Human Activities Economic1. Profession2. Employment 3. Business Non Economic

Characteristics of Business

Importance of Business Improves standard of living Provides opportunities to work and earn livelihood Improves national image by producing and

exporting quality goods of international standard Better return to investors on their capital

investment Promotes social interest by providing tourist

services, sponsoring cultural programme Facilitates exchange of culture among people of

different nations Help in development of science and technology

Types of Business Activities

Growth and Development of Indian Trade and Commerce

Ancient Period Medieval Period Modern Period

Contribution of India to the world of Business The Numerical and Decimal System Joint Hindu Family Business System Division of Labour Hundis Emphasis on quality

Objectives of Business Economic Objectives Social Objectives Human Objectives National Objectives Global Objectives

Economic Objectives Profit earningA business enterprise is established for earning some income. It is the hope

of earning profits that inspires people to start business. Profit is essential for the survival of every business unit. Profits enable a businessman to stay in business by main taining intact the wealth producing capacity of its resources.

Creation of customersA business man can earn profits only when there are enough customers to

buy and pay for his goods and services. No business can succeed without providing customers value for their money. Business exists to satisfy the wants, tastes and preferences of customers.

Regular innovations Business can be successful only when it creates new designs, better machines, improved techniques, new varieties, etc. Modern science and technology have created a great scope for innovation in the business world. Firms develop new technology, introduce new designs and new tools and processes to minimise costs and to satisfy ever increasing wants of customers. In order to create customers business has to explore new markets and attract more cus tomers. It has also to retain old customers by providing better services to them.

Social ObjectivesBusiness is a part of society. It cannot survive and grow without the support of

society. Business must therefore discharge social responsibilities in addi tion to earning profits.

Production and supply of goods and services Goods and services should be of good quality and these should be supplied at reasonable prices. It is also the social obligation of business to avoid malpractices like boarding, Black marketing and misleading advertising.

Fair Remuneration to employees - Employees must be given fair compensation for their work. In addition to wages and salary a reasonable part of profits should be distrib uted among employees in recognition of their contributions. Such sharing of profits will help to increase the motivation and efficiency of employees.

Contribution to the general welfare of the society Business should provide support to social, cultural and religious organisations. Business enterprises can build schools, colleges, libraries, dharam shalas, hospitals, sports bodies and research institutions. They can help non-government organisations (NGOs) like CRY, Help Age, and others which render services to weaker sections of society

Economic well being of the employees Social and psychological satisfaction of

employees Development of Human Resources Well being of socially and economically

backward people

Some More..

National Objectives Creation of employment Promotion of social justice Production according to national priority Contribution to the revenue of the

country Export promotion

Global Objectives Raise general standard of living Reduce disparities among nations Make available globally competitive

goods and services

Indian companies – Fortune 500 8 Indian companies have made it to Fortune

500 list in 2010. These are: Indian Oil Corporation Reliance Industries Tata Steel Tata MotorsBharat PetroleumHindustan PetroleumState Bank of IndiaONGC

Rank CompanyRevenues

($ millions)Profits

($ millions)

1 Wal-Mart Stores 408214 14335

2 Royal Dutch Shell 285129 12518

3 Exxon Mobil 284650 19280

4 BP 246138 16578

5 Toyota Motor 204106 2256

6Japan Post Holdings

202196 4849

7 Sinopec 187518 5756

8 State Grid 184496 -343

9 AXA 175257 5012

10China National

Petroleum (CNPC)

165496 10272

What do you mean by Business Environment???

The environment of any organization is “ the aggregate of all conditions, events and influences that surround and affect it.”Characteristics of Business Environment: Complex Dynamic Multi-faceted Far- reaching impact

Why Study Business Environment Development of broad strategies to ensure

sustainability

To foresee the impact of socio-economic changes at the national and international levels on firm’s ability

Analysis of competitor’s strategies and formulation of effective counter measures

To keep oneself dynamic

Significance of Business Environment Help to understand internal

environment Help to understand Economic System Help to understand economic policy Help to understand market conditions

Environment of Business

Internal Environment

Refers to all the factors that are within an

organization which impart strengths or cause

weaknesses of strategic nature.

Controllable factors. These include:

Value system

Mission and Objectives

Management Structure and Nature

Components of Internal Environment Human Resources

Company Image and Brand Equity

Other Factors

Physical Assets and Facilities

R & D and Technological Capabilities

Marketing Resources

Financial Resources

Types of External EnvironmentExternal Environment

Micro environmentMacro environment

Economic Non Economic

External Environment Includes all factors outside the organization

which provide opportunities or pose threats to the organization

Uncontrollable factors

Consists of Micro and Macro environment

Micro Environment

“It consists of the factors in the company’s immediate environment that affect the performance of the company”.

Micro Environment Factors

SuppliersCustomersMarketing IntermediariesCompetitors Workers and Unions Financers

Micro Environment of a typical car manufacturer

ComponentsSupplier

Customers

Car DealersCompetitors

Stakeholders

CarManufacturer

PotentialSupplier

PotentialCustomers

Customers

PressureGroups

ForSupplies

ForCustomers

PotentialDealers

Government

LocalCommunities

Macro EnvironmentIt comprises general trends and forces that may not immediately affect the organization but sooner or later will alter the way organization operates.

Macro Environment :- Economic Non Economic

Economic Environment Economic stages that exists at a given time in a

country Economic system that is adopted by a country for

example. Capitalistic, Socialistic or Mixed Economy Economic planning, such as five year plans, budgets,

etc. Economic policies for example, monetary, industrial

and fiscal policies Economic Indices such as National Income, Per Capita

Income, Disposable Income, Rate of growth of GNP, Distribution of Income, Rate of savings, Balance of Payments etc.

Economic Problems Functioning of economy

Non Economic Environment

Socio- Cultural Environment

Demographic Environment

Technological Environment

Political Environment

Non- Economic Environment Cultural Environment

Social Customs & Rituals and practices

Lifestyle patterns

Family structure

Role & position of men, women, children and aged in family & society

Non- Economic Environment Demographic Environment

Growth of population

Age Composition

Life Expectancy

Inter-state migration

Macro Environment

Technological Environment

Sources of technology

Technological development

Impact of technology Foreign technological collaboration are popular in India but

subject to strict commitment regarding impact on local technological development etc.

Political Environment

Political parties in power

Political Philosophy

Macro Environment Regulatory Environment

Constitutional framework

Policies relating to pricing and foreign investment

Policies related to the public sector, SSIs, development of backward areas and control of environmental pollution

International/Global Environment

Important factors that operate at global level which have an impact on organization are:

Growth of world economy

International institutions IMF,WTO ILO

Economic relations between nations

Global human resource-nature and quality of skills, mobility of labor

Global technology and quality standards

Global demographic patterns

Overview of Business Environment

MACRO ENVIRONMENT

ECONOMIC Environment

MICRO ENVIRONMENT

BUSINESS

Internal Environment

Values, Mission & Objectives.

Human Resources,Co. Image & Brand Equity

TECHNOLOGICAL FACTORS

MARKETING INTERMEDIARIES

DEMOGRAPHIC FACTORS

SOCIAL CULTURAL FACTORS

Non - Economic Environment

Thank You