Micro And Macro Env.
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Business Environment “A business environment is the social, technological, economic and political environment in which a business functions. The business environment affects organizational decisions, strategies, processes and performance.” A manager is someone skilled in knowing how to analyze and improve the ability of an organization to survive and grow in a complex and changing world. This means that managers have a set of tools that enable them to grasp the complexity of the organization's environment.
A management system describes the organization and the set of significant interacting institutions and forces in the organization's complex and rapidly changing environment that affect its ability to serve its customers. The firm must continuously monitor and adapt to the environment if it is to survive and prosper. Disturbances in the environment may spell profound threats or new opportunities for the firm. The successful firm will identify, appraise, and respond to the various opportunities and threats in its environment.
A business environment is the social, technological, economic and political environment in which a business functions. The business environment affects organizational decisions, strategies, processes and performance.
Types of Business Environment
External Environment Macro environmental factors involve: •
The Economy
o
GNP or GDP per capita
o
economic growth
o
unemployment rate
•
•
o
inflation rate
o
consumer and investor confidence
o
inventory levels
o
currency exchange rates
o
merchandise trade balance
o
financial and political health of trading partners
o
balance of payments
o
future trends
Government o
political climate - amount of government activity
o
political stability and risk
o
government debt
o
budget deficit or surplus
o
corporate and personal tax rates
o
payroll taxes
o
import tariffs and quotas
o
export restrictions
o
restrictions on international financial flows
Legal o
minimum wage laws
•
o
environmental protection laws
o
worker safety laws
o
union laws
o
copyright and patent laws
o
anti- monopoly laws
o
Sunday closing laws
o
municipal licenses
o
laws that favor business investment
Technology
o
Efficiency of infrastructure, including: roads, ports, airports, rolling stock, hospitals, education, healthcare, communication, etc.
•
o
industrial productivity
o
new manufacturing processes
o
new products and services of competitors
o
new products and services of supply chain partners
o
any new technology that could impact the company
o
cost and accessibility of electrical power
Ecology o
ecological concerns that affect the firms production processes
o
ecological concerns that affect customers' buying habits
o
ecological concerns that affect customers' perception of the company or product
•
•
Demographic factors such as: o
population size and distribution
o
age distribution
o
education levels
o
income levels
o
ethnic origins
Socio-Cultural o
religious affiliations
Attitudes towards: o
materialism, capitalism, free enterprise
o
individualism, role of family, role of government, collectivism
o
role of church and religion
o
consumerism
o
environmentalism
o
importance of work, pride of accomplishment
Cultural structures including:
•
o
diet and nutrition
o
housing conditions
Global environment
Micro environmental factors involve:
•
Suppliers Labor supply o
quantity of labor available
o
quality of labor available
o
stability of labor supply
o
wage expectations
o
employee turn-over rate
o
strikes and labor relations
o
educational facilities
Material suppliers o
quality, quantity, price, and stability of material inputs
o
delivery delays
o
proximity of bulky or heavy material inputs
o
level of competition among suppliers
Service Providers
•
o
quantity, quality, price, and stability of service facilitators
o
special requirements
Stakeholders o
Lobbyists
o
Shareholders
•
o
Employees
o
Partners
Customers
o
business
o
customers(Individual / Household)
o
government
o
resellers (Retailers, Wholesalers, etc.)
o
international
•
Competitors
•
Public
•
o
financial public
o
media public
o
citizen Action Public
o
local and general action public
Market intermediaries
o
middlemen
o
distributors
o
marketing service agencies
o
marketing research firms
advertisement agencies
marketing consultancy firms
financial intermediaries
banks
credit institution
insurance
Environmental Scanning
“Environmental scanning is a concept from business management by which businesses gather information from the environment, to better achieve a sustainable competitive advantage.” To sustain competitive advantage the company must also respond to the information gathered from environmental scanning by altering its strategies and plans when the need arises. Environmental scanning usually refers just to the macro environment, but it can also include industry and competitor analysis, consumer analysis, product innovations, and the company's internal environment. Scanning these macro environmental variables for threats and opportunities requires that each issue be rated on two dimensions.
•
Its potential impact on the company and ( I )
•
Likeliness of its occurrence. ( L )
Multiplying the potential impact parameter by the likeliness of occurrence parameter gives us a good indication of its importance to the firm. Importance to firm= L x I. There are basically four Steps followed in Environmental Scanning. These are: o
Scanning
o
Monitoring
o
Forecasting
o
Assessing
EXTRA A new spirit of economic freedom is at work in India, bringing with it great change. A series of ambitious economic reforms, aimed at deregulating the country and stimulating foreign investment have taken place.
India is a democracy of one billion people, and economic reform is a consensus shared by its many political parties. They have been quick to embrace free market enterprise, which has attracted a number of American corporations, including General Electric, General Motors, Hewlett-Packard, Johnson & Johnson, and Microsoft, to name a few.
Bangalore, the location of Acusis' Indian headquarters, is known as the "Silicon Valley of India." The city is a vast entrepreneurial haven, not only to the software engineering industry, but also hosting companies in a variety of other industries, including: aeronautical engineering, research & development, agriculture and biochemistry.
Companies across the globe are coming to realize the opportunity India presents, and are wasting no time in acting. Siemens of Germany, a company which produces and sells power plants, electric meters, hi tech medical equipment and mobile phones has big plans for India. According to CEO Heinrich Von Pierer, "We are going to make new investments in India to the extent of $500 million in the years to come."
The Siemens group in India has 12 subsidiaries employing 10,000 people with combined sales of $650 million, more than six times the sales recorded a decade ago. The company, which also deals in infrastructure projects like airports and highways, plans to build an airport in Bangalore. Siemens plans to set up more hardware and software development centers there.
