CHAPTER ONE

MANAGEMENT
• Management is an art of getting things done
through and with others.
• Management is the process of utilizing the right
resources i.e. Manpower, Money, Material, Machine
and Information to achieve the organizational
objectives and goals.
• Management is what manager does i.e. Planning,
Organizing, Staffing, Leading, Controlling,
Communicating, Co-ordination, Leadership,
Motivation, Supervision, Direction.
 TYPES OF MANAGERS
• On the basis of Levels of Management
1. TOP LEVEL MANAGERS
2. MIDDLE LEVEL MANAGERS
3. LOWER/OPERATIONAL LEVEL MANAGERS
• On the basis of Nature or Area of Managerial Job
1. Generalist Manager
2. Functional Manager
3. Staff Manager
On the basis of Nature or Area of Managerial Job

• 1. Generalist Manager- As the name suggests

the generalist managers perform the GENERAL
FUNCTIONS. They are usually the Top Level
managers who are responsible for the overall
performance of the organization. They need to
perform the function according to the
requirement and situation. They do not have a
particular job as such. CEO, GM, Presidents may
be categorized under this type of managers.
 On the basis of Nature or Area of
Managerial Job
• 2. Functional Managers- These are the
managers who are given the responsibility of a
particular function such as Marketing,
Finance, Front Office etc. They are also known
as the Departmental Managers. They need to
co-ordinate with the Generalist Manager.
• Their duties and responsibilities are already
described and they are given the Authority to
perform those responsibility.
 On the basis of Nature or Area of
Managerial Job
• 3. Staff Managers- Staff managers are the ones
who are the experts hired by the organization
to perform the specialized/specific tasks. These
managers may not be permanent in the
organization and can be hired on contract basis
to complete the particular task.
• They can not give order or command but can
only give Advices and Suggestions to the
Generalist and Functional managers.
 SKILLS OF MANAGERS
• Skill can be defined as the ability or capacity to
perform a particular task. Every managerial
level requires various sets of skill to successfully
perform the task. The following are the various
skills required by the managers;
• A. Conceptual Skill
• B. Interpersonal Skill
• C. Technical Skill
 SKILLS OF MANAGERS
• A. Conceptual Skill- This is the skill required by
the managers to perform the highly intellectual
tasks. Generally, the top level managers highly
require this skill as they are called the ‘Brain of
the Organization’ and develop long term plans,
policies and strategies for the organization.
Managers need this ability to innovate, be
creative and exercise their analytical power to
lead the organization to a better future.
 SKILLS OF MANAGERS
• This skill requires managers to face and deal
with the challenges and manage the risk and
implement the vision of the organization.
 SKILLS OF MANAGERS
• 2. Interpersonal Skills- This is generally known
as the Human Skill. It is related with dealing
with people. The word ‘Interpersonal’ means
something relating with two or more than two
people. Thus Interpersonal skill means the
ability of managers where they need to
communicate with the subordinates,
superiors, co-workers/colleagues and other
stakeholders.
 SKILLS OF MANAGERS
• They need to have the quality of Empathy (to
stand in some body else’s shoes), Patience,
Active Listening ability, Quality of Judgment,
Developing cordial relation with everyone
around. Generally the middle level managers
highly require these skill.
 SKILLS OF MANAGERS
• 3. Technical Skill- Technical skill simply can be
defined as the ability to carry out the technical
tasks which may be related to a certain
method/process, tool, technique,
Machineries, IT, Computerizations and
Robotics and Automation etc. Generally, the
Operational managers highly require this kind
of skill.
 MANAGERIAL ROLES
• Managerial roles can be defined as the
behavior shown by the managers according to
the necessity of time and situation. Managers
have to play various roles as their job is very
complex and multi-dimensional.
• Henry Mintzberg is the researcher who
classified the TEN roles of managers and
grouped them into the three categories;
Interpersonal, Informational and Decisional.
MANAGERIAL ROLES (HENRY MINTZBERG)

