
Micro Environment
Suppliers
Suppliers are the persons who supply raw
material to company.

 If uncertainty (regular supply, quality, price)

about suppliers exists, high inventory cost.
 Egs- JIT, WalMart
 Suppliers as partners
 Vertical integration
Micro Environment
Customers
Customers are the persons who buy goods
from company.

 Profile
 Customer switching
 Relationship marketing
Micro Environment
Market Intermediaries
Market intermediaries are those person
who helps company to sell its products.

 Distribution channels
 Logistics, Warehouse
 Ad agencies, Market research firm,
Consultancy
Micro Environment
Financial Intermediaries
Financial intermediaries are those
institutions who provide loan, credit
and advance to company.
 Banks
 NBFCs
 Agencies
Micro Environment
Competitors
Competitors are those who also sell
same product as the company.

 Mono/Duo/Oligopoly/Perfect
competition
 Desire/Generic/Product form/Brand
competition
Micro Environment
Public
Public is that group of people who
can buy or who can show their
interest to buy the products of
company.
 Media
 Citizen
 NGOs
 Local public
Micro Environment

 More controllable than the macro

environment
 May be firm specific
 More intimately linked with firm than the
macro environment
The Macro Environment
Macro environment of business
means all external factors which
affects company and its business and
there is no control of company on
these factors.
Macro Environment
Economic
We can introduce economic environment as all
the factors which affect business due to changing
the economic policies, economic system and
economic conditions.

 Stage of economic cycle, Growth rate

 National Income-GDP, GNP, Per capita
Income, Income distribution
 Inflation- CPI, WPI
Macro Environment
Political environment
Political environment also affects business
with different business laws. These laws
controls all the activities of business.

 Political system (forms of govt)- Pure

democracy, Republic, Theocracy,
Totalitarianism
 Political philosophy- LPG, Political stability,
Institutions
 Regulations and laws for general
 Code of conduct of business, Govt. policies.
Macro Environment
Demography
In demographic environment of business,
we can include following things.

 Size of population
 Growth rate
 family size
 Educational level
 Age composition
 Sex composition
Macro Environment
Technological Environment

 efficiency of infrastructure, including: roads, ports,

airports, rolling stock, hospitals, education,
healthcare, communication, etc.
 industrial productivity
 new manufacturing processes
 new products and services of competitors
 new products and services of supply chain
partners
 any new technology that could impact the
company
Status of Technological
Environment or Technology in
India :-
 Establishment of technological and research
institute
 Positive Technical policy
 High Growth Rate of Information Technology
in India.
 Incentive for promoting Technology in India
Significance of B.E.
 Facilitates operations of the organization.
 Form the basis of long term policies, plans and
strategies of organization.
 Help organization in identifying &
understanding its competitors.
 Help the firms to expand & grow.
 In-cashing business opportunities
 Affect internal control
Significance of B.E.
 Optimize scare resources
 Market relevant technology development
 Avoiding threats
 Competitors analysis, Sustainable competitive
advantage
 Monitoring and forecasting
 Strategy formulation
 Power relationships and lobbying
 International trade