Q1. What do you mean by business environment? Discuss the features & importance in business environment?

MEANING BUSINESS ENVIRONMENTBusiness environment is a combination of the words business-environment. Business-: Business may be defined as an activity in which different persons exchange something of value, whether goods or services for mutual gain or profit Environment refers to all external forces, which have a bearing on the functioning of business. The environment includes factors outside the firm which can lead to opportunities for or threats to the firm. No business organizations functions in a vacuum. Every business needs to take decisions and strategies purveying under the many internal and external factors. The sum all those factors and forces which have a greater impact on the business decisions are collectively called as Environment. Business environment characteristics will be indicated that major challenges, opportunities, threat and weakness of the business.DEFINITIONS OF BUSINESS ENVIRONMENTAccording to Bayard O Wheeler, business environment refers to The total of all things external to firms and industries, which affect their organisation and operation.According to Keith Davis, defines business environment in his famous book The challenges of Business as Business environment is the aggregate of all conditions, events and influences that surround and affect it.According to Arthur M Weimer, Business environment encompasses the climate or set of conditions, economic, social, political or institutional in which business operations are conducted. FEATURES OF BUSINESS ENVIRONMENTUnderstanding environment within which the business is to operate is very important for successful business. Some of the features of business environment are as follows:(i) Totality of External Forces: Business environment is the sum total of all things external to business firms and, as such, is aggregative in nature. (ii) Specific and General Forces: Business environment includes both specific and general forces. Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly and immediately in their day-to-day working. General forces (such as social, political, legal and techno-logical conditions) have impact on all business enterprises and thus may affect an individual firm indirectly only. (iii) Dynamic Nature: Business environment is dynamic in nature. It keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market. (iv) Uncertainty: Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries. (v) Relativity: Business environment is a relative concept since it differs from country to country and even region to region. Political conditions in the USA, for instance, differ from those in China or Pakistan. Similarly, demand for sarees may be fairly high in India whereas it may be almost non-existent in France. (vi) Multi-faceted: Business environment changes are frequent and depend on knowledge and existence of business person. Changes may be viewed differently bu different individuals. It may be an opportunity for some or a threat for others.

IMPORTANCE OF BUSINESS ENVIRONMENTThere is a close and continuous interaction between the business and its environment. This interaction helps in strengthening the business firm and using its resources more effectively. As stated above, the business environ-ment is multifaceted, uncertain, and dynamic in nature which has a far-reaching impact on the survival and growth of the business. To be more specific, proper understanding of various aspects of business environment such as social, political, legal and economic helps the business in the following ways:1. First Mover Advantage: Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors. For example, Maruti Udyog became the leader in the small car market because it was the first to recognize the need of small cars in India. 2. Identification of Threats: Identification of possible threats helps in taking corrective and improving mea-sures to survive the competition. For instance; if an Indian firm finds that a foreign multinational is entering the Indian market, it can meet the threat by adopting measures like, by improving the quality of the product, reducing cost of the production, engaging in aggressive advertising, and so on. 3. Coping with Rapid Changes: All types of enterprises are facing increasingly dynamic environment. In order to effectively cope with these significant changes, firms must understand and examine the envi-ronment and develop suitable course of action.4. Improving Performance: The enterprises that continuously monitor their environment and adopt suit-able business practices are the ones which not only improve their present performance but also con-tinue to succeed in the market for a longer period. 5. Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities. 6. Meeting Competition: It helps the firms to analyse the competitors strategies and formulate their own strategies accordingly in order to cope with the rapidly increasing competition.7. Image Building: Environmental understanding helps the business organisations in improving their im-age by showing their sensitivity to the environment within which they are working. For example, in view of the shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement of power and saving to loss of energy in transmission. 8. Continuous Learning: Environmental analysis makes the task of managers easier in dealing with busi-ness challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business.

Q2. Explain briefly about factors affecting the internal business environment? Internal environment refers to the factors internal to the firm i.e., factors existing within a business firm. These factors are generally controllable because the company has control over them and determine the potential of a company to meet the environment challenges.IMPORTANT INTERNAL ENVIRONMENT FACTORSThe important internal factors are as follows