DECISIONAL ROLE
• A. Entrepreneur
INTERPERSONAL ROLE INFORMATIONAL ROLE • B. Disturbance
• A. Figurehead • A. Monitor
• B. Leader • B. Disseminator Handler
• C. Resource
• C. Liaison • C. Spokesperson
Allocator
• D. Negotiator
 INTERPERSONAL ROLE
• The word Interpersonal relates with two or more
than two person. This role of manager deals with
how a manager communicates with his superiors,
subordinates, colleagues/co-workers and
stakeholders.
• Here, a manager is the representative of the
organization and is responsible to maintain good
relationship with everyone. Within this role, he
has to play the role of Figurehead, Leader, Liaison.
 INTERPERSONAL ROLE
• A. Figurehead- This is a CEREMONIAL and
SYMBOLIC role of manager. In other words,
they represent the organization. Greeting the
visitors, distributing awards, gifts and
certificates, attending the functions organized
by other organizations, attending meetings of
Associations etc.
 INTERPERSONAL ROLE
• B- Leader- There is a saying that all managers
must be a good leader but all leaders may
not be a good manager. Managers must make
sure as a leader, they have the ability to guide
and influence the subordinates. They need to
maintain discipline in the organization. As a
leader they should set an example for the
workers and need to motivate them to
achieve organizational goals.
 INTERPERSONAL ROLE
• C. Liaison- Liaison simply means a Link.
Managers need to play the role of a mediator
or link or bridge between their organization
and outside people. Here the manager has to
maintain the social and business relation with
the external parties.
 INFORMATIONAL ROLE
• Information is the life blood of the business. It
is one of the primary resources for the
organization. A manager has to play a
dominant role in the use and exchange of the
information. He needs to receive, collect and
disseminate the information to various
parties.
 INFORMATIONAL ROLE
• A. Monitor- This role is related with the process of
receiving the information from various sources of
the organization as well as analyzing the
information regarding the external environment.
Here, the manager, needs to carefully observe the
performance of the subordinates and receive
various reports as well. Only after the monitoring
the organization a manager can analyze the
Strength, Weakness, Opportunity and Threats of
the organization.
 INFORMATIONAL ROLE
• B. Disseminator- This role of manager is
related with the relaying or transmitting the
information to the various people and groups
inside the organization. A manager needs to
communicate important decisions and policies
to the subordinates so they can confidently
move on with their work.
 INFORMATIONAL ROLE
• C. Spokesperson- This role is also about
relaying or disseminating the information to
the EXTERNAL WORLD. A manager needs to
communicate regularly with the external
environment and maintain close relation to
assure that the organization maintains a
healthy relation with all the STAKEHOLDERS
such as Government, Media, Suppliers,
Community etc.
 DECISIONAL ROLE
A major role of the manager is to take
important decisions to solve various problems
of the organization. It is believed that the
manager spends majority of the time in
communicating or taking major decisions.
Decision making is the process of choosing
the best alternative out of many alternatives
to solve a particular problem or handle a
particular situation.
 DECISIONAL ROLE
• A. Entrepreneur-This role involves managers to
innovate for the organization. Entrepreneurs are
the ones who are Risk takers. Managers should
develop and initiate new plans and policies on
behalf of the organization. If the managers stop
initiating new things and develop new policies
then organization will lag behind in the market.
Managers as Entrepreneurs should always try to
find out new methods to improve performance.
 DECISIONAL ROLE
• B. Disturbance Handler- In an organization there
may occur various disturbances due to different
factors such as Strike, Lock Out,
Misunderstandings and Conflicts within groups. It
is the role and duty of managers to make sure
these disturbances are resolved immediately. He
has to initiate a quick response to the
disturbances coming in and collect the required
information and develop right strategies to
handle the disturbances.
 DECISIONAL ROLE
• C. Resource Allocator- Resources generally are
classified as Manpower(Human Resource), Money
(Finance), Material, Machine and Information. As a
resource allocator, its is the role of a manager to
make sure there is the right resources available for
Every Departments and Sections to carry out the
work smoothly. Resource division is an important
aspect for an organization to perform well. Manager
should make sure fair and right distribution/allocation
of resources in every area of organization.
 DECISIONAL ROLE
• D. Negotiator- Here, a manager needs to
Bargain, Influence, Negotiate or maintain
diplomatic relation with his colleagues,
superiors or other Departments to make sure
he obtains the right advantage for his team or
department. Sometimes, Negotiation may
also be needed to solve the conflict between
the two parties/groups.
 BECOMING A MANAGER
• A manager is someone who performs the
management functions in an organization such as
Planning, Organizing, Staffing, Directing, Controlling,
Communicating, Leading, Supervision, Motivating,
Coordinating etc.
• The job of a manager is very complex, unpredictable
and challenging and the environment keeps on
changing. Thus becoming a manager is very
challenging. Thus, a manager needs to develop
various skills to handle those situations.
 BECOMING A MANAGER
A. Role of Education- Education is one of an important
sources of Knowledge. It helps a person to develop the
base or foundation to become a manager. Education
can be Formal or Informal. Formal Education can be
obtained from School, Colleges and Universities. These
days to be a manager a minimum Masters Degree is
required. Informal Education on the other hand is an
open source of knowledge, it could be gained from
anywhere, surroundings, interaction with other
people, media and self study and research.
 BECOMING A MANAGER
• B. Role of Experience- As the old saying goes, “Either
you learn from Education or from Experience.” Colleges
and Universities provide the formal education that
helps the people to understand the basic or
fundamental principles of overall Management,
however, a manager can not develop various skills
without the professional and life experience. The
challenges in the career, the ups and downs, success
and failures people learn serve as the basis for the
source of Experience which helps a person to be a
more creative and skillful manager.
 BECOMING A MANAGER
• C. Role of Situation- Managers may face a variety of
situations which may be Predictable or Unpredictable
and Unique. Those situations if dealt well can be a
source of knowledge and skill for a manager. Every
situation may carry a certain knowledge or a lesson with
itself so if the manager is well able to understand the
situation then definitely s/he can receive those
knowledge and implement it in the organization. Every
situation needs to be dealt in a different way, one
method of dealing a situation may not match/tally with
other situation. Therefore, a manager must be careful in
the manner/method of dealing a situation.
 FUNCTIONS OF MANAGEMENT
• A. PLANNING- Planning is the basic function of
management. As we know the future is uncertain.
Thus, a manager needs to be careful as the
uncertain future can bring lots of complexities and
difficulties in the organization. Therefore, he needs
to plan well.
• Planning is simple words can be defined as the
management function that determines the goals
and objectives of the organization and also
explain the ways to achieve them.
 FUNCTIONS OF MANAGEMENT
Contd….
• Planning is the answer to all the ‘WH’ questions.
• It is the bridge between WHERE WE ARE and
WHERE WE WANT TO GO IN THE FUTURE.
• It is THE THINKING BEFORE DOING function of
management.
• It is a mental exercise of managers which
requires high intelligence, skill, vision, creativity
and analysis.
