overview, internal & external

8/4/2019 Overview, Internal & External

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Internal and External



Def: Surroundings, external objects, influences or

circumstances under which someone or

something exists.

` Determines the role of the enterprise and the

nature of task.

` Determines role of the top management and also

its business policy.



Interact and transact with

environment

Influence on scope and direction



` Helps an organization to develop its broad

strategies and long term plans.

` Analyze competitor¶s strategies.

` Keeps the organization dynamic in approach.` Foresee the impact of socio ± economic changes

at the national and international level.

` Adjust to the prevailing conditions.



` Social

` Economic

` Cultural

` Geographic

` Technological

` Political

` Legal

` Ecological

` Govt. Policies` Competitive Market Condition

` Locational



Social Factors ± business is a ³social institution´.

` Social responsibility

` Satisfy the needs and wants of society ± goals

` Cultural Values, Tastes and Preferences (servingfestive menus), Social Integration and

Disintegration (US A and India)



Economic Factors

` Per Capita Income, National Income, Resource

Mobilization

` Exploitation of Natural Resources, Infrastructure

Development, Capital Formation

` Employment Generation, Propensity to Consume

(Luxury or Economic goods), Industrial

Development



Cultural Factors

` Social and religious practices (liquor business),

education, knowledge

` Norms and beliefs

` Social stratification (rural parts)

Geographic Factors ± important for global

business managers

` Geographic Location, Seasonal Variations,

Climatic Conditions` Industrial location policies of Government



Technological Factors` Rapidly changing`

R &D

Activity (India must invest)e.g. ± Foreign Investment upto 100% in Industries withsophisticated technology.

Political Factors`

Philosophy and approach of political party` Government interventions

Legal Factors` Industrial Licensing, Company formation laws

` Laws regarding Industrial disputes, payment of wages,trade unionism (Honda ± Gurgaon), Monopoly control,Foreign Exchange Regulation.



Ecological Factors

` Ecological Imbalance due to change in

environment and biotic factors` Environmental protection and Preservation

` Pollution Free Industrial Activity (Carbon Credit)

` Legislations

Government Policies` Industrial Policy resolutions and Licensing Policies

` Trade Policies, Labor Policies, Location Policies,Export ± Import policies, Forex Policies, Taxation

policies (Arab Countries)



Competitive Market Condition

` Socialist ± centralized authority

` Capitalist ± competitive forces

India ± a Mixed Economy

Location Factors` Taxation Policies

` Subsidies



` Nature and environment of blocs (OPEC, ASEAN

etc.)

` Single Market (e.g. ± EEC members follow similar

standards)` Glocal strategies for Global businesses

Factors to be Consider ed«?



` Security Risk ± India ± militancy / North Korea ±nuclear threat

` Political Risk Stability - coalition parties (India, Brazil) Government Effectiveness risk ± hindrance to reforms Legal & Regulatory Risk ± slow Macroeconomic Risk ± inflation, prices Foreign Trade and Payment Risk ± Export / import duties, tariff

barriers Tax Policy Risk ± VAT, GST Labor Market Risk

Financial Risk ± Currency appreciation / depreciation Infrastructure Risk Country Risk ± changes in monetary / fiscal policy



Why a product like radio declined and now onceagain emerging as an entertainment medium ?

Drivers of Change.????` Technology` Govt. Policy

` Media Substitutes` Tastes and Preferences



` Within the organization

` Factors controlled by the organization

Technology Advancement Employee Attitude

5M¶s ± Machine, Manpower, Money, Materials,

Management



` Outside the organization Political - P

Economical - E

Social - S

Technological - T

Ecological - E

Legal - L

overview, internal & external

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