business environment

Amity Business School

BUSINESS ENVIRONMENT

Presented By

`Naga S Sridhar N (A-34)

Venkatesh Ravada (A-17)

Neha Sharma (A-39)

Kapil Sharma (A-20) Abhishek Verma (A-42)

Sandeep Dasmanthrao (A-19)


Business Environment• Business Environment is a direct relationship

between successful management and the influence and impact of environmental change.


External business environment: • External Business environment is a set of political,

economic, social and technological (PEST) forces that are largely outside the control and influence of a business, and that can potentially have both a positive and a negative impact on the business.


Factors influencing the business environment : • Technological innovation• Globalization• Growth of poverty• Collapse of emerging markets• Shift from manufacturing jobs to service jobs• New methods of manufacturing


Internal Business Environment• Internal Business Environment is the set of

elements or forces which affects a organization's or firm’s behaviour.

• Examples are like personnel, finance, marketing, production, operational research and so on.


MICRO ENVIRONMENT


Micro environment is the environment that an

organization can influence. It may not be able to

Correct all flaws in the microenvironment, but it

has a much better control over the macro

environment.


Factors Influencing Micro –Environment

• Consumers – needs , purchasing power and behavior• Suppliers• Market intermediaries• Competitors


I. Micro environment of business.

1) Suppliers

Supply raw materials and other components (Inputs)

Importance

- Reliable supply – continuous supply for smooth functioning


2) CUSTOMERS

Different categories of customers

i. Industrial customers

ii. Wholesale customers

iii. Retail customers

iv. Government customers

v. Foreign customers


3) Market intermediaries

i. Middlemen.

ii. Physical distribution Firms: (warehouses and transport firms)

iii. Marketing service agencies (Advertising agencies market research firms, media firms, consulting firms)

iv. Financial intermediaries


4. Competitors:

The Threat of entry of new firms The Power of Buyers The Power of Suppliers The Power of Substitutes The Intensity of Rivalry among existing firms


MACRO ENVIRONMENT


• Macro Environment are major external and

uncontrollable factors that influence an

organization's decision making, and affect its

performance and strategies.


These factors include :-• Sociological Factors• Political Factors• Legal Factors• Educational Factors• Technological Factors• Economical Factors• Natural Factors• Historical Factors


SOCIOLOGICAL FACTORS

It concerns with society as a whole; it covers health, media, education,

minorities, women, organized labour , legal system and demographics.

The biggest challenge to firms is the society's changing demands.

POLITICAL FACTORS

Political environment gives shape to business. Political stability, Government

administration, Philosophy of the political parties are some of political factor which

affects the business environment


LEGAL FACTORS

Legal Environment has a permanent and lasting impact in shaping business .

Labour law act, Industrial dispute act, Minimum wages act, Law of contract,

Import & Export control act and tax law act are few legal factors.

EDUCATIONAL FACTORS

Educational cum cultural environment affects business activities and managerial skills.

These factors include literacy, attitude toward training and skill required for a business

like specialized, vocational and technical training


TECHNOLOGICAL FACTORS

Technology is about application of tools, methods and techniques to improve

production and processes. Technology is life for growth and competitiveness of

Business.

ECONOMICAL ENVIRONMENT

Economic environment conditions such as business cycle, unemployment, Inflation,

monitory policies, Industrial policies, trade policies etc also affects the business

environment.


NATURAL & ECOLOGICAL FACTORS

Use of modern technology sometimes involves huge social cost in term of

Deterioration of environmental pollution and ecological balance. So business

environment should also consider about natural resources, weather & climatic

conditions, health hazards etc.

HISTORICAL FACTORS

Business Environment is also affected by historical factors. Business environment in a

number of newly independent countries has been determined by their past colonial

status.


• The Determinants of Business Performance

• Structure - conduct - performance

– relationship between business structure and business conduct (behaviour)

• competitive markets and competitive behaviour

• limited competition and collusion

– relationship between business conduct and business performance

• different indicators for measuring performance

• profitability, market share, growth, etc.


• Internal aims and organisation– profit maximisation as the prime goal– distinction between owners and managers– importance of managers’ own objectives


• Other factors affecting performance– internal structure– information– competence of management– quality of the workforce

business environment

Documents

micro environment of

external business environment

macro environment

technological pest forces

manufacturing jobs

set of political

set of elements

kapil sharmaa