VERY

GOOD
MORNING
 BUSINESS
ENVIROMENT
&
CYCLE

Presented to :- Presented By :-
Mr. ASHOK KUmar ROBIN
CHUGH
SAKSHI
BHARDWAJ
RUCHIKA
 BUSINESS ENVIROMENT
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.
 COMPONENTS
COMPONENTS
Internal Environment:
It includes 5 Ms i.e. 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.

.
COMPONENTS
External Environment:

Those factors which are

beyond the control of business
enterprise are included in
external environment. These
factors are: Government and
Legal factors, Geo-Physical
Factors, Political Factors,
Socio-Cultural Factors, Demo-
Graphical factors etc
 BUSINESS CYCLE
A predictable long-term pattern of
alternating periods of economic growth
(recovery) and decline (recession),
characterized by changing employment,
industrial productivity, and interest rates.
also called economic cycle/Business
Cycle.
 Phase of Business Cycle

Prosperity

Recession

Depression

Recovery
 PROSPERITY
 The top business cycle is called Prosperity, peak or boom. In the boom period
the overall business activity is rising at a more rapid rate. There is a rise in
real output and incomes of the people. The general mood of the businessmen
is that of optimism and commercial. During Prosperity there is:

 Increase in production
 Increase in Capital Investment
 Expansion of credit high prices
 Increase in profits
 New business ventures
 Rise in level of Employment
 RECESSION
 During a recession - a cyclical economic contraction, consumers frequently
postpone major purchases and shift buying patterns toward basic, functional
products carrying low prices. Businesses mirror these changes in the
marketplace by slowing production, postponing expansion plans, reducing
inventories, and often cutting the size of their workforce. During Recession
there is:

 Employment decline
 Decline in demand
 Credit contraction
 Increasing competition

 DEPRESSION
Depression is a large recession. Firms try to survive as they can sell off the
inventory on hand. More bankruptcies are observed, but the number and the size of
the bankrupt firms are bottoming out. All prices, interest rates and wages are at their
lowest..The unemployed are ready to take any job. The contraction has run its
course. The economy has reached its trough. During Depression there is:

Negative growth rate

National income declines

Expenditure declines

Economic activity slows down

 RECOVERY

 In the recovery stage, the recession begin to disappear, and consumers start
purchasing more discretionary items such as vacations and new computer
equipment. The economy strengthens from a period of slow growth. Its
pace is still slow. It is important to note that recovery doesn't necessarily
take place at a steady pace. During Recession there is:

 Improvement in business
 Slow rise in price
 Small rise in profit
 New investment in capital goods
 Industry, bank expand credit