WISH U A GOOD BEGINNING

lmothilal@gmail.com - DMS, Pondicherry University

What is Business Environment?

It refers to all External Forces, Internal Relationships & Society Which have impact on the functioning of business

lmothilal@gmail.com - DMS, Pondicherry University

Business Environment
Internal Environment External Environment Micro (Task / operations) Macro (General / Remote)

lmothilal@gmail.com - DMS, Pondicherry University

Internal Environment
1. 2. 3. 4. 5. 6. 7. Promoters Values Mission & Objectives Management Structure Internal Power Relationship Company Image / Brand Physical Assets / Facilities R & D / Technological Capabilities
lmothilal@gmail.com - DMS, Pondicherry University

Internal Environment
8. Human Resources 9. Internal Relationships Jobs & Wages Human Factor Safe & Hygienic Work Place Security
lmothilal@gmail.com - DMS, Pondicherry University

External Environment - Micro

1. 2. 3. 4. 5. 6. Customers Suppliers Competitors Public Financiers Marketing Intermediaries

lmothilal@gmail.com - DMS, Pondicherry University

External Environment - Macro

Economic Factors Social & Cultural Factors Demographic Factors Political & Government Factors Natural Factors Technological Factors Global Factors
lmothilal@gmail.com - DMS, Pondicherry University

Introduction - General
Various Revolutions Industrial :
Labour Intensive Capital Intensive

Green White

lmothilal@gmail.com - DMS, Pondicherry University

Introduction - General
I.T. (Convergence of Communication Technologies) Knowledge Resolution (Intellectual Capital)

lmothilal@gmail.com - DMS, Pondicherry University

Introduction - General

Two Economic Eras 1. Mass Production 2. Customized Production

lmothilal@gmail.com - DMS, Pondicherry University

Features of old Economic Era

Growth Areas:

Energy Transportation Utility Chemicals & Consumer Goods

lmothilal@gmail.com - DMS, Pondicherry University

Features of old Economic Era

Growth Rate 2-3 % p.a. Focus Natural Resources Important Physical Assets (main)

Example - Oil Rich Countries

lmothilal@gmail.com - DMS, Pondicherry University

Features of New Economic Era

Growth Engines:
1. I.T. 2. Satellites 3. Fiber optics 4. Biotechnology 5. Environment 6. Healthcare
lmothilal@gmail.com - DMS, Pondicherry University

Features of New Economic Era

Growth Rate 20-30% p.a. Focus Knowledge

Knowledge Management

lmothilal@gmail.com - DMS, Pondicherry University

Features of New Economic Era

Important Physical Assets + Intangible Assets:

Global Brands Skills & Relationships

Drivers of Success

Example Japan, Singapore, Hong Kong

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

In era of turbulent change, managing change & discontinuity is a key Issue

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

PDCA

PDCA

P Plan D Development C Check A Act

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Companies are operating in a war zone of rapidly changing

Competitors Technology New Laws Trade Policies

Diminishing Customer Loyalty
lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Todays younger generation is coming with new dreams, hopes & aspirations What it needs New set of Corporate Response Why ?
lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Todays Generation : High Awareness increased information Bargaining Power will Influence Intelligent & Proactive Higher Standard of Living

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Demands Variety of Services Wants World Class Quality Tech Savvy Try New Products & Fickle in brand loyalty More Sensitive

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Initially companies begin to compete on Cost basis, once companies achieve comparable cost structure within industry, Focus shifts to Quality then Variety & finally to Responsiveness
lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

1. 2. 3. 4. Key Differentiator Service for example: Xerox Corp. (service within 3 Hours anywhere in U.S.) McDonald's (Courteous) WalMart Store People Greeter Singapore Airlines Smile
lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Old Rule is changing: Big will not swallow small but, that FAST who will outpace SLOW

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

It is not the strongest nor the most

intelligent that will survive but the one who is the most responsive to the change Charles Darwin

Gap between conception of an idea & commercialization has decreased tremendously.

