BUSINESS ENVIRONMENT

Reference book
Mishra and Puri Himalya Publication House 2012 Edition
WHAT IS MORDEN BUSINESS ?
• LARGE SIZE
• OLIGOPOLY
• DIVERSIFICATION
• GLOBAL
• TECHNO SAVY
• CHANGE
• GOVERNMENT CONTROL
WHAT IS ENVIRONMENT ?
• MORE BRODER – REFERS TO BOTH INTERNAL AND EXTERNAL WHICH
HAVE A DIRECT OR INDIRECT BEARING ON THE ACTIVITIES OF
BUSINESS

• INSIDE -INTERNAL
• OUTSIDE -EXTERNAL
INTERNAL ENVIRONMENT
• Value system – positive or negative
• Mission and objective
• Management structure -
• Internal power – Shareholder %BOD %Executive
• Physical resources and technology
• Human resource
External Environment=Micro + Macro

MICRO
• Supplier of inputs( cost, quality , availability certain or uncertain , if monopoly)
• Workers and their unions( imp , nature of labor diff FOP , organized and unorganized , eg. Counter
productive,)
• Customers( not homogeneous group, success depends on success of product-loyalty-satisfaction , drift risk ,
eg HUL necessity )
• Marketing intermediaries( popularity or new product, case study )
• Competitors ( “the desire competition” , non-price competition)
• Public (they are other than consumer, known as –environmentalist , consumer protection group , media
person & local lobbyist… threat to the interest of business , PIL)
 Macro Environment
Economic and Non- economic
Economic environment (National & Global)
Non – economic (political , social-cultural , demographic , technological
, natural)
 Economic

1. Economic system
2. Macro economic scenario
3. Economic phases
4. Financial system
5. Economic policies
6. Neo-liberal profile of the economy
 Global Economic
Environment
1930 to present situation
Recession – WTO- changing global equation
 Social Environment
The social environment of a nation
determines the value system of the society
which, in turn affects the functioning of the
business. Sociological factors such as costs
structure, customs and conventions, mobility
of labor etc. have a greater impact on the
business.
 Technical Environment

The business in a country is greatly influenced by the

technological development. The technology adopted
by the industries determines the type and quality of
goods and services to be produced and the type and
quality of plant and equipment to be used.
 Legal Environment

Legal environment includes

flexibility and adaptability of
law and other legal rules
governing the business. It may
include the exact rulings and
decision of the courts.
 Political Environment

The political environment of a country is

influenced by the political organizations
such as philosophy of political parties,
ideology of government or party in
power, nature and extent of bureaucracy
influence of primary groups etc.
 Needs and Importance of Environmental analysis

• 1. Identification of strength:
• 2. Identification of weakness:
• 3. Identification of opportunities:
• 4. Identification of threat:
• 5. Optimum use of resources:
• 6. Survival and growth
• 7. To plan long term objective 
• 8. Business strategy