Download Business Environment Notes for MBA DU PDF

TitleBusiness Environment Notes for MBA DU
TagsMacroeconomics Fiscal Policy Government Budget Balance Economics Market (Economics)
File Size266.1 KB
Total Pages62
Table of Contents
                            Environmental Influences
		The General or Contextual Environment
			The Immediate or Operational Environment
			Analyzing the Business Environment
				LECTURE # 2
				The Political Environment
				Democratic Political System
				Figure: Representative democracy
				Democratic Institutions and Processes
				Political Institutions in Democratic States
				A Model of Policy Process
				Figure: Representative democracy
			Lecture # 3
				The Centrally Planned Economy
				Politico-economic Synthesis
		People, Technology and Natural Resources
Government  and Business
	Department of Marketing, University of Dhaka
	Department of Marketing, University of Dhaka
	Department of Marketing, University of Dhaka
	Department of Marketing, University of Dhaka
Document Text Contents
Page 2

Lecture # 1
Introduction: Business Organizations – The External Environment.

Business organizations differ in many ways, but they also have a common feature:
the transformation of inputs into output. This transformation process takes place
against a background of external influences which affect the firm and its activities.
This external environment is complex, volatile and interactive, but it cannot be
ignored in any meaningful analysis of business activity.

Business Defined: It can be described as being concerned with buying and selling or
with trade and commerce, or the concern of profit-making organizations.

Environment is the totality of forces and entities interacting with and affecting any

A model of business activity: Though there are differences among businesses, but all
business organizations are ultimately involved in the same basic activity, namely,
the transformation of inputs or resources into outputs, i.e. goods or services.

This process is illustrated below:

Inputs Outputs

Land, Premises
Materials Goods
Labor BUSINESS Services
Technology ORGANIZATIONS Ideas Consumption
Finance Information etc
Managerial Skills etc.

Figure: 1. The Business Organization as a transformation System.

In essence, all organizations acquire resources – including labor, premises,
technology, finance, materials – and transform these resources into the goods or
services required by their customers.

In short, inputs help to create output and output creates inputs. The output of an
organization may represent an input for another.

The Firm in its Environment:
Organizations are entities made up of interrelated parts which are intertwined with
the outside world – the external environment. This environment comprises a wide
range of influences – economic, demographic, social, political, legal, technological,
etc – which affect business activity in a variety of ways and which can impinge not
only on the transformation process itself, but also on the process of resource

Page 31

technology which brings about new ways of producing goods will lead to a
greater investment.

c. Innovation and Technology: There are two types of innovation that can occur as
a result of technological change: product innovation and process innovation.
Product innovation is the development of new products, like microprocessors,
which will have far reaching effects on business. New products impact upon the
industrial structure of a country, as new industries grow and old industries
disappear. This in turn will lead to changes in the occupational structure of the
workforce. Process innovation refers to changes that take place in the production
process, like the introduction of assembly-line production in the manufacture of
cars. Not all innovation is technological in nature; for example, changes in fashion
in clothing

d. Research and Development: Most, but not all, technological changes have
occurred through the process of research and development. Research can be
theoretical or applied, and development refers to the using of research in the
production process. Most research and development carried out by private
companies is directed towards applied research and development. It is designed to
develop new products and production processes which will render production
more profitable. The spending on research and development can be protected by
firms applying for patents whereby other firms have to pay to see the information
and wait a specified period of time before the idea can be used.

e. Limits to Technological Change: Technological change has many effects on the
economy and the environment and if uncontrolled can lead to problems, like high
levels of unemployment or exhaustion of natural resources. For these and other
reasons the scale of technological change needs to be controlled.

Natural Resources

In economics, natural resources are put under the heading of land as a factor of
production. It would include all natural resources like the soil, minerals, oil, forests, fish,
water, the sun, and so on.

Although the area of land in a country is fixed, land as a factor of production is not
completely fixed in supply as more land can be made available through land reclamation
schemes and better irrigation. The productivity of agricultural land can be increased by
the use of fertilizers. Our natural resources are in finite supply. Natural resources are
renewable and nonrenewable.

Protection of the Environment: Increased knowledge of the effects of depletion of
natural resources has led to increased environmental awareness amongst the population.
There has been an increased interest in conservation and recycling and the search for
alternative forms of energy. This change in public opinion has already had a major
impact on the way in which business operates and is likely to have been bigger effects.
One proposal is that there should be a packaging levy designed to reduce the amount of
packaging used and encourage the use of environmentally friendly material in packaging.

Similer Documents