BUSINESS ENVIRONMENTS BY

PETUNIA F. MAKHUNGA

WHAT IS BUSINESS ENVIRONMENT?

• BUSINESS ENVIRONMENT CONSISTS OF ALL THE

FACTORS THAT HAVE A BEARING ON THE BUSINESS SUCH

AS THE STRENGTHS, WEAKNESSES, INTERNAL POWER

RELATIONSHIPS AND ORIENTATIONS OF THE

ORGANIZATION, GOVERNMENT POLICIES.

BUSINESS ENVIRONMENT IS THE SUM TOTAL OF ALL

FACTORS INTERNAL & EXTERNAL TO THE BUSINESS FIRM

THAT GREATLY INFLUENCE THEIR FUNCTIONING

IT COVERS FACTORS AND FORCES LIKE CUSTOMERS,

COMPETITORS, SUPPLIERS, GOVERNMENT, AND THE

SOCIAL, CULTURAL, POLITICAL, TECHNOLOGICAL AND LEGAL

CONDITIONS.

FEATURES OF BUSINESS ENVIRONMENT

THE CHANGES IN BUSINESS ENVIRONMENT ARE

UNPREDICTABLE.

BUSINESS ENVIRONMENT DIFFERS FROM PLACE TO PLACE,

REGION TO REGION AND COUNTRY TO COUNTRY. EX:

POLITICAL CONDITIONS IN INDIA DIFFER FROM THOSE IN

PAKISTAN. TASTE AND VALUES CHERISHED BY PEOPLE IN

INDIA AND CHINA VARY CONSIDERABLY.

Types of environment

Internal environment External environment

Market environment Macro environment

ENVIRONMENT OF BUSINESS

Micro Environment

TYPES OF ENVIRONMENT

• ON THE BASIS OF THE EXTENT OF INTIMACY WITH THE

FIRM, THE ENVIRONMENTAL FACTORS MAY BE

CLASSIFIED IN TO DIFFERENT TYPES OF LEVELS:

• INTERNAL FACTORS: CONTROLLABLE AND DIRECT

IMPACT ON BUSINESS

• EXTERNAL FACTORS: UNCTROLLABLE AND INDIRECT

IMPACT ON BUSINESS

INTERNAL ENVIRONMENT

• THE INTERNAL FACTORS ARE GENERALLY REGARDED AS CONTROLLABLE FACTORS BECAUSE THE COMPANY HAS CONTROL OVER THESE BECAUSE THE COMPANY HAS CENTRAL OVER THESE FACTORS; IT CAN ALTER OR MODIFY SUCH FACTORS AS ITS PERSONNEL, PHYSICAL FACILITIES, ORGANIZATION AND FUNCTIONAL MEANS, SUCH AS MARKETING MIX TO SUIT THE ENVIRONMENT.

MICRO ENVIRONMENT

MISSION

VISION

OBJECTIVES

BUSINESS FUNCTIONS

MANAGEMENT STRUCTURE

ORGANIZATIONAL CULTURE

A VISION IS A BROAD EXPLANATION OF WHY THE FIRM EXISTS

AND WHERE IT IS TRYING TO LEAD ITGIVES THE ORGANISATION

A SENSE OF PURPOSE AND A SET OF VALUES THAT UNITE

EMPLOYEES IN A COMMON DESTINY.

A MISSION STATEMENT OUTLINES THE FUNDAMENTAL

PURPOSE OF THE ORGANISATION.

OBJECTIVES THEREFORE, REPRESENT THE OPERATIONAL

SIDE OF AN ORGANISATION

BUSINESS FUNCTIONS REFER TO A SET OF OPERATIONS THAT

ARE EXECUTED REGULARLY TO CARRY OUT A PART OF THE

MISSION FOR AN ORGANISATION. THIS TERM CAN ALSO BE

DEFINED AS THE ESSENTIAL FUNCTIONS SUCH AS SALES AND

PRODUCTION THAT AN ORGANISATION CANNOT DO WITHOUT.ORGANIZATIONAL STRUCTURE, COMPOSITION OF BOARD OF

DIRECTORS, EXTENT OF PROFESSIONALIZATION OF

MANAGEMENT SOMETIME DELAY DECISION MAKING WHILE

SOME OTHERS FACILITATE QUICK DECISION MAKING

• ORGANIZATIONAL CULTURE IS THE BEHAVIOUR OF HUMANS WHO

ARE PART OF AN ORGANIZATION AND THE MEANINGS THAT THE

PEOPLE ATTACH TO THEIR ACTIONS. CULTURE INCLUDES THE

ORGANIZATION VALUES, VISIONS, NORMS, WORKING LANGUAGE,

SYSTEMS, SYMBOLS, BELIEFS AND HABITS. IT IS ALSO THE

PATTERN OF SUCH COLLECTIVE BEHAVIOURS AND ASSUMPTIONS

THAT ARE TAUGHT TO NEW ORGANIZATIONAL MEMBERS AS A WAY

OF PERCEIVING, AND EVEN THINKING AND FEELING.

