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8/8/2019 Business Environment[1]
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The CommercialThe Commercial
EnvironmentEnvironmentMeaning, Concept, Significance & NatureMeaning, Concept, Significance & Nature
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ObjectiveObjective
After reading this section you should beAfter reading this section you should be
able to describe the environmental forcesable to describe the environmental forcesthat affect the companys ability to serve itsthat affect the companys ability to serve its
customers & understand the significance ofcustomers & understand the significance of
Commercial Environment in BusinessCommercial Environment in Business
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Commercial EnvironmentCommercial Environment
The actors and forces outsideThe actors and forces outside
business/marketing that affectbusiness/marketing that affect
marketing managements abilitymarketing managements abilityto develop and maintainto develop and maintain
successful transactions andsuccessful transactions and
relationships with its targetrelationships with its target
customerscustomers..
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INTRODUCTIONINTRODUCTION
Society and business enterprises areSociety and business enterprises are
mutually dependentmutually dependent
Business enterprises satisfy societal needsBusiness enterprises satisfy societal needsRelationship between society and businessRelationship between society and business
enterprises takes place in a changingenterprises takes place in a changing
environmentenvironment
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COMPONENTS OF THECOMPONENTS OF THE
BUSINESS ENVIRONMENTBUSINESS ENVIRONMENT
Different environmental variables existDifferent environmental variables exist
internally and externally to the businessinternally and externally to the business
enterpriseenterprise
Environmental variables have a positive orEnvironmental variables have a positive or
negative influence on the enterprisenegative influence on the enterprise
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COMPONENTS OF THECOMPONENTS OF THE
BUSINESS ENVIRONMENTBUSINESS ENVIRONMENT Business environment consists of two subBusiness environment consists of two sub--
environments:environments:
Internal (micro) environmentInternal (micro) environment
External environmentExternal environment
Market environmentMarket environment
Macro environmentMacro environment
Mutual relationships exist between theseMutual relationships exist between these
environmentsenvironments
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Significance ofCommercialSignificance ofCommercial
EnvironmentEnvironment First Mover AdvantageFirst Mover Advantage
Warning SignalsWarning Signals
Sensitize the ManagementSensitize the Management Basis ofStrategyBasis ofStrategy
Source of intellectual SimulationSource of intellectual Simulation
Image BuildingImage Building Continuous LearningContinuous Learning
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The Companys MicroThe Companys Micro --
EnvironmentEnvironment
In designing business/marketingIn designing business/marketing
plans, marketing management mustplans, marketing management musttake other company groups, such astake other company groups, such astop management, finance, researchtop management, finance, researchand development (R&D), purchasing,and development (R&D), purchasing,manufacturing and accounting, intomanufacturing and accounting, intoconsiderationconsideration..
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The CompanyThe Company
In designing business/marketing plans,In designing business/marketing plans,marketing management must take othermarketing management must take other
company groups, such as top management,company groups, such as top management,
finance, research and development (R&D),finance, research and development (R&D),
purchasing, manufacturing and accounting, intopurchasing, manufacturing and accounting, intoconsideration.consideration.
SuppliersSuppliers
Firms and individuals that provide the resourcesFirms and individuals that provide the resources
needed by the company and its competitors toneeded by the company and its competitors to
produce goods and services.produce goods and services.
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Marketing IntermediariesMarketing Intermediaries
Firms that help the company to promote, sell andFirms that help the company to promote, sell and
distribute its goods to final buyers; they includedistribute its goods to final buyers; they includephysical distribution firms, marketingphysical distribution firms, marketing--serviceserviceagencies and financial intermediaries.agencies and financial intermediaries.
ResellersResellers
The individuals and organizations that buy goods andThe individuals and organizations that buy goods andservices to resell at a profit.services to resell at a profit.
Physical distribution firmsPhysical distribution firms
warehouse, transportation and other firms that help awarehouse, transportation and other firms that help acompany to stock and move goods from their point ofcompany to stock and move goods from their point oforigin to their destinations.origin to their destinations.
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Financial intermediariesFinancial intermediaries
Banks, credit companies and other businessesBanks, credit companies and other businessesthat help finance transactions or insure againstthat help finance transactions or insure againstthe risks associated with the buying and sellingthe risks associated with the buying and sellingof goods.of goods.
CustomersCustomers
The company must study its customer marketsThe company must study its customer marketsclosely and keep up to date with changingclosely and keep up to date with changing
customer requirements.customer requirements. The company must communicate with itsThe company must communicate with its
customers, and must listen to them closely.customers, and must listen to them closely.
