Bus203 Session-2 Lecturer – Asheka Mahboob

Recommended Text Essentials of business environment: K. Aswathappa (Chapter-1) The Business Environment: Paul Wetherly and Dorron Otter (Chapter-1) Photo Copy of this chapter will be provided after the class

Learning Objectives After completion of this session-1, you should be bale to:  Understand the nature and scope of business  Shortlist characteristics of contemporary business  Describe the criticisms against business  Understand the nature of environment  Understand the nature of environmental analysis  Suggest a suitable organizational arrangement for scanning the environment

What is Business? Business may be understood as the organised efforts of enterprises to earn profit

Characteristics of contemporary business Business transition Pressure of competition Competition is good. Immense opportunities Globalization Technology Waning trust in business Bigger role for government Predominance of small business

Some renowned companies operating in Bangladesh 1.Chevron (Petroleum Industry) 2.Grameenphone Ltd (Concern of Telenor, Telecommunication industry) 3.Unilever Bangladesh (FMCG) 4.Standard Chartered Bank (Banking Industry) 5.HSBC(Banking Industry) 6.Citi NA (Citi Group, Banking Industry) 7.British American Tobacco (Cigarette) 8. Nestle Bangladesh (FMCG)

Business objectives

Critics of business Business is being criticized for several reason such as- dehumanization and exploitation of workers, denting cultural fabric of a society, scams and scandals, degradation of natural environment and the like.

What is environment? Environment mainly refers to external forces that impact business. Such forces include political-legal, technological, cultural, economic and physical.

Why study business environment? Development of broad strategies to ensure sustainability To foresee the impact of socio-economic changes at the national and international levels on firm’s ability Analysis of competitor’s strategies and formulation of effective counter measures To keep oneself dynamic

Types of environment Internal environment External environment

12 Types of Environment contd…. External Environment relate to business environment Internal environment relate to firm specific environment External Environment is also divided into two categories: Immediate or operational environment General or contextual environment

13 Types of Environment contd…. The immediate or operational environment for most firms includes suppliers, competitors, labor market, financial institutions and customers and may also include trading organizations, trade unions and a parent company. In contrast the General or Contextual Environment comprises those macro environmental factors such as economic, political, social, cultural, technological, legal, environmental,ethical influences on business which affect a wide variety of businesses and which can emanate from, local, national and global sources

Basic goals of environmental analysis Environmental analysis has three basic goals. First, the analysis should provide an understanding of current and potential changes taking place in the task environment. Secondly, environmental analysis should provide inputs for strategic decision-making. Thirdly, environmental analysis should facilitate and foster strategic-thinking in organizations-typically a rich source of ideas and understanding of the context within which a firm operates

Benefits of environmental analysis Analysis of competitors’ strategies and formulation of effective counter-measures Develop action plans to deal with technological advancements Identify, priorities and exploit opportunities Minimize the effects of adverse conditions and changes Better decisions to support established objectives More effective allocation of resources to identified opportunities Integrate behaviors of individuals into a total effort Keep managers dynamic Encourage forward thinking and develop favorable attitudes towards change Degree of discipline and professionalism to the management of a business

What are the takeaways for a student from Reading business environment?

Limitations of environmental analysis Environmental analysis does not foretell the future, nor does it eliminate uncertainty for any organization Environmental analysis on and off itself, is not a sufficient guarantor of organizational effectiveness The potential environmental analysis is often not realized because of how it is practiced Too much reliance is often placed on the information collected through environmental scanning. When there is overloading of information, one is likely to get lost and become inactive-typical of ‘paralysis through analysis syndrome’.

The process of environmental analysis The analysis consists of four sequential steps: Scanning Identify early signals of possible environmental change Detect environmental change already under way Monitoring It frequently involves following signals or indicators unearthed during environmental scanning. Three outcomes emerge out of monitoring A specific description of environmental trends and patterns to be forecast The identification of trends for further monitoring The identification of areas for further scanning Forecasting Forecasting is concerned with developing plausible projections of the direction, scope, and intensity of environmental change Assessment I n assessment, the frame of reference moves from understanding the environment- the focus of scanning, monitoring and forecasting- to identifying what the understanding means for the organization.

That’s all for today……. See you in next class!!