With the phenomenal expansion of the country's software industry, many Indian policy makers are predicting significant growth rates in the years to come.
A management system describes the organization and the set of significant interacting institutions and forces in the organization's complex and rapidly changing environment that affect its ability to serve its customers. The firm must continuously monitor and adapt to the environment if it is to survive and prosper. Disturbances in the environment may spell profound threats or new opportunities for the firm. The successful firm will identify, appraise, and respond to the various opportunities and threats in its environment.
A business environment is the social, technological, economic and political environment in which a business functions. The business environment affects organizational decisions, strategies, processes and performance.
Types of Business Environment
External Environment Macro environmental factors involve: •
The Economy
o
GNP or GDP per capita
o
economic growth
o
unemployment rate
•
•
o
inflation rate
o
consumer and investor confidence
o
inventory levels
o
currency exchange rates
o
merchandise trade balance
o
financial and political health of trading partners
o
balance of payments
o
future trends
Government o
political climate - amount of government activity
o
political stability and risk
o
government debt
o
budget deficit or surplus
o
corporate and personal tax rates
o
payroll taxes
o
import tariffs and quotas
o
export restrictions
o
restrictions on international financial flows
Legal o
minimum wage laws
•
o
environmental protection laws
o
worker safety laws
o
union laws
o
copyright and patent laws
o
anti- monopoly laws
o
Sunday closing laws
o
municipal licenses
o
laws that favor business investment
Technology
o
Efficiency of infrastructure, including: roads, ports, airports, rolling stock, hospitals, education, healthcare, communication, etc.
•
o
industrial productivity
o
new manufacturing processes
o
new products and services of competitors
o
new products and services of supply chain partners
o
any new technology that could impact the company
o
cost and accessibility of electrical power
Ecology o
ecological concerns that affect the firms production processes
o
ecological concerns that affect customers' buying habits
o
ecological concerns that affect customers' perception of the company or product
•
•
Demographic factors such as: o
population size and distribution
o
age distribution
o
education levels
o
income levels
o
ethnic origins
Socio-Cultural o
religious affiliations
Attitudes towards: o
materialism, capitalism, free enterprise
o
individualism, role of family, role of government, collectivism
o
role of church and religion
o
consumerism
o
environmentalism
o
importance of work, pride of accomplishment
Cultural structures including:
•
o
diet and nutrition
o
housing conditions
Global environment
Micro environmental factors involve:
•
Suppliers Labor supply o
quantity of labor available
o
quality of labor available
o
stability of labor supply
o
wage expectations
o
employee turn-over rate
o
strikes and labor relations
o
educational facilities
Material suppliers o
quality, quantity, price, and stability of material inputs
o
delivery delays
o
proximity of bulky or heavy material inputs
o
level of competition among suppliers
Service Providers
•
o
quantity, quality, price, and stability of service facilitators
o
special requirements
Stakeholders o
Lobbyists
o
Shareholders
•
o
Employees
o
Partners
Customers
o
business
o
customers(Individual / Household)
o
government
o
resellers (Retailers, Wholesalers, etc.)
o
international
•
Competitors
•
Public
•
o
financial public
o
media public
o
citizen Action Public
o
local and general action public
Market intermediaries
o
middlemen
o
distributors
o
marketing service agencies
o
marketing research firms
advertisement agencies
marketing consultancy firms
financial intermediaries
banks
credit institution
insurance
Environmental Scanning
“Environmental scanning is a concept from business management by which businesses gather information from the environment, to better achieve a sustainable competitive advantage.” To sustain competitive advantage the company must also respond to the information gathered from environmental scanning by altering its strategies and plans when the need arises. Environmental scanning usually refers just to the macro environment, but it can also include industry and competitor analysis, consumer analysis, product innovations, and the company's internal environment. Scanning these macro environmental variables for threats and opportunities requires that each issue be rated on two dimensions.
•
Its potential impact on the company and ( I )
•
Likeliness of its occurrence. ( L )
Multiplying the potential impact parameter by the likeliness of occurrence parameter gives us a good indication of its importance to the firm. Importance to firm= L x I. There are basically four Steps followed in Environmental Scanning. These are: o
Scanning
o
Monitoring
o
Forecasting
o
Assessing
EXTRA A new spirit of economic freedom is at work in India, bringing with it great change. A series of ambitious economic reforms, aimed at deregulating the country and stimulating foreign investment have taken place.
India is a democracy of one billion people, and economic reform is a consensus shared by its many political parties. They have been quick to embrace free market enterprise, which has attracted a number of American corporations, including General Electric, General Motors, Hewlett-Packard, Johnson & Johnson, and Microsoft, to name a few.
Bangalore, the location of Acusis' Indian headquarters, is known as the "Silicon Valley of India." The city is a vast entrepreneurial haven, not only to the software engineering industry, but also hosting companies in a variety of other industries, including: aeronautical engineering, research & development, agriculture and biochemistry.
Companies across the globe are coming to realize the opportunity India presents, and are wasting no time in acting. Siemens of Germany, a company which produces and sells power plants, electric meters, hi tech medical equipment and mobile phones has big plans for India. According to CEO Heinrich Von Pierer, "We are going to make new investments in India to the extent of $500 million in the years to come."
The Siemens group in India has 12 subsidiaries employing 10,000 people with combined sales of $650 million, more than six times the sales recorded a decade ago. The company, which also deals in infrastructure projects like airports and highways, plans to build an airport in Bangalore. Siemens plans to set up more hardware and software development centers there.
With the phenomenal expansion of the country's software industry, many Indian policy makers are predicting significant growth rates in the years to come.
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