Business Environment

-Omdeep Gupta
 Learning Objectives
 Definition of Business Environment (BE)
 Nature of BE
 Importance of BE
 Types of BE and their interaction with each other

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 How to Define BE?

Decisions and
performance of
organization is dependent
upon diverse set of factors

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 How to Define BE?

Business Env can be

defined as the total
surroundings which have
direct or indirect bearing
on the business activities.
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 Differing views of BE?
View 1: View 2: View 3:
It consists of Internal Economic :
both external environment Fiscal, Monetary
and internal helps to cope up and Industrial
environment with external Policy, Nature of
(physical and env,, which is out economic system
psychological of control of and Pace of
resources) business. economic
development

Non Economic:
MUTUAL Socio Cultural,
Politico-Legal,
INTERACTION Technological
and Natural
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 Nature of BE
• Keep track of changes and
Dynamic development

• Factors, Events and Conditions interact

Complex with each other

• Some treat an influence as threat and

Multifaceted some opportunity

Far Reaching • On survival, growth and continuity of

Impact business. E.g. demand and supply

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 Importance of BE
• Continuous env scanning helps in visualizing the
impact of changes and taking corrective action
• Helps in identifying threats and opportunities in
business
• Helps in identifying strengths and weaknesses in
view of the technological and global
developments.

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 Importance of BE contd.
• Helps in evaluating the present strategies and
formulating future strategies
• It enable firms to analyze competition and
formulate necessary counter strategies
• Helps firm to adapt to the changes and sometimes
influence environment to make it congenial to the
business.

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 Types of BE
Internal Environment
• Value system and Ethical standards
• Mission, Goal and Objectives
• Orgn structure determining the extent of
professionalism and HR- skills, morale,
commitment, attitudes
• Physical Assets and Facilities- available technology,
production capacity, logistics, marketing efficiency
• Financial Position, sources of funds, capital
structure, financial policies
• Corporate Image and Brand Identity
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 Types of BE
External Environment

• Micro Environment
• Forces which are in immediate contact with the
business : Customers, Competitors, Mktg
intermediaries, Suppliers, workers and publics
• Macro Environment
• Societal or physical forces which impact both
business and micro environment : Economic,
Technological, Politico-Legal and Socio Cultural
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Micro Environment

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Macro Environment

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