ORGANIZATIONAL CULTURE AFFECTS THE WAY PEOPLE AND

GROUPS INTERACT WITH EACH OTHER, WITH CLIENTS, AND WITH

STAKEHOLDERS.

EXTERNAL ENVIRONMENT

• MARKET ENVIRONMENT: IS ALSO KNOWN AS TASK ENVIRONMENT AND

OPERATING ENVIRONMENT BECAUSE THE MICRO ENVIRONMENTAL

FORCES HAVE A DIRECT BEARING ON THE OPERATIONS OF THE FIRM

• MACRO ENVIRONMENT: IS ALSO KNOWN AS GENERAL ENVIRONMENT

AND REMOTE ENVIRONMENT. MACRO FACTORS ARE GENERALLY

MORE UNCONTROLLABLE THAN MICRO ENVIRONMENT FACTORS.

• WHEN THE MACRO FACTORS BECOME UNCONTROLLABLE, THE

SUCCESS OF COMPANY DEPENDS UPON ITS ADAPTABILITY TO THE

ENVIRONMENT.

o MARKET ENVIRONMENT

SUPPLIERS

EMPLOYEES

CUSTOMERS

COMPETITORS

INTERMEDIARIES

STAKEHOLDERS

COMMUNITY

SUPPLIERS ARE 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.

CUSTOMER IS A PERSON WHO PURCHASES AND USES GOODS

AND SERVICES

COMPETITORS 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 DESIRE OF THE CUSTOMERS.

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 CONSUMERS

STAKEHOLDER IS A PERSON, GROUP OR ORGANIZATION THAT HAS

INTEREST OR CONCERN IN APARTICULAR ORGANIZATION

COMMUNITY 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.

EMPLOYEES ARE THOSE PEOPLE THAT WORK FOR THE

ORGANIZATION.

MACRO ENVIRONMENT

ECONOMIC ENVIRONMENTPOLITICAL ENVIRONMENTTECHNOLOGICAL ENVIRONMENTSOCIAL ENVIRONMENTGLOBAL ENVIRONMENT

ECONOMIC ENVIRONMENT REFERS TO THE AGGREGATE OF THE

NATURE OF ECONOMIC SYSTEM OF THE COUNTRY, BUSINESS

CYCLES, THE SOCIO-ECONOMIC INFRASTRUCTURE

IT INCLUDES FACTORS SUCH AS CHARACTERISTICS AND POLICIES

OF THE POLITICAL PARTIES, NATURE OF CONSTITUTION AND

GOVERNMENT SYSTEM RELATING TO BUSINESS POLICIES AND

REGULATIONS

TECHNOLOGICAL ENVIRONMENT INFLUENCES THE BUSINESS IN

TERMS OF INVESTMENT IN TECHNOLOGY,CONSISTENT

APPLICATION OF TECHNOLOGY AND THE EFFECTS OF

TECHNOLOGY ON MARKETS.

THE SOCIAL DIMENSION OR ENVIRONMENT OF A NATION

DETERMINES THE VALUE SYSTEM OF THE SOCIETY WHICH, IN

TURN AFFECTS THE FUNCTIONING OF THE BUSINESS.

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

• REFERENCES

• THAKUR. A, SINGH. D, EKTA, BANSAL. K, MUSTAFA. (2012). BUSINESS ENVIRONMENTS.

HTTP://WWW.SLIDESHARE.NET/EKTA2407/BUSINESS-ENVIRONMENT-11464424.

ACCESSED ON 04/03/2014

• MATCH. P. (2013). BUSINESS ENVIRONMENTS. HTTP://

WWW.SLIDESHARE.NET/DANIYALT/BUSINESS-ENVIRONMENT-26301669. ACCESSED ON

04/03/2014

• SINGH. A. (2009) BUSINESS ENVIRONMENTS. HTTP://

WWW.SLIDESHARE.NET/SINGHANSHU21/FIRST-CHAPTER. ACCESSED ON 04/03/2014

• AHMAD. M.(2012). BUSINESS ENVIRONMENTS. HTTP://

WWW.SLIDESHARE.NET/MUNIF/BUSINESS-ENVIRONMENTS. ACCESSED ON 04/03/2014

• SELVA. A. (2013) BUSINESS ENVIRONMENTS. HTTP://

WWW.SLIDESHARE.NET/ARUNSELVA11/BUSINESS-ENVIRONMENT-25086837.

ACCESSED ON 04/03/2014