SYLLABUSBusiness and its EnvironmentMeaning Scope and Characteristics Significance for economic policies and decisions in Organisation2. Global EnvironmentNature of Globalisation Manifestations of globalisation Challenges of international business Strategies for going global India, WTO and trading blocks.3. Technological Environment

Meaning features Impact of Technology Technology and Society Management of Technology4. Political Environment Political institutions Legislature Executive Judiciary The Constitution of India The Preamble The fundamental rights Rationale and extent of state intervention Role of Government in business.5. Economic EnvironmentCharacteristics of Indian Economy, Factors affecting economy, Economic resources (natural, industrial and technological)

Impact of Liberalisation, Privatisation and Globalisation on Indian Business.6. Government Policies: Impact of Fiscal, Monetary, EXIM policy and Industrial policy on Business (Latest policy measures).7. Natural Environment: Meaning and influence on business.

Business & its Environment An IntroductionNature of BusinessPurpose of BusinessScope of BusinessCharacteristics of Contemporary businessBusiness ObjectivesCritics of BusinessMeaining of EnvironmentObjectives & uses of Business environment study

The process of Environmental AnalysisLimitation of Environmental analysis

Nature of Business Business may be understood as the organised efforts of enterprises to supply consumers with goods and services for a profit.CHARACTERISTICS OF CONTEMPORARY BUSINESSBusiness in Transition: The Indian business leaders find totally a new environment characterised by competition, both from within and from foreign business.Pressure of Competition: Indian businesses are facing competition.

Competition though unwelcome to managers, is a boon to customers.Immense Opportunities: Indian business has plenty of opportunities which can be exploited to one's advantage.Globalisation: Modern business necessitates globalisation. Internationalisation or globalisation is fast becoming imperative for modern business due to technological innovations; crumbling trade barriers; global flow of capital and technology; information explosion; intensity of market competition; changing life styles & the demand for new products.

Technology: Business is characterised by increasing use of technology. The impact of technology on business is pervasive.Information: Another characteristic of contemporary business is the recognition of and the need for information. The whole area of retrieving & extending information, including data processing, information systems analysis & preparation of effective records & reports, has achieved a major status.

Business objectivesBefore we describe business objectives, it is desirable to be clear about related concepts, viz., VisionMission &ObjectivesVISION: A Vision is a broad explanation of why the firm exists and where it is trying to lead.

Business Vision

Creating the VisionEstablishing Goals

VisioningOne of the most important things to do in the preparation stage is to VISUALIZE things in your mind.Mayor Rudolph Giuliani

Visioning vs. PlanningPlanningprocess that provides specific direction and meaning to the day-to-day activities.strategic planning places the strategic vision into motion.

Visioningproactive plan for the future.It is a view of the future that everyone can believe in.

A Vision StatementSays what you want out of Business.Details principles and beliefs.Gives you the power to create and design your business around your values.

In SummaryYou have to have a plan for success!It starts with a vision. You get the vision by reaching each goal.You reach goals by hard work, dedication, and perseverance.

MissionA Mission statement outlines the fundamental purpose of the organisation. A Mission statement incorporates four elements:Customer needs, or what is being satisfied.Customer groups, or who is being satisfied.

3. The companys activities, technologies, and competencies, or how the firm goes about creating and delivering value to customers and satisfying their needs.4. The companys concern for survival, its philosophy, its self-concept and its concern for public image.

Our Mission

Dayananda sagar InstitutionsMISSION To achieve our objectives in an environment that enhances creativity, innovation and scholarly pursuits within the stated values.VISION To be a centre of excellence in education, research & training and to produce human resource of exceptional leadership quality to serve national needs

Growth has no limit at Reliance. I keep revising my vision.Only when you can dream it, you can do it.Dhirubhai H. AmbaniFounder Chairman Reliance Group December 28, 1932 - July 6, 2002

ObjectivesObjectives render mission statements more concrete.Mission statements seek to make a vision more specific and Objectives are attempts to make mission statements more concrete.Objectives therefore, represent the operational side of an organsiation.

Profit: Profit is the main incentive, motivator, strong sustainer, judicious allocator of resources, objective indicator of productivity and a solid basis for growth, expansion and survival. Profits enables a businessman to realise his other objectives too. Growth: Business should grow in all directions over a period of time. The strategies adopted to achieve growth are: (a) add more products/markets; (b) diversify into new areas; (c) increase market share; (d) cut down costs and increase productivity.

