Business Environment

The term Business Environment is composed

of two words Business and Environment. In

simple terms, the state in which a person

remains busy is known as Business. The

word Business in its economic sense means

human activities like production, extraction,

purchase or sales of goods that are performed

for earning profits.

On the other hand, the word Environment refers to the aspects of surroundings. Therefore, Business Environment may be defined as a set of conditions; Social, Legal, Economical, Political or Institutional that are uncontrollable in nature and affects the functioning of organization.

Business Environment has two components:

1. Internal Environment 2. External Environment

Internal Environment includes 5 Ms man, material,

money, machinery and management, usually within the control of business.

Business can make changes in these factors according to

the change in the functioning of enterprise.

External Environment Those factors which are beyond the control of business enterprise. These factors are government and legal factors, geo-physical factors, political factors, socio-cultural factors and demo-graphical factors.

Organizational Structures

Why do we need a Structure?

All businesses have to organize what they do. In order for the organization to see clearer which part of the business does certain job.

Some Key Terms

Span of control Chain of command Hierarchy Delegation Empowerment

Ways to Structure a Business

By function - Arranging the business according to what each section or department does.
By product or activity Organizing according to the different products made. By area - Geographical or regional structure.

Ways to Structure a Business

By customer - Where different customer groups have different needs.

By process - Where products have to go through stages as they are made.

Pros and Cons of Different Structures

Functional Structure
Chief Executive

Board of Directors

Production

Marketing

Accounts

Personnel

IT

Pros and Cons of Functional Structure

Advantages
Specialization each department focuses on its own work Accountability someone is responsible for the section Clarity know your and others roles

Disadvantages
Departments can become resistant to change Coordination may take too long Gap between top and bottom

Structure by Product or Activity

Hewlett Packard

Imaging and Printing Group

Personal Systems Group

Enterprise Systems Group

HP Services

HP Financial Services

Structure by Product/Activity
Advantages Clear focus on market segment helps meet customers needs Positive competition between divisions Better control as each division can act as separate profit centre Disadvantages Duplication of functions (e.g. different sales force for each division) Negative effects of competition Lack of central control over each separate division

Organization by Area
Bangko de Oros National Headquarters

BDO

Luzon
Metro Manila, Manila

Visayas
Cebu City, Cebu

Mindanao
Ozamiz City, Mis. Occ.

Organization by Area
Advantages Serve local needs better Positive competition More effective communication between firm and local customers
Disadvantages

Conflict between local and central management Duplication of resources and functions

Operational Systems

An operational system is a term used in data

warehousing to refer to a system that is used to process the

day-to-day transactions of an organization. These systems

are designed so processing of day-to-day transactions is performed efficiently and the integrity of the transactional data is preserved. Sometimes operational systems are referred to as operational databases.

Organization
Manufacturing Company
Bank Hospital University

Probably
Product data Account Data Patient Data Student Data Planning data

Government Department

Operational databases can store different types of information such as training status, personal employee

information, and previous proposal information.

Storing information in a centralized area can increase

retrieval time for users.

Operational databases are important when information is needed quickly. An important feature of storing information in an operational database is the ability to share information across the company. Another feature

of an operational database is how much information can

be stored that pertains to a business.