1. Business Environment

2. Important Terms Business
Any activity that seeks to provide goods and services to others while operating at a profit.
Profit
The amount of money a business earns above and beyond what it spends for salaries and other expenses.

3. Important Terms Entrepreneur
A person who risks time and money to start and manage a business.
Revenue
The total amount of money a business takes in during a given period by selling goods and services.

4. Important Terms
Loss
When a business’s expenses are more than its revenues.
Risk
The chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

5. Important Terms Stakeholders
All the people who stand to gain or lose by the policies and activities of a business.
Outsourcing
Assigning various functions, such as accounting, production, security, maintenance, and legal work, to outside organizations.

6. Business ENVIRONMENT

7. What is “Environment”?

8. Environment => everything which surrounds a system

9. What is “Business Environment”?

10. Business Environment =>
Anything which surrounds the business organization that either help or hinder the development of businesses

11. Business Environment =>
Anything which surrounds the business organization that either help or hinder the development of businesses
What are they?

12. Principal elements of a business organization’s environment
Macroenviroment
2. External environment
Microenvironment
1. Internal environment

13. Types of Business Environment
1. Internal environment => all functions within a firm
2. External environment => all forces and events outside organization affect on its activities
Macro environment: not immediately affect firm’s activities
Micro environment: directly affect the firm’s activities

14. Principal elements of a business organization’s environment
Political/ legal
Economic
Technological
Social/ cultural
Macroenviroment
Customers
Suppliers
Competitors
Intermediaries
Other stakeholders
Microenvironment
Internal environment
Marketing, Production, Finance, Personnel, R&D

15. Why we have to understand Business Environment ?

16. What will happen if a firm doesn’t know its business environment?

17. Why Business Environment is important?
If the firm failed to respond to change in the environment , it might affect on declining in its profitability, business failure, loss of jobs, and a low standard of living and quality of life.
On the other hand, it could be an opportunity for the firm to succeed in which it always adjust itself with the current business trends and environment.

19. Economic & Legal Environment

20. Economic & Legal keep taxes and regulations to a minimum
allow private ownership of businesses
minimize interference with the free exchange of goods and services
passing laws that enable businesspeople to write contracts that are enforceable in court
establish a currency that’s tradable in world markets
minimize corruption

21. Starting a business in some countries is much harder than in others.
In India, for example, a person has to go through an extraordinary and time-consuming bureaucratic process to get permission to start a business—and with no certainty of success.
Nonetheless, those businesses that do get started can become a major source of wealth and employment. This jewelry business is one small example.

22. Technological Environment

23. Technological Environment
Technology means everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and the various software programs that make business processes more effective, efficient, and productive

24. Important Terms Effectiveness means producing the desired result.
Efficiency means producing goods and services using the least amount of resources.
Productivity is the amount of output you generate given the amount of input (e.g., hours worked) The more firm can produce in any given period of time, the more money firm can get

25. Technological Environment (Cond’t)
Emerging of Internet
The Growth of E-Commerce
E-Commerce: The buying and selling of goods and services over the Internet.

26. Technological Environment (Cond’t)
Database: An electronic storage file
where information is kept; one use of databases is to store vast amounts of
information about consumers. The company can use those info. send you catalogs and other direct mail advertising that offers the kind of products you might want, as indicated by your past purchases

27. Technological Environment (Cond’t)
Identity theft: The obtaining of private
information about a person, such as Social Security number and/or credit card number, and using that information for illegal purposes, such as buying things with it.

28. Amazon.com Must Change with the Times

29. Amazon.com by Jeff Bezos struggled since 1995 to prove its viability to its investors
After its success, many competitors arose, many traditional retailers starts their online service to compete
Bezos, therefore, encounter those by expanding the company’s offerings i.e. free shipping for minimum order of $99, then$ 49, and ended up at $25

30. Overtime, amazon.com is now offering wide range of products from automobiles and baby items to video games and watches.

31. EBay is an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. In addition to its original U.S. website, eBay has established localized websites in thirty other countries. It is one of the big winners in the fight for Internet attention.

32. Q&A What Internet sites are your favorites?
Do you think that buying items over the Internet is going to greatly affect the shopping malls in your area?/ How?

33. Competitive Environment

34. HOW COMPETITION HAS CHANGED BUSINESS
TRADITIONAL BUSINESSES
Customer satisfaction
Customer orientation
Profit orientation
Reactive ethics
Product orientation
Managerial focus
WORLD-CLASS BUSINESSES
Delighting the customer
Customer and stakeholder orientation
Profit and social orientation
Proactive ethics
Quality and service orientation
Customer focus

35. Important Terms
Proactive = doing the right thing before anyone tells you to do it
Reactive = responding to criticism after it happens

36. How to survive in competitive environment?
Adjust the firm’s products, policies, and practices to meet consumer demands
Restructure organization and do the empowerment to meet the changing needs of customers and employees
Empowerment:
Giving frontline workers the responsibility,
authority, and freedom to respond quickly to customer requests

37. Social Environment

38. Social
Demography: The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.
Why demography is important to the business?

39. Social Trends Today
Managing diversity-> company tends to search more of diverse workforce
Increasing number of older people-> successful businesses like travel, medicine, nursing homes, adult day care, home health care businesses
Two-income families->pregnancy benefits, parental leave, flexible working schedule, child/ elder care counseling programs
Single parents-> family leave, flextime

40. Example: 4 day work week
In Birmingham, Alabama, city officials decided to implement a four-day week starting July 1 for some 2,400 municipal employees and later in the year for around 1,000 police and firefighters.
allowing employees to work four 10-hour days, may save 500,000 to one million dollars annually in fuel costs alone for the employees

41. 4 day work week
The biggest motivation was to give employees a cost savings due to high gasoline prices. Also it will also give parents an extra day with their children and save on day care costs

42. Global Environment

43. Global War and terrorism-> security costs and policies
How global changes affect you?

44. MH17 Malaysia plane crash in Ukraine
Ebola virus