OM PRELIM

Business

organized efforts of enterprises to supply consumers with goods & services for profit.

L.H. Haney

Business is a human activity

Thomas

Business is an occupation

Peterson and Plowman

Business is an activity with an exchange of something value

Old Concept

For profit maximization

New Concept

For customer satisfaction

F.C. Hooper

Business means the whole complex of commerce and industry

Peter F. Drucker

Business is to create and to expand market share

At least 5 Business Characteristics

1. Customer satisfaction
2. Exchange of goods and services
3. Creation of utility
4. Profit Motive
5. Human Activity
6. Innovation and Research
7. Wide Scope
8. Business is both Science and Art
9. Business is social activity
10. Continuity in dealings
11. Entrepreneurship and risk

Business Environment

Refers to those aspects of the surroundings of business enterprise which have influence on the functioning of business

Arthur M. Weimer

Business environment is the set of climate or weather conditions in which business operations are conducted

Bayard O. Wheeler

B. Envi. Is the total of all things external to business firms which affect their orgs and operation

Dunham and Pierce

B. Envi. represents the sets of conditions, circumstances, and influence that surround and affect the functioning of the business firms

Internal and External Environment

Components of B Envi

Internal Envirinment

Environment withing the organization

5 ms

1. Man
2. Machinery
3. Money
4. Management
5. Materials

External Environment

Refers to those aspects of the surroundings of business enterprise

Reinche and Schoell

The environment of business consists of all those external things to which it is exposed and by which it may be influenced directly or
indirectly

William Glueck and Jauck

In environment, there are external factors, which constantly bring opportunities and threats to the business firm.

Micro/ Operating Environment and Macro/ General Environment

Types of External Environment

Micro/ Operating Environment

Forces which are close to the company... and immediate environment

Factors in Micro Environment

1. Customers
2. suppliers
3. Market Intermediaries
4. competitors
8. Public

Philip Kotler

The micro environment consists of factors in the company’s immediate environment which affect the performance of the business unit.

Hill and Jones

The micro environment of the company consists of elements that directly affect the company

Suppliers

person/entity that provides goods & services to other companies

Reliability

Consistency of performance over time

Multiple Suppliers

It is better to have alternative suppliers

Customers

the central point of every business

Types of Customers

1. Wholesale Cust
2. Retail Cust
3. Industrial Cust
4. Foreign Cust
5. Government & other institutions

Segmentation of Customers

1. Income level
2. Age of customers
3. Quantity to be purchased
4. Tastes and preferences
5. Geographic area
6. Personality and lifestyle
7. Education Level

Market Intermediaries

is a link between company & final consumer

Market intermediaries includes

1. Middlemen
2. Marketing intermed
3. Financial intermed
4. Physical intermed

Physical Intermediaries

warehouses, transport agencies.

Marketing Intermediaries

advertising, consultancy firms, media, market research firm, etc.

Financial Intermediaries

banks, insurance companies, financial institutions, money markets,
capital markets, etc.

Middlemen

Wholesalers, retailers, and department stores

Competitors

it means other business units which are marketing or producing similar products or a very close substitute of your product.

Public

a group that has actual or potential interest in the business.

Local public and Media public

Examples of public

Macro Environment

general environment of the business

Philip Kotler

Macro environment includes forces that create opportunities & threats to the business units.

Hill and Jones

The macro environment consists of the broader economic, social, political, legal, demographic andtechnological setting within which the industry & the business units are placed.”