 FUNCTIONS OF MANAGEMENT
• B. ORGANIZING- Organizing is the process of
Identifying all the activities to be done in the
organization and then grouping those activities on
the basis of similarities and creating Jobs and finally
assigning those jobs to various Departments and
Individuals.
• It is also the process of arranging the required
resources; Manpower (Human Resources), Money
(Finance), Material Machine, Information to
perform the given jobs and activities.
 FUNCTIONS OF MANAGEMENT
(organizing contd…)
• Also, organizing is the management function
that DEVELOPS THE ORGANIZATION
STRUCTURE
• It is also the function which helps to delegate
the necessary Authority and Responsibility to
the workers to perform their assigned jobs.
 FUNCTIONS OF MANAGEMENT
• C. STAFFINNG- Staffing in simple words can be
defined as Right person at the right job. Staffing
helps to make sure that for any job right kind of
people are placed who are qualified for the job.
• Staffing is the function that defines the QUALITY
AND QUANTITY of the requirement of
Manpower/Human resources in various Levels of
the organization.
• Staffing helps to complete the proper Recruitment,
Selection, Appointment of right Human Resources.
 FUNCTIONS OF MANAGEMENT
• (Staffing contd….)
• Staffing also helps in the evaluation of the
performance of the workers. It also makes
sure that the workers get the right
Remuneration according to their skill and
ability.
 FUNCTIONS OF MANAGEMENT
• D. DIRECTION- Direction is a function which helps
to guide, lead, instruct, inspire and develop the
subordinates to achieve the goals and objectives of
the organization. Direction avoids the confusions
among the workers and increases their confidence.
• Direction function includes;
1. Supervision 4. Communication
2. Motivation 5. Co-ordination
3. Leadership
 FUNCTIONS OF MANAGEMENT
• 1. Supervision- Supervision is consists of two
words SUPER and VISION. Super means Above and
Vision above to Look after. Thus, Supervision is the
function of management where the immediate
superior looks after the performance of the
immediate subordinate. It is the function where
the superior guides, corrects and improves the
performance of the subordinates. Supervision is
also to make sure or check that all resources are
properly utilized or not.
 FUNCTIONS OF MANAGEMENT
• 2. Motivation- The word motivation is derived from
the Latin word ‘movere’ which means to move. The
word motive means an urge or a desire.
• Motivation is the process of inspiring or encouraging
the subordinates to perform in a better way.
• It is the process of creating WILLINGNESS among the
workers to do or not to do something.
• It creates a positive energy among the workers.
Motivation provides various rewards and incentives
to the workers on the basis of their performance.
 FUNCTIONS OF MANAGEMENT
• 3. LEADERSHIP- Leadership is the function of
management where the manager influences
and guides the performance of their
subordinates. The followers can ask for
suggestions, advices and direction from the
leader. Leaders are mentors for their
followers.
• It is said ‘All managers must be a good leader
but all Leaders might not be a manager.’
 FUNCTIONS OF MANAGEMENT
• 4. Communication- Communication is the
process of exchanging News, Views, Ideas,
Information and Messages from one person to
another through a certain Medium. The
person sending the message is said to be
Sender and the person receiving the message
is said to be as Receiver. Communication can
be Verbal (oral and Written) or Non-Verbal.
 FUNCTIONS OF MANAGEMENT
• 5. Co-ordination- Co-ordination is the function of
management that relates with developing Unity,
Harmony, co-operation, good understanding,
trust and support between superior-
subordinates, co-workers/colleagues,
Departments, Levels, Sections etc.
• Co-ordination promotes two way communication
and tries to avoid misunderstandings, conflicts
and unhealthy relation in organization.
 FUNCTIONS OF MANAGEMENT
• E. CONTROLLING- Controlling is another important
function of management which compares the PLAN
with ACTUAL PERFORMANCE and if there are no
differences between planning and performance or if
the performance is according to the plan then
feedback is provided but if the performance is not
according to the plan then the cause of difference is
found out and corrective action are taken.
• Simply to put, controlling is the function that
balances PLAN and PERFORMANCE.
 FUNCTIONS OF MANAGEMENT
• Controlling can also be defined as the process
of ensuring proper utilization of resources in
organization.
• Controlling is also the system of ensuring
discipline in an organization.
 CORPORATE SOCIAL RESPONSIBILITY
• CSR in simple sense is the duty of a company towards
the society to protect the social values and develop the
society.
• As we know an organization is born in the society, it
uses the resources of the society, does its operation in
the society, sells its goods and services in the society,
expands in the society, earns profit from the society, so,
it is the duty of the organization to protect and develop
the society, this obligation or responsibility of an
organization can be defined as CORORATE SOCIAL
RESPONSIBILITY.
 CORPORATE SOCIAL RESPONSIBILITY
• CSR develops the feeling in an organization to
respect the social values and regulations. It
should achieve the goals and objectives of an
organization without hampering or affecting
the society in a negative way. Instead it should
always try to promote social welfare.
 CORPORATE SOCIAL RESPONSIBILITY
• Why CSR?
1. It is the Ethical/Right thing to do.
2. To develop the right image in public.
3. To develop a good Brand
4. To earn Long run profit
5. To create better Environment.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
A. Towards Investors/Shareholders
B. Towards Consumers
C. Towards Employees
D. Towards Government
E. Towards Community (Public)
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
• A. Towards Investors
Investors or Shareholders are the owners of the
business firm. They invest in the company and
take the risk of losses. From the shareholders
there are few elected people who represent
them known as the Board of Directors (BOD)
who also take active part in the management
of organization. They have direct interest in the
development of the organization.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
• Following are the responsibilities of an organization towards
Shareholders or Investors
i. To make sure their investment is safe and properly/rightly used.
ii. To provide them a fair and regular return for the investment
they have provided.
iii. To provide them correct/truthful information about the
company.
iv. To offer them opportunities to participate in the Planning and
Decision making process for organization by giving them right to
elect their BOD who work for their benefit.
v. To keep on maximizing or increasing the value of their
investment.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
• B. Towards Consumers- Consumers are the
sources of revenue for any business. Consumers
may take a company to greater heights or may be
the reason towards its failure, Company has to
meet their expectations and be responsible
towards them.
1. To supply better quality products at right price.
2. To provide various AFTER SALES SERIVCE such as
Guarantee, Warranty, Home Delivery, Repair and
Maintenance, Installation etc.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
• 3. To always try to develop quality, improve
distribution and reduce price.
• 4. To Perform various research activities to
know more about the needs of the consumers
• 5. Not to wrong activities such as Black
Marketing, False Advertising, Food
Adulteration, Artificial Shortage etc.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
• C. TOWARDS EMPLOYEES- Employees are the pillar of
strengths of an organization as they are the one to run
the day to day operation and management of an
organization. They put their sweat and blood on the
development of an organization. They are the important
asset of an organization so the management should
always take care of the employees.

