ECONOMIC ENVIRONMENT OF BUSINESS : AN INTRODUCTION

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

COURSE CONTENT : 4 PARTS PART I : The Fundamentals {Before syllabus we would cover in deeper the meaning of economic environment of business} The Scope & Subject Matter of Macroeconomics An Introduction to the Economics of Growth & Development An Introduction to the Indian Economy - Its Salient Features India's Gross Domestic Product & Net National Product (its components & the significance of the same to growth) Inter-Sectoral Distribution of the Gross National Product over the Five Year Plans Period.

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

PART II: The Economic Markets: The Product Market & How it Affects India's Growth Potential The Money Market & How it Behaves The Capital Market & its Variability The Money Market & the Role of Central Banking How does Commercial Banking Effect Industry & Business The Indian Labor Market & Levels of Unemployment & Inflation since 1990

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

PART III : Federal Budget Objective is to expose the students to the various components of the national budget and how these impact on the business world.

PART IV: India & the World The capitalist world economy and India's position therein since 1990 The World Bank, and IMF conditionalities leading to the liberalisation - privatisation -globalisation exercise and beyond

India's balance of trade and fluctuations since 1990. How do

er figure in the world order.

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

India's balance of payments and how its study can assist corporate decision making. What is needed to improve the situation, if at all it is poor. The Business Cycle and how it is perceived to behave in the immediate future. What business decision hinge on this analysis.

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

Reference Text: Economic Environment of Business, S.K.Misra and V.K.Puri, Himalaya Publishing House, 2005 Business Environment, Francis Cherunilam, Himalaya Publishing House, 2005 Business Environment Aswathappa, HPH (10) Raj Aggrawal: Business Environment (Excel) Adhikary, M: Economic Environment of Business in India(Sultan Chand) Indian Economy Datt & Mahajan (6) Economic Environment of Business Veena Keshav Pailwar (6) MACRO ECONOMICS

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

Business Environment Aswathappa, HPH (10) : Comprehensively deals with Business Environment : Groups to deal with Application part + Material related to course revision. Lot of examples related to points dealing with theoretical points. Pailwar book: Indian economy related applications. In each chapter; Importance from the viewpoint of Managerial application (significance) is given. Groups to consult the same for presentation. Indian Economy: Latest information related to the data and development still obsolete. You have to go for updating the same.

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

Mode of teaching: Interfacing sessions: Groups to discuss subjects + case studies + Important observations in the subject. Will teach principles for better understanding and then Groups are to come well prepare for regular discussion the applications. Though paper is of 50 marks but most important for managers as it will give a fairly good idea about the business environment and sharpen capabilities of taking logical decisions.

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

May not look exciting and challenging apparently as managerial economics since no charts and diagrams . But then you need to remember lot of things with capability to reproduce. Data in books are obsolete . You need to update them. You need to update your study material with every day developments appearing in financial papers so that in exam you can produce best material.

ECONOMIC ENVIRONMENT OF BUSINESS {50 MARKS}

GROUP FORMATION: ARE YOU COMFORTABLE WITH THE SAME GROUPS OR WANT SOME CHANGE? CRs to discuss with class and provide us names and group. Let us freeze them from very beginning.

ECONOMIC ENVIRONMENT OF BUSINESS : AN INTRODUCTION

INTRODUCTION : BUSINESS CHALLENGES

INTRODUCTION: Never before business environment was so Volatile and Dynamic. Managing business is a daunting task in changing environment for the managers. Never before there were so many opportunities to strike and prosper as they are seen now. A MANAGER SHOULD HAVE FULL KNOWLEDGE OF ENVIRONMENT IN WHICH HE/SHE IS OPERATING

BUSINESS

ENVIRONMENT

NATURE OF BUSINESS
NATURE OF BUSINESS: It is organised efforts of enterprise to earn profit . Business may vary in size in terms of no. of employees, sales revenues etc.: small or big in size but all aim at making profits. SAIL, TISCO has thousands of employees and their sales revenues run in thousands of crores of rupees. Small business units (viz. 1 or 2 working at home or 10 operating in a retail store, 1,00,000 operating in a multiple units spread across the country working they are all have major concern - to earn profits.

NATURE OF BUSINESS
Businesses go beyond the objective of earning profit in a society; It represents an institution in society. Be it for the supply goods and services; Creating job opportunities; Offering better quality of life; Contributing to the economic growth of the country and putting it on the global map; Role of business is crucial .

