WISH U A GOOD BEGINNING

What is Business Environment?

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

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

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

Internal Environment
8. Human Resources 9. Internal Relationships Jobs & Wages Human Factor Safe & Hygienic Work Place Security

External Environment - Micro

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

External Environment - Macro

Economic Factors Social & Cultural Factors Demographic Factors Political & Government Factors Natural Factors Technological Factors Global Factors

Introduction - General
Various Revolutions Industrial :
Labour Intensive Capital Intensive

Green White

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

Introduction - General

Two Economic Eras 1. Mass Production 2. Customized Production

Features of old Economic Era

Growth Areas:

Energy Transportation Utility Chemicals & Consumer Goods

Features of old Economic Era

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

Example - Oil Rich Countries

Features of New Economic Era

Growth Engines:
1. I.T. 2. Satellites 3. Fiber optics 4. Biotechnology 5. Environment 6. Healthcare

Features of New Economic Era

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

Knowledge Management

Features of New Economic Era

Important Physical Assets + Intangible Assets:

Global Brands Skills & Relationships

Drivers of Success

Example Japan, Singapore, Hong Kong

Era of Turbulent Change

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

Era of Turbulent Change

PDCA

PDCA

P Plan D Development C Check A Act

Era of Turbulent Change

Companies are operating in a war zone of rapidly changing

Competitors Technology New Laws Trade Policies

Diminishing Customer Loyalty

Era of Turbulent Change

Todays younger generation is coming with new dreams, hopes & aspirations What it needs New set of Corporate Response

Why ?

Era of Turbulent Change

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

Era of Turbulent Change

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

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

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

Era of Turbulent Change

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

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.

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)

Era of Turbulent Change

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

Era of Turbulent Change

Analyze Environment S Strengths W Weaknesses O Opportunities T Threats SWOT

Era of Turbulent Change

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

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

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)

Economic Environment
Structure of the Economy: Components Primary Agriculture Secondary Industry Tertiary Service

Economic Environment
Economic Policies: Industrial Policy Trade Policy Foreign Exchange FDI / FPI Monetary Fiscal - Public Expenditure & Revenue 5 Year Plans

Economic Environment
Economic Conditions: Boom Recession

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

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

Roles of Government Economic

Regulatory Promotional Infrastructure Entrepreneurial Planning

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)

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

Demographic Environment
Age Structures Gender Family Size Family Life-Cycle Single Married With / Without Children

Demographic Environment
Occupation Education Social Class Religion Nationality Urban / Rural

Types of Forecasting
3. Political Forecasting:

Political Alliances Political Ideologies Political Leadership

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

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

(Future shock)

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

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

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