Human Activities  Economic 1. Profession 2. Employment 3. Business  Non Economic

Characteristics of Business Characteristic s of Business Deals in goods and services Sale and exchange of goods and services Regular exchange of goods and services Requires investmen t Aims at earning profit Involves risk and uncertaint y of income

Importance of Business  Improves standard of living  Provides opportunities to work and earn livelihood  Improves national image by producing and exporting quality goods of international standard  Better return to investors on their capital investment  Promotes social interest by providing tourist services, sponsoring cultural programme  Facilitates exchange of culture among people of different nations  Help in development of science and technology

Types of Business Activities Types of business activities Commercial Activities Trading Activities Auxiliaries to Trade activities Industrial Activities

Growth and Development of Indian Trade and Commerce  Ancient Period  Medieval Period  Modern Period

Contribution of India to the world of Business  The Numerical and Decimal System  Joint Hindu Family Business System  Division of Labour  Hundis  Emphasis on quality

Objectives of Business  Economic Objectives  Social Objectives  Human Objectives  National Objectives  Global Objectives

Economic Objectives  Profit earning A business enterprise is established for earning some income. It is the hope of earning profits that inspires people to start business. Profit is essential for the survival of every business unit. Profits enable a businessman to stay in business by main­taining intact the wealth producing capacity of its resources.  Creation of customers A business­man can earn profits only when there are enough customers to buy and pay for his goods and services. No business can succeed without providing customers value for their money. Business exists to satisfy the wants, tastes and preferences of customers.  Regular innovations Business can be successful only when it creates new designs, better machines, improved techniques, new varieties, etc. Modern science and technology have created a great scope for innovation in the business world. Firms develop new technology, introduce new designs and new tools and processes to minimise costs and to satisfy ever increasing wants of customers. In order to create customers business has to explore new markets and attract more cus­tomers. It has also to retain old customers by providing better services to them.

Social Objectives Business is a part of society. It cannot survive and grow without the support of society. Business must therefore discharge social responsibilities in addi­tion to earning profits.  Production and supply of goods and services Goods and services should be of good quality and these should be supplied at reasonable prices. It is also the social obligation of business to avoid malpractices like boarding, Black marketing and misleading advertising.  Fair Remuneration to employees - Employees must be given fair compensation for their work. In addition to wages and salary a reasonable part of profits should be distrib­uted among employees in recognition of their contributions. Such sharing of profits will help to increase the motivation and efficiency of employees.  Contribution to the general welfare of the society Business should provide support to social, cultural and religious organisations. Business enterprises can build schools, colleges, libraries, dharam shalas, hospitals, sports bodies and research institutions. They can help non-government organisations (NGOs) like CRY, Help Age, and others which render services to weaker sections of society

 Economic well being of the employees  Social and psychological satisfaction of employees  Development of Human Resources  Well being of socially and economically backward people Some More..

National Objectives  Creation of employment  Promotion of social justice  Production according to national priority  Contribution to the revenue of the country  Export promotion

Global Objectives  Raise general standard of living  Reduce disparities among nations  Make available globally competitive goods and services

Indian companies – Fortune 500  8 Indian companies have made it to Fortune 500 list in These are:  Indian Oil Corporation  Reliance Industries  Tata Steel  Tata Motors  Bharat Petroleum  Hindustan Petroleum  State Bank of India  ONGC

RankCompany Revenues ($ millions) Profits ($ millions) 1Wal-Mart Stores Royal Dutch Shell Exxon Mobil BP Toyota Motor Japan Post Holdings Sinopec State Grid AXA China National Petroleum (CNPC)

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.” Characteristics of Business Environment:  Complex  Dynamic  Multi-faceted  Far- reaching impact

Why Study Business Environment  Development of broad strategies to ensure sustainability  To foresee the impact of socio-economic changes at the national and international levels on firm’s ability  Analysis of competitor’s strategies and formulation of effective counter measures  To keep oneself dynamic

Significance of Business Environment  Help to understand internal environment  Help to understand Economic System  Help to understand economic policy  Help to understand market conditions

Environment of Business Business ethics Work environment Business policies Industrial Relations MIS Prospects of Business development Company’s image and brand equity Finance Human Resources Internal Environment Microenvironment Macroenvironment External Environment

Internal Environment  Refers to all the factors that are within an organization which impart strengths or cause weaknesses of strategic nature.  Controllable factors. These include:  Value system  Mission and Objectives  Management Structure and Nature

Components of Internal Environment  Human Resources  Company Image and Brand Equity  Other Factors  Physical Assets and Facilities  R & D and Technological Capabilities  Marketing Resources  Financial Resources

Types of External Environment  External Environment  Micro environment  Macro environment  Economic  Non Economic

External Environment  Includes all factors outside the organization which provide opportunities or pose threats to the organization  Uncontrollable factors  Consists of Micro and Macro environment

Micro Environment “ It consists of the factors in the company’s immediate environment that affect the performance of the company”.

Micro Environment Factors Suppliers Customers Marketing Intermediaries Competitors Workers and Unions Financers

Micro Environment of a typical car manufacturer Potential Supplier Potential Customers Pressure Groups For Supplies For Customers Potential Dealers Government Local Communities

Macro Environment It comprises general trends and forces that may not immediately affect the organization but sooner or later will alter the way organization operates. Macro Environment :-  Economic  Non Economic

Economic Environment  Economic stages that exists at a given time in a country  Economic system that is adopted by a country for example. Capitalistic, Socialistic or Mixed Economy  Economic planning, such as five year plans, budgets, etc.  Economic policies for example, monetary, industrial and fiscal policies  Economic Indices such as National Income, Per Capita Income, Disposable Income, Rate of growth of GNP, Distribution of Income, Rate of savings, Balance of Payments etc.  Economic Problems  Functioning of economy

Non Economic Environment  Socio- Cultural Environment  Demographic Environment  Technological Environment  Political Environment

Non- Economic Environment  Cultural Environment  Social Customs & Rituals and practices  Lifestyle patterns  Family structure  Role & position of men, women, children and aged in family & society

Non- Economic Environment  Demographic Environment  Growth of population  Age Composition  Life Expectancy  Inter-state migration

Macro Environment  Technological Environment  Sources of technology  Technological development  Impact of technology Foreign technological collaboration are popular in India but subject to strict commitment regarding impact on local technological development etc.  Political Environment  Political parties in power  Political Philosophy

Macro Environment  Regulatory Environment  Constitutional framework  Policies relating to pricing and foreign investment  Policies related to the public sector, SSIs, development of backward areas and control of environmental pollution

International/Global Environment Important factors that operate at global level which have an impact on organization are:  Growth of world economy  International institutions IMF,WTO ILO  Economic relations between nations  Global human resource-nature and quality of skills, mobility of labor  Global technology and quality standards  Global demographic patterns

Overview of Business Environment MACRO ENVIRONMENT ECONOMIC Environment MICRO ENVIRONMENT BUSINESS Internal Environment Values, Mission & Objectives. Human Resources, Co. Image & Brand Equity TECHNOLOGICAL FACTORS MARKETING INTERMEDIARIES DEMOGRAPHIC FACTORS SOCIAL CULTURAL FACTORS Non - Economic Environment

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