Business Environment PDF

Business Environment Prof. Dushar Department of Management NSBM Green University - Department of Management 1 Business Environment  Classification of Business Environment Internal environment Task environment General environment Outline SWOT Analysis...

Business Environment Prof. Dushar Department of Management NSBM Green University - Department of Management 1 Business Environment  Classification of Business Environment Internal environment Task environment General environment Outline SWOT Analysis Applicability of SWOT for organizations Q&A Organizational Environment  Organizational Environment is a set of forces surrounding an organization that have the potential to affect the way it operates and its access to scare resources. (Jones, 2007)  Organizational Environment is the sum totality of all the internal and external factors and forces affecting the organizational performance. 4 Classification of Business Environment Classification of Environment Internal environment: actors close (direct impact) to the company that affect its ability to serve its customers. External environment: larger societal forces that affect (indirectly) for the organization. Considered to be beyond the control of the organization. 6 ACTIVITY WRITE DOWN 6 REASONS FOR WHY WE SHOULD LEARN BUSINESS ENVIRONMENT. 7  Enables to identify Business Opportunities Helps in tapping useful resources Importance of Business Coping with Changes Environment Assistance in planning Helps in improving performances 8 INTERNAL ENVIRONMENT Internal Environment- Vision, Mission and Values The first is a statement of vision. It provides a destination for the organization. Next is a statement of mission. This is a guiding light of how to get to the destination. These are critical statements for the organization and the individuals who run the organization. ◦ Vision – Big picture of what you want to achieve. ◦ Mission – General statement of how you will achieve the vision. A companion statement often created with the vision and mission is a statement of core values. Core Values – How you will behave during the process. Internal Environment- Management The process of planning, organizing, leading and controlling the work of organizational members and of using all available resources to achieve organizational goals and objectives Internal Environment- Employees An individual who works part-time or full-time under a contract of employment, whether oral or written, and has recognized rights and duties Internal Environment- Culture The behavior of humans who are part of an organization and the meanings that the people attach to their actions. It includes the organization values, visions, norms, working language, systems, symbols, beliefs and habits 14  SWOT ANALYSIS Applicability of SWOT for organizations Identifies internal strengths of the business -ensures maximum utilization Identifies internal weaknesses of the business- ensure minimization and setting to zero. Identifies future opportunities from external environment to expand the business, product portfolio and start new business. Identifies possible threats to business and get prepare with suitable strategies and plans to avoid them. Strengths of an organization Good vision, mission, organizational values Organizational philosophy (innovation oriented, employee oriented) Skill full management Competent operational level and executive level workers Strengths of organization continued….. Clear organizational structure with clear paths of communication and command Location of the business or spatial spread of the business Ex: world wide branches, global business Human resource development strategy (trainings, learning culture, career development, welfare) Strengths of organization continued….. Physical resources and technology orientation Efficiency of business information management Employee unions- welfare activities, collective negotiations Weaknesses of organization Improper vision, mission and strategies Rigid management Unskilled labour and misconduct of employees Disorganized organizational hierarchy Conflicting communication paths and commanding paths  Insufficient resources and obsolesced technology Employee unrest- petitions, absenteeism Weaknesses of Poor human resource strategy- low payments, lack of welfare organization activities Contd., Work oriented organizational philosophy Opportunities Professional and Reliable supply Diverse consumer experienced network needs and wants marketing intermediaries Less pressure from Less restrictions on Less competitors publics financial services  Threats Suppliers become producers Power of consumers to bargain Consumers becoming manufacturers. Ex: self tailoring More rivals at industry Marketing intermediaries become manufacturers. - Amazon.com became a publisher of books - Cargills food city- out grower network More pressure from publics ACTIVITY - SWOT ANALYSIS CHOSE A COMPANY OF YOUR OWN AND PERFORM A SWOT ANALYSIS 25 External Environment BUSINESS ENVIRONMENT  External Environment Task (Micro) General(Macro) Demographic Consumers environmental forces Intermediaries Socio-Cultural Forces Suppliers Technological Forces Economical Forces Public Groups Political and Legal Forces Competitors Natural Environmental https://www.youtube.com/watch?v=_YhEpBvlO2M Forces 27 Task Environment Task Environment Task Environment – Forces of an organization’s immediate environment ◦ Competitors seeking the same resources as the organization. ◦ Customers who acquire an organization’s products or resources. ◦ Suppliers that provide resources for the organization. ◦ Intermediaries ◦ Public groups Competitors 30 Customers 31 Suppliers 32 Intermediaries 33 Pressure groups 34 General Environment (Macro) 35 ECONOMIC ENVIRONMENT 36  ECONOMIC ENVIRONMENT Cyclical trends of the economy Inflation rate Interest rates and credit availability Unemployment level Exchange rate Disposable income (income after taxes) and income disparity 37 Socio Cultural Environment 38  SOCIO-CULTURAL ENVIRONMENT Social organizations such as family, school, temple and culture of the society shape beliefs, norms, values and behavior of people. Social groups and norms Reference groups Lifestyle and values 39 40 41 42 NATURAL ENVIRONMENT 43  NATURAL ENVIRONMENT Managers should be keen on the consequences attached with the following key trends in the natural environment. -The increased levels of pollution - Impending (upcoming) shortage of raw materials -The increased cost of energy -Natural disasters 44 45  TECHNOLOGICAL ENVIRONMENT Technology is the most dramatic force which changes people’s live Every new technology obsolete the existing technology and all the products based on it. Trends accruing in this environment -Pace of change -Automation -R&D expenditures by companies -Electronic commerce -Mobile Commerce 46 TECHNOLOGICAL ENVIRONMENT 47 E-Commerce (Electronic Commerce) 48 M Commerce (mobile commerce) 49 POLITICAL ENVIRONMENT Political Policies 50  POLITICAL-LEGAL ENVIRONMENT This environment is composed of laws, government policies and bodies, and pressure groups that influence and limit the behavior of individuals and organizations. Political policies Terrorist attacks and civil wars Laws (Employment Law, Competition Law, Tax Law) 51 52 Political Environment 53 PESTEL ON NIKE Group Activity EXPLAIN HOW EXTERNAL ENVIRONMENTAL FACTORS INFLUENCE THE OPERATIONS OF MCDONALDS 55 Thank you! 56