P R I M E A C A D E M Y

P R I M E A C A D E M Y Page 5

BUSINESS ENVIRONMENT

COMPETITIVE ENVIRONMENTMichael Porters Five Force Model

ENVIRONMENTAL INFLUENCES ON BUSINESS– Complex (which include many factors)

– Dynamic (changes repidly)

– Uncertainity (which is difficult to predict)

– Impact

RELATIONSHIP BETWEEN BUSINESS AND ENVIRONMENT

They exchange

i) Information

ii) Resources

iii) Influence & Power

MACRO ENVIRONMENT (GD PEST)G – Global – Integratingwithworldmarket SixReasons–MRFTTP3

EightManifestations–REPTILCS4

D – Demographic Populationfeatures–Age,Sex,Education,etc.

P – Political

E – Economic Demand&SupplyForces,availabilityof4M’s &Cost–Revenue

S – Social –beliefs,norms,relationships,values,etc.

T – Technological changes

MICRO ENVIRONMENT (CIMCOS)C – Consumer (theirneedsandbuyingpatterns)

I – Intermediaries (bridgethegapbetweenproducersandconsumers)

M – Market (KnowledgeofCPTMD2 is necessary)

C – Competitors (theirstrategiesandpricestructure)

O – Organisation Owners – Profits BOD – InstitutionandBuilding Employees – CareerandJobguarantee

S – Suppliers (Affectthecoststructure)

A – AssetsIncreaseS – SalesVolumeincreaseE – AcquisitionofNewEnterpriseT – TechnologicaladoptionS – ShareinMarket

C – CostStructureP – PricesensitivityT – TechnologicalchangesM– MaturityofMarketD – Distributionpattern

M– CheapMaterialR – NoRichnessF – ForeignInvestmentT – TimeandspaceislowT – ReductioninTransportationcostsP – PrivateEnterprises

R – RegionalblocksE – EfficiencyinMarketsideP – Privatisation

T – Trade BarriersI – InfrastructureatInternationalprices

1 2 3 4

Solution: Kierstsu(Example)–Smallgroupsformationtocarry on business through coordination

OBJECTIVES OF BUSINESS1. Survival – Initial stages of Business

2. Stability – Conservationobjective LeaseExpensive

3. Growth – Popularobjective IttakesplacethroughASETS

4. Efficiency – Operationalobjective ToolforReductionincost

5. Profit Making – Ultimate,Primaryobjective [Thefirstfourobjectivesaremeantforprofitmaking]

“ P E G S S ”

Govt[Underwhichbusinessisheld]

Legal[Compliancewithlaws]

Political[Sustaining unions]

L – LinkedEconomiesC – ConfigureanywhereS – Skilledresources

PRIME A

CADEMY