Business

Environment
Indian and Global

Free Powerpoint Templates

 Role of Business in Society
• Why Firms Exist?
• Businesses help satisfy consumer wants.
• Businesses contributes to social welfare
• Social Responsibility of Business
• Serve customers.
• Provide employment opportunities.
• Obey laws and regulations.
Attitude Features of business environment…

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the surrounding complex. dynamic. long term impact
situations. on business.

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 Business Environment
• Internal environment – firm's resources, business
strategy, value system, objectives, mgt structure
• External environment – business opportunities & threats
to business. It is consists of economic, legal, social,
demographic, natural, technology & political
environment.

• Micro environment – immediate environment which

includes suppliers, marketing intermediaries, competitors,
customers & the public.
• Macro environment- demographic, economic, technical,
political & cultural environment. Macro environments is
more uncontrollable than micro.
 Factors affecting business environment…..

• Economic Factors • Political

Factors

• Technological • Social
Factors Factors

• Legal Factors • Demographic

Factors

Two sides of business environment

Economic Environment & Non- Economic Environment
 Economic Environment…
Core of all external environments. Economic strengths & weaknesses important for determining legal, social & political environment

Economic Conditions Economic Policies

-domestic & international  Industrial Policy. Economic System
Gross Domestic Product  Fiscal Policy. The world economy is
& Per Capita Income.  Monetary Policy. primarily governed by
Availability of Capital.  Foreign Investment three types of
Market for goods and Policy. economic systems, viz.,
services.  Export-Import Policy. (i) Capitalist economy;
Foreign Exchange (ii) Socialist economy;
Reserves. The government keeps on (iii) Mixed economy.
Growth of Foreign changing these policies
Trade. from time to time in view India has adopted the
Strength of Capital of the developments mixed economy system
Market taking place in the which implies co-
Nature of economy economic scenario, existence of public
(rich/poor) political expediency & the sector and private
Structure of economy/ changing requirements. sector.
composition of NI
• Political Environment: Politics can often determine economic
& business policies. It includes - Political structure, Economic
systems, Economic roles of Govt. & Domestic & international
trends etc.
• Legal Environment: Political & economic environment governs
legal environment. It influences business environment.
Examples - Laws to control investment, Laws to regulate the
conduct of business- standards, packaging, ethics, etc., Laws to
protect consumer interest
• Natural Environment: Resources, location, climate etc.
• Demographic Environment: Demographic transition,
population growth, life expectancy, age structure, education,
labour market
• Social & Cultural Environment: Customs, traditions, values and
beliefs, which contribute to the growth of an economy to a
considerable extent
• Types of economic systems:
• Basic Qs Pertaining to Economy (Because Resources are Scarce) What to
produce? How to produce? And for whom to produce?
• Economics is about how society allocates its scarce resources, how the
economy works, how business & government make decisions and how
these decisions affect the individuals.

• Economic System:
• An economic system is a nation’s plan for answering the key economic
questions. Governments (democratic, socialist, communist) take differing
approaches to how they allow their economic systems to operate. However,
no systems operate in a pure form.

• An economic system is composed of two features

• Mechanism for allocating resources - Market or Command
• Mode of resource ownership - Private or State
• Three Methods of Resources Allocation

• Command Economy (Centrally-Planned) - Resources are allocated according to explicit instructions

from a central authority
• Economic questions are answered by the owners of the resources.
• Resources are controlled by the government. They decide how much of each item is to be produced
• Use military to enforce these decisions. People have little say in price or supply

• Market Economy
• Individuals decide by buying and selling in a market.
• Consumers and businesses make their own decisions based on their interests.
• Profit is the motivator
• Market forces – demand & supply

• Mixed Economic Systems - Most countries have mixed economies

• Decisions are based on cost-benefit analysis
• Some private ownership and some public ownership of property
• Some government intervention in the economy - Redistribution of income – high taxes on the rich to
provide lots of government services, government programs
• How is our economy a mixed economy?
• Resource Allocation in the India
• Numerous cases of resource allocation outside the market
• Government uses regulations of various types to impose constraints on our
individual choice
• The market is the dominant method of resource allocation in India. However,
it is not a pure market

• Five Major Features of our Economy

• Private Enterprise - Choose what you want to do, May succeed or fail
• Private Property - Own, use, and dispose of things
• Profit - Money from sales after costs
• Competition - Rivalry among businesses to sell their goods and services to
buyers, Allows consumers to make choices, Keeps prices reasonable
• Freedom of Choice - You can buy what you want (if it’s legal), Enter into a
business or career of your choice
• Economic System Changes? What countries have changed economic systems
recently (within a decade or two)?
 Three pillars on which modern Indian
economy stands in global terms..
Privatization Liberalization Globalization

Modern trends in business…

Knowledge Process Outsourcing (KPO)
Business Process Outsourcing (BPO)
E- Commerce, M- Commerce
.