• 1. To provide Job Security

• 2. To make sure they receive the right salary, wages and
other benefits such as allowances, bonus etc.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
3. To make sure they get opportunities to
participate with managers in important
functions of management such as Planning and
Decision making.
4. To make them participate in various trainings,
skill development programs, conferences,
seminars etc.
5. Not to involve in any Nepotism and Favoritism.
6. To develop their overall career.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
• D. TOWARDS GOVERNMENT- Government is a
very important part of society that develops laws
(legislative) for business, implements them in the
right manner (executive) and check whether the
laws are properly followed or not.
• A business can not disobey the law. It is not
beyond the regulation of law and can not run
without the co-operation from the government.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
1. It should follow all the rules and regulations formed by
the government.
2. It should pay various taxes honestly without any fraud.
3. It should not to any kind of unfair business such as
Monopoly, Black marketing, Artificial Shortage etc.
4. It should work with the government to solve national
problems such as Unemployment, Poverty, Illiteracy etc.
5. It should help government to keep balance of trade i.e
Import and Export for economic development.
 AREAS OF CORPORATE SOCIAL
RESPONSIBILITY
• E. TOWARDS COMMUNITY- Community means the general
public. Public always expect business to do various social
welfare activities in their community. Business should also
think of promoting the development of the community in
which they are established in.
• 1. To try to protect environment and not to be involved in
the act of pollution.
• 2. To create employment opportunity to community people.
• 3. To protect social and cultural values.
• 4. To promote social development programs such as
Entertinment, Education, Health, Games, Sports etc.
 MANAGERIAL ETHICS
• Ethics in simple words can be defined as the ability to
distinguish what is right and what is wrong.
• It is a set of moral values and principles to be followed
by a person.
• It is a guideline to one’s life or a belief of a person to
know what is right and wrong which may be different
from person to person.
• Ethics are different from law as these are free belief and
may be different from person to person and are usually
determined by personal beliefs, social values, culture,
family influence and upbringing etc.
 MANAGERIAL ETHICS
• Managerial Ethics on the other hand is the ability
of the manager to determine what is right and
what is wrong while managing the organization.
• Managerial ethics may also be different from one
manager to another and may be influenced by
the organization culture, manager’s personality,
individual’s values and perception and
philosophy, organizational environment etc.
 SIGNIFICANCE OF MANAGERIAL ETHICS

