(1)What is a Business Environment?
A Business Environment is the physical and operational factors, both internal and external, that affect the flow of activities in a business. They include; customers, competitors, suppliers, distributors, industry trends, substitutes, regulations, government activities, the economy, demographics, social and cultural factors, innovations and technological developments. (2)What Are the Types of External Business Environments?
There are many types of external business environments. Just to name a few you have consumers, finance, public reputation, macro environment, economics and politics. For financing this is an important centerpiece in a business because many businesses base their structure on the cash flow of the company. (3)What Is Business Environment?
Meaning: – The term Business Environment is composed of two words ‘Business’ and ‘Environment’. In simple terms, the state in which a person remains busy is known as Business. The word Business in its economic sense means human activities like production, extraction or purchase or sales of goods that are performed for earning profits. On the other hand, the word ‘Environment’ refers to the aspects of surroundings. Therefore, Business Environment may be defined as a set of conditions – Social, Legal, Economical, Political or Institutional that are uncontrollable in nature and affects the functioning of organization. Business Environment has two components: 1. Internal Environment
2. External Environment
Internal Environment: It includes 5 Ms i.e. man, material, money, machinery and management, usually within the control of business. Business can make changes in these factors according to the change in the functioning of enterprise. External Environment: Those factors which are beyond the control of business enterprise are included in external environment. These factors are: Government and Legal factors, Geo-Physical Factors, Political Factors, Socio-Cultural Factors, Demo-Graphical factors etc. It is of two Types: 1.Micro/Operating Environment
2. Macro/General Environment
Micro/Operating Environment: The environment which is close to business and affects its capacity to work is known as Micro or Operating Environment. It consists of Suppliers, Customers, Market Intermediaries, Competitors and Public. (1) Suppliers: – They are the persons who supply raw material and required components to the company. They must be reliable and business must have multiple suppliers i.e. they should not depend upon only one supplier. (2) Customers: – Customers are regarded as the king of the market. Success of every business depends upon the level of their customer’s satisfaction. Types of Customers: (i) Wholesalers
(iv) Government and Other Institutions
(3) Market Intermediaries: – They work as a link between business and final consumers. Types:- (i) Middleman
(ii) Marketing Agencies
(iii) Financial Intermediaries
(iv) Physical Intermediaries
(4) Competitors: – Every move of the competitors affects the business. Business has to adjust itself according to the strategies of the Competitors. (5) Public: – Any group who has actual interest in business enterprise is termed as public e.g. media and local public. They may be the users or non-users of the product. Macro/General Environment: – It includes factors that create opportunities and threats to business units. Following are the elements of Macro Environment: (1) Economic Environment: – It is very complex and dynamic in nature that keeps on changing with the change in policies or political situations. It has three elements: (i) Economic Conditions of Public
(ii) Economic Policies of the country
(iv) Other Economic Factors: – Infrastructural Facilities, Banking, Insurance companies, money markets, capital markets etc. (2) Non-Economic Environment: – Following are included in non-economic environment:- (i) Political Environment: – It affects different business units extensively. Components: (a) Political Belief of Government
(b) Political Strength of the Country
(c) Relation with other countries
(d) Defense and Military Policies
(e) Centre State Relationship in the Country
(f) Thinking Opposition Parties towards Business Unit
(ii) Socio-Cultural Environment: – Influence exercised by social and cultural factors, not within the control of business, is known as Socio-Cultural Environment. These factors include: attitude of people to work, family system, caste system, religion, education, marriage etc. (iii) Technological Environment: – A systematic application of scientific knowledge to practical task is known as technology. Everyday there has been vast changes in products, services, lifestyles and living conditions, these changes must be analysed by every business unit and should adapt these changes. (iv) Natural Environment: – It includes natural resources, weather, climatic conditions, port facilities, topographical factors such as soil, sea, rivers, rainfall etc. Every business unit must look for these factors before choosing the location for their business. (v) Demographic Environment :- It is a study of perspective of population i.e. its size, standard of living, growth rate, age-sex composition, family size, income level (upper level, middle level and lower level), education level etc. Every business unit must see these features of population and recongnise their various need and produce accordingly. (vi) International Environment: – It is particularly important for industries directly depending on import or exports. The factors that affect the business are: Globalisation, Liberalisation, foreign business policies, cultural exchange. Characteristics:-