Society cannot function without business.

NATURE OF BUSINESS
SCOPE OF BUSINESS: Vast Scope. Various activities are involved in bringing raw materials to the factory and the product from there to the market constitute business. Automobiles: Supplier of raw materials Manufacturer converting raw materials into inputs and products. Transport agent assists in moving materials to the manufacturing places; Banker to finance various activities Advertising agencies tell about vehicles Where they can be produced ; Insurance agent Other host of activities. A long chain of activities. Business is people.

NATURE OF BUSINESS
CHARACTERISTICS OF CONTEMPORARY BUSINESS:

Transition Pressure of competition Immense Opportunities Globalisation Technology Information

CHARACTERISTICS OF CONTEMPORARY BUSINESS

TRANSITION COMPETITION

INFORMATION

BUSINESS

OPPORTUNITIES

TECHNOLOGY

GLOBALISATION

CHARACTERISTICS OF CONTEMPORARY BUSINESS

BUSINESS IN TRANSITION For long time business was conducted in sheltered market covering inefficiencies, low productivity and high cost. In 1990s and ahead the process of liberalisation started and most all protectionist measures were lifted. In a globalised environment Indian business leaders find totally new environment characterised by competition both from within and from foreign business. A TYPICAL BUSINESS LEADER IS SANDWICHED BETWEEN THE COMPULSIONS OF THE NEW BUSINESS ENVIRONMENT AND THE OLD PRACTICES OF DOING BUSINESS.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

What he needs to do ? Rigid hierarchical and tall structure Flexible flat and team based structures. Family centric, closed minded and secretive environment Dispersed ownership , open minded and transparent environment. Caste ridden superstitious laid back styles of management Rational thinking and vibrant styles of management.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

PRESSURES OF COMPETITION: Indian businesses are competing among themselves and are also exposed to outside competition from foreign firms. Competition though unwelcome to managers , is a boon to customers. Earlier customers were squeezed, they paid high prices for bad quality goods. Producers maintained monopoly. (6-7 years wait for telephone connection; 3-4 years to get cooking gas connection , 8-10 years to get a new two wheeler and the list goes on).

CHARACTERISTICS OF CONTEMPORARY BUSINESS

In changed scenario customer is the king ; lot of choices for customers and at lower prices; service providers greets customers. Nature of delivery of services across the counters changed. Courteous handling of customers. Competition helps rival firms. Competing firms benefits from having strong domestic and foreign rivals : Competition defines new ways of doing business Building new capabilities Building new standards for CRM Brings proactiveness among business leaders.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

IMMENSE BUSINESS OPPORTUNITIES: BPO, CALL CENTRES, I.T., ITES, Wealth Management, Risk Management, Private Banking new types of businesses. Opportunities in traditional sector: viz. Industry. Globally Competitive manufacturing possible in India. Pharmaceuticals, chemicals, textiles , metals refining, cement, auto and ancillaries; Exporting large amount of output. Many MNCs look at India as export base. Suzuki and Hyundai perceive India as a car club.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

India has potential to emerge as the second global manufacturing base after China . First wave $460 Mn. (McKinney) covered low technology products like garments, toys etc. Second of $1.6 trillion yet to come.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

Commodity Business: Yet another area where Indian companies are in a stronger position . L.N. Mittal in Steel, Ambanis in Polyester, K.M. Birla in Viscose Fibre and Bharat Forge in forgings are some names . 3 reasons for enviable and commanding position of industrialists: First Low Cost production Second Confidence these entrepreneurs love Confidence derived from their increased competitiveness and global outlook

CHARACTERISTICS OF CONTEMPORARY BUSINESS

Third, Countries which were traditionally centres of manufacturing are finding their competitiveness eroded by other low cost countries. (In Europe a number of small auto components manufactures are selling out and are being taken over by the likes of Bharat forge.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

Globalisation: Going International is yet another trend followed by modern business houses . Political boundaries are no barriers to business. Production facilities are being set up in different countries and products are being sold through a global network. Gradually business houses are exposed to global competition which augurs well for the consumers.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

Internationalisation and Globalisation is fast becoming imperative for modern business (triggers for globalisation) Technological innovations Crumbling trade barriers Global flow of capital & technology Information Explosion Intensity of market competition Changing life style Demand for New Products.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

Technology: Business is characterised by increasing use of technology. It influences ways of Organising production functions Marketing of products Communication among employees Hiring and motivating employees Organising Finance function INFORMATION: Recognition of information needs. Major Improvements in Data Processing, information systems analysis and preparation of effective records and reports.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

Vital reason for progress in the area of business is the availability of the computer and electronic devices that have made feasible the quick and accurate gathering, processing and distributing information. Information technology itself has undergone revolutionary changes. FROM HAND WRITTEN SHEET OF BUSINESS TO TYPING TO STENCIL CUTTING TO PHOTOCOPYING TO FLOPPIES TO CYBERSPACE.. As businesses are globalised online communication across the world would be highly useful .