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CompetitorsCompetitors
The marketing concept states that, to beThe marketing concept states that, to be
successful, a company must providesuccessful, a company must providegreater customer value and satisfactiongreater customer value and satisfaction
than its competitors. Thus, marketers mustthan its competitors. Thus, marketers must
do more than simply adapt to the needs ofdo more than simply adapt to the needs of
target consumers.target consumers.
They must also gain strategic advantageThey must also gain strategic advantage
by positioning their offerings stronglyby positioning their offerings strongly
against competitors offerings in the mindsagainst competitors offerings in the minds
of consumers. They must strive toof consumers. They must strive to
anticipate competitor activity and strategy.anticipate competitor activity and strategy.
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PublicsPublics
Any group that has an actual or potential interestAny group that has an actual or potential interest
in or impact on an organizations ability toin or impact on an organizations ability toachieve its objectives.achieve its objectives. Financial publics:Financial publics: Influence the companys ability toInfluence the companys ability to
obtain funds. Banks, investment houses andobtain funds. Banks, investment houses and
stockholders are the principal financial publics.stockholders are the principal financial publics. Media publics:Media publics: Are those that carry news, featuresAre those that carry news, features
and editorial opinion. They include newspapers,and editorial opinion. They include newspapers,magazines and radio and television stations.magazines and radio and television stations.
Government publics:Government publics: Management must takeManagement must take
government developments into account. Marketersgovernment developments into account. Marketersmust often consult the companys lawyers on issuesmust often consult the companys lawyers on issuesof product safety, truth in advertising and otherof product safety, truth in advertising and othermatters.matters.
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PublicsPublics
Citizen action publicsCitizen action publics A companys marketingA companys marketing
decisions may be questioned by consumerdecisions may be questioned by consumerorganizations, environmental groups, minorityorganizations, environmental groups, minoritygroups and other pressure groups.groups and other pressure groups.
Local publicsLocal publics Every company has localEvery company has local
publics, such as neighborhood residents andpublics, such as neighborhood residents andcommunity organizations.community organizations.
General publicGeneral public A company needs to beA company needs to beconcerned about the general publics attitudeconcerned about the general publics attitude
towards its products and activities. The publictowards its products and activities. The publicimage of the company affects its buying.image of the company affects its buying.
Internal publicsInternal publics A companys internal publicsA companys internal publicsinclude its workers, managers, volunteersinclude its workers, managers, volunteers
and the board of directors.and the board of directors.
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The Companys MacroThe Companys Macro--
EnvironmentEnvironment
The larger societal forces that affect theThe larger societal forces that affect the
whole microenvironmentwhole microenvironment -- demographic,demographic,economic, natural, technological, politicaleconomic, natural, technological, political
and cultural forces.and cultural forces.
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General EnvironmentGeneral Environment
Sociocultural SegmentSociocultural Segment
Women in the workplaceWomen in the workplace
Workforce diversityWorkforce diversity
Attitudes about quality of worklifeAttitudes about quality of worklife Concerns about environmentConcerns about environment
Shifts in work and careerpreferencesShifts in work and careerpreferences
Shifts in product and service preferencesShifts in product and service preferences
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Economic segmentEconomic segment
General EnvironmentGeneral Environment
Inflation ratesInflation rates
Interest ratesInterest rates
Trade deficits or surplusesTrade deficits or surpluses Budget deficits or surplusesBudget deficits or surpluses
Personal savings ratePersonal savings rate
Business savings ratesBusiness savings rates
Gross domestic productG
ross domestic product
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General EnvironmentGeneral Environment
Political/Legal SegmentPolitical/Legal Segment
Antitrust lawsAntitrust laws
Taxation lawsTaxation laws
Deregulation philosophiesDeregulation philosophies
Labor training lawsLabor training laws
Educational philosophies and policiesEducational philosophies and policies
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General EnvironmentGeneral Environment
Technological SegmentTechnological Segment Product innovationsProduct innovations
Applications of knowledgeApplications of knowledge Focus ofprivate and governmentFocus ofprivate and government--supportedsupported
R&D expendituresR&D expenditures
New communication technologiesNew communication technologies
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General EnvironmentGeneral Environment
Global SegmentGlobal Segment
Important political eventsImportant political events
Critical global marketsCritical global markets
Newly industrialize countriesNewly industrialize countries
Different cultural and institutional attributesDifferent cultural and institutional attributes
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General EnvironmentGeneral Environment
Demographic SegmentDemographic Segment Population sizePopulation size
Age structureAge structure
GeographicGeographic
distributiondistribution
Ethnic mixEthnic mix
Income distributionIncome distribution