INDIAN BUSINESS ENVIRONMENT

FUNDAMENTALS OF BUSINESS & BUSINESS ORGANISATIONS

BUSINESS
Business may be understood as the organized efforts of enterprises to supply consumers with goods and services for a profit. Or It may be understood as the organized efforts of enterprises to earn profit. Business may be small or big in size but all of the aim at making profit.

BUSINESS ENVIRONMENT
It can be defined as the forces, factors and institutions with which the businessman has to deal with to achieve the objectives. OR Business Environment is the surroundings in which business exists. Whenever any businessman is operating or working then he has to interact with customers, suppliers and he has to perform the transactions with in the rules and regulations of the government. All these persons, institutions and policies form a part of business environment

BUSINESS ENVIRONMENT
Definitions: Environment of the Business means the aggregate of all conditions, events and influences that surround and affect it. Keith Davis Business Environment is the total of all things external to firms and individuals which affect their Organization and operations. B.O. Wheeler

TYPES OF BUSINES ENVIRONMENT

There is two types of business environment: Internal Environment These are generally regarded as controllable factors because the company has control over these factors. External Environment These are the one which are beyond the control of a company.

Internal Environment

Value System
The values, beliefs and the acceptance of it by the founders has important bearing on the choice of business, the mission and objectives of the organization, business policies and practice.

Management Structure and Nature

The organizational structure, the composition of the Board of Directors, extent of professionalisation of management etc. are the important factors influencing business decisions.

Internal Environment
Internal Power Relationship
The Support of the Top management to its different employees and vice-versa i.e. the support the top management enjoys from different levels of employees, shareholders. Board of Directors have important influence on the decision and their implementations.

Human Assets
the competence, morale and motivation of employees have a significant impact in the success of the firm.

Internal Environment
Company Image and Brand Equity
The image and brand equity of the company plays a significant role in raising finance, forming alliance, choosing dealers and suppliers, launching of new products entering foreign markets.

Mission and Objectives

The business philosophy and the purpose of a company guide its priorities, business strategies, product market scope and its development process.

External Environment
It consist : Micro Environment
Micro environment is also known as Mask environment and the Operational environment because the micro environmental forces have direct impact on the operations of the firm.

Macro Environment
Macro environment refers to the general environment or remote environment with in which a business firm and forces in its micro environment operate.

Micro Environment
Suppliers of inputs Companys success to a great extent depends upon the low cost production of goods. This can be ensured by uninterrupted supply of inputs, particularly raw material. Customers A business exists to create and satisfy customers. A firm may have customers like individuals customer, households, government departments, commercial establishments. In order to be successful a company must understand and meet the needs and expectations of its customers.

Micro Environment
Competitors A company may face direct as well as indirect competition. Direct competitors are the forms which offers the same or similar products and services. e.g. Sony TV faces direct competition from other brands like Samsung, Onida, BPL. Marketing Intermediaries Middlemen like agents, wholesalers, retailers serve as a link between the company and its customers. Advertising agencies, marketing research agencies etc. are other types of marketing intermediaries.

Micro Environment
Financiers Debenture holders, shareholder financial institutions provide financial assistance to the firm. Financial capacity, polices and attitude of financiers are important factors for the company. Publics A public is any group that has an actual or potential interest in or impact on an organization ability to achieve its interest. E.g. Media group, Non-government organization

Macro Environment
Global Environment it refers to those global factors which are relevant to business as the WTO principles and agreements, International conventional/treaties/agreement/ declarations/protocols etc. economic and business conditions etc. exp. If the economic conditions in a companys export prospects are generally very good and vice-versa. Recession in other countries can increase the import threats, including dumping.

Macro Environment
Political and Legal Environment Political environment serves as the regulatory framework of business main constituents of political and legal environment are: o Image of the country and its leaders. o Defence and military policy. o Laws governing business. o The constitution of the country.

Macro Environment
Economic and Financial Environment : o for business the economic system is a parameter and the business has no choice but to adjust itself with in the fram3work of the given economic system. o The nature of economic system is capitalist, socialist and mixed economy. o Economic Policies- i.e. the industrial policy, monetary policy, fiscal policy. o Economic infra-structure o The markets and their factors which affect the market.

Macro Environment
Technological and physical Environment The main components of technological and physical environment are o Research and development (R&D) systems. o Rate of technological changes. o Approaches to production of goods and service.

Macro Environment
Social and cultural Environment Social environment refers to the characteristics of the society in which a business firm exist and operates. Social and cultural factors include: o Religion o Caste, Traditions, Norms, Beliefs. o taste and preferences of customers o Social and Non-government organization o Education system.

Macro Environment
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Natural Environment
Population and its density Agriculture resources Natural resources Ecological system Climatic conditions under which the firm operates.