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THE NATURE AND SCOPE OF BUSINESS ENVIRONMENT
EVENTS AFFECTING BUSINESS CPI
----
Backing out in the matter of INDIA signing The Nuclear Deal With The USA (PE)
RELIANCE ----
Walking out of Retail in U.P.
TATA Nano ----
Being evicted from Singrur
US Sub ---prime Crisis
Led to worldwide recession
(SE)
(IE)
NEW ECONOMIC ---- Led to economic progress (EE) POLICY OF INDIA RANBAXY ---- 30 Drugs banned by USFDA TROUBLE
(LE)
RIL
«« Resistance to increase in tariffs (SE)
Budget
««. Placing emphasis on Rural Sector (EE)
Pope¶s Call
««. Threat to Outsourcing
SEZ
««. Stamp duty waiver (PE)
SATYAM ---COLLAPSE
Poor Internal management (LE )
MEANING & SCOPE OF BUSINESS TO PRODUCER
USER
Activity «. Raise funds from capital markets «. Obtain various inputs «. Raise financial resources «. Transport finished product to market «. Advertisement creates awareness of product «. Distribution agencies reach the product to the ultimate user «. Risks are covered through Insurance companies
BUSINESS DIMENSIONS
«.. FINANCE «.. TRADE «.. TRANSPORT «.. PRODUCTION «.. BANKING «.. INSURANCE «.. ADVERISING «.. INDUSTRY «.. COMMERCE
CHARACTERISTICS OF MODERN BUSINESS
LARGE SIZE
OLIGOPOLISTIC CHARACTER
DIVERSIFICATION
GLOBAL REACH
HUL, Telco, L&T, Tata Motors, Maruti Udyag, Hero Honda Small number of firms selling a homogenous or differentiated product Modern business in its attempt to grow over time takes recourse to diversification Companies have expanded their revenues and assets base across countries and engage in cross border flow of capital goods and know how
TECHNOLOGY ORIENTATION
CHANGE
Technology orientation to improve products and cut costs. R & D Japanese & Korean Companies
Strategies for making changes in product design, quality, and packaging for offering differentiated products. Role of Govt. in both developed & underdeveloped countries has diminished
GOVERNMENT CONTROL
Govt. Role
Market failures Externalities Public goods
CHARACTERISTICS OF ENVIRONMENT
Complex
Environment consists of a number of factors, events, conditions and influences arising from different sources which impact business
Dynamic
Environment is constantly changing
Multifaceted
Impact
Environment has different effects on different industries e.g. WTO
Environment has different effects on different firms in the same industry e.g. Drugs
Opportunity & Threat
It may be an opportunity as well as a threat to expansion. E.g Liberalization«HUL
Increases Competition
General environmental changes alter the boundaries of an industry and change the nature of its competition
Unpredictable
Environmental changes are difficult to predict with any degree of accuracy e.g. interest rate fluctuations, rate of inflation, exchange rate variations.
IMPORTANCE OF THE STUDY OF BUSUNESS ENVIRONMENT
STRATEGIES & POLICIES : Helps an organization its broad strategies and long term policies
COMPETITORS ANALYSIS : Enables an organization to analyse its competitors strategy and thereby formulate effective competitive strategies
DYNAMISM : Knowledge about changing environment will keep the organization dynamic in its approach
IMPACT : Enables the organizations to foresee the impact of socioeconomic changes at the national and international level on its stability
ADJUSTMENT : As a result of the study, executives are able to adjust to the prevailing conditions and thus influence the environment to make it congenial to do business
Environment and Strategic Management
Environmental scanning
Strategy Formulation
Strategy Implementation
Evaluation and Control
Input Providers
Customers
Channel Members
Employees
INTERNAL ENVIRONMENT
Rivals
Government
Domestic Macro Environment Economic System Economic Stability
Socio-Cultural Environment
Growth & Distribution Environment EXTERNAL ENVIRONMENT Competitive Environment Non Economic Macro Environment
Economic Policy Demographic Environment
INTERNATIONAL ENVIRONMENT
DIFFERENT LAYERS OF BUSINESS ENVIRONMENT INTERNATIONAL ENVIRONMENT
Domestic Macro Environment Economic System Economic Stability Competitive Environment