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Thus, the term business means continuous production and distribution of goods and services with the aim

of earning profits under uncertain market conditions.

Exchange of goods and services Deals in numerous transactions Profit motive Risk and uncertainties Buyer and seller Marketing and distribution Satisfaction of human wants Social obligations

External factors Dynamic in nature

Specific and general forces

Uncertainty Relativity

Organisational principles Vision mission and objectives Human resource Management structure Internal relationships Research and development Marketing resources Financial factors

Micro factors Suppliers : Reliable suppliers should be banked upon. They also influence the quality and cost of production. Multiple sources of supply should be developed. Customers : Their needs should be met. There should be a diversity in customers segments. Competitors : Competition has become fierce due to globalisation. Competition can be either desire competition, generic competition or brand competition. Marketing Intermediaries: Firms involved in promoting, selling and distributing, agents, warehousing firms, advertising agencies, marketing research agencies, consulting firms. Public : Media, local citizens and NGOs have a great impact on the companies. They may pose threat to the companies or may even provide opportunities to the business.

Macro factors Economic : Foreign trade policies, fiscal policies, GDP, monetary policy, industrial policy, EXIM policy. Political : Philosophy of political parties, image of the leaders, government affairs. Socio cultural : Caste structure, educational system, values beliefs and morals of the people. Demographic : This refers to the size, density, distribution and growth rate of
population. Natural : Refers to the natural endowments, climatic conditions,

locational aspect of the country. Technological : It poses threat and even gives opportunities to the business. No business can afford to work in outdated technologies.

Continuous process. Enables early warnings Requires analytical skills An avoidance can lead to failure

It aims at: Giving an idea about organisational environment Gives a brief about the competitors Makes the managers aware of the threats and opportunities Helps in predicting the future

1. Scanning An overall analysis of all the areas. It is an ill-structured activity An ambiguous but exploratory activity Enables making sense out of the unstructured data 2. Monitoring Involves collection of relevant information only after identifying the forces acting on the business Structured and meaningful analysis More focused and systematic activity Data gathered by discussions with employees, suppliers, and competitors

3. Forecasting Involves anticipating before formulating the strategic plans It is a deductive and complex activity Forecasts are made in all facets Techniques used are: scenario building, delphi technique, expert opinion. 4. Assessment It reveals the implication of environment on strategic management. It helps in identifying the reasons why the current changes will affect the strategic management.

Makes the manager aware and keeps them informed Serves as an early warning signal to alarm the company

about impending threats It creates new equilibrium in the business It is essential for implementation of strategies Enables the selection of suitable alternatives and thereby concentrate on more important alternatives

Environmental turbulence and dynamism makes

prediction difficult. External environment is enormous to be kept track about as every move in any part of the world may have and impact on the business. A combination of systematic, adhoc and processed approach should be used.

It is the formulation and implementation of plans and carrying out of activities relating to matters which are of vital importance to achieve the corporate objectives. It involves environmental analysis which includes the following steps: Defining business mission and objectives Mission is the purpose which differentiates the organisation from others. It implies the image of the company which the organisation desires to project. Objectives define the company. They lay down what the company stands for.

SWOT Analysis

It involves the identification of the core area of business of an enterprise and also the weak areas which should be given up to survive. Choice of strategy All the alternatives should be identified and the most feasible one should be chosen which becomes the companys strategy. Implementation Effective implementation is necessary for successful strategy. Plans are prepared and resources are arranged. This requires sound organisational structure, effective information system, control system, functional polices.

Evaluation and control

To see whether the implemented plans are achieving the objectives or not. Corrective steps could be taken according t the cause of failure. It is an ongoing process, because continuous monitoring is needed.

To implement strategies the nature and the degree of competition should be clearly understood. The state of competition can be classified as under: Threat from existing companies : Leads to rivalry because of aggressive promotional strategies to win over customers resulting into lower prices thus lowering the profits. Threat from new entrants