Business Environment

Team Members
• Anshuman singh
• Bhawana singh
• Upendra singh
• Chandrakant
• Richa Rani
• Swapnesh Patel
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 Definition of business
• Business includes all activities connected to production,
trade ,banking, insurance, finance, advertising
,packaging and numerous other related activities.
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• It also includes all efforts to comply with the legal
restrictions and govt. requirements for discharging of
obligations to consumers , employees, owners and
other interest groups who may or may not have stakes
directly or indirectly with the organization.
Characteristics of business
• Transistion
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• Competition
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• Opportunity
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• Globalization
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• Technology
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• Information
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 What is business environment?
• Business Environment is individual and organization that
exist outside the business and have influence direct and
indirect to the business.
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• Types of business environment Business environment
may be classified into internal and external environment.
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• External environment:
• Internal environment:
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 Goals of business
• Vision and mission statements
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• “…..vision and mission alone enables a business to set objectives ,
develop strategy, to concentrate its resources and go to work .it
alone enables a business to be managed by performance” -
Peter Drucker
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• “ A mission statement is an enduring statement of purpose that
distinguishes one business from other similar firms. a mission
statement identifies the scope of a firms operation in product and
market terms.” John A Pearce
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• “A mission statement reveals the long term vision of an organisation
in terms of what it wants to be and whom it wants to serve. it
describes an organisations purpose, customer, products or services,
markets, philosophy and basic technology as well as strategy
formulation, strategy implementation and strategy evaluation.
-Fred David
 Objectives and Goals
• Objectives are defined as the long term results which the organization
wishes to achieve by pursuing its basic mission and operations. It
pertains to a wide or narrow part of an enterprise and it may be either
long range or short range.
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• Goals are defined as the intermediate results to be achieved by the firm at a
certain time as part of a grand plan. it is the short term milestones or
bench marks that organizations must achieve in order for reaching long
term objectives.
• 1.Goals must be measurable, challenging, consistent , realistic and
prioritized.
• 2.They should be established at corporate, divisional and functional levels.
• 3.It should be stated in terms of management, marketing, finance,
production , research and development.
Benefits of Environmental Analysis
• Development of broad strategies & long term policies of firm.
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• Development of action plans to deal with technological
advancements
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• Analysis of competitors’ strategies & formulation of effective
counter measures.
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• To foresee the impact of socio economic changes at the
national & international levels on the firm’s stability.
• To seek oneself dynamic.
External environment may be further classified into micro
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and macro environment:

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• Micro environment:
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• Macro environment:
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 External environment
Micro (task
 • Macro (general
environment) environment)
• Customers • Economic factors
• Suppliers • Socio/cultural
• Competitors factors
• Publics • Demographic
• Financiers factors
• Marketing • Political/govt
intermediaries factors
• Natural factors
• • Technological
factors
• Global factors
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 Socio/cultural factors
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Economic factors
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• Economic system • Culture creates people

• Culture and globalization
• Industry
• Culture determines goods
• Agriculture and services
• Money and capital • Peoples attitude to
markets business and work
• Per capita and national • Education
income • Family and marriage
• Population • Authority
• New economic policy • Ethics in business
• • Social responsibility
• Social audit
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• •
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Demographic
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factors Political/govt factors

• Size of the population • Role of legislature

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• Composition of the • Role of executive
population •
• • Role of judiciary
• Male female ratio
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• Constitution of India
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• New direction for
governments role
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 Technological factors
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Natuaral factors
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• • Technology reaches
• Manufacturing depends people though
on physical inputs business
• Mining and drilling • Increased productivity
depend on natural
deposits • Need to spend on r and d
• Agriculture depends on • Fast changing technology
nature • Rise and decline of
• Trade between two products and
regions organizations
• transport and • High expectations of
communication consumers
• • Demand for capital
• Social change
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Global factors
Increased opportunity as the
world has become one
market
Improving quality

Competition from MNC

Capital and technology

transfers
Deciding which markets to

enter and how to enter

Adjusting the management

process
India and WTO

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Internal environment
• Promoters/shareholders value
• Mission /objectives
• Management structure/nature
• Internal power relationship
• Company image/brand equity
• Physical assets/facilities
• R&D and technological capabilities
• Human resources
• Marketing capabilities
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Stages of environmental analysis

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• Scanning
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• Monitoring
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• Forecasting
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• Assessing
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 Limitation of environmental analysis
1. Environment analysis doesn’t foretell the future, nor
does it eliminate uncertainty for any organization.
2.
3. Environmental analysis on and off itself, is not a
sufficient guarantor of organizational
effectiveness.
4.
5. The potential of environmental analysis is often not
realized because of how it is practiced.
6.
7. Too much reliance is often placed on the information
collected through environmental scanning.
ENVIRONMENTAL SCANNING

• Environmental
Scanning is a
process of gathering,
analyzing and
dispensing
information for
tactical or strategic
purposes.
There are three ways of scanning the business
environment
1. Ad – hoc scanning – short term, infrequent
examinations usually initiated by a
crisis.
2. Regular scanning – studies done on a
regular schedule (say once a year)
3. Continuous scanning (also called
continuous learning) – continuous
structured data collection and
processing on a broad range of
environmental factors.
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Steps of Environmental scanning
• 1) Identification of environmental variable
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• 2)collection of data
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• 3) Monitoring
WHAT SCANNING CAN ACCOMPLISH
Scanning improves an organization’s abilities to deal with a
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rapidly changing environment in a number of ways:

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• 1. It helps an organization capitalize on early opportunities
rather than lose these to competitors.
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• 2. It provides an early signal of impending problems, which can
be defused if recognized well in advance.
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• 3. It sensitizes an organization to the changing needs and
wishes of its customers.
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• 4. It provides a base of objective qualitative information about
the environment that strategists can utilize.
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• 5. It provides intellectual stimulation to strategists in their
decision making.
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• 6. It improves the image of the organization with its publics by
showing that it is sensitive to its environment and
responsive to it.
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• 7. It is a means of continuing broad-based education for
executives, especially for strategy developers.
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Thank you