DISCUSSION REPORT The Business Environment

DISCUSSION REPORT The Business Environment DISCUSSION REPORT The Business Environment DISCUSSION REPORT The Business Environment DISCUSSION REPORT The Business Environment DISCUSSION REPORT The Business Environment DISCUSSION REPORT The Business Environment DISCUSSION REPORT The Business Environment

THUONGMAI UNIVERSITY HOSPITALITY AND TOURISM FACULTY DISCUSSION REPORT Topic: The Business Environment Lecturers : Ms Vu Thi Thanh Hoa Subject : Technical English Group :4 Class code: 2082ENTI1011 Hanoi 2020 I Introduction to Business Environment The business environment consist of the surrounding factors that either help of hinder the development of business It needs living person, natural resources and places and things to exist The sum of all these factors and forces is called the business environment There are the five elements in the business environment; economic and legal environment, technological environment, competitive environment and the last is global environment Marco environment is the force and institution outside of the organization that can potentially affect the performance of the organization come under the external environment of business consist of the economic demographic, natural, cultural and political forces II.Features of Business Environment: 1.The totality of External Forces  Business environment includes everything which is outside the organisation  If we add all these forces, they will form a business environment Example: When Pepsi and Coca-Cola got permission to set up their business in India, it was an opportunity for them and threat for local manufacturers like gold spot, camp-cola etc 2.Specific and General Forces  Specific forces are those forces which directly affect the operational activities of the business enterprise  Example: Suppliers, Customers, Investors, Competitors, Financers etc  General forces are those forces which indirectly affect the functioning of business enterprises Example: Economic, Social, Political, Legal and Technological conditions (C) Inter-relatedness  Different forces of business environment are interrelated to each other  One component of the business environment affects the functioning of other components Example: The increased life expectancy of people and awareness of health consciousness has increased the demand for many health products like diet coke, olive oil, and so many health products Dynamic Nature The business environment is dynamic in nature and keeps on changing in terms of : (a) Technological improvement, (b) Shifts in consumer preferences, (c) The entry of new competition in the market Example: Many established companies in FMCG (Fast Moving Consumer goods) sector are focusing on producing the goods with natural ingredients with the entry of ‘Patanjali Products’ Uncertainty  The changes in the business environment cannot be predicted accurately because of future uncertainties  It is very difficult to predict the changes in the economic and social environment Example: There has been a sharp decline in the prices of Android smartphones due to the entry of many new companies Complexity  All forces of the Business environment are interrelated and dynamic, which makes it difficult to understand  Complex nature of Business environment can be understood if we study it in parts  Example: Increase in goods and service tax to 15 % would increase the revenue of the government (economic), which would help the government to improve social being of people (social) and reduce the personal disposable income of rich people and thereby controlling inflation Relativity  Business Environment differs from place to place, region to region and country to country Example: In China, the electricity to the industry is provided at cheaper rates as the consumption increases and hence, it leads to mass production whereas, in India, it is otherwise, higher consumption of electricity leads to costly electricity which results in lower production & higher cost of production III Elements of the business environment The Economic and Legal Environment The economic and legal environment the part of the entrepreneur’s risk involves in the economic system and how the government works with or against business 1.1 What can government do? Government can a lot to lessen the risk of starting, businesses and thus to increase entrepreneurships and wealth Also, another way for government to actively promote entrepreneurships is to allow the private ownership of business Nowadays, government is selling those businesses to private individuals to create more wealth The best thing the government to develop the country is to minimize interference with the free exchange of goods and services In addition, the government can reduce entrepreneurial risk by passing laws that can be enforced in court The government can also create one currency is traded in the world market That is, we can buy and sell goods and services anywhere in the world using the currency The system relies on the honesty, integrity and high ethical standards, and it is easy to see the damage caused by poor moral behavior and ethical business number The Technological Environment Since prehistoric times, human have left the need to create tools that make their jobs easier Few technological changes have had a more comprehensive and lasting impact on businesses than the recent emergence of information technology (IT) that are computers, modems, cellular phones and so on 2.1 Technology and Productivity Technology means everything from mobile phones and computers, a variety of software programs that will make business processes more effective, efficient and productive There are many effective way to produce the desired results Efficiency means producing goods and services using the least amount of resources Productivity is the amount of output you generate a given amount of input Technology affects people in all industries, including agriculture Because, they have access to technology, it allows then to be more productive and make more money working 2.2 The growth of E- Commerce Apart from this, a recent