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Entrepreneurship and Management
3.1. BUSINESS ENVIRONMENT: MAIN PRINCIPLES AND FEATURES
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Definitions Marketing approach: The business environment is a marketing term and refers to factors and forces that affect a firm's ability to build and maintain successful relationships with customers. (Armstrong Kotler, Gary Philip) Corporate Governance and Theory of the Firm approach The total of all things external to firms and industries which affect their organization and operation. (Bayard O. Wheeler) The “climate” or set of conditions, economic, social, political or institutional in which business operations are conducted. (Arthur M. Weimer) The environment includes factors outside the firm which can lead to opportunities for or threats to the firm. Although there are many factors, the most important of the sectors are socio-economic, technological, supplier, competitors, and government. (Lawrence R. Jauch, William F. Glueck) Environment consists of factors that are largely if not totally, external and beyond the control of individual industrial enterprise and their managements. These are essentially the “givens” within which firms and their management must operate in a specific country and they vary, often greatly, from country to country. (Barry M. Richman, Melvyn Copen) My definition: Business Environment means external forces and factors which are beyond the control of the company and which affect its functioning.
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Importance of the Business Environment
The business environment factors influence almost every aspect of business There is a lot of factors of different kind (components of environment) Two-way relationships: business influences its environment too Studying business environment helps companies Determining opportunities and threats Identifying firm’s strength and weakness Giving direction for growth Continuous learning Image building Being more competitive etc.
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Types of Business Environment
Vertical approach: macro, mezzo, micro levels Economic and non-economic environment PESTEL analysis Political factors Political setup Economic policy Economic factors State of markets Access to finance Macroeconomic indicators Socio-cultural factors social capital human capital demography Technological factors Environmental factors Legal factors Constitution Laws and regulations Judicial decisions
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World Bank Doing Business Project
Ease of Doing Business Index Starting a business – Procedures, time, cost and minimum capital to open a new business Dealing with construction permits – Procedures, time and cost to build a warehouse Getting electricity – procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse Registering property – Procedures, time and cost to register commercial real estate Getting credit – Strength of legal rights index, depth of credit information index Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits Paying taxes – Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit Trading across borders – Number of documents, cost and time necessary to export and import Enforcing contracts – Procedures, time and cost to enforce a debt contract Resolving insolvency – The time, cost and recovery rate (%) under bankruptcy proceeding
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Ease of Doing Business index 2017
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Ease of Doing Business index 2017 Top
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Corporate Social Responsibility
Definitions Investopedia: The idea that businesses should balance profit-making activities with activities that benefit society; it involves developing businesses with a positive relationship to the society in which they operate. ISO 2600: An organization's responsibility for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior that: contributes to Sustainable Development, including health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behavior; and is integrated throughout the organization and implemented in its relations. Core subjects according to ISO 26000: Human rights Labor practices The environment Fair operating practices Consumer issues Community involvement and development Responsibility towards Shareholders or owners Employees Consumers Government Community
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The secret of life is honesty and fair dealing
The secret of life is honesty and fair dealing. If you can fake that, you've got it made. Groucho Marx
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