Business Environment

1. Business Environment Introduction to Business

2. Definition of Business ‘ Business is a human activity directed towards producing or acquiring wealth through buying and selling activities.’ - L. H. Haney

3. Nature/ Features/ Characteristics of Business Organized Activity Customer Satisfaction Profit Motive Risks and Uncertainties Regularity in dealing Goods and Services Government rules and Regulations Business System and the society

4. Importance/ Role/ Functions of Business Creates Employment Meaningful use of resources Aids Economic Development Generates Tax Revenue to government Provides goods and services to consumers Creates Entrepreneurs Customer Satisfaction Enhances Corporate Image

5. Scope of Business Scope of Business Industry Commerce • Primary • Extractive • Genetic • Manufacturing • Basic • Capital goods • Intermediate goods • Consumer goods (Durables + Non- Durables) • Construction • Service • IT Trade Aids to Trade • Transport • Warehousing • Advertising & Salesmanship • Insurance • Mercantile Agents & Traders • Banking and Finance Internal External • Retail • Wholesale • Import • Export • Entreport

6. Scope of Business INDUSTRY ( Production side of the business) 1. Primary Related to the production of primary goods like wheat, rice, cotton etc. 2. Extractive Involves extracting materials or minerals from natural resources. E.g. Mining, Oil- drilling. 3. Genetic Involves Reproduction and multiplication. E.g. Plant nurseries, cattle breeding.

7. Scope of Business INDUSTRY 4. Manufacturing (Processes raw materials into intermediates or finished goods.) • Basic Provides bases for development of other industries. E.g. Fertilizers is a basic input of agriculture. Coal, Oil, Electricity are examples of basic industries. • Capital goods Helps in producing other goods and services. These cannot be consumed directly. E.g. Machines, equipments or tools. • Intermediate goods Goods which have already undergone manufacturing process but which form inputs for other industries as a material for further processing part or component. E.g. Tyres and tubes. • Consumer goods Durables: Goods which are used up at once in a short period. E.g. Food stuff, soap Non- Durables: Goods which serve the consumer over a long period of time. E.g. Car, T.V etc.

8. Scope of Business INDUSTRY • Construction Means process of constructing. E.g. Construction of buildings, bridges etc. • Service Includes services like Banking, Insurance etc. Also professional services like doctors, lawyers etc. • IT Information Technology industry deals with the use of computers and telecommunications for storing, retrieving and sending information. Telecommunications is the technology related to long- term distance communication by means of cable, telephone, broadcasting, satellite, etc.

9. Scope of Business COMMERCE Trade: (Buying & Selling of goods and services) • Internal (Conducted inside or within the home country) • Retail (Involves buying of goods from the manufacturer & selling them to the final consumer. ) • Wholesale (Buying & Selling of goods in large quantities) • External (Trade done between two or more countries) • Import (It involves buying of goods by buyers of one country from the sellers of another country.) • Export (It involves selling of goods by sellers of one country to the buyers of another country.) • Entreport (It involves buying of goods from one country for the purpose of re-exporting (selling) to another country.)

10. Scope of Business COMMERCE Aids to Trade: (ATD are those activities which remove the difficulties of trade & helps in the smooth flow of goods & services from the producers to the consumers) • Transport Removes difficulty of Place. Helps in moving the goods from the place of production to the place of consumption • Warehousing Warehousing is a place for storing raw materials or manufactured goods. Removes difficulty of Time. Fills in time gap between time of production & time of consumption.

11. Scope of Business COMMERCE Aids to Trade • Advertising & Salesmanship It fills the information gap. • Insurance Business firms insure their risks like loss due to fire, theft, etc. • Mercantile Agents & Traders The wholesaler, retailers etc. create a link between the firms and the buyer. • Banking & Finance B&F helps in fulfilling the working capital and fixed capital needs of the businessmen.

12. Role of Business TO FIRMS Achievement of objectives Increasing knowledge & skills Product development Development of good relations Good corporate image Optimum utilization of resources Expansion of business Social status & Prestige

13. Role of Business TO CONSUMERS Provides quality goods and services Provides goods at reasonable prices Higher standard of living Customer satisfaction Better facilities and services

14. Role of Business TO SOCIETY Economic growth Regional development (industries set-up in backward areas.) Social welfare Employment opportunities Revenue to the government Capital formation International relations

15. Role of Profit in Business Indicates Efficiency Rewards for risks and uncertainties Return on investment Helps in survival of business Helps in providing facilities to the employees

16. Meaning of Business Environment ‘Environment of the business means the aggregate of all the conditions, events and influences that surround and affect it.’ • Keith Davis • ‘Business environment is the total of all the things external to firms and individuals, which affect their organization and operations.’ • - B. O. Wheeler

18. Features of Business Environment • Environment is the surrounding situation of business • Environment is dynamic • Business to a greater extent cannot control the environment • Environment controls the scope of the business • Direct and lasting effect • Environment is inseparable part of business • Business environment is complex

19. Features of Business Environment • Environment creates opportunities and threats • Business Environment is a challenge • Environment requires adaptability • Environment needs continuous study by businessmen