1. The Business Environment Microenvironment Market environment Macro environment
Prof. Arjun B. Bhagwat
Department of Commerce,
S. M. Joshi College, Hadapsar, Pune-28
F. Y. B. Com

2. The business environment
There is a direct relationship between successful management and the influence and impact of environmental change
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3. The business environment
Change is a process of constant renewal and regeneration in every conceivable sphere of society
Business organisation as the central component of the business environment are naturally also subject to change
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4. The business environment
The interaction between the environment and a business organisation is an ongoing process that results in new problems and new opportunities
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5. The business environment: examples
Technological innovation
Globalisation
Growth of poverty
Collapse of emerging markets
Shift from manufacturing jobs to service jobs
New ways of doing work
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6. Micro - Environment Mission and objectives of the organisation
The organisation and its management , e.g. marketing , financial and purchasing management
Resources – human resources , capital and know how
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7. Market environment Consumers – needs , purchasing power and behavior
Suppliers
Intermediaries
Competitors
Opportunities & threats
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8. Macro - environment Technological environment Economic environment
Social environment
Physical environment
Institutional – political environment
International environment
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9. Strategic Management
The set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives.
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10. The Balanced Scorecard
Financial
“To succeed financially, how should we appear to our shareholders?”
Vision and Strategy
Customer
“To achieve our vision, how should we appear to our customers?”
Internal Business Processes
“To satisfy our shareholders and customers, what business processes must we excel at?”
Learning and Growth
“To achieve our vision, how will we sustain our ability to change and improve?”
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11. Porter’s Five Forces Industry Competition
Potential entrants
Threat of new entrants
Suppliers
Bargaining power
of suppliers
Industry competitors
Rivalry Among
Existing Firms
Buyers
Bargaining power
of buyers
Substitutes
Threat of substitute products or services
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12. Market environment
Interaction between business and its suppliers , consumers and competitors
Interaction can result in opportunities or threats to a business
Business awareness rely on – environmental scanning , market research and information management
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13. The Firm’s External Environment
Remote Environment (Global and Domestic)
Industry Environment (Global and Domestic)
Operating Environment (Global and Domestic)
Economic
Social
Political
Technological
Ecological
Entry barriers
Supplier power
Buyer power
Substitute availability
Competitive rivalry
Competitors
Creditors
Customers
Labor
Suppliers
THE FIRM
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14. Macroenvironment
Macro variables have an effect on the market environment , decision –making by management and on one another
Emphasis is on change caused by the uncontrollables and implications for management
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15. Macroenvironment Technology Originates in research and development
New processes , methods & even approaches to management
Technology results in higher productivity
Source of competitive advantage
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16. Macroenvironment Economic environment
Influenced by technology , politics and the social and international environments.
Cross influences result with change in economic growth rate , levels of employment , consumer income , the rate of inflation , interest rate & exchange rates
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17. Macroenvironment Economic environment
Gross Domestic Product – total value of all goods and services produced within a country
7 – 8 % signals an economy which grows fast to create jobs for its country
Exports more products than it imports and stable currency
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18. Macroenvironment
Inflation – higher rate than country’s major trading partners & international competitors results with a reduction in international competitiveness
Monetary policy – affects money supply , interest rates and strength of the currency
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19. Macroenvironment Economic environment
Fiscal policy – affects business and consumers through taxation and tax reforms
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20. Social environment
Demographic change – increasing or decreasing population rate
Urbanisation
Levels of education
Changing role of women
Consumerism
Social responsibility & business ethics
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21. Social environment
Hiv/Aids
culture
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22. Physical environment
Population & health patterns – land degradation, pollution, malnutrition and illness.
Food
Water
Energy and climate
Biodiversity
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23. Political – government environment
Regulatory environment
Labour laws
Employment Equity Act 55 of 1998
Safety Health & Environment
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24. International environment
Globalisation – borderless world
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