CHARACTERISTICS OF CONTEMPORARY BUSINESS

BUSINESS OBJECTIVES: VISION: BROAD AND HAZY EXPLANATION OF WHY THE FIRM EXISTS AND WHERE IT IS TRYING TO REACH Where do we go from here? What changes lie ahead in the business landscape? What differences will these changes make to the companys present business? VISION GIVES ORGANISATION A SENSE OF PURPOSE AND A SET OF VALUES THAT UNITE EMPLOYEES IN A COMMON DESTINY.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

Infosys Vision To be globally respected corporation that provides best of breed business solutions, leveraging technology, vendors and society MISSION: Mission Statement outlines the fundamental purpose of the organisation. A vision becomes tangible to as a mission statement. Most of the organisations manufacturing, services, infrastructure have describe their own mission statement in writing. It seeks to give a definite meaning to vision. If vision seeks answers to the question where to go from here? mission answers what business we are in the right now

CHARACTERISTICS OF CONTEMPORARY BUSINESS

ELEMENTS OF MISSION STATEMENTS: 1. Customer needs or What is being satisfied 2. Customer groups or Who is being satisfied 3. Companys activities, technologies and competencies or How the firm goes about creating and delivering value to customers and satisfying their needs 3. The companys concern for survival , its philosophy, its self concept and its concern for public image.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

Mission statements are highly personalisedunique to the organisation for which they are developed. It is therefore normal that different firms in same industry has different mission statements. OBJECTIVES: Mission statements are more specific than vision statements but they are not to be taken as concrete directions for action.

CHARACTERISTICS OF CONTEMPORARY BUSINESS

BUSINESS OBJECTIVES: Mission Statements are more specific than vision statements but are not to be taken as concrete directions for actions. Objectives render mission statements more concrete A typical business unit seeks to achieve more than one objective and there are always restraints to attainment of some objectives.

BUSINESS OBJECTIVES

Profit

Power

Quality of products and services

Growth
Employee Satisfaction & Development

BUSINESS GOALS

Challenging Joy of Creation

Market Leadership

Service to Society

BUSINESS OBJECTIVES
PROFIT: Main incentive, Motivator, Strong sustainer, Judicious allocator of resources, Objective indicator of productivity and a solid basis for growth Expansion and survival Enables business to achieve other objectives too. Not all enterprises are interested in making profits. Viz. Hospitals, Schools, charitable trust, , Government agencies Non profit organisation customarily rely on gifts, endowments, receipts from money raising projects subsidies or taxes for sustenance.

BUSINESS OBJECTIVES
Profit should really be beginning and not end in itself. Acting as seed for new products, more plants, more dividends, more tax payments, more jobs and more opportunities. Profit should promote well being of society. promoting only products with high margins (to earn profits), ignoring research and failing to provide working conditions satisfactory to employees may in the ultimate bring about the demise of an enterprise

BUSINESS OBJECTIVES
GROWTH: Growth is another primary objective of business: The strategies adopted to achieve growth are:

(a) Add more products/markets (b) Diversify into new areas (c) Integration forward or backward (d) Increase market share (e) Expand markets or (f) Cut down costs and increase productivity.

BUSINESS OBJECTIVES
POWER: Business houses have vast resources (in the form of money , materials, men and knowhow) at their command. Next to top officials of Govt. perhaps it is the business people who enjoy considerable clout. Several enlightened business men have used their power for the good of society. About JN Tata Time of India April 13, 1912 wrote He was above all a patriot. .. who made no public speeches. To his mind wealth and the industry which led to wealth were not ends in themselves but means to an end, the stimulation of the latent resources of the country and its elevation in the scale of nations.

