Business environment

* Barnard- environment consist of atoms and molecules ,agglomeration of motion, alive ,of men and
emotions, of physical and social laws, social ideas, norms of actions, of forces and resistance.

* the number is infinite, it is present, and it is changing.

* works within the frame work provided by the society.

* every activity of an individual includes business that satisfies unlimited wants and desires.

* business is the organized efforts of the enterprise to supply the goods and services to the consumers
for the profit.

* business vary in the size, volume of sales , no of employees.

* business is crucial, society cannot do without business, but there is no emphasis that a business needs
society as much.

* modern business is dynamic, defined by the word 'change', which made companies to spend on R&D.

* success of the business depends on adapting itself to the environment.

FEATURES

* totality of external factors.

* specific( investors, customers, competitors, suppliers) and general forces( social, legal, political,
technological).

* dynamic in nature.

* uncertainty.

*relativity.

*multi-faceted.

IMPORTANCE

* early identification of the opportunities.

* identification of threats.

* coping up with the rapid changes.

* improving the performance level in the market.

* identify the areas of growth and expansion of their activities.

* knowing competitors strategies and formulate their own strategies.

* sensitive to the society. Eg ( CPP) captive power plant.

* helps managers to face challenges and update themselves (continuous learning)

VISION AND MISSION STATEMENT

* vision - desired future position of the company.

* mission- company's business. Its objectives and its approaches to reach the objectives.

TYPES OF BUSINESS ENVIRONMENTS

 internal environment

 external environment

INTERNAL ENVIRONMENT

* 6M's man( human resource), money( financial factor), marketing resources, machinery(physical
assets), management structure and nature, miscellaneous factors ( R&D, company image and brand
equity, value system, competitive advantage)

* these factors are within the control of the business, business can make changes in these factors.

HUMAN RESOURCES ( MAN )

*strength and weakness of any organization.

* characters like skill, quality, high morale, commitment towards work, attitude should be possessed.

* involvement and initiative differs in different levels of work and form organizations.

* beard by organizational culture and over all environment.

FINANCIAL FACTORS

* financial policies, positions and capital structure have an impact on the business functions and
performance.

* Financial facilities are required to start business and operate it.

* sources of finance- share cap, banking and financial institutions and unorganized capital market.
Changes in Indian market indicate availability of plenty of resources( fin institutions and from general
public).
MARKETING RESOURCES

* resources like organization for the marketing, quality of marketing men, brand equity, distribution
network have direct impact on the marketing efficiency of the company.

PHYSICAL ASSETS

* facilitates production capacity, technology influences the competitiveness of the firm. Proper
acquisition and working is essential for efficient working of the organization..

* a firm invests in plant and machinery as it expects a positive rate of return over cost in future.

* revenue from the use of the plant and machinery should be sufficient so as to cover the invested
money, operating costs and generate enough profit to satisfy the organization.

* availability of the plant depends on the technological development of the country and government's
approach towards the foreign technical collaborations.

MANAGEMENT STRUCTURE AND NATURE

* composition of board of directors influences the decisions of business. Has a direct impact on the
firms decisions.

* managed for smooth fn and operations, strategies are determined by the structure.

* organizations in slow market tend to have a rigid, hierarchical structures, while those in changing
markets are more adaptive. They can create new divisions in their management structure, to deal with
emerging issues.

MISCELLANEOUS FACTORS

* R&D- mostly outsourced from the external environment but has a direct impact on working and
operations and decision making of the firm. R&D results in technological improvement ( total
knowledge providing ways of doing things.)

* IMAGE AND BRAND QUALITY - image outside the company have an impact inside the company. Helps
in raising finance making joint ventures, other alliances, expansions and acquisitions, entering sale and
purchase contracts, launching new products. Brand quality helps the company in the similar manner.

* VALUE SYSTEM - the principles that are right or wrong that are accepted by the individual and the
organization comprises the value system.

* COMPETITIVE ADVANTAGE - competitors actions affect the ability of the business to make the profits,
because competitors will continuously seek to gain an advantage over each other, by differentiating
their products and services and by seeking to provide better value for money.
EXTERNAL ENVIRONMENT

MICRO /OPERATING ENVIRONMENT

MACRO/ GENERAL ENVIRONMENT.

MICRO ENVIRONMENT

* They have a direct bearing on the operations of the firm.

* consists of factors in the company's immediate environment that affects the performance and workng
of the company.

* more intimately linked with the company than the macro factors. Micro factors need not necessarily
affect all the firms in a particular industries in the similar ways.

* Micro environmntal factors are  customrs.

employees.

 suppliers.

share holders.

 media.

 competitors.

MACRO ENVIRONMENT.

* macro environment- general or remote environment.

* uncontrollable, success of the company depends on the adaptability to the environment.

* environment has the bearing on the stratergies adopted by the firm and any changes in the areas of
the macro environment are likely to have far reaching imppact on their operations.

* concerned with the major issues and upcoming changes in the environment. * 'STEEP'

 socio-cultural and demographics.

 technology.

 economic conditions.( economic conditions, economic policies[ industrial policy,fiscal policy monetary
policy, foreign investment policy, export-import policy{exim policy}], economic system)

 ecology and physical environment.

 political and legal.