Business Environment Flashcards
What is Business Environment?
It is the aggregate of all conditions, events and influences that surrounds and effect the business organisation.
Features of business environment?
- Totality of external forces
- General & specific forces
- Diversity
- Relativity
- Mutual dependence
- Dynamic
Importance of business environment?
- First mover advantage
- Early warning signal
- Public image
- Coping with change
- Customer focus
Dimensions of business environment
Micro environment and macro environment
What is micro environment? What is it also known as?
Micro env. refers to all those internal & external factors that exercise a direct control on the working & performance of an individual business organisation.
It is also known as Direct Section Environment or Task Environment.
What are the factors of Micro environment?
Internal factors:
- Corporate culture
- Power structure
- Company image & brand equity
- Human and other resources
- Top management
- Mission and objectives
External factors:
- Customers
- Suppliers
- Public
- Financiers
- Competitors
- Marketing intermediaries (middlemen)
What is Macro Environment? What is it also known as?
It refers to the general environment or remote environment within which a business firm and forces in its micro environment operate.
It is also known as Indirect Action Environment
Factors affecting macro environment?
- Social environment
- Economic environment
- Legal (regulatory) environment
- Technological environment
- Political environment
Factors of macro environment in detail :
1) Economic environment
Consists of factors & forces concerning means of production & distribution of wealth.
COMPONENTS:
1. Organisation& development of the cap. market
2. Market conditions: degree of competition
3. Stage and pace of economic growth in the country
4. Industrial infrastructure: transportation, communication , power, etc.
2) Social environment
Consists of all the social and cultural forces within which business firms operate.
COMPONENTS:
1. Social attitudes, customs, traditions, rituals, culture, life styles, etc.
2. Family structure & values
3. Education levels, awareness of rights, work ethics.
4. Demographic trends- life expectancy, male- female ratio, income distribution, etc.
3) Legal environment
Business has to function within the framework of laws & regulations of the country.
COMPONENTS:
1. Rights & duties of citizens as specified in our constitution.
2. Flexibility & adaptability of laws.
3. Laws concerning promotion , operation & expansion
of business.
4. Judicial system of the country & judicial decisions.
4) Technological environment
Refers to the state of science & technology in the country and related aspects such as technological change, manufacturing processes & equipment, etc.
T.E depends upon several factors such as innovation among people, application of new technology, access to foreign technology, etc.
T.E. exercises a significant influence on industry & commerce. Advancements in technology help to improve productivity and quality.
5) Political environment
Consists of forces concerning management of public affairs & their impact on business.
COMPONENTS:
1. Constitutional framework
2. Foreign policy & defense policy of the country
3. Relations of the country with other countries.
4. The political structure- centre-state relations
5. Political philosophy & stability of the government
What is SWOT Analysis?
STRENGTH:
Inherent capability of the company
WEAKNESS:
Inherent limitation/ constraint of the company
OPPORTUNITY:
Favourable condition in the company’s external environment
THREAT:
Unfavourable condition in company’s external environment