BUSINESS OBJECTIVES
EMPLOYEE SATISFACTION AND DEVELOPMENT :

If you want to plan for a year plant corn. If you want to plan for 30 years plant a tree. But if you want to plan for 100 years plant men So goes a Chinese proverb. Concern for employees continues to be an important aspect of management. TATAs are legend in pursuing this objective. Implementation of Labour Welfare measures Safety and Security measures Training and development.

BUSINESS OBJECTIVES
QUALITY PRODUCT AND SERVICES : Persistent quality of products earns brand loyalty, a vital ingredient of success. Hindustan Lever is flourishing because of the high quality of its products (Liril, Vim, Lifebuoy, Rin, Sunlight, Close up , Lux, Rexona etc.) Buyers consider them safe, high quality and reasonably priced. They have excellent R& D facilities behind brands. Quick Money can come through short cuts but such enterprises will not survive for long.

BUSINESS OBJECTIVES
MARKET LEADERSHIP: To earn market leadership and a niche for oneself innovation is the key factor. Innovation may be in product, advertising, distribution, finance or in any other field. Blow Plast retains its market leadership by introducing soft luggage & bags. Hindustan Lever earned leadership in tooth paste by introducing mouth washer in its Close up. Asian Paints adopted unconventional channels for the sale of its products Ambanis of Reliance Textiles introduced convertible debentures which have become attractive.

BUSINESS OBJECTIVES
CHALLENGING: Business offers vast scope and poses formidable challenges. The worth of an individual is tested more in business than in any other profession.

JOY OF CREATION: It is through business strategies that new ideas and innovations are given a shape and are converted into a useful products and services for the benefit of customers. Some of the areas of future focus in next 2-3 decades would be: Readily available artificial human organs except brain. Means of transportation without an automobile perhaps an individual flying machine.

BUSINESS OBJECTIVES
Drugs to cure or prevent cancer and the common cold. A personal telephone no longer than cigarette pack that can be used from any location A pocket size computer/Laptops. Clothing that can be cleaned by placing it in a cleaning chamber for one minute. A synthetic material to replace wood.

SERVICES TO SOCIETY:

BUSINESS OBJECTIVES
SERVICES TO SOCIETY: Providing safe and quality goods at reasonable prices Providing employment. Patronising cultural and religious activities. Maintaining and protecting ecology and Supporting less privileged sections of people in society.

GOOD CORPORATE CITIZENSHIP:

BUSINESS OBJECTIVES
GOOD CORPORATE CITIZENSHIP: It implies that business unit complies with the rules of the land, pays taxes to Government regularly, discharges its obligations to society and cares for its employees and customers. Unethical practices are anathema to the Tatas. Quoting JRD TATA This factor has also worked against our growth. What would have happened if our philosophy was like that of some other companies which do not stop at any means to attain their ends I have often thought of that and I have come to the conclusion that if we were like these other groups , we would be twice as big as we are today. What we have sacrificed is a 100% growth.

BUSINESS OBJECTIVES
Read Critics of Business: Homework: Group 1 to discuss table 1.1- 1.2, Box 1.1 to 1.4

WHAT IS ENVIRONMENT
Environment refers to all external forces which have a bearing on the functioning of business. Environment factors or constrains are largely if not totally, external and beyond the control of individual industrial enterprises and their managements. These are essentially the givens within which firms and their managements must operate in a specific country and they vary often greatly from country to country Glueck and Jauch : The environment includes factors outside the firm which can lead to opportunities for or threats to the firm . Although there are many factors, the most important of the sectors are socio economic technological supplier, competitors and government.

WHAT IS ENVIRONMENT
6 Factors of business environment: Political legal Economic TABLE Socio Cultural Technological Global Natural ECONOMIC ENVIRONMENT: Refers to all forces that have an impact on business: Industrial Production, Agriculture, Planning , Basic economic philosophy, Infrastructure , National Income, Per Capital Income, Money Supply, Price Level, Population, Savings, Stages in the economic development and trade cycles are major factors. Business obtains all its needed input from the economic environment & it absorbs the output of business units.

WHAT IS ENVIRONMENT
TECHNOLOGICAL ENVIRONMENT: It is systematic application of scientific or other organised knowledge to practical tasks. It is through business that technology reaches people. Technology changes fast and to keep pace with it business men should be ever alert to adopt changed technology in that business.

WHAT IS ENVIRONMENT
POLITICAL ENVIRONMENT: This refers to the influence exerted by the 3 political institutions viz. legislature, executive and the judiciary in shaping, directing, developing and controlling business activities. The legislature decides on a particular course of action ; executive also called government implement whatever is decided by the Parliament. Judiciary functions as the watchdog in order to ensure that both the legislature and the executive function in public interest and within boundaries of the Constitution.