change in the most important environment is the growth of e-commerce, buying and selling goods on the Internet There are two main types of transactions E-Commerce: Business-to-consumer (B2C) and business-to-business (B2B) (B2C) is a business that produces a product to sell directly to consumers and (B2B) is a business that produces a product to sell directly to other businesses (B2B) E-Commerce is at least five times as large as (B2C) E-Commerce The rises of the internet marketing are come so fast and furious that it attracts hundreds of competition into the fray 2.3 Responsiveness to customers The way of traditional retailers can respond to the Internet revolution is to use technology to become more responsive to customers as a business marked the items with UPCS Product Code (bar code) Universal, their series of lines and numbers you see in most of the packaged consumer goods The database is an electronic storage file where information is stored Use a database to store large amounts of information about the user The Competitive Environment Competition among businesses has always come out, but it has never been greater than today Competitive advantage has been found by a number of companies with a focus on quality The goal for many companies is zero defects no mistake in making the product To offer value to customers, companies need to offer both high quality products and excellent service at competitive prices 3.1 Customer driven Organizations Customers nowadays are very demanding and they not just want good quality at low prices, but they also want great service as well Big businesses and small businesses rely on their customers back and as a result should come out the way to make customers feel as they are the kings of them, and theirs will and needs to be emphasized Successful organizations now need to listen more closely to customers to determine their wants and needs, and then tailor products, policies and practices of the firm to meet their demands 3.2 Employee Empowerment Empowerment is meeting the needs of customers; firms must give their frontline workers the responsibility, authority and freedom to respond quickly to customer requests The businesses must reorganize to help their employee’s become more effective than they are now Also, empowered employees need to be treated as partners in the firm The Social Environment Demography is the study of human population statistics with regard to size, density, and other characteristics such as age, race, gender, and income The U.S population is undergoing major changes; affect how people live, where they live, what they buy and how they spend their time 4.1 Managing Diversity The managing of diversity is an important concern for business people Businesses are concerned about having a diverse, workforce for two main reasons First, a business can better serve customers with a diverse workforce Second, a diverse work environment brings about new, fresh ideas and perspectives All this affect each of everyone because each of us need to work with people of various ages, races and backgrounds in order to be successful where we work 4.2 Aging consumers Another social issue and concern is the fact that the baby boomers are getting older, and as they retire there will be more jobs than qualified people to fill those jobs Businesses that cater to aging baby boomers will have opportunity to exceptional growth in the near future 4.3 Two- income families Dual- income families play a role in the societal changes One result of this trend is a host of programs that companies have implemented in response to the demands of bust two-income families With more dual-income families, in the workforce, many employees provide child care benefits of some types Many companies are increasing the number of part-time workers which the children can earn income 4.4 Single parents The rapid growth of single-parent households has had a major effect on businesses as well Many single parents struggle with the work-life balance, and they have encouraged businesses to implement programs such as family leave and flextime The Global Environment Two important environmental changes in recent years has been the growth of international competition and increasing of free trade among countries Free trade is the reduction of trade barriers, such as the elimination of tariffs on goods brought into other countries Cooperation among businesses has the potential to create rapid growing global market that can generate prosperity beyond the expectations of most people It is very important to note that all size businesses compete in the global market 5.1 Entrepreneurship vs Working for others There are two ways to succeed in a business, one is to work for others, get experience and skills, and rise up though the rank, the other riskier path is to start your own business Working for others businesses: As you graduate from college and choose a company, large or small, to work for; you may be happy to know that the earning power of a college graduate far outpaces that of less- educated individuals Once you have the experience, you will have the ability and opportunity; you can start your own business Entrepreneurial challenge: Millions of people from all over the world have taken entrepreneurial challenge and succeeded Woman also have the same opportunity to engage in entrepreneurship is an attractive career path for an increasing number of women 5.2 Nonprofit organization or Government agency Nonprofit organization: A non-profit organization is an organization that goals not include making a personal profit for the owners or organizers Government agency:Government Agencies is an organization responsible for overseeing the functions of the government clarity Concepts and principles that are making businesses are more efficient and are used in government agencies and nonprofit organizations as well IV.Importance of Business Environment: Just like us, business operations not survive in confinement Every enterprise is not an island to itself; it subsists, endures and develops within the circumstances of the part and forces of its