APresentation

ONBUSINESS ENVIROMENT

2016 – 18FACULTY OF MANAGEMENT

Pacific Academy of Higher Education and Research University, Udaipur

Guided By: Submitted By:Himanshu panchalDr.PALLAVI MEHTA

CONTENTSIntroduction of EnvironmentDefination of EnvironmentCharacteristics of EnvironmentTypes of EnvironmentInternal EnvironmentMacro EnvironmentMicro EnvironmentEnvironmental AnalysisForecastingBenefit of Environmental AnalysisLimitation of Environmental Analysis

INTRODUCTION Every business operates in an environment and a business unit has its own environment. A chance in environment provides opportunities to some and threat to other . The environment is complex ,dynamic,multifaceted and has a far reaching impact. The impact of an environment trend often differs significantly for different firms within the same industry. The general environment usually holds both opportunities for, and threat to, expansion. Development in the genera environment changes competitive battle line, and many development in the general environment are difficult to predict with any degree of accuracy, while other are readily predictable.

DEFINATIONEnvironment literally means the surroundings, external objective, influences or circumstance under which someone or something exists.According to Jauch and Gluecke “The environment includes factor outsides the firm which can lead to opportunities or a threat to the firm . Although there are many factors, the most important of these sectors are socio-economic, technological, supplier ,competitor and the government”Environment refer to all external forces that have a bearing on the functioning of a business

Characteristics

1. Environment is Complex2. Environment is Dynamic3. Environment is multi-faceted4. It has a far-reaching impact5. Its impact on different firms with in the same industry

differs6. It may be an opportunity as well as a threat to

expansion7. Change in the environment can change the competitive

scenario8. Sometimes development are difficult to predict with

any degree of accuracy

Types of Environment

The types of environment can be divided into three broad categories

Types of Environ

ment

Internal Environme

nt

Macro Environme

ntMicro

Environment

Internal Environment1. Couture and Value System: Organization culture can be viewed as

the system of shared values and beliefs that shape a company’s behavioral norms. A value is an enduring preference as a modal of conduct or an end state. Value and culture are inherited from senior by juniors in a organization.

2. Mission and Objective: The mission and objective of the company guide the priorities, direction of development, business philosophy, and business policy.

3. Management Structure and Natures: Structure is the manner in which the tasks and sub-tasks of the organization are related. Structure is concerned with the hierarchical relationship and the relationship between the management of different functional areas like the structure of the top management and the pattern of share holding.

4. Human Resource: It concern with factor like manpower planning, recruitment and selection, compensation, communication and appraisal.

Macro EnvironmentStudy of the entire economy in the term of the total amount of goods & services produced, total income earned, level of employment of productive resource & general behavior of price.

Demographic

Components of Macro Environment

Political/legal

Economic

Business

Global

Socio culture

Technological

Micro EnvironmentMicro environment or the competitive environment refers to the environment which an organization faces in its specific arena. This arena may be an industry, or it may be what is referred to as a strategic group.

The five forces of competition:- 1. Threat of competitor:-The rivalry among sellers in the industry.2. Threat of New Entrants:- The potential entry of new competitors.3. Threat of substitution :- Market attempts of companies in other

industries to win customer over to their own substitute.4. Bargaining Power of suppliers:- The competitive pressure stemming

from the supplies-seller collaboration and resultant bargaining.5. Bargaining Power of Buyers:-The competitive pressure stemming

from seller –buyer collaboration and bargaining.

Environmental analysisCollection of information:-Analysis is done by means of search of verbal and written information, spying, forecasting and formal studies and information system.The source of verbal information are:-1. Media such as radio and television.2. The firm’s employees such as peers, subordinate and

supervisors. Other sources of verbal information outside the firm are:- Customer of the enterprise, persons in industry channel ( such as wholesalers, brokers, distributors, etc.), suppliers doing business with the firm, competitors and their employees, financial executive such as bankers, stockholder and stock analysis, consultance and the government.

ForecastingTechniques of environmental forecasting:-1. Scenario planning2. Issue analysis3. Export Opinion4. Delphi Method5. Market Experiments6. Survey7. Time Series Analysis8. Trend Projection

Benefits of Environmental Analysis1. Environment analysis gives an idea of organization’s

environment. 2. Environment analysis gives a brief about competitors. 3. Environment analysis tells us about opportunities to reap

profits.4. Environment analysis gives details about threats in the

environment.5. Environment analysis keeps the manager informed and alert.6. Business is all making the right decision at the right

time.Without proper environment analysis, the right decision can’t be made.

7. Environment analysis helps in predicting the future.8. Environment analysis helps in suitable modification of

strategies. As and when required.

LIMITATION OF ENVIRONMENT ANALYSIS

1. Today the environmental is turbulent and dynamic and it is difficult to forecast or predict the environmental.

2. Business environmental is global and any development in any part of world can influence the business. Even a small political move can have drastic impact, which is very difficult to scan assess.

3. The Effectiveness of environmental analysis depend upon how it is practiced, i.e., whether it is a systematic approach, ad hoc or processed.

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