BUSINESS ENVIRONMENT ASSIGNMENT

TOPIC:-
NATURE AND RULES OF BUSINESS ENVIRONMENT

SUBMITTED TO:-

By:-
What is Environment?

Our Environment is our surrounding. This includes living and

non-living things around us. The non-living components of
environment are land, water andair. The living components are
germs, plants, animals and people.

All plants and animals adjust to the environment in which they

are bornand live. A charge in any component of the environment
may cause discomfortand affect normal life. Any unfavorable
change or degeneration in theenvironment is known as
‘Environmental Pollution.

We need to protect our environment to live happily.

The New Business Environment?

New global political & economic order

Wars on terrorism

Demographic changes (aging) and education

The opening & development of new markets

Offshoring and outsourcing

Globalization & localization

New pressure on public sector organizations

European integration and enlargement

Lowering of trade barriers (e.g. WTO, EU, APEC)

Environmental concerns

The ‘ICTs Revolution’ and the information economy

Internet and e-business.

Others.
 AN INTRODUCTION

 Business may be understood as the organized efforts of an

enterprise to supply consumers with and services for a profit.

 Environment refers to all external forces which have a

bearing on the functioning of business.

 Business Environment consists of all those factors that have a

bearing on the business.

 In simple terms environment means things surrounding the

living being. Everything on this earth, whether living or non –
living is surrounded by an environment and so is business.

 The environment of business environment is very useful to

anticipate opportunities and to plan resources to exploit
these opportunities successfully.

MEANING AND DEFINITION

 Business environment is a sum total of all those factors,

conditions, situations or surroundings which directly affect
the working of business.
 According to Keith Davis, “ Environment of the business
means the aggregate of all conditions, events and influences
that surround the affect it”.

 In the words of B.O. Wheeler, “ Business Environment is the

total of all things external to firms and individuals which
affect their organization and operations”.

CHARACTERISTICS

 Environment is inseparable part of Business.

 Environment is Dynamic.

 Environment is decided by chance and not by choice.

 Environment regulates the scope of business.

 Environment has a direct and long lasting impact on business.

 Internal and External Environment.

 Environment is complex.

 Environment is Multi – faceted.

 Environment and planning.

 NEED AND IMPORTANCE

 Identify prospects and problems.

 Optimum use of resources.

 Flexibility.

 Effective planning.

 Future needs.

 Face competition.

 Ecological Balance.

 Formulate strategy.

The Information Economy

 Information, both as commodity and resource, become

'strategic resource'.

 Information content in all economic activities.

 Information labour as a proportion of the overall workforce.

 In 1967, 46% of US GNP from information activities, 50% of
labour force as information workers earning 53% of labor
income, grown to 62% in 1994.

 1981 UK, 45.2% workforce (58% in greater London)

 By early 1980s in OECD, 40-50% of workforce in information

occupations. 60%+ today …

 ‘We are indeed in a new economy – an economy driven by

information, research, knowledge and technology.’

The New Economy?

 The productivity paradox – ‘you can see computer age

everywhere but in productivity statistics’

 The new economy arrived in the late 1990s in US according to

Mckinsey & Economic Report of the President 2001 etc.

 Labour productivity increased from 1.4% (73-94) to 2.4% (95-

99) … 2.9% in 2000, 1.1% in 2001 and 4.8% in 2002

 IT is of great, but nor primary importance (?)

 New economy emerged from business competition and

managerial innovations.
 Farrell, D (2003) The real new economy. Harvard Business
Review. Oct 2003, pp 105-112

 Adams, F Gerard (2004) The E-Business Revolution and the

New Economy. Thomson, Mason (Ohio)

Intangible Assets

 The total value of a company compare with the value of its

tangible asset (e-Bay is worth more than McDonald’s;
Microsoft worth more than the 3 car manufacturers put
together)

 Employee’s skills, IT systems and organisational culture and

company brands etc are worth far more to many companies
than their tangible asset.

 Intangibles are hard for competitors to imitate – sustainable

advantage ?

 Intangible asset worth different things to different people

and organisations.
 BUT - Many existing management theories and techniques
geared toward managing tangible assets …

 Robert S Kaplan & David Norton (2004) Strategic Map.

Harvard Business School Press, Boston (also their earlier book
on ‘Balanced Scorecard’; also HBR papers)

General Implications

 All industries became information-intensive.

 Accurate & adequate information crucial to success of

industrial & commercial operations.

 Fast growing ICTs & information industries.  

 Profound impacts of on what activities are located where,

how territories administered or markets served, linkages
maintained between customers and suppliers etc.

 Need for Strategic and organisational Innovations!

 New perspectives

 Zuboff & Maxmin – Chasm between individuals and

organisations:

 People have changed more than the commercial

organisations upon which they depend. And here is the new
opportunity …. New economic order (p8)

 The chasm … is not limited to the business world… citizens

and their public institutions,worshopers and their religious
institutions. (p9)

 Corporations today continue to operate according to a logic

invented one century ago.

 New logic needed – a new support economy based on new

distributed capitalism – critical role for electronic
communications (ICTs)!

