Business Environment Flashcards
What is business environment ?
Business environment is the total sum of individuals, institution and other forces that are outside the control of business enterprise but that may affect its performance.
What is Environment scanning?
Environment scanning refers to complete awareness and understanding of business environment. Business environment provide constraints as well as opportunities for the businessman
What are the features/nature/characteristics of business environment ?
- All of external forces : business environment includes all the forces, institutions and factors which are external to business organisations
- Specific and general forces : specific forces affect business enterprise directly and immediately in day to day working, it includes suppliers, investors, customers.
General forces (such as social, political, legal and technological conditions) have impact on all business enterprise and may affect an individual firm only indirectly. - Interrelation : Different elements of business environment are interrelated.
- Uncertainty : Business environment is uncertain as it is difficult to predict future happenings as environment is changing too fast.
- Dynamic : Business environment is highly flexible and keeps on changing.
- Complexity: it is difficult to understand the impact of business environment on the companies.
- Relativity: Business environment differ from country to country, region to region. Constraint for one opportunity for other
What are the importance of business environment?
- Enable the firm to identify opportunity and getting first mover advantage: early identification of opportunities help firm to be the first to exploit them instead of losing them to competitors
- Help in identifying threats and early warning signals : The businessman who are able to scan And understand the business environment on time get a warning signal to deal with the constraints of business environment
- Helps in tapping and assembling resources: The businessman acquired
raw material and other resources keeping in mind the output demanded in the environment - Helps in coping with rapid changes: Managers must understand and examine the environment and develop suitable courses of actions according to the external involvement changes
- Assisting in planning and policy formulation: The major strategies or plans are policies in the organisation are formed keeping in mind business environment because the plans and policies have to be implemented in the presence of environmental factors.
- Improvement in performance: With continuous scan of business environment companies can easily improve their performance.
What are the dimensions of business environment?
P e s t le
Political, economical, Social, Technological, Legal
All the factors forces and institutions which have direct or indirect influence over the business transactions
Explain economical environment
All thw forces and factors which affect the economy directly
Increase in gdp
High inflation rates
Decrease in interest rates
Passing of gst bill
Changes in economic and fiscal policy
Banking sector reform
Role of private and public sector
Rate od saving and investment
Money supply
International debt
Explain social environment
Consists of customs, traditions, standard of living, taste, preference, education level, beliefs, etc
Demand for reservation in job for minority and women
Change in quality of life
Birth and death rate and population
Education and literacy rates
Tradition custom and habit of ppl
Explain political environment
Consists of all the factor related to govt affairs such as type of govt in power, attitude of govt towards ppl policies implemented etc,
Swatch bharat abhiyan
Constitution of county
Foreign policy
Value and ideology of political parties
Present political system and profile of political leaders
Explain legal environment
Obeying the law of land
Various laws and legislative
Administrative order issue by govt authority
Court judgement
Legal policy
Check on ad
Foreign exchange regulation and mangment act
Licensing and Foreign trade policy
Explain Technological environment
Forces related to scientific improvements and innovations which provide new ways of producing good and services and new way of operating business
Online sale online booking
Comparing of different things
Innovation in diff scientific and engineering field
Demonetisation
The withdrawal of currency as a legal tender
Features of demonetisation
Demonetisation as a tax administrative measure : ppl had to declare their cash holding to get it exchanged from bank
Non tolerance of tax : govt will no longer accept tax envasion
Creating cash less economy: channelizing more through the formal financial system and improving tax compliance
Tax administrating and channelising saving into formal financial system : cash deposited by ppl for exchange will be offered to ppl for loan under new schemes
