WELCOME TO THIS COURSE BUSINESS ENVIRONMENT

UNIT-I

BUSINESS ENVIRONMENT
INTRODUCTION TO BUSINESS STRATEGY

STRATEGIC MANAGEMENT FOR BUSINESS

UNIT-II

CORPORATE STRATEGY
TOP MANAGEMENT

STRATEGIC PLANNING
UNIT-III

IMPLEMENTATION OF STRATEGY
SOCIAL RESPONSIBILITY

BUSINESS ENVIRONMENT
UNIT I

CHAPTER I
BUSINESS
ENVIRONMENT

UNIT I

BUSINESS ENVIRONMENT

INTRODUCTION BUSINESS ENVIRONMENT

Business is an important institution in society.
Business is nothing more than a person or group of persons
properly organised to produce or distribute goods or
services.

DEFINITION OF BUSINESS
The term business typically refers to the development and processing of economic values in
society.
Business is any organisation which makes distribution or provides any article or service to the
customers, who are members of the society.

UNIT I

BUSINESS ENVIRONMENT

CHARACTERISTICS OF BUSINESS

Business is to provide goods and services to

the people. It provides the public with the
things it needs and wants. In order to survive,
enjoy life and improve in a material sense.

Goods that have been produced or procured for

sale in retail enter the realm of business. This
activity of selling results in the creation of
wealth for the society.

Business is a profit seeking activity firm. It

supplies goods and services to customers,
satisfies their demand and desire, and add to
the societys value by earning profit.

UNIT I

BUSINESS ENVIRONMENT

PURPOSE OF A BUSINESS

It is to create customers/clients in market.

It is to create customers for selling their products and services.

It is to create market for redlining and buying of product and services.

Customers determine the main purpose of the business.

Customers are the basic foundation of the business and keep their existence in the
market.

It is to be catering to material needs and requirement of the society, individual persons,

government institutions, company, firms and enterprise

Business should be running within the purview of the legal and general public interest.

It is the ultimate result of an economic expansion, growth and change of firm

CHARACTERISTICS OF BUSINESS ENVIRONMENT

Environment is complex

Environment is dynamic

Environment is multi-faceted

Environment has a far reaching impact

UNIT I

BUSINESS ENVIRONMENT

ENVIRONMENTAL INFLUENCES AND ANALYSIS ON BUSINESS

The process by which strategists monitor the economic, governmental, legal, market,
competitive, supplier, technological, geographic, and social-cultural settings to determine
opportunities and threats to their firms, company and organisation

UNIT I

BUSINESS ENVIRONMENT

ENVIRONMENT INFLUENCE ON SWOT

Environment influence is a part of SWOT analysis. SWOT is the acronym of strengths,
weaknesses, opportunities and threats
Strength: Strength is an inherent resource capability of the organisation or company which
can be used to gain strategic advantages from their competitors in the market.
Weakness: A weakness is an inherent limitation or constraint or
problem of the organisation. It creates strategic disadvantages to
the company or organisation.
Opportunity: An opportunity is a favourable condition in the
business organisations environment which enables it to
consolidate the resource and strengthen its position.
Threat: A threat is an unfavourable condition in the business
organisations environment which causes a risk for, or damage to,
the organisation.

UNIT I

BUSINESS ENVIRONMENT

COMPONENTS OF BUSINESS ENVIRONMENT

Components of business
environment of firm

Internal environment

External environment

Micro environment

Macro environment

UNIT I

BUSINESS ENVIRONMENT

EXTERNAL ENVIRONMENT
External environment is an attempt to understand the outside forces of the organisational
boundaries that help to shape the organisation.

