Business Environment

Definition of Business : Modern business covers complex field of industry and commerce which involve activities related to both production and distribution. These activities on one hand satisfy society's needs and desires and on the other hand having profit to business firm. Scope of business is very vast. Activities are undertaken for profit then only it is called as business.

Nature of Modern Business : 1 Large in size : This is the era of large size business. Fortune 500 companies. 1 Wal mart stores U.K. 2 Exxon Mobil

U.K.

3 Royal Dutch shell U.K. 4 B.P.

U.K.

5 Toyota

Japan

Seven Indian Companies in Fortune five hundred Reliance Industries

Position no 206

Tata Steel

Position no 315

Indian Oil Corporation

Position no 116

BPCL

Position no 287

HPCL

Position no 290

ONGC

Position no 335

SBI

Position no 380

Majority companies are from USA,Japan and Europe.

Oligopolistic Nature of Business : Firms are few in number and selling homogeneous or differentiated products. Action taken by one firm in respect of price, product, advertisement is likely to evoke retaliation from other firm in the same line of business. If one firm reduce price other firms follow the same path, it leads to price war and hence every body is loosing. Most of the firm likely observe non price competition in the form of non price and variation in quality and design of the products.

Diversification : Modern business in its attempt to grow overtime has taken recourse to diversification. However diversification may not always contribute to growth of a business enterprise. In recessionary phase it is quite risky to aspire for growth by going for unplanned diversification.

Global Reach : Earlier companies were doing business domestically . Due to globalisation companies have expanded their revenue and asset base across countries and engage in cross border flow of capital, goods and knowledge.

Technology oriented : In the competitive environment without technological advancement companies cannot produce a quality product at a competitive rate. Companies are spending more on R&D. More research is made is the country from where company originates from.

Change : Modern business through systematic innovations bring some change in their product and create synthetic demand for products. Otherwise people will not purchase durable consumer goods by discarding existing goods with them which are in good condation. Examples : Colour T.V. -- Black and white T.V. Nylon cloth -Terrycot cloth – cotton cloth.

Government control : Government creates an environment which will promote business. As market economy faces the problem of business cycles may a times government intervention is required. In the present recession government of every country gave bailout package to Industry.

Environment of business : Environment by definition is something external to an individual or organization. Therefore in strict sense business environment refers to all external factors which have a direct or indirect impact or bearing on activities of business. Some expert have used the term business in a broad sense. They have defined business environment as internal and external factors that have direct or indirect impact on business or business activities.

Internal environment : Value System : No business firm is established for philanthropic purpose. But persons holding top positions in certain modern corporate enterprises have some values which influence their policies, practices and overall internal environment. These values can be positive or negative. Examples : Positive Value - J.R.D, Tata, Reliance, Vijay Merchant. Negative value : Pharmacy Companies selling duplicate Drug.

Goals and objective : Apart from traditional goals every organization or a company has got vision and mission. Mission – Role that organization plays in a society or purpose behind existence of organization.

Mission of companies : Ranbaxy : To become research based pharmaceutical industry. U T I : To keep a common man is sharp in sharp focus to encourage saving and investment habits among them. Canara Bank : Our mission is to be most competitive and progressive institution in our banking industry.

Arvind Mill : To achive global dominance. I T M : To provide industry relevant management education,training and consultancy in various discipline of management and add value inter ail to provide educational opportunities to economically disadvantaged by providing financial assistance to mold them in to contributing citizen of the world.

Management structure : How is the Board of Directors ! 1 Made up of Family members 2 Professionals 3 How quick decisions are taken?

Inter power relationship : Relationship between Board --- Sr. Management (Executive) -- Share holders Technology : It makes labor obsolete, Research and development of company and the speed at which technological changes occur in it determine company's internal environment which in tern influence business decisions in decisive manner

Human Resources : The quality of human resources of a company depends largely on skill, commitments, attitude and morale of the employee. Whether these employees work i company or for company makes all differences in the work culture of the company. Company concern for employee and employee concern for Company both grow. Problems of today's employees – Nuclear family, Travelling.

Macro Environment : It refers to all those economic and non Economic factors which exercise their influence on the business activity in general and thus determine opportunities that a company may have to promote its business. Macro environment

Economic

Non Economic.