1. CULTURE -: It is widely acknowledged fact that any business organisation is normally undertaken for profit maximization. Nonetheless, persons holding top positions in certain modern corporate enterprises have some values which influence their policies, norms, working language, systems, symbols practices and overall internal environment. This may be refer as culture of the organisation which is the collective behaviour of humans that are part of an organisation. The extent to which the culture of the organization is shared by all, leads to an important factor contributing to success.2. VISION, MISSION AND OBJECTIVES -: Vision, mission and objectives of the company guide its priorities, philosophy, policies etc. e.g., Ranbaxys mission to become a research based international pharmaceutical company led it to enter foreign markets. 3. TOP MANAGEMENT STRUCTURE -:The composition of the board of directors is very critical factor for the development and performance of company as they are highest decision-maker authorities, extend of professionalism of management as it may be professionally managed or family controlled, nominee of financial institutions having large holdings in companies, the shareholding pattern could have important managerial implications. All these factors are of great importance from the point of view of the companys internal environment.4. POWER STRUCTURE -: The internal power relationship between the board of directors and senior executive officers highly effect the decision making process of the organization. 5. HUMAN & OTHER RESOURCES -: The quality of human resources of a company depends largely on competence, commitment, attitude and motivation, plays an important role in the success of the organization..6. PHYSICAL RESOURCES AND THE TECHNOLOGY-: The production capacity, technology, R & D work, distribution logistics etc are the factors that influence functioning and competitiveness of the firm.7. COMPANY IMAGE & BRAND EQUITY -: The image and brand equity of the company matters a lot in raising finance, forming joint ventures and other alliance, choosing dealers and suppliers etc.

Q3 Discuss the MICRO environmental factor affecting the business Environment?

The micro environment of business consists of the forces in the companys immediate environment that affects the performance of the company. These forces are more closely linked with the business than the macro factors.

According to Philip Kotler:The micro environment consists of the actors in the companys immediate environment that affects the performance of the company. These include the suppliers, marketing intermediaries, competitors, customers and the public.

MICRO ENVIRONMENTThe micro environment is also known as the task environment and operating environment because the micro environmental forces, though are external factors, still have a direct bearing on the operations of the firm. The micro environment consists of the factors in the companys immediate environment that affects the performance and working of the company. Micro environmental factors, internal factors close to a business that have a direct impact on its strategy include-: Customers Employees Suppliers Shareholders Media Competitors Public

1. Customers: Organizations survive on the basis of meeting customer needs and wants and providing benefits to their customers. Failure to do so will result in a failed business strategy. This includes offering customers the best quality products at reasonable prices. 2. Employees: Employing the correct staff and keeping staff motivated is an essential part of an organizations strategic planning process. Training and development play a critical role in achieving a competitive edge; especially in service sector marketing. Employees have a substantial influence on the success of the enterprise. They help in executing the policies and plans of business. If this factor is not given, as much attention as it requires, it may prove to be non beneficial for the organization as employees after customer, are the backbone of the organisation. 3. Suppliers: The important force in the micro environment of a company is the suppliers i.e., those who supply the inputs like raw materials and components to the company.Importance; For the smooth functioning of the business it is very important to have reliable source of supply. Uncertainty regarding the supply or other supply problems will compel the companies to maintain high inventories which will cause increase in costs. It is very risky to depend on a single supplier because a strike, lock out or any other production problem with that supplier may seriously affect the company, similarly a change in the attitude of behavior of the supplier may also affect the company. Hence, multiple sources of supply often help reduce such risks.Many companies go for pertanising/relationship marketing because of scarcity of resources and to maintain healthy supply from the suppliers in international level. 4. Shareholders: A shareholder is an individual that invests into companys business. They own shares of the company thereby end up owning the company itself. Therefore, they have the right to vote on decisions that affect the operations of company. This means that shareholders affect the functions of the business. The introduction of public shareholders brings new pressures as public shareholders want a return from their money invested in the company. Shareholder pressure to increase profits will affect organizational strategy. Relationships with shareholders need to be managed carefully as rapid short term increases in profit could detrimentally affect the long term success of the business, if all is distributed as dividend. 5. Media: Positive media attention can make an organization (or its products) and negative media attention can break an are required. Organizations need to mange the media so that it helps promote the positive things about the organization and conversely reduce the impact of a negative event on their reputation. Some organizations will even employ public relations (PR) consultants or gurus to help them manage a particular event or incident. 6. Competitors: Competitors play a vital role in running the business enterprise; business has to adjust its various business activities according to the behavior of the competitors. They are various types of competitors:1. Desire Competition. This type of competition generally found in where the countries having low income and the unsatisfied customers. Such a countries the basic Task of buying products go to either he or she has to buy T V or refrigerator or washing machine. This type of competition among desires is termed as desire competition.2. Generic competition: generic competition arises where the consumers has many option in single line of products. For example one may have options in investing the money either in UTI or post office or banks. It is called generic competition.3. Product form competition: in this type of competition the consumer has to choose between different forms of the product. For example if the consumer decides to go for a washing machine the next question which form of the washing machine semi automatic or fully automatic front loading or top loading etc. 4. Brand competition: this type of competition arises where consumers has many brands in similar products. The marketer in this regarding needs to create brand demand for the products.7. Public: A company may encounter certain publics in its environment. A public is any group that has an actual or potential interest in or impact on an organizations ability to achieve its interests. Media public, citizen action publics and local publics are some examples

