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Business

BUSINESS ENVIRONMENT
Business Environment mainly refers to external forces that impact business. Such forces include political-legal ,technological ,cultural ,economic and physical.

Factors under External Environment
All the factors that provides opportunities or pose threats to an organization make up its external environment.
• DEMOGRAPHIC ENVIRONMENT
• SOCIAL ENVIRONMENT
• CULTURAL ENVIRONMENT
• POLITICAL ENVIRONMENT
• ECONOMIC ENVIRONMENT
• FINANCIAL ENVIRONMENT
• TRADE ENVIRONMENT
• TECHNOLOGICAL ENVIRONMENT
• LEGAL ENVIRONMENT
• REGULATORY ENVIRONMENT
• TAX ENVIRONMENT
• ETHICAL ENVIRONMENT

External environment consists of 1. Micro Environment 2. Macro Environment

1. Micro Environment
• Micro environment is called as the task environment and operating environment.
• Micro environment forces have a direct bearing of the operation of the firm.
• These factors are present in companies environment and affect on the performance of the companies.
• Includes – suppliers ,marketing intermediaries .competitors,customers and public.

Micro environment are more intimately linked to company than macro.
 Suppliers :
o Those who supply inputs,raw material and components
o Uncertainty in supply compels high inventory cost.
o India maintains stocks of 3 to 4 months were as Japan maintains for few hours.
o Eg : Nirma –believes of the logic that captive production plant for raw material is best for cost control.(backward integration)
o Co feel outsourcing is more beneficial
o Risk to depend on single supplier
o Globally companies are resorting to partenering relationship marketing.

 Customers:
o Business exists because of customers
o Monitoring customers sensitivity is perquisite
o The choice of customer by the firm can be on
a. Relative profitability
b. Dependability
c. Stability of demand
d. Growth prospects
o Today customer is global customer as exposed to global products.

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