1. Business environment is compound in nature.
2. Business environment is constantly changing process.
3. Business environment is different for different business units. 4. It hasboth long term and short term impact.
5. Unlimited influence of external environment factors.
6. It is very uncertain.
7. Inter-related components.
8. It includes both internal and external environment.
(4)What is the Importance of external and internal environments? Answer
The internal and external environments can act as hindrances and also as a means of achieving the corporation’s goals. The importance of external environment stems from the fact that it is the source of competition. The firm will then strive to improve its quality in the presence of competition and will maximize its sales. (5) Business environment
The process of starting up and developing a business is not just an adventure, but also a real challenge. In order to help entrepreneurs with this, it is essential to create a favourable business environment. Ensuring easier access to funding, making legislation clearer and more effective and developing an entrepreneurial culture and support networks for businesses are all instrumental as far as the setting up and growth of businesses are concerned. However, creating a favourable business environment does not mean simply improving the growth potential of businesses. It also means turning Europe into a place in which it is advantageous to invest and work. In this way, the promotion of corporate social responsibility is contributing to making business in Europe more attractive. Small and medium-sized enterprises (SMEs) make up 99% of European businesses. Their small size makes them very sensitive to changes in the industry and environment in which they operate. It is therefore vital for their well-being to be a focus of political attention. * SMALL AND MEDIUM-SIZED ENTERPRISES (SME) – 99% OF EUROPEAN ENTERPRISES * A “Small Business Act” for European SMEs
* A modern policy for SMEs
* European Charter for Small Enterprises
* Definition of micro, small and medium-sized enterprises * The SME Envoy
* A programme for clean and competitive SMEs
* Action plan for entrepreneurship
* Promoting entrepreneurship in schools and universities * BUSINESS SUPPORT
* Developing Public Private Partnerships
* Development of micro-creditArchives
* Access to financing for businesses
* Financing SME GrowthArchives
* Competitiveness and Innovation Framework Programme (CIP) (2007-2013) * Advice
* Support to businesses
* IMPROVING THE BUSINESS ENVIRONMENT
* Improving rules, practices and management
* Combating late payment in commercial transactions * Green Paper: European Contract Law for consumers and businessesArchives * Open method of coordination: BEST procedure
* Reducing administrative costs
* Administrative burdens: sectoral reduction plans 2009 * A simplified business environment
* Transfer of businesses
* Overcoming the stigma of business failure
* Community eco-management and audit scheme (EMAS) * Late paymentsArchives
* Corporate social responsibility (CSR)
* A European strategy 2011-2014 for Corporate Social Responsibility * Promoting corporate social responsibility
* Corporate social responsibility: a business contribution to sustainable development. * Green Paper on corporate social responsibilityArchives * Sustainable Consumption, Production and Industry Action Plan (6)Ethical Problems in Business Environment
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“Business ethics examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole” (“Business Ethics,” 2010). In today’s society, many people pursue careers in businesses for different reasons such as convenience, salary, and many other reasons that do not include ethics. Unfortunately, people’s professional values are no longer mirroring their personal values. (Tinkler, 2005). Individuals are giving up everything to move ahead professionally and as a result, businesses are becoming worse at upholding their ethical standards because they are able to get away with it.
Poor Human Resources practices are one example of how today’s businesses affect our community. Many businesses fail to create a system where there is strong communication between the employees and human resources. As a result, employees are unable to voice their complaints to the HR department and the HR department is unaware of problems within the company. Employees must clearly know what is expected of them, and when they are not delivering they must be addressed. This type of system is beneficial to the company because once flaws are addressed, then the company can come up with solutions to better manage the business. When businesses take the time to discuss projects and explain their goals to the employees, the employeesfeel as though they have a special place within the company and they become motivated. Keeping the employees updated on tasks, the more they become invested in the project. Also, many times companies fail to recognize and reward their employee’s achievements and this creates a bitter relationship between the employees and the company; human beings become motivated to do well through positive reinforcement. Favoritism also becomes a huge problem between human resources and the employees; (7)Strategic Alliances and International Mergers and Acquisitions in the Modern Global Business Environment By twoods34, February 2011 | 10 Pages (2,333 Words) | 1155 Views |
Strategic Alliances and International Mergers and Acquisitions in the Modern Global Business Environment
The modern globalized world has triggered stark change in the actions of many of the actors in traditional society. One such actor that has embraced this change and recognized its benefits is in the area of international business. With globalization providing access to a myriad of new networks, markets, and technology at an unprecedented pace, international business firms have aligned themselves to capitalize on these new opportunities. While inter-firm alliances, mergers, and acquisitions are certainly not a new innovation in international business practice, the modern international business environment has seen a significant increase in the number of mergers, acquisitions, and joint ventures in response to globalization. The motivations for these inter-firm alliances have also changed inconjunction with this recent trend. Traditionally, businesses engaged in inter-firm alliances, mergers, or acquisitions to either increase their market power in a region or territory, or to reduce a firm’s transaction costs. However, in accordance with the globalization of international business activity, firms have had new motivations emerge as reasons for inter-firm alliances, mergers, or acquisitions. The extent that these new motivations arise in firm activity must be examined by studying the following questions: i) why have motivations changed; ii) what are the factors that have led to the formation of these motivations; and, iii) how do these motivations lead the firm to choose on which form of activity to partake. Each of these questions will be addressed in turn.
I. Why have the motivations for inter-firm alliances, mergers, and acquisitions changed? Corporate firms have long engaged in alliances, mergers, and acquisitions as a strategic tool to optimize their particular economic goals. As described by Andrew Inkpen in his analysis of strategic…