 Prahalad & Ramaswamy – Co-Creating unique value with

customers.

 From company-centric & customer-centric logic to network

centric logic.

 Traditional notions of value creation no longer sustainable.

  joint efforts of the consumer and the firm – the firm’s
extended network and consumer communities together – are
co-creating value through personalized experience that are
unique to each individual consumer.’ (p.x)

 Connected, informed and active consumers – information

access; global view; networking/communities; and
experimentation.

 Interaction as basis for co-creation is at the crux of emerging

reality.

 From products to solutions to experiences - The new

experience economy.

ENVIRONMENTAL FACTORS AND THEIR FEATURES

Global Environment
 Increasing opportunity as world has become one market.

 Improving quality.

 Competition from MNCs.

 Capital and technology transfers.

 Deciding which markets to enter and how to enter.

 Adjusting the management process India and WTO.

Technological Environment

 Technology reaches people through business.

 Increased productivity.

 Need to spend on R & D.

 Fast changing technology.

 Rise and decline of products and organization.

 High expectations of consumers.

 Problem of techno structure.

 System complexity.

 Increased regulation and stiff opposition.

 Demand for capital.

 Social change.

Economic Environment

 Growth Strategy.
 Economic system.

 Industry.

 Agriculture.

 Money and capital markets.

 Per capita and national income.

 Population.

 New economic policy.

Political Environment

 Role of legislature.

 Role of executive.

 Role of judiciary.

 Constitution of India.

 New direction for government’s role.

SOCIAL – CULTURAL ENVIRONMENT

 Culture creates people.

 Culture and globalization.

 Culture determines goods and services.

 People's attitude to business and work.

 Caste system.

 Spirit of collectivism and individualization.

 Education.

 Family and marriage.

 Authority.

 Scientific spirit.

 Authority.

 Scientific spirit.

 Ethics in business.

 Social responsibility.

 Social audit.

 Corporate governance.
 Natural Environment

 Manufacturing depends on physical inputs.

 Mining and drilling depend on natural deposits.

 Agriculture depends on nature.

 Trade between two regions depends on geographical factors.

 Transport and communication depend on geographical

factors.

EMERGING SECTORS IN INDIAN ECONOMY

INTRODUCTION

 Indian refers to problems concerning India.

  Economy refers to all those activities and arrangements
which the citizens of a country, either individually or
collectively, undertake to satisfy their wants of food, clothing,
shelters.

 Indian Economy is a Under – developed economy.

 Indian Economy is a Mixed Economy.

 Indian Economy is a Planned Developing economy.

PUBLIC SECTOR

According to industrial policy 1991, production of 6 goods viz

atomic energy, minerals, defense equipments etc have been
reserved for private sector in the interest of industrial
development, public welfare, and defence. It implies that all units
pertaining to these industries will be installed in public sector. In
1993 number of industries pertaining to public sector was further
reduced to 6.

The public enterprises which were promoted as an instrument

for implementation of the government’s socio – economic policies,
had a multitude of objectives set for them, viz.,

 To help in rapid economic growth and industrialization of the

country and create the necessary infrastructure for economic
development.
  To earn return on investment and thus generate resources
for development.

 To promote redistribution of income and wealth.

 To create employment opportunities.

 To promote balanced regional development.

 To assist the development of small – scale and ancillary

industries.

 To promote import substitution, save and earn foreign

exchange for the economy.

PRIVATE SECTOR

In mixed economy private sector too has important

role to play.

An agency for planned national development, in the

context of the country’s expanding economy, the

private sector will have opportunity to develop and

expand.

The area where private sector has been allowed, its

operations & development have been regulated by

Government in the public interest.

The private sector has been dominant in most of the

consumer goods industries. It plays important role in a
number of capital goods industries too. In a number of
important industries, it function side by side with public
sector.

CO- OPERATIVE SECTOR

 In India the co – operative sector has been assigned an

important role in the development of many sectors. It covers
areas like agriculture, rural, and small – scale industry, retail
distribution, housing etc.

 The important objective of the development

of the cooperative sector are prevention of concentration of

economic power, wider dispersal of ownership of productive
resources, active involvement of people in development
programmes, augmentation of the productive resources and
speedier of economic development, liquation of unemployment
and poverty, etc.

 Processing and industrial Co – operatives.

{Sugar Factories, Spinning mills, and solvent extraction

plants. Medium and small units, such as rice mills, oil mills, cotton
ginning etc}

 Storage, distribution and marketing Co - operatives { NAFED}

 Functional Co – operatives { dairy, fisheries & poultry}

basically for weaker section of society.

 Multi – purpose Co – operatives { Providing credit to tribal,

undertaking collection and marketing of agricultural and
minor forest produce, arranging for supply of agriculture
inputs as well as essential consumer goods.

ACKNOWLEDGEMENT

This project report could not have been prepared, if not for the help and

encouragement from various people. Hence, for the same reason I would like to thank my
guide Proffessor Poonam Pariya . It was for her support that I got proper guidelines for

preparing this project.