EXTERNAL
ENVIRONMENT

MACRO
ENVIRONMENT

MICRO
ENVIRONMENT

UNIT I

BUSINESS ENVIRONMENT

MACRO/REMOTE ENVIRONMENT
The macro/remote environment principally consists of the following elements which are
listed in the figure below:
Demographic
Economics
Government
Macro Environment
Elements

Legal
Political
Cultural
Technological

CHAPTER II
INTRODUCTION TO
BUSINESS STRATEGY

UNIT I

INTRODUCTION TO BUSINESS STRATEGY

INTRODUCTION

Introduction to Business Strategy

Strategy is the direction and scope of an organisation in the long-term, which achieves
advantage for the organisation through its configuration of resources within a challenging
environment, to meet the need of markets and to fulfill stakeholders expectations.
FEATURES OF STRATEGY
The following are the features of strategy:

Strategy is significant because it is not possible to foresee the future. Without a perfect
foresight, the firms must be ready to deal with the uncertain events which constitute the
business environment.
Strategy deals with long-term developments rather
than routine operations, i.e., it deals with probability
of innovations or new products, new methods of
productions, or new markets to be developed in
future.
Strategy is created to take into account the
probable behaviour of customers and competitors.
Strategies dealing with employees will predict the
employee behaviour.

UNIT I

INTRODUCTION TO BUSINESS STRATEGY

STRATEGY AT DIFFERENT LEVELS OF BUSINESS

Business
Unit
Strategy
Corporate
Strategy

UNIT I

INTRODUCTION TO BUSINESS STRATEGY

TYPES OF POLICIES
Marketing Policy: The basic attitudes underlying a companys marketing activity is called
marketing policy.
Financial/Economic Policy: Economic policy refers to the actions that government takes
in the economic field.
Personnel Policy: Is a set of rules or guidelines that defines the way in which an
organisation deals with matters relating to staff, or a particular rule or guideline relating to a
particular issue affecting staff.

FEATURES OF BUSINESS POLICY

An effective business policy must have following features:
Specific: Policy should be specific/definite in nature. If it is uncertain, then the
implementation will become difficult.
Clear: Policy must be unambiguous. It should avoid use of jargons and connotations.
There should be no misunderstanding in following the policy.
Reliable/Uniform: Policy must be uniform enough, so that it can be efficiently followed
by the subordinates.
Appropriate: Policy should be appropriate to the present organisational goal.
Simple: A policy should be simple and easily understood by all in the organisation.

UNIT I

INTRODUCTION TO BUSINESS STRATEGY

FEATURES OF BUSINESS POLICY

An effective business policy must have following features:
1. Specific
Policy should be specific/definite in nature. If it is uncertain, then the implementation will
become difficult.
2. Clear
Policy must be unambiguous. It should avoid use of jargons and connotations. There should
be no misunderstanding in following the policy.
3. Reliable/Uniform
Policy must be uniform enough so that it can be efficiently followed by the subordinates
4. Appropriate
Policy should be appropriate to the present organisational goal.
5. Simple
A policy should be simple and easily understood by all in the organisation.
6. Inclusive/Comprehensive
In order to have a wide scope, a policy must be comprehensive.

UNIT I

INTRODUCTION TO BUSINESS STRATEGY

7. Flexible
Policy should be flexible in operation/application. This does not imply that
a policy should be altered always, but it should be wide in scope so as to
ensure that the line managers use them in repetitive/routine scenarios.
8. Stable
Policy should be stable else it will lead to indecisiveness and uncertainty
in minds of those who look into it for guidance.
DIFFERENCE BETWEEN POLICY AND STRATEGY
Policy
a. Policy is a blueprint of the organisational
activity which is repetitive/routine in nature.
b. Policy formulation is the responsibility of toplevel management.
c. Policy deals with routine/daily activities

Strategy
a. Strategy is concerned with those organisational
decisions which have not been dealt/faced before
in same form.
b. Strategy formulation is basically done by
middle-level management.
c. Strategy deals with strategic decisions.

essential for effective and efficient running of an

organisation.
d. Policy is concerned with both thought and
actions.
e. A policy is what is, or what is not done.

d. Strategy is concerned mostly with actions.

e. A strategy is the methodology used to achieve a
target as prescribed by a policy.