3. Power: Business houses have vast resources at its command. These resources confer enormous economic and political power on owners and managers of business ventures.4. Employee satisfaction & Development: Concern for employees continues to be an important aspect of management.5. Quality products & services: Those who insisted on and persisted in quality survived competition and stayed ahead of others in the market. Persistent quality of products earns brand loyalty, a vital ingredient of success.

6. Market Leadership: To earn market leadership, innovation is the key factor. Innovation may be in product, advertising, distribution, finance or in any other field.7. Challenging: Business offers vast scope and poses formidable challenges. 8. Joy of creation: It is through business strategies new ideas and innovations are given a shape and are converted into useful products and services for the benefit of customers.

9. Service to society: Business is a part of society and has several obligations towards it.10. Good Corporate citizenship: It implies that the business unit complies with the rules of the land, pays taxes to the government regularly, discharges its obligations to society and cares for its employees and customers.

The Four-Step Pyramid of Corporate Social Responsibility

CRITICS OF BUSINESSSpecific criticisms are the following:1.Business activity has a corrosive effect on a range of cherished cultural values.Business dehumanises and expolits workersBusiness harms interests of consumers.Business degrades nature and the environment.Business has destroyed handicraft and rendered artisans jobless.

There are five groups of CriticsActivist ReformersLiberal IntellectualsMarxistsRadical Non-Marxists.Reactionaries.

Meaning of EnvironmentEnvironment refers to all external forces which have a bearing on the functioning of business.Environment of a FirmTechnological EnvironmentEconomic EnvironmentPolitical EnvironmentGlobal EnvironmentSocial and Cultural Environment

Business EnvironmentBusiness environment refers to all those internal and external factors that have a bearing on the business.Keith Davis defines business environment as the aggregate of all conditions, events and influences that surround and influence it.

Three different levels of Business Environment are as follows:Internal EnvironmentMicro EnvironmentMacro Environment

INTERNAL ENVIRONMENTThe important internal factors which have a bearing on the strategy and other decisions are:Value systemMission & ObjectivesManagement Structure & NatureInternal Power relationshipHuman resourcesCompany image & Brand equity

Miscellaneous factorsPhysical assets and facilitiesR & D and Technological capabilities.Marketing resourcesFinancial factors. EXTERNAL ENVIRONMENTThe external business environment consists of Micro environment andMacro environmet

MICRO ENVIRONMENTThe micro environment consists of the actors in the companys immediate environment that affect the performance of the company.Suppliers: Suppliers are the important force in the task environment of a business. Multiple sources of supply often help to reduce risks.Customers: To succeed in capturing customers, a business must try its best to know what people want and will buy.Labour: The labour force is organised in the form of trade unions. The trade unions interact with the management & pressurise the management for the fulfilment of their demands.

Competitors: Competitors play a vital role in running the business enterprise. There are various types of competitions:Desire competition: Under this type of competition the primary task is to influence the basic desire of the customer.Generic competition: The competition among alternatives which satisfy a particular category of desire is called generic competition.Product form competition: In this type of competition, the consumer has to choose between different forms of the product.

Brand competition: The competition between different brands of the same product.Taking into consideration these different factors every marketer should strive to create primary and relative demand for his product.Regulating agencies: The regulators include government departments and other organizations which monitor the activities of business.

MACRO ENVIRONMENTThe macro forces are, generally, more uncontrollable than the micro forces.Important macro environment factors includes:Economic environmentPolitical and Regulatory environmentSocial/Cultural environmentDemographic environmentTechnological environmentNatural & Global environment

ECONOMIC ENVIRONMENTThe survival & success of a business enterprise is finally decided by the economic environment & various market conditions. The important external factors that affect the economic environment of a business are as follows:Economic conditionsEconomic systemEconomic policies

Economic growthInterest ratesCurrency exchange rates.

POLITICAL & LEGAL ENVIRONMENT

Political environment refers to the influence exerted by the three political institutions:LegislatureExecutiveJudiciaryIt provides a framework within which the business is to function & its existence depends on the success with which it can face the various challenges contructed out of political & legal framework.

