bom chapter 2 business sys & its environ
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Business System & Its Environment
Lesson 1.2
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Systems Approach
A system is a set of objects , elements or components which are interrelated & which interact with
one another
These elements operate on inputs to accomplish common objectives such as prod & satisfaction . In
simplest form a system consists of ( 1 ) environ ( 2 ) input ( 3 ) processing unit ( 4 ) output
Can be regarded as an open adaptive sys with environ acting as a supra system . There are four areas underlying business org as a system .
1 firm is Iden as a whole not collection of depts. Each being in itself a sub system of the business
concern , closely interlinked & interdependent . A business org represents an integrated united
structure
2 org closely related to the environ which assumes imp with rapid changes which force frequent
internal changes in products , processes
3 The input –processing –output mechanism is present in every system .
4 info flow enjoys a key role in system approach as we have both inflow & outflow of info
continuously in a cyclic manner . Info key to effe3ctive decision making . Planning –action –control
cycle needs continuous info flow . Hence communication info net work has unique significance in
modern business
Socio –Economic System
1 Must adjust constantly to threats & opportunities presented by environ changes . If only internal
focus ignore external like market changes , competition , tech changes bound to loose opportunity
Management of a business org through integrated business planning is involved in translating
opportunities into innovations , into satisfied customers into accomplished corporate objectives .
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Tech forecasts
Innovations in machinery ,
tools , processes , inventions
/discoveries ,
New processes
Economic forecasts
Changes in competition
/demands supply prices /
lifestyles .
Change in spending , nationalincome ( GNP ) change in
market segments
Political forecasts
Legislations , Govt
Programmes , world
monetary problems ,
instability
Social Forecasts
Impact of education , knowledge
explosion , public opinion ,change in social attitudes ,
behavior change
1
2
3
4
Management through
comprehensive plans converts
disorg resources of men ,
machines materials , money
into useful effective enterprise
welcome to the enterprise
resources drawn from environ
are integrated into a total sys
for accomplishment of goals
Elements of business
environment
Every business org must
be aware of environ
elements which are
numerous & changing
Internal are controllable
external not ?
Healthy enterprise adapts
responds & shape own
environ –Mutual advantage
for org & environ
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Elements of business environment
1 Business environment represents a complex of shifts in the structure of the economy & society , in
the state of technology , in the customer demand & market place , in short all factors outside the
control of the management
Changes of environ constitutes the starting point of the process of growth . Major environmental
forces influencing the business are1 Demographic & Economic environ
Market means people with money & spending capacity . Demographic is used in Market Analysis &
Segmentation & formulation of marketing mix
Market represents variety of consumers & can be divided into a number of segments based on age ,
income , social status etc . We have shifting consumer tastes & preferences
Peop0le constitute only one element of a market . Second element is purchasing power &
willingness .
Economy also plays a major role like inflation , recession tax policies
2 Social & cultural Environment
Business unit has to make necessary adjustments in marketing plans to cater for changing social
trends
There are three aspects of social environ ( 1 ) changes in life style & social values ( 2 ) major social
concerns like pollution policies , demand for socially responsible marketing policies & emphasis on
safety in occupations & products ( 3 ) growing consumerism indicating consumer dissatisfaction on
a large scale against unfair trade practices –consumerism is becoming increasingly imp to
marketing decision process .
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3 political & legal Environment
Becoming increasingly imp . Business systems are affected by Govt monetary & fiscal policies ,
import /export policies , custom d
Legislation controlling physical environ ( pollution laws ) influence business plans /policies .
Legislation also tries to protect consumer interests by controlling marketing .
We have regulations to control & regulate trade practices in many countries . Business managemencannot ignore the legislation regulating & protecting consumers . Public policies affects marketing
management
Business enterprises may not be allowed to resort to price discrimination , false /misleading
advertisement , exclusive distribution ships & tying agreements & other unfair trade practices
Science & technology
Phenomenal development of science & tech has completely transformed life & living conditions .
Ever expanding markets create conditions that lead to tech progress . Most case market was the
mother to inventions
Basic incentive for inventions through R & D is profit seeking through meeting marketing needs .
New tech offer a main source of economic growth e. g . Computers digital tech etc
Consumer purchase & manner of consumption reflect a societies life style . Tech forces help to
shape changes in the life style of consumers .
Business management with the help of tech can create, deliver & change standards & styles ,
values & converting technology to market opportunities for profitable sales to particular market
segment .
Of all changes in business environ tech developments are faster as well as far reaching & either
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Implications
1 need for accurate forecasts to meet the challenges due to rate of tech change in products
/processes
2 scientists/engineers included in basic planning
3 R & D integral part
Fundamental environ change problems can be partially solved by using market focus in
formulating corporate plans
Customer oriented marketing considerations can act as a basis for strategic planning .
In order to meet technological . Social , business changes , customer oriented marketing org &
customer oriented business planning can be considered as the best alternative approach to be
adopted by the top management
Ecology or Natural environment
Wider concept of marketing eco environ has assumed a unique imp in prod & marketing in modern
economies .
Pollution is an inevitable by product of high consumption economic systems . Marketing system has
now to satisfy not only the buyers ( consumers ) but also social wants which may be adversely
affected by its activities . Only than it is entitled to achieve its profit objective
Future attention to Quality of life & preservation of environment
6 Customer Demand
Customer needs & desires act as the centre of marketing universe . Business plans , policies ,
Programmes are planned , org & executed with main objective of customer satisfaction & service
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N i i t i l lt l l l liti l & t h f hi h
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Non economic environment covers , social , cultural , legal , political & tech forces which are
dynamic & uncontrollable by an enterprise
Economic & non economic constantly interact & together create the business environ
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