Post on 07-Apr-2018
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Internal and External
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Def: Surroundings, external objects, influences or
circumstances under which someone or
something exists.
` Determines the role of the enterprise and the
nature of task.
` Determines role of the top management and also
its business policy.
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Interact and transact with
environment
Influence on scope and direction
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` Helps an organization to develop its broad
strategies and long term plans.
` Analyze competitor¶s strategies.
` Keeps the organization dynamic in approach.` Foresee the impact of socio ± economic changes
at the national and international level.
` Adjust to the prevailing conditions.
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` Social
` Economic
` Cultural
` Geographic
` Technological
` Political
` Legal
` Ecological
` Govt. Policies` Competitive Market Condition
` Locational
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Social Factors ± business is a ³social institution´.
` Social responsibility
` Satisfy the needs and wants of society ± goals
` Cultural Values, Tastes and Preferences (servingfestive menus), Social Integration and
Disintegration (US A and India)
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Economic Factors
` Per Capita Income, National Income, Resource
Mobilization
` Exploitation of Natural Resources, Infrastructure
Development, Capital Formation
` Employment Generation, Propensity to Consume
(Luxury or Economic goods), Industrial
Development
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Cultural Factors
` Social and religious practices (liquor business),
education, knowledge
` Norms and beliefs
` Social stratification (rural parts)
Geographic Factors ± important for global
business managers
` Geographic Location, Seasonal Variations,
Climatic Conditions` Industrial location policies of Government
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Technological Factors` Rapidly changing`
R &D
Activity (India must invest)e.g. ± Foreign Investment upto 100% in Industries withsophisticated technology.
Political Factors`
Philosophy and approach of political party` Government interventions
Legal Factors` Industrial Licensing, Company formation laws
` Laws regarding Industrial disputes, payment of wages,trade unionism (Honda ± Gurgaon), Monopoly control,Foreign Exchange Regulation.
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Ecological Factors
` Ecological Imbalance due to change in
environment and biotic factors` Environmental protection and Preservation
` Pollution Free Industrial Activity (Carbon Credit)
` Legislations
Government Policies` Industrial Policy resolutions and Licensing Policies
` Trade Policies, Labor Policies, Location Policies,Export ± Import policies, Forex Policies, Taxation
policies (Arab Countries)
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Competitive Market Condition
` Socialist ± centralized authority
` Capitalist ± competitive forces
India ± a Mixed Economy
Location Factors` Taxation Policies
` Subsidies
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` Nature and environment of blocs (OPEC, ASEAN
etc.)
` Single Market (e.g. ± EEC members follow similar
standards)` Glocal strategies for Global businesses
Factors to be Consider ed«?
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` Security Risk ± India ± militancy / North Korea ±nuclear threat
` Political Risk Stability - coalition parties (India, Brazil) Government Effectiveness risk ± hindrance to reforms Legal & Regulatory Risk ± slow Macroeconomic Risk ± inflation, prices Foreign Trade and Payment Risk ± Export / import duties, tariff
barriers Tax Policy Risk ± VAT, GST Labor Market Risk
Financial Risk ± Currency appreciation / depreciation Infrastructure Risk Country Risk ± changes in monetary / fiscal policy
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Why a product like radio declined and now onceagain emerging as an entertainment medium ?
Drivers of Change.????` Technology` Govt. Policy
` Media Substitutes` Tastes and Preferences
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` Within the organization
` Factors controlled by the organization
Technology Advancement Employee Attitude
5M¶s ± Machine, Manpower, Money, Materials,
Management