Business Environment

Important Terms Business Any activity that seeks to provide goods and services to others while operating at a profit. Profit The amount of money a business earns above and beyond what it spends for salaries and other expenses.

Important Terms Entrepreneur A person who risks time and money to start and manage a business. Revenue The total amount of money a business takes in during a given period by selling goods and services.

Important Terms Loss When a business’s expenses are more than its revenues. Risk The chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

Important Terms Stakeholders All the people who stand to gain or lose by the policies and activities of a business. Outsourcing Assigning various functions, such as accounting, production, security, maintenance, and legal work, to outside organizations.

Business ENVIRONMENT

What is “Environment”?

Environment => everything which surrounds a system

What is “Business Environment”?

Business Environment => Anything which surrounds the business organization that either help or hinder the development of businesses

Business Environment => Anything which surrounds the business organization that either help or hinder the development of businesses What are they?

Principal elements of a business organization’s environment Macroenviroment 2. External environment Microenvironment 1. Internal environment

Types of Business Environment 1. Internal environment => all functions within a firm 2. External environment => all forces and events outside organization affect on its activities Macro environment: not immediately affect firm’s activities Micro environment: directly affect the firm’s activities

Principal elements of a business organization’s environment Political/ legal Economic Technological Social/ cultural Macroenviroment Customers Suppliers Competitors Intermediaries Other stakeholders Microenvironment Internal environment Marketing, Production, Finance, Personnel, R&D

Why we have to understand Business Environment ?

What will happen if a firm doesn’t know its business environment?

Why Business Environment is important? If the firm failed to respond to change in the environment , it might affect on declining in its profitability, business failure, loss of jobs, and a low standard of living and quality of life. On the other hand, it could be an opportunity for the firm to succeed in which it always adjust itself with the current business trends and environment.

Economic & Legal Environment

Economic & Legal keep taxes and regulations to a minimum allow private ownership of businesses minimize interference with the free exchange of goods and services passing laws that enable businesspeople to write contracts that are enforceable in court establish a currency that’s tradable in world markets minimize corruption

Starting a business in some countries is much harder than in others. In India, for example, a person has to go through an extraordinary and time-consuming bureaucratic process to get permission to start a business—and with no certainty of success. Nonetheless, those businesses that do get started can become a major source of wealth and employment. This jewelry business is one small example.

Technological Environment

Technological Environment Technology means everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and the various software programs that make business processes more effective, efficient, and productive

Important Terms Effectiveness means producing the desired result. Efficiency means producing goods and services using the least amount of resources. Productivity is the amount of output you generate given the amount of input (e.g., hours worked) The more firm can produce in any given period of time, the more money firm can get

Technological Environment (Cond’t) Emerging of Internet The Growth of E-Commerce E-Commerce: The buying and selling of goods and services over the Internet.

Technological Environment (Cond’t) Database: An electronic storage file where information is kept; one use of databases is to store vast amounts of information about consumers. The company can use those info. send you catalogs and other direct mail advertising that offers the kind of products you might want, as indicated by your past purchases

Technological Environment (Cond’t) Identity theft: The obtaining of private information about a person, such as Social Security number and/or credit card number, and using that information for illegal purposes, such as buying things with it.

Amazon.com Must Change with the Times

Amazon.com by Jeff Bezos struggled since 1995 to prove its viability to its investors After its success, many competitors arose, many traditional retailers starts their online service to compete Bezos, therefore, encounter those by expanding the company’s offerings i.e. free shipping for minimum order of $99, then$ 49, and ended up at $25

Overtime, amazon.com is now offering wide range of products from automobiles and baby items to video games and watches.

EBay is an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. In addition to its original U.S. website, eBay has established localized websites in thirty other countries. It is one of the big winners in the fight for Internet attention.

Q&A What Internet sites are your favorites? Do you think that buying items over the Internet is going to greatly affect the shopping malls in your area?/ How?

Competitive Environment

HOW COMPETITION HAS CHANGED BUSINESS TRADITIONAL BUSINESSES Customer satisfaction Customer orientation Profit orientation Reactive ethics Product orientation Managerial focus WORLD-CLASS BUSINESSES Delighting the customer Customer and stakeholder orientation Profit and social orientation Proactive ethics Quality and service orientation Customer focus

Important Terms Proactive = doing the right thing before anyone tells you to do it Reactive = responding to criticism after it happens

How to survive in competitive environment? Adjust the firm’s products, policies, and practices to meet consumer demands Restructure organization and do the empowerment to meet the changing needs of customers and employees Empowerment: Giving frontline workers the responsibility, authority, and freedom to respond quickly to customer requests

Social Environment

Social Demography: The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income. Why demography is important to the business?

Social Trends Today Managing diversity-> company tends to search more of diverse workforce Increasing number of older people-> successful businesses like travel, medicine, nursing homes, adult day care, home health care businesses Two-income families->pregnancy benefits, parental leave, flexible working schedule, child/ elder care counseling programs Single parents-> family leave, flextime

Example: 4 day work week In Birmingham, Alabama, city officials decided to implement a four-day week starting July 1 for some 2,400 municipal employees and later in the year for around 1,000 police and firefighters. allowing employees to work four 10-hour days, may save 500,000 to one million dollars annually in fuel costs alone for the employees

4 day work week The biggest motivation was to give employees a cost savings due to high gasoline prices. Also it will also give parents an extra day with their children and save on day care costs http://www.today.com/external.php?url=http://news.sawf.org/Lifestyle/51090.aspx&reffurl=http://www.today.com/view/energy-surge-prompts-move-to-4-day-work-week-in-us/id-2131856/

Global Environment

Global War and terrorism-> security costs and policies How global changes affect you?

MH17 Malaysia plane crash in Ukraine Ebola virus