UNIT I

INTRODUCTION TO BUSINESS STRATEGY

OBJECTIVES OF BUSINESS
An objective of
business means the
purpose for which
the business is
established.

These may be to
earn profit for its
growth and
development, to
provide goods to its
customers, to
protect the
environment, etc.

It is generally
believed that the
main objective of
business is to make
profit and avoid loss.

Business objective is
something which a
business organisation
wants to achieve or
accomplish over a
specified period of
time.

UNIT I

INTRODUCTION TO BUSINESS STRATEGY

CLASSIFICATION OF OBJECTIVES OF BUSINESS

Economic
Social
Human
National
Global
objectives objectives objectives objectives objectives

BUSINESS ENVIRONMENT
UNIT II

CHAPTER III
STRATEGIC
MANAGEMENT FOR
BUSINESS

UNIT II

STRATEGIC MANAGEMENT FOR BUSINESS

NEED FOR STRATEGIC MANAGEMENT

A companys strategy provides a central purpose and direction to the activities of organisation.
Company must employ strategies to accomplish its basic objectives. These strategies must be
clearly communicated to the people working in the organisation.

UNIT II

STRATEGIC MANAGEMENT FOR BUSINESS

NEED FOR STRATEGIC MANAGEMENT IS FELT FOR THE FOLLOWING REASONS

Due to Change
Provides Guidelines
Better Performance
Improved Allocation of Resources
Competitive Advantage
Provides Holistic Approach
Improved Integration
Systematise Business Decisions

UNIT II

STRATEGIC MANAGEMENT FOR BUSINESS

STRATEGIC MANAGEMENT PROCESS

Environmenta
l Scanning

Strategy
Formulation

Strategy
Implementati
on

Evaluation
and Control

UNIT II

STRATEGIC MANAGEMENT FOR BUSINESS

BENEFITS OF STRATEGIC MANAGEMENT

FACILITATES BETTER DELEGATION

ASSISTS IN REALISTIC AND EFFECTIVE

PLANS

PROACTIVE APPROACH

EXPLOITING OPPORTUNITIES

BOOST PROFIT

TO GAIN COMPETITIVE ADVANTAGE

MINIMISES WEAKNESSES

PROMOTES EMPLOYEES PARTICIPATION

SYSTEMATIC APPROACH FOR

MANAGEMENT DECISION

EMPOWERMENT OF EMPLOYEES

UNIT II

STRATEGIC MANAGEMENT FOR BUSINESS

ROLE OF STRATEGY IN STRATEGIC MANAGEMENT

Deliberate Attempt To Counteract Actions Of Opponents
Minimises Risk
Creates System Approach
Emergence of Tactful Decision
Optimum Use of Organisational Resources
Helps in Formulating General Policies
Provides Integrated Approach
Continues Review

UNIT II

STRATEGIC MANAGEMENT FOR BUSINESS

REASONS BEHIND FAILURE OF STRATEGIC MANAGEMENT

1. Strategy is concerned with future course of action and the future being
uncertain due to various reasons, definite strategy cannot be determined. It
is likely to be erroneous if adopted.
2. Business cycles, government rules, competitors role, etc., make strategy
planners weak and force them to change strategy very often.
3. Risk involved in the implementation of a strategy is more since strategy
involves long-range planning which is subject to greater degree of
uncertainty.
4. Success of strategy depends on the joint efforts and co-operation of people in
the organisation and in practice, it is seldom expected and therefore, there
are more unforeseen impediments in the successful implementation of the
strategy.
5. Conficts between managers goals and the company goals may be an
additional impediment.
6. Management is generally reluctant either to drop or modify the
predetermined strategy for achieving the benefits of market opportunities.

CHAPTER IV
CORPORATE STRATEGY

UNIT II

CORPORATE STRATEGY

INTRODUCTION
Corporate management is a broad phenomenon and covers a wide spectrum of activities. It
is the direction an organisation takes with the objective of achieving business success in
the long-term. Recent approaches have focused on the need for companies to adapt to and
anticipate changes in the business environment, i.e., a flexible strategy.

