Business Environment
• Business Environment is a direct relationship between successful management and the influence and impact of environmental change.
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External business environment:
• External Business environment is a set of political, economic, social and technological (PEST) forces that are largely outside the control and influence of a business, and that can potentially have both a positive and a negative impact on the business.
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Factors influencing the business environment :
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Technological innovation
Globalization
Growth of poverty
Collapse of emerging markets
Shift from manufacturing jobs to service jobs
New methods of manufacturing
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Internal Business Environment
• Internal Business Environment is the set of elements or forces which affects a organization's or firm’s behaviour.
• Examples are like personnel, finance, marketing, production, operational research and so on.
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MICRO ENVIRONMENT
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Micro environment is the environment that an organization can influence. It may not be able to
Correct all flaws in the microenvironment, but it has a much better control over the macro environment. Amity Business School
Factors Influencing Micro –Environment
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Consumers – needs , purchasing power and behavior
Suppliers
Market intermediaries
Competitors
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I. Micro environment of business.
1) Suppliers
Supply raw materials and other components
(Inputs)
Importance
-- Reliable supply – continuous supply for smooth functioning
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2) CUSTOMERS
Different categories of customers
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Industrial customers
ii. Wholesale customers iii. Retail customers iv. Government customers
v. Foreign customers
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3) Market intermediaries
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Middlemen.
ii. Physical distribution Firms: (warehouses and transport firms) iii. Marketing service agencies (Advertising agencies market research firms, media firms, consulting firms) iv. Financial intermediaries
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4. Competitors:
The Threat of entry of new firms
The Power of Buyers
The Power of Suppliers
The Power of Substitutes
The Intensity of Rivalry among existing firms
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MACRO ENVIRONMENT
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• Macro Environment are major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies.
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These factors include :• Sociological Factors
• Political Factors
• Legal Factors
• Educational Factors
• Technological Factors
• Economical Factors
• Natural Factors
• Historical Factors
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SOCIOLOGICAL FACTORS
It concerns with society as a whole; it covers health, media, education, minorities, women, organized labour , legal system and demographics.
The biggest challenge to firms is the society's changing demands.
POLITICAL FACTORS
Political environment gives shape to business. Political stability, Government administration, Philosophy of the political parties are some of political factor which affects the business environment
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LEGAL FACTORS
Legal Environment has a permanent and lasting impact in shaping business .
Labour law act, Industrial dispute act, Minimum wages act, Law of contract,
Import & Export control act and tax
