3. What is business?
ï” efforts of enterprise to supply goods and services for profit
ï” Vary in size
ï” Measured by no. of employees
ï” Or by sale volume
ï” It include many activities
6. OBJECTIVES OF BUSINESS
ï” Profitability
ï” Growth
ï” Employ satisfaction and development
ï” Quality products and services
ï” To earn market leadership
ï” Service to society
ï” Building reputation
8. What is business environment?
ï” Surrounding of business enterprise
ï” Environment influences activities and operations
ï” Threat and opportunities
9. Why study business environment?
ï” Development of broad strategies
ï” To foresee impact of socio-economic factors
ï” Analysis of competitorâs strategies
ï” To keep oneself dynamic
10. Factors affecting business environment
Business
environment
Internal
environmental
factors
External
environmental
factors
Micro factors Macro factors
11. INTERNAL FACTORS
ï” Value system
ï” Vision, Mission and objective
ï” Management structure and nature
ï” Internal power relationship
ï” Human resources
ï” Company image and brand equity
ï” Physical assets and facilities
ï” R&D and technological capabilities
ï” Financial factors
12. EXTERNAL FACTORS
ï” Micro - The micro factors carry implication for a particular
business.
ï” Macro - The macro factors implication for the industry or the
economy as a whole.
14. ï” Social factors
ï” Demographical factors
ï” Natural factors
ï” Technological factors
ï” Political factors
ï” Economic factors
ï” Global factors
Macro factors
15. ENVIRONMENTAL SCANNING
ï”âThe study and interpretation of external factorsââ
ï” Factors to be considered are events,
trends, issues and expectations of
the different interest groups.
16. Objectives of environmental scanning
ï” Knowledge of Information
ï” Basis of Decisions
ï” Helpful in making of Policies
ï” Technological Planning
ï” Survive in the Business
18. SWOT ANALYSIS
Factors that gives
an edge for the
company over its
competitors
Favorable situation
which can bring a
competitive
advantage
Factors that can be
harmful if used
against the firm by
competitors
Unfavorable
situation which can
negatively affect
the business
19. Tools for external environmental scanning
ï” PEST Analysis
ï” PESTLE Analysis
ï” STEEPLE Analysis
1. S - Social
2. T - Technological
3. E - Economic
4. E - Environmental
5. P - Political
6. L - Legal
7. E - Ethical
21. THE MCCAIN FOOD
ï” McCain is privately owned company
ï” Deals in frozen food products and potato chips
ï” Worldâs largest producer of potato chips
ï” Buys 12% of British potatoes crops
22. External challenges
One of the biggest environmental factors affecting McCain in
2005/6 was the growing concern about obesity, particularly in
children. This case study shows how McCain has risen to the
challenges of this debate and other external challenges.
23. Social factor
ï” Social trends are one of the key factors affecting a business. Consumer buying
patterns are determined by trends. Just as the demand for some popular clothes are
determined by fashion, demand for food products is determined by eating patterns.
Recently McCain have seen a slow down in sales as a result of campaigns to
encourage healthier eating.
ï” Response :- By reducing quantities of salt and oil throughout its potato products
rang.
They are made with only natural ingredients - specially selected potatoes
and sunflower oil.
24. Legal factors
ï” The government's Food Standards Agency has recommended that firms put 'traffic
light' labels on food to help people understand what they are buying and to help
them make the right choices:
1. Red represents high levels of ingredients such as fats and salts.
2. Green represents low levels.
ï” Also featured on the labels are Guideline Daily Amounts (GDAs) which show how
much fat, saturated fat, sugar and salt each product contains. This helps the
consumer to achieve a consistently balanced diet.
25. Economic and political factors
ï” Economic factors include changes in buying patterns as people's incomes rise.
ï” As people become cash-rich and time-poor they prefer to switch to ready meals
and simple to prepare foodstuffs that they can quickly heat in an oven or
microwave.
ï” McCain has risen to this challenge by creating a range of varieties.
ï” On political factors, the UK government has increased the pressure on food
suppliers to come up with healthier foods.
ï” McCain supports the government's initiative. It believes that the foods that it
provides, including potato based products, are nutritious provided that they are
prepared in a healthy and simple way.
26. Technological factors
ï” Food technology is one of the most dynamic technologies in the modern economy.
ï” Each of these products involves finding technical solutions to problems such as how
to:
1. Freeze while retaining flavor
2. Maximize natural nutritional characteristics
3. Turn a frozen product into an oven heated product.
ï” McCain is continually being faced by new challenges from technological factors. but
also kept the sort of flavor that would delight customers.
27. CONCLUSION
Business environment have a great impact on the
working of business. It may also lead to its failure
or success. The factor affecting may be internal or
external it needs to be analyzed timely so that
measures can be taken and any type of lose or
resentment among interested parties is prevented.