• 1. Promotes Goodwill and Image- As we know

that managerial ethics is the ability of manager
to distinguish right and wrong. If an organization
follows the right managerial ethics then it can
gain the public trust. Consumers purchase the
product of the company which does ethical
business and avoids unethical business activities
such as Black Marketing, Artificial Shortage,
Adulteration, false marketing etc.
 SIGNIFICANCE OF MANAGERIAL ETHICS

• 2. Helps maintain Better relation with

Stakeholders- An ethical company can always
maintain a healthy relation with its stakeholders
because it follows the right way of doing things.
Stakeholders may be suppliers, customers,
employees, government Media etc. Good
managerial ethics always avoids unfair trade
practices, develops trust and understanding
among stakeholders and create a long term
relation.
 SIGNIFICANCE OF MANAGERIAL ETHICS

3. Less interference from the Government-

Government will only interfere in the matter of
those organization who perform illegal and
wrong activities such as Fraud, Bribery,
Corruption, Non-payment of Tax etc. But if an
organization is ethical in nature then government
will not interfere in their matters. Instead, the
government will reward those organization who
perform business in the right way.
 SIGNIFICANCE OF MANAGERIAL ETHICS

• 4. Promotes Fair Competition- Business with

good managerial ethics will not involve in the
unhealthy competition. It always discourages
managers to do wrong marketing activities
such as Black marketing, Artificial Shortage,
Adulteration etc. Managers with right ethics
will promote fair competition where every
organization can have opportunities to grow in
the market.
 SIGNIFICANCE OF MANAGERIAL ETHICS

• 5. Improve working environment- An

organization following the right ethics will
always give a good working environment for
its workers. A manager will not do any kind of
Discrimination among the workers. An ethical
manager will always motivate the workers to
perform better. He will promote justice,
equality, freedom, rewards, sense of
ownership etc for the workers.
 SIGNIFICANCE OF MANAGERIAL ETHICS

• 6. Promotes Social Responsibility- An ethical

company will always try to develop the
society. It will involve in the activities that
helps to fulfill the social interests such as
Health, Education, Culture, Sports,
Entertainment etc. It also tries to help the
society by providing employment
opportunities.
 SIGNIFICANCE OF MANAGERIAL ETHICS