WHAT IS ENVIRONMENT
GLOBAL OR INTERNATIONAL ENVIRONMENT:

A Manager must understand that Safe and protected markets are no more there; That the world is becoming small in size thanks to advanced means of transport and communication facilities; That learning of foreign languages is a necessity; That acquiring familiarity with strange and changing currencies is a must That facing legal and political uncertainties is inevitable. and that their products to meet different customer needs and tastes would only help companies survive amides intense competition.

WHAT IS ENVIRONMENT
SOCIAL AND CULTURAL ENVIRONMENT : It refers to the influence exercised by certain factors which are beyond the companys gate. It includes; Peoples attitude to work and wealth; Role of family; marriage; religion and education; Ethical issues and Social responsiveness of business.

WHAT IS ENVIRONMENT
BUSINESS = PRODUCT OF Technological TABLE Political legal Economic, Social cultural and Natural factors amides which it functions. 3 FEATURES: 3 features are common to the web of relationship between business and its environment 1. There is symbiotic relationship between business and its environment that is business is influenced by its environment and in turn to a certain degree it will influence the external forces. Similarly political legal environment influences economic environment and vice versa .

WHAT IS ENVIRONMENT
2. These environment factors are dynamic. They keep on changing as years roll by so does business. 3. A particular business firm by itself may not be in a position to change the environment. But along with other firms business will be in a position to mould the environment in its favour to a large extent. KNOWING THE ENVIRONMENT: The environment provides a mass of ambiguous information. What should be done to make out the relevance of the information What is to be accepted and what is rejected.

ENVIRONMENT OF BUSINESS

INTERNAL ENVIRONMENT

GLOBAL
EXTERNAL ENVIRONMENT

WHAT IS ENVIRONMENT
3 concepts seek to answer these questions: 1. Enacted Environment 2. The Domain consensus and 3. The task environment. ENACTED ENVIRONMENT: It is organisations own environment out of the total external environment Chooses those on which to react and not on entire environment. Domain & domain Consensus : Domain is a part of enacted environment which the organisation carves out for itself.

WHAT IS ENVIRONMENT
Firm delineates its own territory out of the environment. - Range of products offered - Population served and - Services rendered. Organisation focuses on these 3 areas only. WHY DOMAIN CONSENSUS: As an organisation has many stakeholders-owners, employees, customers, government , public , suppliers and lenders, Domain Consensus is formed when all the stakeholders agree upon the domain of the organisation. If Domain consensus is not reached it can create conflicts and vissiate growth environment.

WHAT IS ENVIRONMENT
Task Environment : The range of products to be offered The technology to be employed and The productive strategies to be used to counter the global competition.

It is the task environment needs constant surveillance though elements outside are not ignored but are not paid less attention.

WHAT IS ENVIRONMENT
OBJECTIVES AND USES OF STUDY: Environmental Analysis has 3 basic goals. Analysis should provide an understanding of current and potential changes (long term perspective) taking place in the task environment. It should provide inputs for strategic decision making. Facilitate and foster strategic thinking in organisations typically a rich source of ideas and understanding of the context in which organisation is operating. It should challenge the current wisdom by bringing fresh viewpoints into the organisation.

ENVIRONMENTAL SCANNING

STRATEGY FORMULATION

STRATEGY IMPLEMENT ATION

EVALUATION & CONTROL

WHAT IS ENVIRONMENT
Benefits of environmental study: 1. Development of broad strategies and long term policies of the firm. 2. Development of action plans to deal with technological advancements 3. To foresee the impact of socio economic changes of the national and international levels on the firms stability 4. Analysis of competitors strategies and formulation of effective counter measures 5. To keep oneself dynamic. THUS the managers can concentrate on these few instead of having to deal with all the environment opportunities and threats in the pressure cooker environment.

WHAT IS ENVIRONMENT
FIRMS WHICH SYSTEMATICALLY ANALYSE AND DIAGNOSE THE ENVIRONMENT ARE MORE EFFECTIVE THAN THOSE WHICH DONT

PROCESS OF ENVIRONMENTAL ANALYSIS

1. SCANNING a. Surveillance of all environmental factors and their interactions in order to Identify early sign of possible environmental change and Detect environmental changes already in way.

2. MONITORING Tracking environmental trends, sequences of events or streams of activities. 3. OUTCOMES EMERGE: a. Specific description of environmental trends or patterns to be forecast. b. Identification of trends for further monitoring and c. The identification of areas for further monitoring

PROCESS OF ENVIRONMENTAL ANALYSIS

These output become inputs for further forecasting. 3. FORECASTING : Scanning and Monitoring provide a picture of what has already taken place or what is happening Strategic Decision requires a future orientation. Hence forecasting is an essential element in environmental analysis.

PROCESS OF ENVIRONMENTAL ANALYSIS

1. Forecasting is concerned with developing plausible projections of the direction, scope and intensity of environmental change: How much time it will take a particularly new technology to reach the market place? Are current life style trends likely to continue.

Forecasting is well focused and is much more deductive and complex activity.

PROCESS OF ENVIRONMENTAL ANALYSIS

4. ASSESSMENT: Assessment involves identifying and evaluating how and why current and projected environmental changes affect or will affect strategic management of the organisation. Assessment tries to answer questions such as what are the key issues presented by the environment and what are the implications of such issues for the organisation?

PROCESS OF ENVIRONMENTAL ANALYSIS

Linkages among Stages: Though conceptually scanning , monitoring, forecasting and assessment are separate activities but they are inextricably intertwined

PROCESS OF ENVIRONMENTAL ANALYSIS

Monitoring

scanning

Though they are separate Activities yet they are inextricably interwined

Forecasting

Assessment

LIMITATIONS OF ENVIRONMENTAL ANALYSIS

1. Environmental Analysis does not foretell the future nor it eliminates uncertainty. 2. It provides only input in strategy development and testing and does not guarantee organisational effectiveness. 3. The potential of environmental analysis is often not realised because of how it is practised. 4. Too much reliance is often placed on the information collected through environmental scanning. paralysis through analysis syndrome NORTON COMPANY : An industrial abrasives manufacturer and a competitor of 3M in US the US Norton faithfully studies environment and followed all management models, systems and procedures.

LIMITATIONS OF ENVIRONMENTAL ANALYSIS

Inspite of all Nortons state of the art management systems its performance remained disappointing. In 1990 it was absorbed into the French giant, Compagnie de Saint- Gobain. 3M achieved success but followed a different path. Company did not get caught by the paralysis syndrome. Leaders place little emphasis on top down planning and control. Instead they nurtured the innovative ideas of sales engineers and sales representative thereby building an entrepreneurial engine that generated a stream of profitable new products and promising new technologies. By mid 80s 3 M was reporting sales 8 times those of its old competitor.

LIMITATIONS OF ENVIRONMENTAL ANALYSIS

3 M was named 5th times in 6 years to Fortunes list. Of 10 most admired corporations.

ENVIRONM. FACTORS AND THEIR FEATURES

Global Environment Technological Environment Economic Environment Growth Strategy Political Environment Role of Legislature Socio Cultural Environment Natural Environment

Increasing Tech. reaches Opportunity as people through world has business become 1 mkt. Improving Quality Increased Productivity

Culture creates Manufacturing people Depends on physical inputs. Culture & Globalisation Mining & Drilling depends on natural depos. Agriculture depends on Nature Trade between 2 regions depends on geo factors Transp & Commun. Depends on geo. factors

Economic System

Role of Executive

Competition from MNCs Capital & Tech Transfer

Need to spend on R &D Fast Changing Technology

Industry

Role of Judiciary Constitution of India

Culture determines Goods & Serv. Peoples attitude to bus. & work Caste System

Agriculture

Deciding which Rise & decline mkt to enter & of products & how organisations

Infrastructure

New Direction for Govt. role

KNOWING THE ENVIRONMENT

Global Environment Adjusting the management process India & WTO Technological Environment High Expectactions of consumers Problem of techno structure System Complexity Increased regulation & stiff opposition Demand for Capital Social Change Economic Environment Money & Capital Markets Per Capita & National Income Population New Economic Policy Political Environment -Socio Cultural Environment Spirit of collectivism & individualisatio n Education Natural Environment --

---

Family & Marriage Authority

Scientific Spirit Ethics in Business Social Responsibility Social Audit

LIMITATIONS OF ENVIRONMENTAL ANALYSIS

ASSIGNMENT Group II- discuss table 1.3 and 1.4 QUESTIONS FOR SURPRISE TESTS: 1.