BUSINESS EVIRONMENTOBJECTIVE OF THE PAPER:

To understand the business scene and factors and trends for strategic policy formulations.

DR.K.SASHI KUMAR

BUSINESS AND ITS ENVIRONMENT AN INTODUCTION.What is business?

Business may be understood as the organised efforts of an enterprise to supply consumers with goods and services for a profit.

Nature and scope of business?The purpose goes beyond earning profit. It is an Important institution in the society.

CHARACTERISTS OF CONTEMPORARY BUSINESS

TRANSITIONRigid, hierarchical and tall to Flexible, Flat and team based

Family centric and close minded to Dispersed ownership, Open minded and Transparent.

Caste ridden, superstitious, laid- back styles to Rational thinking and vibrant.

COMPETITION

Defines new ways of doing business

Helps build new capabilities

Builds new customer satisfaction standards

Makes business leaders become proactive

OpportunitiesBPOSITWealth managementRisk managementPrivate BankingReal opportunities in the traditional sectorIndia wave

COMMODITY BUSINESSCoy Product CapacityRank

Mittal Steel70 Mil.tons1

Birla visc Viscose251850 tons1

Basell polyprop-8 mil. Tons1(chatterjee/Access)

Reliance Polester1.8mil.tons1

Hero cycles Cycles5.2 mil.units1

Essel propackLaminated packaging4 billion units1

Bharat Forge Forgings102,900 tons2

Jubilantorganosis Pyridine22,500 tons2

Orchid chemicals Cephalosporin1.100tons5 Business todayJune 5, 2005

Business objectives

Critics of business

Business environmentEnvironment mainly refers to external forces that impact business. (important internal factors)

Environment can create opportunities as well as threats.

The total environment of business includes six factors viz, Political-legal, economic, social cultural, technological, global and natural.

Features unique to business environmentThere is symbiotic relationship between business and its environment.

Environmental forces are dynamic

No firm is in a position to change the environment.

Importance of the study of business environmentIt helps an organization to develop its broad strategies and long-term policiesIt enables an organization to analyse its competitors strategies and thereby formulate effective counter strategiesKnowledge about the changing environment will keep the organisation dynamic in its approachSuch a study enables the organisation to foresee the impact of socio-economic changes at the national and international level on its stabilityExecutives are able to adjust to the prevailing conditions and thus influence the environmnmet in order to make it congenial for business

Business policies and environment Perform critical function of matching the needs of the society and the capacity of the goods and services to satisfy the needs of the peopleAdapt the organisation itself to the dynamic conditions of the society;Match the organisational policies and resources with the social needs; andContribute to the social responsibility of business.

Micro and Macro environmentMicro environment Refers to such players whose decisions and actions have a direct bearing on the company.

Macro environmentRefers to all those economic and non-economic factors which exercise their influence on the business activity in general and thus determine opportunities that a company may have to promote its business.Economic and non-economic

NATURAL ENVIRONMENTPhysical inputsMining and drilling depend on natural depositsAgriculture depends on NatureTrade between two regions depends on geographical factorsTransport and communication depend on geographical factors

Ecological factorsProtection of the environment and the preservation of ecological balance is the responsibility of every business organisation

Issue of pollution control and recycling

Important legislation- The water prevention and pollution control act of 1974, The air prevention and pollution control act of 1981, The environment protection act 1986

TECHNOLOGICALTechnology reaches people through businessIncreased productivity Need to spend for R&DRise and decline of products and oraganisationsProblem of techno structureSystem of complexitySocial changeIncreased regulation and stiff oppositionsHigh expectations of consumer

Demographic factorsPopulation land man ratioHuman development indexLiteracyLife expectancyChild mortalityPercapita income

SOCIO CULTURALAttitude of people towards work and businessCaste systemSpirit of collectivism and individualisationEducationFamily and marriageAuthorityScientificSocial responsibilityCorporate governance

PoliticalRole of legislatureRole of executive Role of JudiciaryConstitutional rights and constitutionLaws relating to company formation, industrial licensing, factory administration etc

Main References

Case studiesStrategies in response to environment changes of any of the five Indian companies(1) HDFC(2) Crompton Greaves(3) UB Group(4) Asea brown(5) Mahindra and Mahindra

Analytical structure.Company and environmental changesStrategic responsesConsequencesSubmission date- August 5, 2007Not to exeed 15 pages Marks 10