BE Unit 1

Business Environment
Chapter-1 Introduction to business environment

Meaning of Business
Business is an economic
activity which is related with
continuous and regular
production and distribution of
goods and services for
satisfying human wants.
Human Activity & Business
 ECONOMIC
 NON- ECONOMIC
Definition
 Stephenson defines business as, "The regular production or purchase and sale of
goods undertaken with an objective of earning profit and acquiring wealth
through the satisfaction of human wants.“
 According to Dicksee, "Business refers to a form of activity conducted with an
objective of earning profits for the benefit of those on whose behalf the activity is
conducted.“
 Lewis Henry defines business as, "Human activity directed towards producing or
acquiring wealth through buying and selling of goods.“
Thus, the term business means continuous production and distribution of goods and
services with the aim of earning profits under uncertain market conditions.
Features of Business
 Exchange of goods and services
 Deals in numerous transactions
 Profit is the main objective
 Business skills for economic success
 Risk and Uncertainties
 Buyer and seller
 Connected with production
 Marketing and Distribution of goods
 Deals in goods and services
Consumer goods
Producer goods
 To satisfy human wants
 Social Obligations
Objectives of Business
Economic Objectives
 Economic Objectives It includes the following

(a) Earning Profit
(b) Technology Improvements.
(c) Production of goods.
(d) Creating Market.
Human Objectives
 Human objectives include

(a) Creating Employment opportunities.
(b) Welfare of employees.
(c) Improving standard of living.
(d) Satisfaction of Shareholders and Customers.
Social Objectives
 Social Objectives It includes the following

(a) Quality goods and services.
(b) Regular supply of goods.
(c) Co-operation with Government.
(d) Proper Financial Planning
(e) Research and Development.
Scope Of Business
Structure and types of business organizations
 Sole Proprietorship
 Partnership
 Co-operative
 Corporations
Types of Business
 Franchise
 Online Business
 Family Business
 Home based business
 Independent contractor
 Importer
 Exporter
Role of Business
Meaning of Business environment
 Business Environment is the sum total of all external and internal factors that affect the
functioning of organization. It refers to the conditions, forces, events and situations within
which business enterprises have to operate.
Features of business environment
 It is inseparable part of business

 It is dynamic
 Business lacks control over environment
 Internal and external factors
 It is complex
 It is multifaceted
 Opportunities and obstacles
 Regulates the scope of business
 Long lasting impact
 Uncertainty
Importance of business environment
 Determining opportunities and threats

 Giving directions for growth
 Continuous learning
 Image building
 Meeting competition
 Identifying firms strength and weakness
Business Environment inter relationship
Components of business
environment
National & Global Trends
 Some of the long term developments that are shaping our world are:
1. Emerging markets increase their global power.
2. Green marketing is becoming a competitive advantage.
3. Global banking seek recovery through transformation.
4. Governments enhance ties with the private sector.
5. Rapid technology innovation creating a smart mobile world.
6. Demographic shifts transform the global workforce.
Analysis of Business Environment
 An organization performs an environmental analysis to gain an understanding of its

strengths, weaknesses, opportunities and threats. The environmental analysis then
influences corporate planning and policy decisions.
Need / Reasons for analysis of business
environment
 A tool to anticipate changes
 Identification of strength
 Identification of weakness
 Identification of opportunities
 Identification of threats
 Optimum use of resources
 Survival and growth
 To plan long term business strategy
 Environment scanning aids decision making
 Enhances corporate image
SWOT Analysis
 Introduction
SWOT analysis was evolved by Stanford
Research Institute of USA in 1960s. It is
a structured planning method used to
evaluate the strengths, weaknesses,
opportunities, and threats involved in a
project or in a business venture. Some
authors call SWOT as SCOT (Strength,
Contains. Opportunities, and Threats) ar
ETOP (Emisonment Threat and
Opportunities Profile).
  Weaknesses
Strengths
- Unique Product -Location of your business
- Location of your business - Lack of quality & customer service
- Worker's unique skill set - - Poor marketing and sales
- Quality of your product - - Undifferentiated products orservices
 Threats
 Opportunities - New competition in the market
- A new emerging or developing market possiblity with new products or services
(niche product, place wew country, less price wars
competition) - Competitors oligopoly or monopoly
- Mergers ,Joint venture or strategic alliance - Taxation
Benefits/ Advantages of SWOT Analysis
 address weaknesses
 deter threats
 capitalize on opportunities
 take advantage of strengths
 Simple to use
 Involves low cost
 Flexible and can be adapting to varying situations
 develop business goals and strategies for achieving them
Limitation of SWOT Analysis
 does not prioritize issues

 does not provide solutions or offer alternative decisions
 can generate too many ideas but may not actually help choose which one is best
 can produce a lot of information, but not all of it may be useful

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Business Environment

Chapter-1 Introduction to business environment

 Economic Objectives It includes the following

 Human objectives include

 Social Objectives It includes the following

 It is inseparable part of business

 Determining opportunities and threats

 An organization performs an environmental analysis to gain an understanding of its

 does not prioritize issues

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