Business Organizations: The External Environment

The Business Environment
Business organizations: The external environment
Course Instructor: Rahma Akhter
Copyright © 2019, 2015, 2009 Pearson Education, Inc. All Rights Reserved
Introduction
Learning outcomes
The business organisation as a
transformation system
The firm in its environment
Two levels of environment
Business Environment
The Business Environment is the sum total of all external and internal
factors that influence a business. An external business environment is composed
of all the outside factors or influences that impact the
operation of business.
*
1-7
1. Economic & Legal Environment
Government actions which affects the operations of a

company or business. A government can promote business
through:
*
1-8
1. Economic & Legal Environment
*
1-9
2. TECHNOLOGICAL ENVIRONMENT
Technology -- Everything from phones to copiers and the various

software programs that make businesses more effective, efficient
and productive.
*
• Effectiveness -- Producing the desired result.
(doing the right things)
• Efficiency -- Producing goods and services using

the least amount of resources. (doing thing right)
• Productivity -- The amount of output you generate given the amount of input
(example: hours you work).
1-10
2. TECHNOLOGICAL ENVIRONMENT
*
Food for thought: Does being busy means being *

productive?
https://youtu.be/HPLBwuj7sMA
1-11
BENEFITS of TECHNOLOGY
*
E-Commerce-- The buying and selling of goods
and services over the internet.(B2B, B2C). *
Universal Product Code helps scan what product
was bought, in what size and color and at what price.
A scanner at the checkout counter can read that
information and put it into a Database, which is an
electronic storage file where vast amounts of information
about customers (name, address, telephone numbers) are
stored.
Identity theft is the obtaining of individual personal

information for illegal purpose.
1-12
3. COMPETITIVE ENVIRONMENT
*
Firms should offer both high quality product and outstanding services at
competitive price.
Need to know the competitors
1-13
3. COMPETITIVE ENVIRONMENT
*
•Two ways to compete:

*
-by exceeding customer expectations
-by restructuring and empowering the employees
1-14
4. SOCIAL ENVIRONMENT
*
• Demography is the statistical study of human *

population with
regard to size, density and other characteristics, i.e.,
age, race, gender & income.
- Diversity has grown from just recruiting minority and
female workers.
- Two income families
• Changes in customers’ tastes and preferences

1-15
*
5. GLOBAL ENVIRONMENT
*
Significant changes in global environment are
Contributed by:
•Increase of global competition
•Increase of free trade among nations
1-16
*
5. GLOBAL ENVIRONMENT
*
Negative effects of globalization on businesses:
•Wars and terrorism
•Global Pandemic
How to stay updated with globalization?
1-17
* The Ecological
6. Ecological Environment Environment
L
*
More than just climate change
•Greening: The trend toward saving

energy and producing products that
cause less harm to environment.
1-18
Environmental influences on a firm’s
marketing system
PESTLE ANALYSIS
PESTLE Analysis (political, economic, social,

technological, legal and environmental) is a management
method whereby an organization can assess major
external factors that influence its operation in order to
become more competitive in the market. As described by
the acronym, those six areas are central to this model. It
offers people professionals insight into the external
factors impacting their organization.
SWOT ANALYSIS
SWOT Analysis is a simple but useful framework

for analyzing your organization's strengths,
weaknesses, opportunities, and threats. It helps you to
build on what you do well, to address what you're
lacking, to minimize risks, and to take the greatest
possible advantage of chances for success..
*
Stakeholders
*
Any individual or group who can affect or are affected by
the achievement of a firm’s objectives
• Stakeholders- customers, employees,

stockholders, suppliers, government etc.
1-24
*
WHAT are ETHICS?
*
• Ethics -- The standards of moral behavior.
Behaviors that are accepted by society as right
versus wrong.
4-26
Basic Moral Values
Copyright © 2019, 2015, 2009
30Pearson Education, Inc. All Rights Reserved
• Can ethics make a difference to deal with
covid19 pandemic in Bangladesh??
*
ETHICS and YOU
*
• Plagiarizing from Internet materials is the most
common form of cheating in schools today.
• Studies found a strong

relationship between
academic dishonesty
and dishonesty at work.
4-32
Ethics
• More Than Legality
• Ethical Standards are
•Ethics begins with each

of us Fundamental
Copyright © 2019, 2015, 2009

To do the RIGHT thing
Copyright © 2019, 2015, 2009

Reasons to Maintain Ethics in Business
• To maintain good reputation

• To keep existing customers
• To attract new customers
• To avoid lawsuits
• To reduce employee turnover
• To avoid government intervention
• To please customers, employees, society
And simply to do the right thing
Copyright © 2019, 2015, 2009

*
ETHICS START at the TOP
*
• Trust between workers and
managers must be based on
fairness, honesty, openness
and moral integrity.
• Leadership can help instill

corporate values in
employees.
4-36
Steps to Improve
Business Ethics
1. Top management support
2. Employees’ understanding
3. Managers’ training
4. Ethics Office- whistle blower
5. Outsiders must be informed
6. Enforcement of ethics code
Copyright © 2019, 2015, 2009

Answer the following
question
 Why a person might be afraid to become
a whistle blower? Identify 3 reasons and
explain how he or she can deal with it?
Assignment
• Choose any business of your choice and
discuss how they are operating in the
current covid19 situation in Bangladesh
keeping the social responsibility in mind.
Also identify the impact of the business
decisions on the stakeholders.

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The Business Environment

Business organizations: The external environment

Course Instructor: Rahma Akhter

Government actions which affects the operations of a

Technology -- Everything from phones to copiers and the various

• Efficiency -- Producing goods and services using

Food for thought: Does being busy means being *

Identity theft is the obtaining of individual personal

Need to know the competitors

•Two ways to compete:

-by restructuring and empowering the employees

• Demography is the statistical study of human *

• Changes in customers’ tastes and preferences

•Increase of global competition

•Increase of free trade among nations

•Wars and terrorism

How to stay updated with globalization?

6. Ecological Environment Environment

•Greening: The trend toward saving

PESTLE Analysis (political, economic, social,

SWOT Analysis is a simple but useful framework

• Stakeholders- customers, employees,

• Studies found a strong

•Ethics begins with each

Copyright © 2019, 2015, 2009

Copyright © 2019, 2015, 2009

• To maintain good reputation

Copyright © 2019, 2015, 2009

• Leadership can help instill

Copyright © 2019, 2015, 2009

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