• 7. Helps to Increase Market share- An ethical

company is appreciated by everyone; whether
they are supplier, government, customers,
media, community, employees and so on. This
helps the company to get a strong position in
the market. Its reputation and goodwill will
enhance if it is ethical. Thus it can expand
itself in the market in the long term.
 CORPORATE GOVERNANCE AND ETHICAL
STANDARD
• Corporate comes from the family word Corporation and
Governance means to govern or to run. Basically,
corporate governance is about efficiently running an
organization.
• Corporate governance is the set of system of rules,
regulations, laws of the company that monitors and
controls the operation of the company.
• In other words Corporate governance is the system which
monitors and controls the behavior of the company.
• In simple words, Corporate governance is the system to
control the overall functioning of the organization.
 CORPORATE GOVERNANCE AND ETHICAL
STANDARD
• Corporate Governance is composed of Internal
Governance and External Governance.
• Internal Governance consists of Board of
Directors, Capital Structure, Rules and
Regulations, Employees, Organization
Structure etc. Whereas, External Governance
relates with Shareholders, Customers,
Suppliers, Creditors, Politic, Society etc.]
 CORPORATE GOVERNANCE AND ETHICAL
STANDARD
• Ethical Standards are the set of moral values and
principles to be followed. It determines what’s right
and what’s wrong for an individual. It is a guideline
to an individual’s behavior. These standards are the
code of conducts that guides the behavior of
employees and managers.
• These standards, though, may be different from
one person to another as these are not compulsory
as law but these are out of a person’s belief system
and morality.
 CORPORATE GOVERNANCE AND ETHICAL
STANDARD
• RELATION BETWEEN CORPORATE GOVERNANCE
AND ETHICAL STANDARD
Corporate Governance is all about monitoring and
controlling the organizational behavior by the
developing proper system, rules, regulations and
policies. Ethical standards on the other hand is
about the code of conduct or guidelines to
differentiate right and wrong. Definitely, there is a
strong inter-connection between these two factors
as they compliment each other.
 CORPORATE GOVERNANCE AND ETHICAL
STANDARD
• RELATION BETWEEN CORPORATE
GOVERNANCE AND ETHICAL STANDARD
• When the system, regulations and policies of
any organization is efficient then the
controlling and monitoring process becomes
easier. Likewise, when the ethical standards of
those people working in the organization are
also stronger then also the system of
controlling and monitoring becomes smooth.
 CORPORATE GOVERNANCE AND ETHICAL
STANDARD
• RELATION BETWEEN CORPORATE
GOVERNANCE AND ETHICAL STANDARD
• Likewise, Ethical standard also support the
governance because when people are ethical
in nature the law and system automatically
works well.
• Similarly when there is good governance
system in organization then people will not be
involved in unethical activities.
 BUSINESS ENVIRONMENT
• Business Environment is the surrounding where business
performs all of its activities.
• It is the environment where an organization transforms
the INPUTS into OUTPUTS.
• It consists of Internal and External environment. Internal
environment is the environment within the control and
management of the organization. Here the Strength and
Weakness of an organization has to be analyzed. Likewise
the External environment is the environment and beyond
the control of the organization. Here, the opportunities
and threats are to be analyzed.
 BUSINESS ENVIRONMENT
• A. INTERNAL ENVIRONMENT- Internal environment is
the surrounding within the organization which is
manageable and controllable by the organization.
Here, the strength and weakness are analyzed.
Internal environment consists of;
• i. Owners
• ii. BOD
• iii. Organizational Resources
• iv. Organizational Structure
• v. Organizational culture
 BUSINESS ENVIRONMENT
• i. Owners- Owners simply are the investors in any
business. They put their money into that business
so they have a direct interest on the development
and welfare of the business. They are named
differently as per the nature of the organization
such as the owners in Sole trading are called Sole
Trader, Partners in Partnership and Shareholders
in a Joint stock Company. Owners may or may not
be directly involved in the management of the
company.
 BUSINESS ENVIRONMENT
ii. Board of Directors- Board of Directors are the
representative of the shareholders and are
elected by them. As we know all the
shareholders can not participate in the
management by themselves so they elect their
representative who go into the management to
run the organization and work for the welfare
and benefit of the shareholders and as well as the
organization. They develop better strategies and
policies for the organization.
 BUSINESS ENVIRONMENT
• iii. Organizational Resources- In order to run the
production and operation process of an
organization, resources are essential.
Organization needs right Manpower (Human
Resources), Money (financial resources),
Materials, Machine and Information. Right
utilization of resources can lead an organization
to a successful future and the lack of adequate
resources may be a great threat to an
organization’s future.
 BUSINESS ENVIRONMENT
• iv. Organization Structure- Organization
structure is the composition of various
elements such as Hierarchy, Management and
its Functions, Organizational Resources, Rules
and Regulations, Centralization
Decentralization, Organizational Culture,
Authority and Responsibility etc. If the
structure of the organization is simple and
clear the performance can also be smooth.
 BUSINESS ENVIRONMENT
• V. Organizational Culture- Culture is what
people follow or believe. Organizational
culture is the belief system or the values and
norms that the organization has developed
over a period of time. It guides the workers to
perform in the right direction. It ensures
discipline in the organization and to carry out
the activities in an ethical manner.
 BUSINESS ENVIRONMENT
• B. EXTERNAL ENVIRONMENT- This is the environment
which is outside the organization and is beyond the
control and management of organization. Here, the
Opportunities and Threats are to be analyzed. As the
external environment keeps on changing, it can bring
Positive as well as Negative Impact in the organization.
Therefore, the organization has to carefully examine
the changes in the external environment to make sure
they can deal with those changes and grab the
opportunities and be safe from the threats.
 BUSINESS ENVIRONMENT
TYPES OF EXTERNAL ENVIRONMENT
a. SPECIFIC/TASK ENVIRONMENT
i. Customers ii. Suppliers
iii. Competitors iv. Government
v. Pressure Groups vi. Financial Institutions
vii. Strategic Allies