SOCIO-CULTURAL ENVIRONMENTIt is very comprehensive because it may include the total social factors within which an organisation operates.Socio-cultural environment may include expectations of the society from business, attitudes of society towards business & its management, views towards achievement of work, views towards structure, responsibility & organisational positions, views towards customs, & labour mobility & level of education.

NATURAL ENVIRONMENTIt includes geographical & ecological factors. Almost every aspect of business depends upon natural environment.Manufacturing depends on physical inputs.Mining depends on natureAgriculture depends on nature.Trade between two regions depends on geographical factors.Topographical factors may affect the demand pattern.

DEMOGRAPHIC ENVIRONMENTIt includes:Size, growth rate, age composition, sex composition etc., of populationFamily size Caste, religion,Educational level...etc

TECHNOLOGICAL ENVIRONMENTBusiness has to adopt technological changes from time to time. Every business enterprise has two basic functions i.e.,Marketing &Innovation.Technological environnment also includes research base decisions.The fast changes in technology also create problems for enterprises as these render plants and products obsolete quickly.

International EnvironmentImplications of global or international environment are as follows:Indian companies are forced to view business issues from a global perspective.Safe & protected markets are no longer there.Learning of foreign languages is a must for every business manager.Acquiring familiarity with foreign currencies is also a must.

Thus, business is the product of the technological, political-legal, economic, socio-cultural, global & natural factors amidst which it functions.

Environmental Analysis

Environmental AnalysisEnvironmental analysis is the process by` which strategist monitors the Environmental sectors to determine opportunities for threats to their firms.

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Conducting Environmental AnalysisIdentifying threats and opportunitiesGathering of information about competitors intelligenceForecasting future direction of environmental changes

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Key EnvironmentsMarketing EnvironmentThe actors and forces that affect a firms ability to build and maintain successful relationships with customers.

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Key EnvironmentsAspects of the marketing environment:Microenvironment: Actors close to the companyMacroenvironment Larger societal forces

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Actors in the Microenvironment

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Figure 4-2: Major Macroenvironmental Forces

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The MacroenvironmentKey Demographic TrendsWorld population growth Now 6.2 billion Projected to reach 7.9 billion by 2025

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The MacroenvironmentThe Economic EnvironmentAffects consumer purchasing power and spending patterns.

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The MacroenvironmentThe Political EnvironmentIncludes laws, governmental agencies, and pressure groups that impact organizations and individuals.

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The MacroenvironmentThe Cultural EnvironmentIs composed of institutions and other forces that affect a societys basic values, perceptions, preferences, and behaviors.

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The MacroenvironmentSocietys cultural values are expressed through peoples views of:ThemselvesOthersOrganizationsSocietyNatureThe UniverseCore beliefs are persistentSecondary cultural values change and shift more easily

The Cultural Environment

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Techniques of environmental scanning Send the researchers, technicians, engineers to international and national conferences and trade shows

Visit the global competitors in trade fairs and exhibitions.

Systematically gather data on the result of government funded research in other nations.

Carefully review technical and scientific journal and newspaper published in another country and home country.

Developing management information system in each and every department and ultimately for the whole organization.

Develop a strategic management information system at all levels of management in collaboration with customers, peers (office people), suppliers, and other middleman, sales officers.

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NEED FOR ENVIRONMENTAL ANALYSISIncreases managerial awareness of environmental changes.

Increases understanding of the context in which industries and markets functions.

Increases understanding of multilateral settings;

Improves resource allocation decisions;

Facilitates risk management;

Focuses attention on the primary influences on strategic changes;

Acts as an early warning system to anticipate opportunities and threats and devise appropriate strategies.This analysis is a valuable mechanism for increasing strategic awareness of managers.

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The Process of Environmental analysisEnvironmental analysis is a challenging, time consuming and expensive affair. The analysis consists of four sequential steps:ScanningMonitoringForecastingAssessment

Five stages of environmental analysis

Audit of environmental influencesAssessment of the nature of the environmentIdentification of the key environmental forces Identification of the principal Os and TsStrategic Position

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SIGNIFICANCE OF BUSINESS ENVIRONMENTThe significance of business environment is that business decisions in general and strategies in particular are moulded by the business environment.The importance of environmental anlaysis from the fact that strategy is some times referred to as a proper firm environment fit. An analysis of the strengths and weaknesses of the organisation and opportunities and threats in the environment (SWOT analysis) is, in fact, one of the first steps in the strategic management process.