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Presented By. Neha Ghildiyal Neha Gupta Ashok Reddy Aswini Kumar Singh

This document discusses the business environment and its analysis. It defines business environment as all factors affecting a business's functioning, including socio-economic, technological, government, supplier, and competitor factors. The business environment is complex, dynamic, multi-faceted, and has far-reaching impacts. Analyzing the environment provides an understanding of opportunities and threats and helps predict the future. The environment can be divided into internal, macro, and micro levels. Various tools are discussed for environmental scanning, monitoring, forecasting, and assessing trends and issues to aid business decision making.

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152 views

Presented By. Neha Ghildiyal Neha Gupta Ashok Reddy Aswini Kumar Singh

This document discusses the business environment and its analysis. It defines business environment as all factors affecting a business's functioning, including socio-economic, technological, government, supplier, and competitor factors. The business environment is complex, dynamic, multi-faceted, and has far-reaching impacts. Analyzing the environment provides an understanding of opportunities and threats and helps predict the future. The environment can be divided into internal, macro, and micro levels. Various tools are discussed for environmental scanning, monitoring, forecasting, and assessing trends and issues to aid business decision making.

Uploaded by

Surya Reddy
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 25

PRESENTED BY.

NEHA GHILDIYAL NEHA GUPTA ASHOK REDDY ASWINI KUMAR SINGH

Introduction
The term Business Environment is composed of two

words Business and Environment. In simple terms, the state in which a person remains busy is known as Business. The word Business in its economic sense means human activities like production, extraction or purchase or sales of goods that are performed for earning profits. On the other hand, the word Environment refers to the aspects of surroundings.

Definition
Business environment refers to all factors affecting the functioning of a business. The environment includes factors outside the firm which can lead to opportunities or a threat to the firm. The important of these factors are socio-economic, technological, government, supplier and competitor.

Nature
Environment is complex: as it consists of number of

factors,events,conditions and influences arising from different sources. Environment is dynamic: as it is constantly changing in its shape and character. Environment is multi -faceted: as it has different effects on different industries. It has far-reaching impact :on the growth and profitability of an organization. It may be an opportunity as well as a threat to expansion. Changes in the environment can change the competitive scenario: Sometimes developments are difficult to predict with any degree of accuracy:

SIGNIFICANCE
Environment analysis gives an idea of

organization's environment. Environment analysis gives a brief about competitors. Environment analysis tells us about opportunities to reap profits. Environment analysis helps in predicting the future.

TYPES OF ENVIRONMENT
The environment can be divided into three broad categories :
Internal Environment. Macro Environment (General Environment). Micro Environment (Relevant Environment).

INTERNAL ENVIRONMENT
Internal Environment refers to that of the organization and is controllable. Some internal factors are, Culture and Value System. Mission and Objectives. Management Structure and Nature. Human Resource.

MACRO ENVIRONMENT
The Macro Environment consists of factors external to the industry that may have a significant impact on the firms strategies.

Dimensions in General Environment


Demographic (It decides the type of product the organization comes out with.) B U S I N E S S Socio Culture (Beliefs, value system, attitudes of people & their demographic composition.) Technological (Organizations products, services customers &competitive position.)

Political (It decides the fortune of businesses in a country)

Economic (Foreign trade policy, industrial policy, fiscal policy, GDP growth rate.)

Global (The International Environment consists of all factors that operate at the transnational, cross cultural & across border.)

MICRO ENVIRONMENT
Micro 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.
Besides looking at primary demand and supply factors, firms examine the state of competition they face because that determines whether they will remain in the same industry or start a new one .

Interaction matrices of different environmental factors


demographic Socio culture

Political/legal

business

Technological

economic

global

Porters Five Force Model

The five forces of competition


Professor Michael Porter of the Harvard Business School has demonstrated the state of competition in an industry as a composite of five competitive forces. a) Threat of competitors: the rivalry among sellers in industry b) Threat of new entrants: the potential entry of new competitors c) Threat of substitutes: market attempts of companies in other industries to win customers over to their own substitute products d) Bargaining power of Suppliers: the competitive pressure stemming from the supplier-seller collaboration and resultant bargaining e) Bargaining power of buyers: the competitive pressure stemming from seller-buyer collaboration and bargaining.

Environmental scanning
It is process by which organizations monitor their environment to identify opportunities and threats affecting their business. Factors to be considered for Environmental Scanning: Events Trends Issues Expectations

Collection of information
Analysis is done by means of a search of verbal and written information, spying, forecasting and formal studies and information system. Sources of verbal information Media The firms employee
Other sources of verbal information outside the firm are: Customers, suppliers, competitors etc.

The second solution of environmental analysis is design of Management Information System.


Information regarding competitors is also gathered through :
Corporate intelligence Spying

Deciding priorities
Impact of Business Probability of Action High Critical High priority To be watched Medium High priority High priority Low priority Low Low priority Low priority Low priority High Medium low

Identify High Priority Environmental Sector

The issues that are critical need maximum attention of the management and quick action or preparation. On the other hand issues of low priority need just monitoring at regular intervals. Issues of high priority need attention standby plans in case and also need regular observation.

Environmental Analysis
Environmental Analysis can be divided into two 1. Environmental evolution.
2. Process of Environmental Analysis.

Environmental Evolution
There are three components that are used to describe changes in environmental segments: Type of change
Forces driving change Type of future evolution

Process of Environmental Analysis


It can be divided into four parts: Scanning
Monitoring
Forecasting Assessment

Forecasting
Forecasting means estimating the future.
All managerial decisions are future oriented. Forecasting is an important management activity.

Major decisions in large business are almost based on

forecasting.

Techniques of environmental forecasting


Scenario Planning
Issue analysis Expert Opinion

Delphi Method
Market Experiments Survey Time series analysis Trend Projections

Techniques of Trend Projections


Graphical Method
Fitting trend equation Box Jenkins Method

Limitations of Environmental Scanning


Today environment is dynamic so it is difficult to

forecast.
Business environment is global and any development

in any part of the world can influence business.


Effectiveness depends on approach .

Thank You

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