B. GENERAL ENVIRONMENT
i. Political-Legal Environment ii. Economic Environment
iii. Socio-cultural Environment iv. Technological Environment
 BUSINESS ENVIRONMENT
SPECIFIC/TASK ENVIRONMENT- The task environment
consists of those particular organizations or groups that
have a very powerful direct impact on the
organizational performance. These are;
A. Customers- Customers are the source of revenue or
basis of survival for an organization. However, the needs
and wants of the customers keep on changing over a
period of time. A satisfied customer may not be the
same tomorrow. Thus, an organization should always try
to know the needs and want of the customers to satisfy
them.
 BUSINESS ENVIRONMENT
• B. Suppliers- Suppliers are the people or
organization who supply various inputs to the
organization. Without the good relation with those
suppliers Business can not perform its regular
activities. Human resources are supplied by the
Manpower or Human Resource companies, Money
or Finance is supplied by the Financial Institutions,
Raw materials by the Farmers or Agro companies,
Machines and Materials by other Industries.
Similarly, Information by the research ompanies.
 BUSINESS ENVIRONMENT
• C. Competitors- Competition in the market
helps the companies to work hard to innovate
new products, service, technology and
methods. In an open economy no organization
can avoid or ignore the competition. Healthy
competition always leads to a better market
with many opportunities for every
organization which performs well.
 BUSINESS ENVIRONMENT
• D. Government- As we know the organizations
are guided by the law. No organization is
superior or above to law. Government
comprises of Legislative, Executive and
judiciary. Legislative develops the suitable
laws and policies, Executive implements them
and the judiciary ensures justice. Business can
be supported in numerous ways if it abides
(follows) the law.
 BUSINESS ENVIRONMENT
• E. Pressure Groups- Pressure groups are the
institutions or groups that act as watchdogs for
the organization. If the organizations are found
to be conducting any unethical and immoral
activities, then these group come into action.
NGOs, INGOs for Environment protection, child
right, women right, Media, Consumer Forum etc
are some examples. They give a moral pressure
to organization to walk on the right path.
 BUSINESS ENVIRONMENT
• F. Financial Institutions- These institutions are very
important for any business organizations as they
provide various services to the organization
without which the organizations can not operate.
Financial Institutions can be Banks (Commercial
Banks, Development Banks, Finance companies
etc) Insurance companies etc. They supply financial
resource and also help in the process of trading.
Business organization has to maintain healthy
relation with these institutions.
 BUSINESS ENVIRONMENT
• F. Strategic Allies- Sometimes, in the course
of the business, a company can jointly work
together with other institutions in the form of
joint venture or any other collaboration or
partnership. This helps to gain mutual benefit
from the market. Also they can share the
expertise in a mutual way.
 BUSINESS ENVIRONMENT
• GENERAL ENVIRONMENT
These are the broad factors of the
environment that affect the organization in a
massive way. These environment are not
controllable. They are also known as MACRO
ENVIRONMENT of business. They consists of
Political, Economic, Socio-cultural and
Technological factors. They provide
opportunities and pose threats in business.
 BUSINESS ENVIRONMENT
• 1. POLITICAL-LEGAL ENVIRONMENT- It is an
obvious fact that the politics and legal environment
massively affects business. The following are the
major components of Political-Legal environment.
• A. Constitution
• B. Political Philosophy
• C. Political Parties
• D. Political Institutions
• E. Legal Institutions
 BUSINESS ENVIRONMENT
• A. Political Philosophy- Political philosophy is
the political principle or belief of a nation.
Normally there are 3 kinds of philosophy;
• i. Democratic/capitalism-In this philosophy the
private sector plays a major part in business
• ii. Socialism- In this philosophy the state or
government plays a major part in business
• Iii. Mixed- Here, both private and the state
work together in business activities
 BUSINESS ENVIRONMENT
• B. Political Institutions- They consists of the
• i. Legislative- They formulate the laws , policies,
rules and regulations
• ii. Executive- They implement those laws
• iii. Judiciary- They check whether the laws are
properly implemented or not.
All of these institutions contribute in the
development and protection of the business
sector.
 BUSINESS ENVIRONMENT
• C. Political Parties- Political parties are the
various institutions with different political
philosophies. In a democratic country there
may be various political parties who
implement their philosophies and make laws
when they come into the government. Those
laws affect the business environment.
 BUSINESS ENVIRONMENT
• C. Legal Institutions- There are various legal
institutions which helps to guide and develop
business sectors such as Courts (supreme
court, District court, Appeal court), Bar
council, Attorney general office etc. These
institutions provide fair judgment so that no
business organization has to face any kind of
injustice. Also, institutions like Police force,
Bureaucrats help in administering the law.
 BUSINESS ENVIRONMENT
• 2. Economic Environment- This is the environment which
consists of all the factors and forces which affect the
demand and supply in the market such as Inflation, Interest
rates, Income level, Stock market changes etc.
• The following are the components of economic
environment
• A. Economic System
• B. Economic Policies
• C. Economic Condition
• D. Capital Market
• E. Globalization
 BUSINESS ENVIRONMENT
• A. Economic System- Economic system is the
economic philosophy of the nation which affects the
business environment in a long term. There are three
kind of Economic system;
• i. Open Market system- Here, private sector is given
more importance
• ii. State owned Economy- Here, government sector
controls the economy
• iii. Mixed economy- Here, both private and
government sector work together for the economy
 BUSINESS ENVIRONMENT
• B. Economic Policies- Here, the various policies are
formulated for the economic development of the
nation which develops the business sector as well.
Economic policies may be Monetary policy which is
related with the money supply, credit, interest
rates. Similarly Fiscal policy is related with the
budget and taxation. Industry and trade policy
directly affects the business environment as it is
related with the registration, licensing, import
export, technology etc.
 BUSINESS ENVIRONMENT
• C. Economic Conditions- They focus on the
economic situation of the nation. There is a
direct relationship between economic situation
and development of business environment i.e.
if there is a healthy economic growth of the
nation business sector will grow and prosper.
Good economic situation is determined by
good PCI, economic growth rate, Balance ratio
between Import and Export etc.
 BUSINESS ENVIRONMENT
• D. Capital Market- Capital market is the
market that constitutes of various Banks such
as the Central bank, commercial bank,
