BUSINESS ENVIRONMENT BY PROF ANIL PANDE MFM2SEM1-2007

BUSINESS ENVIRONMENTBusiness Environment

mainly refers to external forces that impact business. Such forces include political-legal ,technological ,cultural ,eco

nomic and physical.Factors under External EnvironmentAll the factors that provides opportunities or

pose threats to an organization make upits external environment.•

DEMOGRAPHIC ENVIRONMENT•

SOCIAL ENVIRONMENT•

CULTURAL ENVIRONMENT•

POLITICAL ENVIRONMENT•

ECONOMIC ENVIRONMENT•

FINANCIAL ENVIRONMENT•

TRADE ENVIRONMENT•

TECHNOLOGICAL ENVIRONMENT•

LEGAL ENVIRONMENT

•

REGULATORY ENVIRONMENT•

TAX ENVIRONMENT•

ETHICAL ENVIRONMENTExternal environment

consists of 1. Micro Environment 2. Macro Environment1.Micro Environment•

Micro environment is called as the task environment and operatingenvironment.•

Micro environment forces have a direct bearing of the operation of the firm.•

These factors are present in

companies environment and affect on the performance of the companies.•

Includes – suppliers ,marketing

intermediaries .competitors,customers and public.Micro environment are more intimately linked to

company than macro.

Suppliers :o

Those who supply inputs,raw

material and componentso

Uncertainty in supply compels high inventory cost.o

India maintains stocks of 3 to 4 months were as Japanmaintains for few hours.o

Eg : Nirma –believes of the logic that

captive production plantfor raw material is best for cost control.(backward integration)o

Co feel outsourcing is more beneficialo

Risk to depend on single supplier o

Globally companies are resorting to partenering relationshipmarketing.1

Customers:o

Business exists because of customerso

Monitoring customers sensitivity is perquisite

o

The choice of customer by the firm can be ona.Relative profitability b.Dependabilityc.Stabili

ty of demandd.Growth prospectso

Today customer is global customer as

exposed to global products.

Competitions:o

Competition includes not

only with competitors of same product but all those who compete for discretionary

income of consumers.o

Eg : the competiton for T V firm may not be only from other T V

manufacturing but also from 2wheelers ,refrigerators,cooking ranges,stereo sets

etc,bank schemes.o

To influence basic desire of customer o

Generic competition:

If the customer decides to spenddiscretionary income on recreation , he come

acrossalternatives like, TV ,stereo ,2 in 1,3 in 1 P C etc.o

It is competition

among alternative.

Marketing Intemediary:o

Firms that aid the company in

promoting,selling anddistributing its grads to final buyers.o

Includes middlemen,a

gents,merchants,distributionfirms,warehouses,transportation firms,marketing,financialintermediaries

,insurances etc.

Financierso

Financiers of the companyo

Their financial capability,policies, strategies.attitudes,ability to provide

non financial assistance.

Publico

Public is any group that has actual or potential

interest I or impact on organizations ability to achieves its interest.o

Media publics,citize

ns action publics,local publicsetc,consumers publicso

Issues against companies

o

Tarnishing the image by mediao

Environmental pollutiono

Chills labour,sweat

labour,cruelty against animals.