Module 1 (Business Enviornment)
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Business Environment
Module - 1
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Course Content
Introduction to Business Environment
Basics of business environment
Internal, industry, and external environments
Marketing concepts and scope of marketing
Marketing philosophies
Contemporary scenario of business
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What is a Business?
Business involves organized efforts by enterprises to supply consumers with goods and services for profit.
Encompasses all human activities related to the production and distribution of goods and services aimed at earning profit.
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Key Objectives of Businesses
Profit (Bottom-line)
Growth
Market leadership
Customer satisfaction
Employee satisfaction
Quality products & services
Service to society
Sustainability goals
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Characteristics of Business
Government control
Information availability
Competition
Change (adaptability)
Large size
Diversification
Globalization
Technology integration
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What is Business Environment?
Defined as the aggregate of all conditions, events, and influences surrounding and affecting an organization.
Characteristics of Business Environment
Complex
Dynamic
Far-reaching impact
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Why Study Business Environment?
Development of broad strategies for sustainability
Foreseeing the impact of socio-economic changes on firm capability
Analyzing competitor strategies to formulate effective countermeasures
Keeping the organization adaptive and dynamic
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Types of Environment
Internal Environment
External Environment
Micro environment
Macro environment
Economic
Non-Economic
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Internal Environment
Refers to controllable factors within an organization providing strengths or weaknesses.
Components
Value System
Mission and Objectives
Management Structure and Nature
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Components of Internal Environment
Human Resources
Company Image and Brand Equity
Other Factors
Physical assets and facilities
R&D and technological capabilities
Marketing resources
Financial resources
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External Environment
Comprises uncontrollable factors outside the organization providing opportunities or posing threats.
Includes Micro and Macro environments.
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Micro Environment
Factors in the company’s immediate environment affecting performance.
Micro Environment Factors
Suppliers
Customers
Marketing intermediaries
Competitors
Publics
Financial community
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Stakeholders in Micro Environment
Potential suppliers
Local communities
Competitors
Pressure groups
Customers
Government interactions
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Macro Environment
Comprises general trends and forces affecting the organization in the long term.
Categories of Macro Environment
Economic
Non-Economic
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Economic Environment
Stages of economic development in a country, including systems like capitalistic, socialistic, or mixed economies.
Covers economic planning and policies (monetary, industrial, fiscal).
Key economic indices: National Income, Per Capita Income, GNP growth rates, Balance of Payments.
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Non-Economic Environment
Regulatory Environment
Socio-Cultural Environment
Demographic Environment
Technological Environment
Political Environment
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Cultural Environment
Social customs, rituals, practices, and lifestyle patterns.
Family structure and demographics (roles of men, women, children, aged).
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Demographic Environment
Factors such as population growth, age composition, life expectancy, and gender ratio.
Insights into fertility and mortality rates, interstate migration.
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Technological Environment
Sources of technology, technological developments, and their impacts.
Political Environment
Influences of political parties and philosophy on business.
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Regulatory Environment
Constitutional framework and policies on pricing, foreign investment, public sector management, environmental control.
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Important Global Factors
Growth of the world economy and distribution of world GDP.
International organizations like IMF, WTO, ILO and their influence.
Economic relations between nations and global labor market dynamics.
Global technology standards and demographic patterns.
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Overview of Business Environment
Macro Environment
Economic Environment
Micro Environment
Internal Environment
Elements like Values, Mission & Objectives, Human Resources, Company Image & Brand Equity, Marketing Intermediaries, Social-Cultural Factors.
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Environmental Scanning
The process of gathering information about internal and external environments.
Importance of Environmental Analysis
Holistic, continuous, and exploratory process.
It helps organizations anticipate changes and minimize surprises.
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Importance of Environmental Analysis
First Mover Advantage: Early recognition of opportunities.
Early Warning Signal: Awareness of threats for timely action.
Customer Focus: Sensitivity to changing customer needs.
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Further Importance of Environmental Analysis
Strategy Formulation: Relevant data informs strategy.
Public Image: Responsiveness to aspirations improves image.
Continuous Learning: Helps organizations adapt to changes effectively.
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Steps in Environmental Analysis
Environmental Scanning: Identify impactful factors.
Environmental Monitoring: Collect and analyze relevant data.
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Continued Steps in Environmental Analysis
Environmental Forecasting: Estimating future events based on analysis.
Assessment or Diagnosis: Evaluating environmental factors' impacts using tools like SWOT analysis.
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Process of Environmental Analysis/Scanning
Environmental Scanning
Environmental Monitoring
Assessment
Forecasting
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Environmental Scanning
Monitoring opportunities and threats affecting business.
Techniques include SWOT analysis for strategic planning.
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Tools for Analyzing the Environment
PEST Analysis
PESTLE Analysis
STEEPLE Analysis (includes additional factors such as Environmental, Legal, Ethical).
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PEST Analysis
Initially proposed by F. Aguilar in the 1960s.
Focuses on environment, technology, politics, and society.
Useful for market analysis and assessing risks.
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Conclusion
Thank you.