The Business Environment

The Business Environment

The Business Environment Key points Introduction The Business Environment types The Business environment analysis The Business environment process SWOT and PEST analysis conclusion What is business environment

It refers to different forces or surroundings that affect business operations. Such forces include customers, competitors, suppliers, distributors, industry trends, regulations, government activities, the economy, demographics, and social and cultural factors. Others are innovations and technological developments Types of business environment

Business environment has two component : 1. Internal Environment: It includes 5 Ms i.e. man ,material , money, machinery and management, usually within the control of business. Business can make changes in these factors according to the change in the functioning of enterprise. 2. External Environment: Those factors which are beyond the control of business enterprise are included in external environment. These factors are : Government and Legal factors ,Political Factors, Cultural Factors, Demo-Graphical factors etc.

It is of two Types: 1. Micro/Operating Environment 2. Macro/General Environment Micro/Operating Environment: The environment which is close to business and affects its capacity to work is known as Micro or Operating Environment. It consists of Suppliers ,Customers , Market Intermediaries, Competitors and Public.

(1) Suppliers: They are the persons who supply raw material and required components to the company. They must be reliable and business must have multiple suppliers i.e. they should not depend upon only one supplier. (2) Customers: Customers are regarded as the king of the market. Success of every business depends upon the level of their customers satisfaction. Types of Customers:

(i) Wholesalers (ii) Retailers (iii) Industries (iv) Government and Other Institutions (v) Foreigners (3) Market Intermediaries: They work as a link between business and final consumers. Types:(i) Middleman (ii) Marketing Agencies (iii) Financial Intermediaries (4) Competitors: Every move of the competitors

affects the business. Business has to adjust itself according to the strategies of the Competitors. (5) Public: Any group who has actual interest in business enterprise is termed as public e.g. media and local public. They may be the users or non-users of the product. Macro/General Environment: It includes factors that create opportunities

and threats to business units. Following are the elements of Macro Environment: (1) Economic Environment: It is very complex and dynamic in nature that keeps on changing with the change in policies or political situations. (2) Non-Economic Environment: Following are included in non-economic environment (i) Political Environment: It affects

different business units extensively (ii) Cultural Environment: Influence exercised by social and cultural factors, not within the control of business, is known as Socio-Cultural Environment. These factors include : attitude of people to work, family system , religion, education, marriage etc (iii) Technological Environment: A systematic application of scientific knowledge to practical task

is known as technology .Every day there has been vast changes in products, services ,life styles and living conditions, these changes must be analyzed by every business unit and should adapt these changes. (iv) Natural Environment: It includes natural resources , weather , climatic conditions, topographical factors such as soil, sea, rivers, rainfall etc. Every business unit must look for these factors before choosing the location for their business.

(v) Demographic Environment :It is a study of perspective of population i.e. its size, standard of living , growth rate, agesex composition , family size, income level (upper level, middle level and lower level), education level etc. Every business unit must see these features of population and recognize their various need and produce accordingly. (vi) International Environment: It is particularly important for industries directly depending on import or exports. The factors that affect the business are: Globalization , Liberalization , foreign business policies, cultural exchange

Characteristics 1. Business environment is compound in nature. 2. Business environment is constantly changing process. 3. Business environment is different for different business units. 4. It has both long term and short term impact. 5. Unlimited influence of external environment factors. 6. It is very uncertain.

7. Inter-related components. 8. It includes both internal and external environment. What is environmental analysis ?? is the study of the organizational environment to determine environmental factors that can significantly influence organizational operations How ? By measuring the weaknesses

& strengths of the internal environment of the organization and the opportunities & threats of the external environment . The purpose and limitations of this analysis Purpose : to identify the potential influence of particular aspects of the general and operating environments on business operations. The environmental analysis then influences

corporate planning and policy decisions. Limitations : The analysis does not guarantee business success and the benefit of the analysis is also limited by the reliability and timeliness of data used in the analysis Business Environmental process It includes 3 steps 1. Company must identify the environmental

factors that affect the business . 2. then gathers information about the selected set of environmental factors that are most likely to impact business operations 3. This information serves as input to expect the impact of each environmental factor on the business Modules of environmental analysis # PEST analysis : (Political, Economic, Social and Technological) focuses on the external,

macro-environment in which your business operates Why it is important ? 1. avoid taking actions that are likely to fail, because of factors beyond your control. 2. It is a useful tool to use when considering expansion into new countries or regions 3. guide you and your company to make the most appropriate decisions about the future direction of your business

# SWOT analysis : Because the PEST model looks at external macro factors, it is useful to use before a SWOT Analysis. A SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis is more microenvironment . Why it is important ? 1. It is versatile and can be used for both personal and business issues 2. by understanding the weaknesses of your business, you can manage or eliminate threats that otherwise could have come as a surprise to you.


Recently Viewed Presentations

  • IGCSE Geography Sand dunes SQA Biosphere Sand dunes

    IGCSE Geography Sand dunes SQA Biosphere Sand dunes

    Sand dunes Biosphere Mature dunes The most mature dunes are found several hundred metres from the shore. High humus and water content allow these plants to succeed previous vegetation. Left undisturbed these dunes develop a soil which can support shrubs...
  • Chronic Kidney Disease - University of Windsor

    Chronic Kidney Disease - University of Windsor

    Chronic Kidney Disease Chronic Kidney Disease (CKD) Involves progressive, irreversible destruction of the nephrons in both kidneys Can lose up to 80% of kidney function without overt body changes Creatinine clearance: an indicator of GFR (amount of creatinine voided out...
  • Présentation de l'INRIA

    Présentation de l'INRIA

    Les grands succès : 10 mn Le futur: séquence environ de 20 mn) Les révolutions du Web et leurs risques on pourrait, sur une question posée par l'animateur, avoir un premier éclairage de Serge puis 2/3 questions de la salle...
  • Separation of Mixtures lab

    Separation of Mixtures lab

    Explain Dalton's atomic theory. Identify the parts of an atom, their location, charge, and relative mass. Determine the numbers of subatomic particles in an atom. ... Quiz. Dalton. Counting. Ions. Isotopes. Average atomic mass. Friday, September 20, 2013.
  • Online on the Prairies - University of Saskatchewan

    Online on the Prairies - University of Saskatchewan

    Important to recognize: It is a process; a complex journey We can't do it alone; requires collaboration Ultimate goals of a liberal arts education is shared between librarians and faculty * Case Study II: SHIRP SHIRP = Saskatchewan Health Information...
  • Managing Organizational Change - Lakehead University

    Managing Organizational Change - Lakehead University

    Management as Shaping. More recent approach. Associated with a perceptive style of managing in which people are encouraged to be involved in decisions and to help identify how things can be done better. Shaping employee behaviour in ways that encourage...
  • FileNewTemplate - BA English Revision

    FileNewTemplate - BA English Revision

    John Agard. Create a short fact file about the author! (AO3) How does his background influence his poetry? John Agard. was born in British Guiana (now called Guyana) in the Caribbean, in 1949. He moved to the UK in the...
  • Humanities Lab at ASU

    Humanities Lab at ASU

    through presentations, op-ed articles, policy recommendations, performances, art projects, etc. There will ultimately be many models, but key terms are challenge-centric, interdisciplinary (across units and disciplines)