CORPORATE STRATEGY
Corporate strategy is related mostly to external environment. Corporate strategy is formulated
at the higher level of management. At operational level, operational strategies are also
formulated. It requires systems and norms for its efficient adoption in any organisation.
Corporate strategy is concerned with a unified direction and efficient allocation of
organisational resources and encompasses the entire management process.

UNIT II

CORPORATE STRATEGY

SCOPE OF CORPORATE MANAGEMENT

The term corporate management is an extension of the term corporate planning and also
includes implementation and control aspects. More specific, the scope of corporate
management is spread over different areas. They are as follows:

Role of top management in corporate governance.

Code of conduct including audit committee, governance committee, etc.

Competitive scenario for dynamic and global markets.

Market structures and network externalities.

Strategic enablers like IT, R&D, knowledge and innovations, etc.

Corporate social responsibility including ethics, values and social audit.

Philanthropy as a strategic choice.

UNIT II

CORPORATE STRATEGY

ESSENTIALS OF CORPORATE PLANNING

Corporate planning deals with the future of current decisions.

The process of corporate planning integrates strategic planning with shortrange operational plans.

A few authorities use comprehensive

corporate planning, strategic planning,
long-range planning, formal planning,
corporate planning, etc., as synonymous to
each other.

Corporate planning is viewed as an

organisational process resulting in
developing strategic intent and action
plans to achieve the objectives.

UNIT II

CORPORATE STRATEGY

STEPS OF CORPORATE PLANNING PROCESS

Following are the steps of corporate planning process:

Formulation of strategic intent

Environmental appraisal

General of strategic alternatives

Evaluation of alternatives

Decisions in terms of strategy, policies

and programmes

UNIT II

CORPORATE STRATEGY
BENEFITS OF CORPORATE PLANNING

Following are the benefits of corporate planning

Corporate planning ensures a rational allocation of resources and
improves co-ordination between various units or divisions.
With corporate planning, significant improvement in performance is
reflected.
A formal planning system can help the management in responding
to a dynamic environment and in managing a strategically complex
organisation with limited resources.
With corporate planning, a sense of making a systematic and
critical review of business is developed.
This develops a visionary approach. A habit of forward thinking is
encouraged in forward planning.

UNIT II

CORPORATE STRATEGY

NEED FOR CORPORATE MANAGEMENT

Scarcity of resources
Fast technological changes
Changing human values
Multiplicity of stake holders
Growing competition
Liberalisation, privatisation and globalisation
Growing scale of business operations
Faster and quicker modes of transportation and
communication
Professionalism in management

UNIT II

CORPORATE STRATEGY

FUNCTIONS OF CORPORATE STRATEGY

It provides a dual approach to problem solving. Firstly, it exploits the most

effective means to overcome difficulties and face competition. Secondly, it
assists in the deployment of scarce resources among critical activities.

It focuses attention upon changes in the organisational set up, administration

of organisational process affecting behaviour and the development of
effective leadership.

It offers a technique to manage changes. The management is totally prepared

to anticipate, respond and influenced to look at changes. It also offers a
different way of thinking.

It furnishes the management with a perspective whereby, the latter gives

equal importance to present and future opportunities.

It provides the management with a mechanism to cope with highly complex

environment characterised by diversity of cultural, social, political and
competitive forces.

UNIT II

CORPORATE STRATEGY

KINDS OF CORPORATE STRATEGY

Stability Strategy

Expansion
Strategy

Combination
Strategies

Retrenchment
Strategy

UNIT II

CORPORATE STRATEGY

LIMITATIONS OF CORPORATE STRATEGY

1. The process of
strategy formulation
is not an easy task.

2. Corporate strategies
are useful for longrange problems.

3. As future is
uncertain and
cannot be predicted
accurately, the
strategic planning
system based on
hazy and
uncertain estimates
is not exact.