Q.4 Discuss the MACRO environmental factor affecting the business Environment?Macro EnvironmentMacro environment has major external and uncontrollable factors that influence an organizations decision-making and affects its performance and strategies. The macro environment of business includes activities which are uncontrollable and need proper nourishment and attention on the part of a business enterprise. According to Hill and Jones The macro environment consists of the broader economic social demographic political legal and technological setting within which the industry and the company are placed.According to Elbing Macro environment is the indirect action environment as it may not have an immediate direct effect on the operation but nevertheless have influence.A. ECONOMIC ENVIRONMENTThe economic environment constitutes of economic conditions, economic policies, and the economic system that is important to external factors of business.The economic conditions of the country include: Nature of the economy of the country.The general economic situation in the region, conditions in resource markets like money, material, market raw material components, services, supply markets and so on which influence the supply of inputs to the organization, their costs, quality, availability and reliability of supply of products and services. It determines the economic strength and weakness in the market. & Purchasing power of the individual depends upon the economic factors like current income, price, savings, circulation of money, debt and credit availability.Economic environment encourages liberalization, privatization and globalization of the economic policies in the business environment. B. POLITICAL-LEGAL ENVIRONMENTPolitical environment refers political and government and legal environment. It has close relationship with the economic system and economic policy. There are number of laws that regulate the conduct of the business. These laws cover matter such as standards of business and its production and service. The democratic governments countries laws / act are passed in the parliament. Then they are regulating rules and regulation of business according to the act. Government policies like fiscal, monetary, industrial, labour, and export and import policies which are influenced to specific legal enactments and framework towards the business organisation Elements of Political and legal Environment Government, Legal, PoliticalGovernment-: Government policies, rules and regulation are controlling and monitoring the business enterprises and its activities in the state.. Secondly, the type of government administration of the state and what is the business policy of state? These things should be evaluated by the strategist from point of view of business.Legal-: Sound legal system is the basic requirement for running of the business operating within the state..Strategist should be aware of various business laws which are protecting consumers, competitors, and organization.Political-: Political system is also influenced to business and its activities. Political pressure groups influence to government and in this way some extent to control and regulate business activities within the country.

C. SOCIOCULTURAL ENVIRONMENTIt consists of factors which are related to human relationships and the impact of social attitudes and cultural values. These are bearing on the business of the organisation.Business organization is a successful due to appropriate strategies effective utilization of socio-cultural environmental factors. Social cultural environment is an important for MNC. Therefore, MNC should study of the social cultural activities of the region, where there are introducing their own business. D. DEMOGRAPHIC ENVIRONMENTThese factors are the relevant to the business for formulating and implementing of strategy for controlling and accomplishment of the objectives of the organization. Demographic factors areThe population size, Growth rate of population, Age composition of the population, Family size, Economic stratification of the population, Education levels, Language, Caste, Religion, Race, Age, Income, Educational attainment, Asset ownership, Home ownership, Employment status and location etc . affect the demand for goods and service.The growth of population and income result increases demand for goods and services. A rapidly increasing population indicates that a growing demand for many products. For instance, developing countries like India, Pakistan, etc; Domestic Environment Factors of BusinessWe shall briefly discuss a few demographic factors which are interest of business:Population Size , Geographic Distribution, Income Distribution Population SizeSize of population is important either small or large to business organisation. It studies the changes in a nations birth rate and family size, increase and decrease in the total population. rapid population growth on natural resources or food supplies., life expectancy of infants, youth and old age people. Geographic DistributionIt refers to geographic region and population that shifts from one region of a nation to another or from village/rural areas to urban areas. This is may be an impact on a companys strategic competitiveness in market. Income DistributionIncome distribution is also one of the important factors of demographic environment. Company is planning to measure changes in incoming distribution, savings patterns for different level of individual.E. TECHNOLOGICAL ENVIRONMENTTechnology is the most important elements of the macro environment. Technology is the human being innovation and it literally wonder. Technology helps to human being go to moon, travelling the spaceships, other side of the globe with few hours. Advances in the technologies have facilitated product improvements and introduction of new products and have considerably improved the marketability of the products. Internet and telecom system is the part of technological development in the world. These things today changed whole world. It changes people and business operation. It leads to many new business opportunities apart from the many existing systems.F. GLOBAL ENVIRONMENT-: Global environment is one of the important elements to macro environment of the business. Today competitive scenario changes rapidly and its impact on business of company. Global environment treated as whole world just as village and has changed how individuals and organizations relate to each other. Due to liberalization Indian companies are forced to view business issues from the global perspective. Safe and protected markets are o longer there world is becoming small in size due to advanced means of transport and communication facilities. Learning of foreign languages is a must for every business manager. Acquiring familiarity with foreign currencies is also mist To survive amidst intense competition every businessman should try to adapt his products to different customer needs and tastes.