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Where Indian companies have to focus? Quantum Restructuring Discard Outdated Systems ( e.g. E- Governance in Administration) Focus on Customer centricity (Blow Up)
lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Analysis of Environment: 1. Scanning 2. Monitoring 3. Forecasting 4. Assessment

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Analyze Environment S Strengths W Weaknesses O Opportunities T Threats SWOT

lmothilal@gmail.com - DMS, Pondicherry University

Era of Turbulent Change

Analyze Competitive Structure of Industries: Rivalry among existing firms Threat of new entrants Bargaining power of suppliers & buyers

lmothilal@gmail.com - DMS, Pondicherry University

Types of Forecasting
1. Economic: General Economic Conditions  GDP Growth Rate  Per Capita Income  Distribution of Income  BOP Trends, Inflation, Rainfall  Climate  Politics Local & International
lmothilal@gmail.com - DMS, Pondicherry University

Economic Environment
Nature of the Economy Low Income - Less than $755 of per capita GNP Middle Income ( $756 - $2995) High Income ($9266 & Above) ( of year 2000)
lmothilal@gmail.com - DMS, Pondicherry University

Economic Environment
Structure of the Economy: Components Primary Agriculture (18% in 2007) Secondary Industry ( Tertiary Service (

lmothilal@gmail.com - DMS, Pondicherry University

Economic Environment
Economic Policies: Industrial Policy Trade Policy Foreign Exchange FDI / FPI Monetary Fiscal - Public Expenditure & Revenue
lmothilal@gmail.com - DMS, Pondicherry University

Economic Environment
Economic Conditions: Boom Recession

lmothilal@gmail.com - DMS, Pondicherry University

Economic Environment
Global Linkages: Membership of WTO, IMF, World Bank, Trade Blocks etc. Magnitude & Nature of cross border Trade Financial Flows FDI / FPI Extremism:
Terrorism within & Cross border Unsocial elements Fanaticism
lmothilal@gmail.com - DMS, Pondicherry University

Economic Environment
Economic Systems: 1. Capital Economy 2. Centrally Planned 3. Mixed Economy

lmothilal@gmail.com - DMS, Pondicherry University

Roles of Government Economic

Regulatory Promotional Infrastructure Entrepreneurial Planning

lmothilal@gmail.com - DMS, Pondicherry University

Other Roles of Government

The Constitution Directive Principles of State Policy Separation of Powers: 1. Union List 2. State List 3. Concurrent List (1&2)

lmothilal@gmail.com - DMS, Pondicherry University

Types of Forecasting
2. Social Forecasting:  Population Growth / Decline  Age Structure of Population  Migration  Family Life-Style  Social Attitude

lmothilal@gmail.com - DMS, Pondicherry University

Demographic Environment
Age Structures Gender Family Size Family Life-Cycle Single Married With / Without Children
lmothilal@gmail.com - DMS, Pondicherry University

Demographic Environment
Occupation Education Social Class Religion Nationality Urban / Rural
lmothilal@gmail.com - DMS, Pondicherry University

Types of Forecasting
3. Political Forecasting:

Political Alliances Political Ideologies Political Leadership

lmothilal@gmail.com - DMS, Pondicherry University

Political Environment
Policies of Political Parties Nature of the Constitution Govt. System: Parliamentary Democracy Presidential Democracy

lmothilal@gmail.com - DMS, Pondicherry University

Types of Forecasting
4. Technological Forecasting: Innovations: Radical / Incremental / Next Generation Place & Extent of Diffusion Pace

(Future shock)
lmothilal@gmail.com - DMS, Pondicherry University

Technological Forecasting
Technological Leadership & Followers Transfer of Technology Appropriate Technology & Adaptation First mover Advantages & Disadvantages Sustainability of the lead

lmothilal@gmail.com - DMS, Pondicherry University

Natural Environment
Geographical Factors: ( e.g. interplanetary explorations & motives beyond them - commercial Exploitation ) Ecological Factors

lmothilal@gmail.com - DMS, Pondicherry University

In view of constant change what should company do?

Customer Needs & Expectations Demand Conditions Substitutes Govt. Policy Social Forces Competitive Dynamics Innovations by R&D Labs Manage cross-cultures
lmothilal@gmail.com - DMS, Pondicherry University