2. at Fullerton India Credit Company ltd. on Aug 10, 201
http://www.slideshare.net/anu070886/external-envt2
by Anuradha Gupta, Senior Research Analyst at
VCCEdge.com on Aug 29, 2010

3. What is business environment?
Business environment includes the ‘climate’ or set of conditions:
economic, social, political or institutional which have a direct
or indirect bearing on the functioning of business
It signifies external forces, factors and institutions that are
beyond the control of the business and they affect the
functioning of a business enterprise.

4. What do you mean by Business
Environment??
 The environment of any organization is “ the aggregate of all conditions,
events and influences that surround and affect it.”
 In other words , business environment is individual and organisation that
exists outside the business and have influence direct and indirect to the
business.

5. Types of environment
External environment
Internal environment
Micro environment
Macro environment
ENVIRONMENT OF BUSINESS

6. Internal environment
The internal environment is the environment
that has a direct impact on the business.
 Important internal factors which
have a bearing on the decisions of a
business firm and which are
generally controllable because
the company has control over
these factors:






Value system
Vision, mission and objectives
Management structure and nature
Internal power relationship
Human resources
Company image

7.  Value system

8.  Vision, Mission & Objective
Ranbaxy’s mission: “ to become a
research based international
pharmaceutical company”- has
driven
it to enter the foreign markets
and development.
Thus the business domain of the
company, priorities, direction of
development, business philosophy,
business policy etc,

9.  Management structure & nature
Organizational structure, composition of
board of directors, extent of
professionalisation of management
sometime delay decision making while some
others facilitate quick decision making.
Board of directors is the highest decision
making body and it overseas performance of
the organization and so its quality is very
important.
The share holding pattern can also have
important managerial implications.

10.  Internal Power Relationship
The amount of support the top
management enjoys from different
levels of employees, shareholders
and board of directors have
important influence on the decisions
and their implementation.
For example: relationship between
the
members of the board of director

11.  Human resources
The characteristics of human
resources like skill, quality, morale,
commitment, attitude etc. could
contribute to the strength and
weakness of an organization
Ex: Some organizations find it
difficult to carry out restructuring or
modernization because of resistance
by employees whereas they are
smoothly done in some others.

12.  External environment
 Micro environment consists of the actors in the
company’s immediate environment that affect the
performance of the company. They are more intimately
linked with the company.
 Macro environment consists of larger societal forces that
affect all the actors in the company’s micro environment.

13. o
Micro environment
Suppliers
Customers
Competitors
Marketing intermediaries
Financiers
Public

14.  Suppliers:
 An 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. The importance of reliable
source/sources of supply to the smooth functioning of the
business is obvious.

15.  Customers:
 The major task of a business is to create and sustain
customers. A business exists
only because of its customers. The choice of customer
segments should be made by considering a number of
factors including the relative profitability,
dependability,
stability of demand, growth prospects and the extent of
competition.
The business firm should not be dependent on a single
customer

16.  Competitors:
 Competition not only include
the other firms that produce
same product but also those
firms which compete for the
income of the consumers the
competition here among these
products may be said as desire
competition as the primary
task here is to fulfill the

17.  Marketing Intermediaries
 The marketing intermediaries
include middlemen such as
agents and merchants that help
the company find customers or
close sales with them. The
marketing intermediaries are
vital links between the
company and the final

18.  Financiers:
The financiers are also important factors of internal
environment. Along with financing
capabilities of the company their policies and strategies,
attitudes towards risk , ability to
provide non-financial assistance etc. are very
important.

19.  Public :

A public is any group that has an
actual or potential interest in or
impact on an organization’s ability to
achieve its interests. Ex-media,
citizens, local public etc.
 NGOs have been protesting against
child labour, cruelty against animals,
environmental problems,
deindustrialization resulting from
imports etc.

20. Macro environment





Economic environment
Political environment
Technological environment
Social environment
Global environment

21. Economic environment
 Economic environment refers to the
aggregate of the nature of economic
system of the country, business
cycles, the socio-economic
infrastructure etc.
The successful businessman visualizes
the external factors affecting the
business, anticipating prospective
market situations and makes suitable
to get the maximum with minimize

22. Political environment
 It includes factors such as
characteristics and policies of the
political parties, nature of
Constitution and government system
relating to business policies and
regulations.
 Important economic policies such as
industrial policy, policy towards
foreign capital and technology, fiscal

23. Technological environment
 The business in a country is greatly influenced by the
technological development.
 The technology adopted by the industries determines the
type and quality of goods and
services to be produced and the type and quality of plant and
equipment to be used.
Technological environment influences the business in terms
of investment in technology,consistent application of
technology and the effects of technology
on markets.

24. Social Environment
 The social dimension or environment of a nation
determines the value system of the society which, in turn
affects the functioning of the business.
 Sociological factors such as costs structure, customs and
conventions, mobility of labour etc. have farreaching
impact on the business. These factors determine the work
culture and mobility of labour, work groups etc.

25. Global environment

The global environment refers to those factors which are
relevant to business such as:

WTO principles and agreements

International conventions

Treaties, agreements, declarations, protocols, economic

Sentiments in other countries, hike in crude oil prices etc.

26. Macro environment
BUSINESS

27. Palit,S .Nov 25,2013 Management Student at
Amity Business School, Noida
Aniali, P. Aug 10,201 Student- Pursuing MBA ( HR,
Finance ) at Intern at Fullerton India Credit
Company ltd.
Gupta, A. Aug 29,2012Senior Research Analyst at
VCCEdge.com