4. Implementation of
corporate strategy is
influenced by
organisational
factors, behavioural
factors and
motivational factors.

CHAPTER V
TOP MANAGEMENT

UNIT II

TOP MANAGEMENT

INTRODUCTION
Highest ranking executives with titles such as chairman, chief executive officer, managing
director, president, executive directors, executive vice-presidents, etc., are responsible for
the growth of the entire enterprise. Top management translates the policy formulated by the
board of directors into goals, objectives and strategies and projects a shared vision of the
future.
MANAGEMENT LEVELS
TOP LEVEL MANAGERS
MIDDLE LEVEL MANAGERS
FIRST LEVEL MANAGERS

UNIT II

TOP MANAGEMENT

BOARD OF DIRECTORS
A board of directors is a body of elected or appointed members who jointly oversee the
activities of a company or organisation. The body sometimes has a different name, such as
board of trustees, board of governors, board of managers, or executive board.

DUTIES OF BOARD OF DIRECTORS

Following are the duties of board of directors:

Governing the organisation by establishing broad policies and objectives.

Selecting, appointing, supporting and reviewing the

performance of the chief executive.

Ensuring the availability of adequate financial resources

Approving annual budgets.

Accounting to the stakeholders for the organisations

performance.

Setting their salaries and compensation.

UNIT II

TOP MANAGEMENT

BOARD OF DIRECTORS

CHAIRMAN

CHIEF EXECUTIVE
OFFICER

CHIEF FINANCIAL
OFFICER

PRESIDENT

BOARD OF
DIRECTORS

UNIT II

TOP MANAGEMENT

DUTIES OF BOARD OF
DIRECTORS
Chief Responsibilities and Skills of Top Management

Planning

Organising

Controlling

BUSINESS ENVIRONMENT
UNIT III

CHAPTER VI
STRATEGIC PLANNING

UNIT III

STRATEGIC PLANNING

INTRODUCTION
Strategic Planning consists of a set of decisions which leads to the development of an
effective strategy. Strategic planning can be defined as the continuous process of making
present entrepreneurial decisions systematically and with the greatest knowledge of their
futurity; organising systematically the efforts needed to carry out these decisions; and
measuring the results of these decisions against the expectations through organised
systemic feedback.

UNIT III

STRATEGIC PLANNING

STRATEGIC PLANNING

Strategic planning is a systematic and disciplined exercise to formulate strategy. It is more

comprehensive as it concentrates on the whole organisation. Strategic planning is a forwardlooking exercise which determines the future posture of the enterprise. Strategic planning is an
organisations process of defining its strategy or direction, and making decisions on allocating
its resources to pursue this strategy, including its capital and people.

UNIT III

STRATEGIC PLANNING

SETTING ORGANISATIONAL GOALS AND OBJECTIVES

The major outcome of strategic road-mapping and strategic planning, after gathering
all necessary information, is the setting of goals for the organisation based on its
vision and mission statement.

A goal is a long-range aim for a specific period.

It must be specific and realistic.

Long-range goals set through strategic planning are translated into activities that will
ensure reaching the goal through operational planning.

Setting objectives involves a continuous process of research and decision-making.

Strategic planning takes place at the highest levels; other managers are involved with
operational planning.

The first step in operational planning is defining objectivesthe result expected by the
end of the budget cycle.

UNIT III

STRATEGIC PLANNING

THE SWOT MATRIX

S-O strategies
pursue
opportunities
that are a good
fit to the
companys
strengths.

W-O strategies
overcome
weaknesses to
pursue
opportunities.

S-T strategies
identify ways
that the
company can
use its strengths
to reduce its
vulnerability to
external threats.

W-T strategies
establish a
defensive plan to
prevent the
companys
weaknesses from
making it highly
susceptible to
external threats.

