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OVERVIEW OF BUSINESS
ENVIRONMENT
UNIT-I
Jyoti Gupta
CHAPTER-1
INTRODUCTION TO BUSINESS
ENVIRONMENT
ENVIRONMENT
The environment of any organization is
CONCEPT OF BUSINESS
ENVIRONMENT
Keith Davis The aggregate of all conditions, events
and influences that surround and effect business
Arthur M. Weimer Business Environment
encompasses the climate or set of conditions, economic,
social, political or institutional in which business
operations are conducted
Jyoti Gupta
CHARACTERISTICS OF
ENVIRONMENT
Environment
NATURE OF BUSINESS
ENVIRONMENT
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SIGNIFICANCE OF BUSINESS
ENVIRONMENT
First mover advantage
Early warning signal
Customer focus
Strategy formulation
Change agent
Public image
Continuous learning
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Internal
Environment
(somewhat
controllable)
External
Environment
(beyond
control)
STRENGTHS
WEAKNESS
OPPORTUNITIES
THREATS
INTERNAL ENVIRONMENT
INTERNAL FACTORS INFLUENCING INTERNAL
ENVIRONMENT ARE:
Culture- Values, beliefs, attitudes of the founders and top management influence
the business.
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Company image and brand equity: Image and brand power plays
a significant role in raising finance, forming alliances, choosing dealers and
suppliers,etc.
EXTERNAL ENVIRONMENT
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micro
macro
MICRO/TASK ENVIRONMENT
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MACRO ENVIRONMENT
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3.
4.
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2.
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CHAPTER-2
ENVIRONMENTAL ANALYSIS
Environmental analysis is the exploratory
process through which an organization monitors
and comprehends various environmental forces
so as to determine the opportunities and threats
that lie ahead.
Also known as environmental appraisal and
environmental scanning
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ENVIRONMENTAL
SCANNING
PROCESS OF ENVIRONMENTAL
ANALYSIS
Collecting relevant
information about the
identified factors from
sources like company
records, publications, etc.
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Environmental
scanning
Process of identifying
factors which may
influence the business.
Environment
monitoring
Forecasting future behavior of
Environmental different aspects of
environment which affects
forecasting
business by regression, time
series, delphi, etc.
Assessing factors in
terms of their impact on Diagnosis(assess
environment, favorable
ment)
or unfavorable by
ETOP,SWOT,etc.
IMPORTANCE OF ENVIRONMENTAL
ANALYSIS
Creates awareness amongst managers about the
events and their linkages with business.
Keep managers alert and informed
Helps in identifying threats and opportunities.
Provides early warning signals
Continuous learning about the transformation in
the industry.
Helps in narrow down the range of available
alternatives while taking decisions
Formulation of strategies.
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LIMITATIONS OF ENVIRONMENTAL
ANALYSIS
Based on assumptions
Not accurate and absolutely true
Time consuming and expensive
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Systematic
approach.
Continuously
updating
Ad hoc
approach
to deal with
specific issues
Processed-form
approach
secondary
sources of data
Ad Hoc
Usually performed in response
General
to crisis
Character Not as in-depth
istics
Forecasts are more short-term
Periodic
Continuous
Predictable frequency
allows for appropriate
budget planning
Frequency provides
timely information
gathering for planning
Planning is proactive
Pros
Cons
SOURCES OF
INFORMATION
Documentary
or secondary
sources of
information
External
agencies
Mass media
Internal
sources
Formal studies
Spying and
surveillance
International
publications
Government
publications
Institutional
publications
Periodicals
and
newspapers
Online
databases
and systems
Agencies
QUEST (Quick
environmental
scanning
technique),
Environmental
threat and
opportunity
profile (ETOP)
SWOT
PESTLE
ANALYSIS
PORTERS
FIVE FORCES
QUEST (QUICK
ENVIRONMENTAL SCANNING
TECHNIQUE)
ETOP
Environmental sector
Nature of
impact
Market Environment
Technological
Technological up gradation in
progress, import of machinery
simple
Supplier Environment
Economic Environment
Regulatory
Environment
Environment
Socio-cultural
SWOT
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Defining
business
objectives and
mission
Environmental
analysis
Strategic
alternatives
and choice of
strategy
Implementatio
n of strategy
Evaluation and
control of
strategy
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CHAPTER-3
MANAGING DIVERSITY
DIVERSITY
Variety
Mixture
Mix
Multiplicity
Co-existance of people from different
backgrounds.
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MULTI CULTURALISM
IMPORTANCE OF MANAGING
DIVERSITY
Lower costs
Better staffing
Marketing advantage
Creativity
Problem solving
Flexibility
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Higher career
involvement of women:
1. dual career 2. sexual
harassment 3. work
family conflict
managing
diversity
HR Management
systems(BIAS FREE):
1. Recruitment 2.
Training and
development 3.
Performance appraisal
4. compensation and
benefits 5. promotion
Cultural differences: 1.
promoting knowledge and
acceptance 2. taking
advantage of the
opportunities that diversity
provides
Education problems: 1.
improve public schools
2. educate management
on valuing differences
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Heterogeneity in race/
ethnicity/ nationality 1. effects
on cohesiveness,
communication, conflict,
morale 2. effects of group
identity on interaction 3.
prejudice(racism)
Organisation culture:
1.valuing differences 2.
prevailing value system
3. cultural inclusion
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CHAPTER 4:
NATURE AND SCOPE OF BUSINESS
CONCEPT OF BUSINESS
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CHARACTERISTICS OF BUSINESS
Sale, transfer or exchange
Dealing in goods and services
Continuity in dealings
Profit motive
Risk or uncertainty
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SCOPE OF BUSINESS
commerce
Extractive
industries
Hindrances :
Genetic
industries
Of person
Of place
Trade
Transportation
Internal and
home trade
Of time
Manufacturing
industries
Construction
industries
Of risks
Of exchange
Of knowledge
Warehousing
and storage
Insurance
International
and foreign
trade
Banking
advertising
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Industry
Auxiliarie
s to trade
Industry
Commerce
Trade
Meaning
extraction.,
reproduction,
conversion processing
and construction of
useful products.
Activities involving
distribution of goods
and services
Scope
Consists of all
activities involving
conversion of
materials and semi
finished products into
finished goods
Comprises exchange
of goods and services
Capital
Large amount of
capital
Capital needed to
maintain stock and to
grant credit
risk
High risk
comparison
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Thank you
Jyoti Gupta