1-BGE.An Overview of Bus.Environ

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BGE-1: An Overview of Business Environment Introduction: Business is an economic activity to acquire money Business activity takes place in different forms like production, Consumption, distribution and exchange All profit seeking activities Features of Business: 1. It is the organized efforts of individuals 2. Satisfaction of human wants 3. Dealing in goods and services

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4. Profit motive 5. Creative and dynamic 6. Risks and uncertainties 7. Self employment 8. Social responsibility Significance of businesses: I.To the consumers: 1. Regular supply of goods and services 2. Reasonable prices 3. Newer goods and services 4. Innovation

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II.To the business firm: 1. Product innovation 2. Expansion and diversification 3. Achievement of various goals 4. Proper utilization of resources 5. Develop goodwill/reputation III.To the society: 1. Generate employment opportunities 2. Improve standard of living 3. Increase capital formation 4. Economic growth 5. Contribute to social welfare

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Major objectives of a business firm: Maximization of profit Maximization of sales revenue Maximization of market share Prevention of competitors Minimization of losses Increase in productivity Maximization of employment opportunities Improvement of technology Improvement of R&D Customers satisfaction Every firm has certain managerial decision variables that can control and influence the business activities.

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Managerial Decision Variables? i. Where shall the firm be located? ii. What goods to be produced? iii. What shall be its legal form? iv. How shall it raise finance? v. What sort of techniques to be adopted? vi. How shall goods to be distributed to consumers? vii. What shall be the size of output? viii. How shall it deal with its employees? Since all these decision variables are internal to the firm in the sense it can be controlled by the firm itself. Every firm operates their business with the external constraints or factors.

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Definitions of Business Environment: 1.According to C.Duggan, “Business environment consists of all internal and external factors that influence the complex interaction of the production, market and finance of the business world” 2.According to Arthur.M, “Business environment includes the set of conditions like economic, social,political,cultural and technological in which the business operations are conducted” Business Environment broadly reflects the factors which impact the operations of the business activities. There are two types of business environment. 1) Internal environment: It is internal to the firm like finance, cost,resources,market standing,technology,management and work culture etc.It has direct impact on business activities and can be controlled.

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2) External environment: It includes many national and international factors in which a firm has no control. Business environment generally means external environment which would ultimately determine the business atmosphere in a country at a point of time. Features of business environment: 1.Environment is inseparable from business 2.Environment is dynamic 3.Environment is complicated 4.Environment has strong impact on business 5.Environment regulates scope of business 6.Environment has to be scanned regularly

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Components of Business Environment Internal Environment Macro Variables Natural resources Demographic Economic Political Customs & Cultural Technological Legal International External Environment Firm’s goals Strategies Physical resources Monetary resources Human resources R&D Infrastructure Micro Variables Consumers Suppliers Dealers Competitors Govt

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Global Business Environment World Nat. Resources Geog. Location BOPs Economic power Wealth /asset Military power Econonomic growth Political system Econo . system Race/ colour Life style Industriali-zation Population HRD Level Major products Religion