Business Environment

Business
Business may be understood as the organized efforts of enterprises to supply consumers with goods and services for a profit. Businesses may be small or big in size, but all of them aim at making profit. The purpose of business goes beyond earning profit. It is an important institution in society. Be it for the supply of goods & services; creation of job opportunities; offer for better quality of life; putting it on global map; the role of business is crucial. Society cannot do without business. It needs no emphasis that business needs society as much.

Scope of business
Business scope is vast. The multitudinous activities involved in bringing raw materials to the factory and the end product from there to the market constitute business. In other words, business includes all activities connected with production, trade, banking, insurance, finance, agency, advertising, packaging & numerous other related activities.

 Business also includes all efforts to comply with legal restrictions & government requirement & discharging obligations to consumers, employees, owners & to other interest groups which have stake in business directly or indirectly. No wonder the principles & practices of managing a business are finding their place in non-business organizations too. Take an NGO, a hospital, or a B-school, you find designation of individual like Vice- President, executives, and corporate & business practices like TQM &re-engineering being replicated.

Characteristics of Business
Opportunities

Competition

Globalization

Business
Transition Technology

Information

 Business in Transition: a typical business person is sandwiteched between the compulsions of the new business environment and of the old practices of doing business.
Pressure of Competition: competition benefits rival firms by defining new ways of doing business, helping build new capabilities, building new customer satisfaction standards, making business executives become proactive. E.g. phone connection now, 8-10 yrs before getting two-wheelers.

 Immense Opportunities: Globalization: modern business necessitates globalization. Technological innovations, crumbling trade barriers, FDI, information explosion , influsing of market competition, changing life styles and demand for new products are the triggers of globalization.

 Technology : business is char. by incin the use of technology. The impact of technology on business is pervasive. The way production function is organized; the way product is marketed; the way employees are hired and motivated; the way employees & subordinates communicates with each other are all influenced by technology. Information :

Business objectives
Vision

Mission

Goal

Objective

Vision
A broad explanation of why the firm exists and where it is trying to lead. A vision provides the point of reference on the horizon-a beacon of light. Vision seeks answer to the following questions: a) Where do we go from here? b) What challenges lie ahead in the business landscape ? c) What differences will these changes make to the companys present business?

 VISION of INFOSYS is to be globally respected corporation that provides best-of-breed business solutions, leveraging technology, vendors and society at large

Mission
Mission statement seeks to give a difinite meaning to vision. Mission statement outlines the fundamental purpose of the organization. A vision becomes tangibles as a mission statement. If vision statement answers the question Where do we go from here? , the mission statement answers What is our business?

 The mission statements of some companies are as follows: to achieve our objectives in an environment of fairness, honesty, & courtesy towards our clients, employees, vendors & society at large (infosys)

Objectives
Mission statements are more specific than vision statements, but are not to be taken as concrete direction for action. Obj render mission statement more concrete. Objs therefore represents operational side of organization. Objs may be more than one &may wary with passage of time.

Profit

Market leadership

Power

Growth

Business Goals

Quality product &services

Service to society Joy of creation

Challenging

Nature of business environment

Aggregative Contextual Interrelated

uncertain
Intertemporal

Relative

Nature of BE
It is very imp for a business firm to understand their environment and changes occurring in it. Business enterprises which know their environment and are ready to adapt to environmental changes would be successful. On the other hand, firms which fail to adapt to their environment are unlikely to survive in their long run.

 Environmental scanning is the process by which organizations monitor their relevant environment to identify opportunities and threats affecting their business. With the help of environmental scanning, an enterprise can consider the impact of different events, trends, issues & expectations on its business operations.

Some direct benefits of understanding the environment are:

First mover advantage: awareness of environment helps an enterprise to take advantage of early opportunities instead of losing them to competitors. E.g. Maruti car became the leader in small car market coz it was Ist to recognize need of small car on acc of rising petroleum prices and a large middle class.

 Early warning signal: environmental awareness serves as an EWS. It aware the firm of the impending threat or crisis so that firm can take timely action to minimize the adverse effects, if any. E.g. when new firms entered mid segment car (threat), Maruti increased the production of its cars threefold. Inc in prod. Enabled the company to make faster delivery and as a result company captured substantial share of market & became the leader in this segment.

 Customer focus: environmental understanding makes the mgmt sensitive to the changing needs &expectations of consumers. E.g. HUL launched small sachets of shampoo & other products realizing the wishes of customers. Strategy formation: environmental monitoring provides relevant information about the business environment. E.g. ITC realized large scope of travel & tourism.

 Change agent: business leaders acts as agent of change. They create a drive for change at the grass root level. Public image: a business firm can improve its image by showing that it is sensitive to its environment & responsive to the aspiration of public. E.g. reliance & icici etc. Continuous learning: environmental analysis serves as broad based & ongoing education for business executives. It keeps them in touch with the changing scenario so that they are never caught unaware.

Types of BE
Refers to factors executing within a business firm. The internal factors are generally regarded as controllable factors becoz the company has control over these factors : it can alter or modify such as its personnel, physical facilities, organization and functional means, such as marketing mix, to suit the environment.

INTERNAL

External

Refers to the factors existing outside the business firm. They are beyond the control of a org/firm/company. The success will depend to a large extent on its adaptability to the environment i.e. its ability to properly design & adjust the internal variables to take advantage of the opportunities & to combat the threats in the environment.

Internal environment
Value system: