Business Environment[1]

8/8/2019 Business Environment[1]

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The CommercialThe Commercial

EnvironmentEnvironmentMeaning, Concept, Significance & NatureMeaning, Concept, Significance & Nature


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ObjectiveObjective

After reading this section you should beAfter reading this section you should be

able to describe the environmental forcesable to describe the environmental forcesthat affect the companys ability to serve itsthat affect the companys ability to serve its

customers & understand the significance ofcustomers & understand the significance of

Commercial Environment in BusinessCommercial Environment in Business


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Commercial EnvironmentCommercial Environment

The actors and forces outsideThe actors and forces outside

business/marketing that affectbusiness/marketing that affect

marketing managements abilitymarketing managements abilityto develop and maintainto develop and maintain

successful transactions andsuccessful transactions and

relationships with its targetrelationships with its target

customerscustomers..


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INTRODUCTIONINTRODUCTION

Society and business enterprises areSociety and business enterprises are

mutually dependentmutually dependent

Business enterprises satisfy societal needsBusiness enterprises satisfy societal needsRelationship between society and businessRelationship between society and business

enterprises takes place in a changingenterprises takes place in a changing

environmentenvironment


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COMPONENTS OF THECOMPONENTS OF THE

BUSINESS ENVIRONMENTBUSINESS ENVIRONMENT

Different environmental variables existDifferent environmental variables exist

internally and externally to the businessinternally and externally to the business

enterpriseenterprise

Environmental variables have a positive orEnvironmental variables have a positive or

negative influence on the enterprisenegative influence on the enterprise


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COMPONENTS OF THECOMPONENTS OF THE

BUSINESS ENVIRONMENTBUSINESS ENVIRONMENT Business environment consists of two subBusiness environment consists of two sub--

environments:environments:

Internal (micro) environmentInternal (micro) environment

External environmentExternal environment

Market environmentMarket environment

Macro environmentMacro environment

Mutual relationships exist between theseMutual relationships exist between these

environmentsenvironments


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Significance ofCommercialSignificance ofCommercial

EnvironmentEnvironment First Mover AdvantageFirst Mover Advantage

Warning SignalsWarning Signals

Sensitize the ManagementSensitize the Management Basis ofStrategyBasis ofStrategy

Source of intellectual SimulationSource of intellectual Simulation

Image BuildingImage Building Continuous LearningContinuous Learning


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The Companys MicroThe Companys Micro --

EnvironmentEnvironment

In designing business/marketingIn designing business/marketing

plans, marketing management mustplans, marketing management musttake other company groups, such astake other company groups, such astop management, finance, researchtop management, finance, researchand development (R&D), purchasing,and development (R&D), purchasing,manufacturing and accounting, intomanufacturing and accounting, intoconsiderationconsideration..


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The CompanyThe Company

In designing business/marketing plans,In designing business/marketing plans,marketing management must take othermarketing management must take other

company groups, such as top management,company groups, such as top management,

finance, research and development (R&D),finance, research and development (R&D),

purchasing, manufacturing and accounting, intopurchasing, manufacturing and accounting, intoconsideration.consideration.

SuppliersSuppliers

Firms and individuals that provide the resourcesFirms and individuals that provide the resources

needed by the company and its competitors toneeded by the company and its competitors to

produce goods and services.produce goods and services.


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Marketing IntermediariesMarketing Intermediaries

Firms that help the company to promote, sell andFirms that help the company to promote, sell and

distribute its goods to final buyers; they includedistribute its goods to final buyers; they includephysical distribution firms, marketingphysical distribution firms, marketing--serviceserviceagencies and financial intermediaries.agencies and financial intermediaries.

ResellersResellers

The individuals and organizations that buy goods andThe individuals and organizations that buy goods andservices to resell at a profit.services to resell at a profit.

Physical distribution firmsPhysical distribution firms

warehouse, transportation and other firms that help awarehouse, transportation and other firms that help acompany to stock and move goods from their point ofcompany to stock and move goods from their point oforigin to their destinations.origin to their destinations.


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Financial intermediariesFinancial intermediaries

Banks, credit companies and other businessesBanks, credit companies and other businessesthat help finance transactions or insure againstthat help finance transactions or insure againstthe risks associated with the buying and sellingthe risks associated with the buying and sellingof goods.of goods.

CustomersCustomers

The company must study its customer marketsThe company must study its customer marketsclosely and keep up to date with changingclosely and keep up to date with changing

customer requirements.customer requirements. The company must communicate with itsThe company must communicate with its

customers, and must listen to them closely.customers, and must listen to them closely.


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CompetitorsCompetitors

The marketing concept states that, to beThe marketing concept states that, to be

successful, a company must providesuccessful, a company must providegreater customer value and satisfactiongreater customer value and satisfaction

than its competitors. Thus, marketers mustthan its competitors. Thus, marketers must

do more than simply adapt to the needs ofdo more than simply adapt to the needs of

target consumers.target consumers.

They must also gain strategic advantageThey must also gain strategic advantage

by positioning their offerings stronglyby positioning their offerings strongly

against competitors offerings in the mindsagainst competitors offerings in the minds

of consumers. They must strive toof consumers. They must strive to

anticipate competitor activity and strategy.anticipate competitor activity and strategy.


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PublicsPublics

Any group that has an actual or potential interestAny group that has an actual or potential interest

in or impact on an organizations ability toin or impact on an organizations ability toachieve its objectives.achieve its objectives. Financial publics:Financial publics: Influence the companys ability toInfluence the companys ability to

obtain funds. Banks, investment houses andobtain funds. Banks, investment houses and

stockholders are the principal financial publics.stockholders are the principal financial publics. Media publics:Media publics: Are those that carry news, featuresAre those that carry news, features

and editorial opinion. They include newspapers,and editorial opinion. They include newspapers,magazines and radio and television stations.magazines and radio and television stations.

Government publics:Government publics: Management must takeManagement must take

government developments into account. Marketersgovernment developments into account. Marketersmust often consult the companys lawyers on issuesmust often consult the companys lawyers on issuesof product safety, truth in advertising and otherof product safety, truth in advertising and othermatters.matters.


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PublicsPublics

Citizen action publicsCitizen action publics A companys marketingA companys marketing

decisions may be questioned by consumerdecisions may be questioned by consumerorganizations, environmental groups, minorityorganizations, environmental groups, minoritygroups and other pressure groups.groups and other pressure groups.

Local publicsLocal publics Every company has localEvery company has local

publics, such as neighborhood residents andpublics, such as neighborhood residents andcommunity organizations.community organizations.

General publicGeneral public A company needs to beA company needs to beconcerned about the general publics attitudeconcerned about the general publics attitude

towards its products and activities. The publictowards its products and activities. The publicimage of the company affects its buying.image of the company affects its buying.

Internal publicsInternal publics A companys internal publicsA companys internal publicsinclude its workers, managers, volunteersinclude its workers, managers, volunteers

and the board of directors.and the board of directors.


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The Companys MacroThe Companys Macro--

EnvironmentEnvironment

The larger societal forces that affect theThe larger societal forces that affect the

whole microenvironmentwhole microenvironment -- demographic,demographic,economic, natural, technological, politicaleconomic, natural, technological, political

and cultural forces.and cultural forces.


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General EnvironmentGeneral Environment

Sociocultural SegmentSociocultural Segment

Women in the workplaceWomen in the workplace

Workforce diversityWorkforce diversity

Attitudes about quality of worklifeAttitudes about quality of worklife Concerns about environmentConcerns about environment

Shifts in work and careerpreferencesShifts in work and careerpreferences

Shifts in product and service preferencesShifts in product and service preferences


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Economic segmentEconomic segment


Inflation ratesInflation rates

Interest ratesInterest rates

Trade deficits or surplusesTrade deficits or surpluses Budget deficits or surplusesBudget deficits or surpluses

Personal savings ratePersonal savings rate

Business savings ratesBusiness savings rates

Gross domestic productG

ross domestic product


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Political/Legal SegmentPolitical/Legal Segment

Antitrust lawsAntitrust laws

Taxation lawsTaxation laws

Deregulation philosophiesDeregulation philosophies

Labor training lawsLabor training laws

Educational philosophies and policiesEducational philosophies and policies


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Technological SegmentTechnological Segment Product innovationsProduct innovations

Applications of knowledgeApplications of knowledge Focus ofprivate and governmentFocus ofprivate and government--supportedsupported

R&D expendituresR&D expenditures

New communication technologiesNew communication technologies


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Global SegmentGlobal Segment

Important political eventsImportant political events

Critical global marketsCritical global markets

Newly industrialize countriesNewly industrialize countries

Different cultural and institutional attributesDifferent cultural and institutional attributes


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Demographic SegmentDemographic Segment Population sizePopulation size

Age structureAge structure

GeographicGeographic

distributiondistribution

Ethnic mixEthnic mix

Income distributionIncome distribution

Documents

Business Environment[1]