CHAPTER VII
IMPLEMENTATION OF
STRATEGY

UNIT III

IMPLEMENTATION OF STRATEGY

ACTIVATING STRATEGY
After designing strategies to be adopted in plans and finalising them, the top management
should take necessary steps for implementing the designed strategy.
STRATEGY FORMULATION vs. STRATEGY IMPLEMENTATION

Strategy formulation and implementation are intertwined.

Strategy formulation is concerned with the development of long-term plans for effective
management of environmental opportunities and threats, in the light of the
organisational strengths and weaknesses.

Strategy implementation is the process by which strategies and policies are out to action
through the development of programmes, budgets and procedures.

Implementation requires changes in the culture, structure and management system to

the entire organisation.

Strategy formulation, the thinking process implementation is the doing process.

UNIT III

IMPLEMENTATION OF STRATEGY

ASPECTS OF STRATEGY IMPLEMENTATION

Strategy implementation includes the following:
Strategi
es

Policies

Procedure
s

Rules

Methods

STEPS IN IMPLEMENTATION OF A STRATEGY

RESOURCE ALLOCATION
FIXING KEY TASKS AND PRIORITIES
ASSIGNING THE TASKS
AUTHORITY DELEGATION
FORMULATING METHODS
POLICIES, GOALS, MIS AND FEEDBACK
REWARDS AND INCENTIVES
TRAINING THE TRAINERS
IMPLEMENTATION
RESTRUCTURING THE STRATEGY

Budgets

UNIT III

IMPLEMENTATION OF STRATEGY

ISSUES IN STRATEGY IMPLEMENTATION

Successful implementation of a strategy depends on how efficient the organisation is
in allocating resources, designing suitable structure, formulating functional
strategies, etc. It should be noted that the objectives give rise to issues; issues lead
to plans and plans result in different projects and programmes. It may include
modernisation of existing facilities or installation or new or additional plants, etc.
Important issues relating to strategy implementation are as follows:

Project
Implementatio
n

Resource
allocation

Procedure
implementatio
n

UNIT III

IMPLEMENTATION OF STRATEGY

IMPORTANCE OF ORGANISATIONAL STRUCTURE

Following points illustrates the importance of organisational structure

It determines the nature of work to be done by different people in the organisation.

It establishes relationship between various activities in the organisation.

It establishes an effective communication system in the organisation.

It ensures proper delegation of authority and responsibility.

It ensures smooth functioning of the organisation.

It ensures co-ordination among workers.

It helps in effective use of human resource of the organisation.

It encourages creativity.

It helps in measuring performance of people in the organisation.

CHAPTER VIII
SOCIAL
RESPONSIBILITY

UNIT III

SOCIAL RESPONSIBILITY

INTRODUCTION
The social responsibility of a business refers to such decisions and activities of a business firm
which provide for the welfare of the society as a whole along with the earning of profit for the
firm. The business firm functions and acts in such a way that it will accomplish social gains
along with the traditional economic gains in which the business firm is interested.
CHARACTERISTICS OF SOCIAL RESPONSIBILITY
Following are the characteristics of social responsibility:

The concept of social responsibility of a business applies to all

business organisations both in private and public sectors
which have been established for earning profits.

Social responsibility of a business is continuous process as

business is a regular and an on-going activity.

The concept of social responsibility of business lays emphasis

on the all-round development of all the sectors of the business.

The concept of social responsibility of business is the basis of

the success of business. Today, the business cannot survive
without the active support of the society.

UNIT III

SOCIAL RESPONSIBILITY

IMPORTANCE OF BUSINESS ETHICS

Following points illustrates the importance of business
ethics:
They determine business objectives.

They contribute to better management decisions.

They compel business units to meet basic human needs.

They increase goodwill of the enterprise. The business unit which is ethical in
its activities will be respected by the society.

They act as tool for evaluating the business practices of a concern.

UNIT III

SOCIAL RESPONSIBILITY

TYPES OF SOCIAL AUDIT

Social
Process
Audit

Financial
Macro-Micro
Social
Statements
Social
Partial
Performanc
Format
Indicator
Social Audit
e Audit
Social Audit
Audit