Contemporary Business Environment
Dr. Paroma Mitra Mukherjee
What is Business???
Business means an organization or economic system where goods and services are exchanged for one another or for money. Stephenson defines business as, "The regular production or purchase and sale of goods undertaken with an objective of earning profit and acquiring wealth through the satisfaction of human wants." According to Dicksee, "Business refers to a form of activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted." Lewis Henry defines business as, "Human activity directed towards producing or acquiring wealth through buying and selling of goods." Thus, the term business means continuous production and distribution of goods and services with the aim of earning profits under uncertain market conditions.
Contemporary Business goals
Profit (Bottom-line) Growth Market Leadership Customer satisfaction Employee satisfaction Quality Products & Services Service to Society
Characteristics of Business
Change
Government Control Large Size
Competition
Characteristics of Business
Diversification
Information Technology
Globalization
BUSINESS CHALLENGES
Managing Bottom line Meeting stakeholders expectations Developing and retaining top talent
Creating a customer responsive organization
Diminishing time to market
Market dynamics
Pricing and quality
What do you mean by Business Environment???
The environment of any organization is the aggregate of all conditions, events and influences that surround and affect it. Characteristics of Business Environment: Complex Dynamic Multi-faceted Far- reaching impact
Why Study Business Environment
Development of broad strategies to ensure sustainability To foresee the impact of socio-economic changes at the national and international levels on firms ability Analysis of competitors strategies and formulation of effective counter measures To keep oneself dynamic
Types of Environment
Internal Environment External Environment
Micro environment Macro environment Economic Non Economic
Overview of Business Environment
MACRO ENVIRONMENT
ECONOMIC Environment
MICRO ENVIRONMENT BUSINESS
Internal Environment
Values, Mission & Objectives. Human Resources, Co. Image & Brand Equity, production policies. Marketing policies, Financial policies, R&D
TECHNOLOGICAL FACTORS DEMOGRAPHIC FACTORS
MARKETING INTERMEDIARIES SOCIAL CULTURAL FACTORS
Non - Economic Environment
Internal Environment
Refers to all the factors that are within an organization which impart strengths or cause weaknesses of strategic nature. Controllable factors. These include: Value system
Mission and Objectives
Management Structure and Nature
Components of Internal Environment
Human Resources Company Image and Brand Equity Other Factors
Physical Assets and Facilities
R & D and Technological Capabilities
Marketing Resources
Financial Resources
External Environment
Includes all factors outside the organization which provide opportunities or pose threats to the organization Uncontrollable factors
Consists of Micro and Macro environment
Micro Environment
It consists of the factors in the companys
immediate environment that affect the performance of the company.
Micro Environment Factors
Suppliers Customers Marketing Intermediaries Competitors Publics Financial Community
Macro Environment
It comprises general trends and forces that may not immediately affect the organization but sooner or later will alter the way organization operates. Macro Environment : Economic Non Economic
Economic Environment
Economic stages that exists at a given time in a country Economic system that is adopted by a country for example. Capitalistic, Socialistic or Mixed Economy Economic planning, such as five year plans, budgets, etc. Economic policies for example, monetary, industrial and fiscal policies Economic Indices such as National Income, Per Capital Income, Disposable Income, Rate of growth of GNP, Distribution of Income, Rate of savings, Balance of Payments etc. Economic Problems Functioning of economy
Non Economic Environment
Regulatory Environment Socio- Cultural Environment Demographic Environment Technological Environment
Political Environment
Non- Economic Environment
Cultural Environment Social Customs & Rituals and practices Lifestyle patterns Family structure
Role & position of men, women, children and aged in family & society
Non- Economic Environment
Demographic Environment Growth of population Age Composition Life Expectancy Sex Ratio
Fertility and Mortality rates
Inter-state migration
Macro Environment
Technological Environment
Sources of technology Technological development
Impact of technology
Political Environment
Political parties in power
Political Philosophy
Macro Environment
Regulatory Environment Constitutional framework Policies relating to pricing and foreign investment Policies related to the public sector, SSIs, development of backward areas and control of environmental pollution
International Environment
Important factors that operate at global level which have an impact on organization are: Growth of world economy Distribution of world GDP
International institutions IMF,WTO ILO
Economic relations between nations Global human resource-nature and quality of skills, mobility of labor Global technology and quality standards Global demographic patterns
WTO and its relevance for Indian companies
The main guidelines of WTO are: Trade without discrimination Growing market access Promotion of fair competition The response of Indian government to WTO constitutes the following actions Reduction of tariffs Opening Indian markets for Global Players Rationalizing industrial licensing and removal of controls on the size of operations
WTO and its relevance for Indian companies
The impact of WTO on Indian companies is likely to include the following : Increasing competition Consolidation of activities in core competence areas Improvements in infrastructure to negate structural disadvantages. Shake out of minor players and M&As to gain global scale.