situation While an individual enterprise is able to minute to change or manage these forces, it has no choice to reacting or modifying according to them Good knowledge of the environment by business managers allows them not only to recognise and assess but also to respond to the forces outside to their enterprises The significance of the business environment and its perception by managers can be understood if we contemplate the below-mentioned following points: It Helps in Identifying Opportunities and Making First Mover Advantage  The environment provides numerous opportunities, and it is necessary to identify the opportunities to improve the performance of a business  Early identification gives an opportunity to an enterprise be the first to identify opportunity instead of losing them to competitors Example: ‘Airtel’ identified the need for fast internet and took first-mover advantage by providing 4G speed to its users followed by Vodafone and Idea  Asian paints lost market share to Nerolac because it failed to match its technology It Helps the Firm Identify Threats and Early Warning Signals  The business environment helps in understanding the threats which are likely to happen in the future  Environmental awareness can help managers identify various threats on time and serve as an early warning signal Example: Patanjali products have become a warning signal to the rest of the FMCG  The sector to develop similar products Similarly, if an Indian firm finds that a foreign multinational is entering the Indian market with new substitutes; it needs to prepare accordingly  Chinese mobile phones have become a threat for Indian mobile phone manufacturers It Helps in Tapping Useful Resources  Business and industry avail the resources (inputs) from the environment and convert them into usable products (outputs) and provide to society  The environment provides various inputs (resources) the like finance, machines, raw materials, power and water, labour, etc  The business enterprise provides outputs such as goods and services to the customers, payment of taxes to the government, to investors and so on Example: With the demand for the latest technology, manufacturers will tap the resources from the environment to manufacture LED TVs and Smart TVs rather than collecting resources for colour or Black & White TVs It Helps in Coping With Rapid Changes  The business environment is changing very rapidly, and the industry is getting affected by changing market conditions  Turbulent market environment, less brand loyalty, divisions of markets, changes in fashions, more demanding customers, and global competition are some examples of changing the business environment Example: Jack Ma started Alibaba as he could see the potential of interest in ECommerce It Helps in Assisting in Planning and Policy Formulation  The business environment brings both threats and opportunities to a business  Awareness of business environment helps in deciding future planning or decision making Example: Multiple entries of Chinese phones like VIVO, Gionee, OPPO, etc have posed a threat to local players like Micromax, Karbonn, Lava etc to think afresh how to deal with the situation It Helps in Improving Performance  Environmental studies reveal that the success of any enterprise is closely bound with the changes in the environment  The enterprises which monitor and adopt suitable business practices not only improve their performance but become leaders in the industry also Example: Apple has been successful in maintaining its market share due to its proper understanding of the environment and making suitable innovations in its products Why It is Important for Business Enterprises to Understand Their Environment? 7.1 It Benefits in Tapping Useful Resources  Business and industry avail the resources (inputs) from the environment and convert them into usable products (output) and provide to society  The environment provides various inputs (resources) like finance, machines, raw materials, power and water, labour etc  The business enterprise provides outputs such as goods and services to the customers, payment of taxes to the government, interest/dividend to investors and so on Example: With the demand for the latest technology, manufacturers will tap the resources from the environment to manufacture LED TVs and Smart TVs rather than collecting resources for colour or black & white TVs 7.2.It Helps in Coping With Rapid Changes  The business environment is changing very rapidly and the industry is getting affected by changing market conditions  Turbulent market environment, less brand loyalty, divisions of markets, changes in fashion, more demanding customers, and global competition are some examples of changing the business environment Example: Jack Ma started Alibaba as he could see huge potential in ECommerce V Conclusion to Business Environment The word ‘business environment’ indicates the aggregate total of all people, organisations and other forces that are outside the power of industry but that may affect its production According to an anonymous writer- “Just like the universe, withhold from it the subset that describes the system and the rest is environment” Therefore, the financial, cultural, governmental, technological and different forces which work outside an enterprise are part of its environment The individual customers or facing enterprises as well as the management, customer groups, opponents, media, courts and other establishments working outside an enterprise comprise its environment ... exist The sum of all these factors and forces is called the business environment There are the five elements in the business environment; economic and legal environment, technological environment, ...I Introduction to Business Environment The business environment consist of the surrounding factors that either help of hinder the development of business It needs living person,... changing the business environment Example: Jack Ma started Alibaba as he could see huge potential in ECommerce V Conclusion to Business Environment The word ? ?business environment? ?? indicates the aggregate