BUSINESS ENVIRONMENT

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

Factors under External Environment

All the factors that provides opportunities or pose threats to an organization make up its external environment. E!"#$A%&'( E)*'$")!E)+ S"('A, E)*'$")!E)+ (-,+-$A, E)*'$")!E)+ %",'+'(A, E)*'$")!E)+ E(")"!'( E)*'$")!E)+ .')A)('A, E)*'$")!E)+ +$A E E)*'$")!E)+ +E(&)","#'(A, E)*'$")!E)+ ,E#A, E)*'$")!E)+ $E#-,A+"$/ E)*'$")!E)+ +A0 E)*'$")!E)+ E+&'(A, E)*'$")!E)+ External environment consists of 1. !icro Environment 2. !acro Environment 1. !icro Environment !icro environment is called as the task environment and operating environment. !icro environment forces have a direct bearing of the
operation of the firm.

+hese factors are present in companies environment and affect on the performance of the companies. 'ncludes 3 suppliers ,marketing intermediaries .competitors,customers and public.

!icro environment are more intimately linked to company than macro. Suppliers 4 o +hose 5ho supply inputs,ra5 material and components o -ncertainty in supply compels high inventory cost. o 'ndia maintains stocks of 6 to 7 months 5ere as 8apan maintains for fe5 hours. o Eg 4 )irma 3believes of the logic that
captive production plant for ra5 material is best for cost control.9back5ard integration:

o (o feel outsourcing is more beneficial o $isk to depend on single supplier

o #lobally companies are resorting to partenering relationship marketing.

(ustomers4 o Business exists because of customers o !onitoring customers sensitivity is per;uisite o +he choice of customer by the firm can be on a. $elative profitability b. ependability c. Stability of demand d. #ro5th prospects o +oday customer is global customer as exposed to global products. (ompetitions4 o (ompetition includes not only 5ith competitors of same product but all those 5ho compete for discretionary income of consumers. o Eg 4 the competiton for + * firm may not be only from other
+ * manufacturing but also from 25heelers , refrigerators,cooking ranges,stereo sets etc,bank schemes.

o +o influence basic desire of customer o #eneric competition4 'f the customer decides to spend
discretionary income on recreation , he come across alternatives like, +* ,stereo ,2 in 1,6 in 1 % ( etc.

o 't is competition among alternative. !arketing 'ntemediary4 o .irms that aid the company in promoting,selling and distributing its grads to final buyers. o 'ncludes middlemen,agents,merchants,distribution
firms,5arehouses,transportation firms,marketing,financial intermediaries ,insurances etc.

.inanciers o .inanciers of the company o +heir financial capability,policies, strategies.attitudes,ability to provide non financial assistance. %ublic o %ublic is any group that has actual or potential interest '
or impact on organizations ability to achieves its interest.

o !edia publics,citizens action publics,local publics etc,consumers publics o 'ssues against companies o +arnishing the image by media o Environmental pollution o (hills labour,s5eat labour,cruelty against animals.

2. !acro Environment !acro environment consists of larger societal forces that affect on companies micro environment. !icro environment forces have a direct bearing of the operation of the firm. +hese factors are present in companies environment and affect on the performance of the companies. 'ncludes 3 suppliers ,marketing intermediaries .competitors,customers and public.

Factors under Internal Environment

+he internal environment comprises the resources ,synergy and distinctive competencies of a firm.+hese together determine its organizational capability in terms of its strengths and 5eaknesses existing in the different functional areas 3 marketing, operations,personnel,financial,technical,etc. )eedless to mention that internal environment is constantly influenced by the external environment. S+$A+E#/ S+$-(+-$E !A$<E+')# (A%AB','+/ "%E$A+'") (A%AB','+/ %E$S"))E, (A%AB','+/ .')A)('A, (A%AB','+/ +E(&)'(A, (A%AB','+/

ENVIRONMENTAL ANALYSIS AN

STRATE!I" MANA!EMENT

S="+ 9S+$E)#+& =EA<)ESSES "%%"$+-)'+'ES and +&$EA+S: plays vital role in environmental analysis and strategic management. Strategy is defined by #lueck as >-nified ,comprehensive and integrated plan relating to strategic advantage of firm to challenge environment?
Strategic management is defined as > Set of decisions and action 5hich leads to development of an ob@ective strategy to help achieve corporate ob@ective >

Strategic management process is explained as under

'mplementation

Evaluation and (ontrol

(hoice of

eterminati on

strategy

of vision

(onsideration of strategic

Establishi ng

alternatives S="+ analysis

"b@ectiv e