Insurance companies, Finance companies,
stock (share) market etc. They are very
responsible to manage the finance in the right
direction. If the capital market of the company
moves in the right direction then definitely the
business and industrial sector can prosper.
 BUSINESS ENVIRONMENT
• E. Globalization- There is a saying that ‘The world is
becoming a global village today.’ Indeed the statement is right
because the world is becoming more narrower due to
globalization. The development of Transportation,
communication, Diplomatic relation between nations,
International agreements and membership in organizations
like WTO (world Trade organization) has helped the business
environment to reach in the global platform/arena. Now, the
import and export of goods and services, the transfer of
technology has become really convenient than in the past
which is an excellent sign for business sector. However,
globalization brings many challenges as well.
 BUSINESS ENVIRONMENT
• 3. SOCIO-CULTURAL ENVIRONMENT
• Socio-cultural environment is the composition of all the
societal components or aspects such as demography,
culture, tradition, values, beliefs, religion etc. Every
business exists in a society so definitely the society has a
direct impact over the Business Environment as it can
provide opportunities and pose threats as well. The
following are its components;
A. Demography B. Lifestyle
C. Social Values D. Social Institutions
E. Religion F. Language
 BUSINESS ENVIRONMENT
• A. Demography- Demography is the science that studies
Population and its components. It studies how the
population is being distributed such as according to age
groups, gender, migration ratio, urbanization, Active and
inactive population etc. These factors directly affect the
business environment. For instance in Japan there is a
NEGATIVE POPULATION GROWTH, the demand for
children products will automatically be less there. Like
wise, in Nepal people are migrating to urban areas for
good opportunities so the demand for various goods
and services will be high in those areas.
 BUSINESS ENVIRONMENT
• B. Lifestyle- The lifestyle of consumers can affect the
business environment directly. Lifestyle is the pattern
of living of people or living standard. The changes in
the income, fashion, interest, education, hobbies,
social background will affect the lifestyle of people and
the changes in lifestyle will affect the choices of
product in the market. Thus Business is affected. For
eg. The western lifestyle created demand for
technological products such as smart phones,
apartment system, Montessori education, fast food
products etc.
 BUSINESS ENVIRONMENT
• C. Social Values- Social values will affect the
organization. Business organization can not go
against the values norms and belief of the
society. It has to operate within the
boundaries of the society. It should perform all
the business activities considering societal
norms and values.
 BUSINESS ENVIRONMENT
• D. Religion- Religion is the belief or trust of
people. Every country has various religion.
Business should not perform any activities
that hampers or disrespects the religious
sentiments of people. For instance beef
products are not openly sold in Nepal.
 BUSINESS ENVIRONMENT
• E. Language- Language is the medium to
communicate and expressing views, ideas,
knowledge, emotion and experience etc.
There may be various languages nationally
and internationally. Some are accepted as an
International medium of communication.
Business organizations today have realized the
importance of language to expand their
business in the international platform.
 BUSINESS ENVIRONMENT
F. Social Institutions- These institutions are the units of society
which may be Family, Reference groups, Social Class etc. Family is
the primary unit of society which is either by blood, marriage or
adoption.
Reference groups are the trusted people of a person such as friends
family, relatives, neighbors, celebrities etc.
Social Class is the division between people on the basis of economic
status i.e. Higher class, Middle Class (upper middle and Lower
middle) and Lower class. These classification will definitely affect the
people in making their choices for the goods and services they buy.
For example, when people want to buy a particular product they
want to take suggestion from reference groups such as friends,
relatives eetc.
 BUSINESS ENVIRONMENT
• 4. TECHNOLOGICAL ENVIRONMENT
• Simply to put, technology is anything that deals with technical
aspect of work. In other words it is the medium of converting
INPUTS into OUTPUTS. Technology may be METHOD or
PROCESS, TOOLS, EQUIPMENTS, MACHINES, IT, INTERNET,
ROBOTICS, ARTIFICIAL INTELLIGENCE etc.
• As we know technology is ever changing so rapidly. Consumers
are more interested towards new and innovative technological
products. Internet, robotics and computerization has
contributed tremendously to the business.
• So, there is an intense competition in the market regarding
technological innovations and development.
 BUSINESS ENVIRONMENT
• The components of technological environment
are as follows;
• A. Nature of Technology
• B. Pace of Technological Change
• C. Technology Transfer
• D. Research and Development
 BUSINESS ENVIRONMENT
• A. Nature of Technology-Generally, technology
may be Manual or Automatic. Manual technology
is related with the labor based technology
whereas Automatic deals with excessive us of
Capital involving high technology and
machineries. So, the cost of manual based
technology is low and Capital based is High. So
depending upon the nature and capacity of the
business, the nature of technology may be used
accordingly.
 BUSINESS ENVIRONMENT
• B. Pace of technological change- The speed at
which the technology is changing in this modern
era is unbelievable. Every now and then new
products are innovated. Competitors are
competing to grab the upper hand by developing
the advanced technology that leads to innovative
products and cost efficiency to the organization.
However, the changes in the technology brings
both opportunities and threats.
 BUSINESS ENVIRONMENT
• C. Technology Transfer- The process of transferring the
technology and its use from one area/location to another
through various medium can be defined as technology
transfer. The process of technological transfer helps to
exchange expertise and create efficiency in production and
operation of business.
• Many MNCs come to various nations and bring along their
technology with them. Likewise, participation in conventions,
seminars, training programs also helps to learn new
technology and skills. Outsourcing of technical experts can
also bring new technologies in new Nation/Location leading to
the development in the Business Environment.
 BUSINESS ENVIRONMENT
• D. Research and Development Budget- Every business
organization spends a substantial (adequate) amount of
time and money in Business research. As we know the
needs and wants of customers keep on changing, the
environment keeps on changing.
• Thus, it is very essential to understand and study the
trend in the market or business environment and the
psychology ad behavior of the customers to satisfy
them so that the organization can smoothly operate
and expand in the market. For this purpose the process
of Research is essential.