BBE Week 1

Business and Business Environment
Topic 1-Different Types of Organisations
Daw Ei Thandar Kyu

Owner(Beauty&Grace Company Limited)
MBA (Stamford International University)
Graduate diploma in Business Management(ABE, UK)
Graduate diploma in Travel, Tourism and Hospitality Management (ABE, UK)
BA(English)
Introduction
• The term “Business environment” represents the sum of all the
individuals, institutions, competing organisations, government,
media, investors, and other factors outside the power of the business
organisations but affects the business performance.
• For example, an increase in taxes by the government makes

everything expensive in the market; technology changes may make
the existing product obsolete, political uncertainty creates fear in the
mind of investors, increase in competition in the market due to
competitors may affect business profit, and changing in preferences
may increase the need for a new product and decrease the demand
for old product.
Business Environment Definition
The term “Business environment " is the sum of all conditions, events,
and influences that surround and affect business activities and growth.
Business Organisation as a Transformation Process
• All businesses undertake the conversion of an input into an output; in

other words, a transformation process.
• The inputs are land, labour, capital and entrepreneurial skills.
• The outputs produced can be tangible such as shoes, clothes,
magazines, etc. or intangibles such as insurance, service in a shop.
Business Organisation as a Transformation Process
Business Organisation as a Transformation
Process (Example)
For example, a fashion designer producing a new dress or suit, will need:
• Input- resources such as material, labour (to cut, sew, check and pack), real
capital in the form of machinery (to sew and pack the item) plus financial
capital (money) to buy the physical and for human resources. The
combination of the risk the designer takes in terms of innovating, using
sales skills and being intuitive as to what will appeal to a potential
customer are all a part of entrepreneurship.
• The outputs are the tangible dress or suit and the intangibles are aspects
such as the quality of the product and the status or confidence the
customer receives from the dress or suit.
Components of Business Environment
Internal and External
Components of Business Environment- Internal and
External
• Internal - It combines the factors that exist within the company.
These are –
• Human resources
• Value system
• Vision and mission
• Labour union
• Corporate culture
Vision and Mission Statement
Vision and Mission Statement (Example)
Components of Business Environment- Internal and
External
• External - An external Environment includes those outside factors that
exercise an influence on a business’s operations. It is further classified into
two segments.
• Macro - Socio-cultural, political, legal, and global factors fall into this
category.
• Micro - This environment has a direct and immediate impact on a business.
It consists of customers, investors, suppliers, etc.
External-Macro Environment
PESTLE Analysis
A scan of the external macro-environment in which the firm operates
can be expressed in terms of the following factors:
• Political
• Economic
• Social
• Technological
• Legal
• Environmental
External-Macro Environment - PESTLE
PESTLE Analysis
A scan of the external macro-environment in which the firm operates
can be expressed in terms of the following factors:
• Political
• Economic
• Social
• Technological
• Legal
• Environmental
External-Macro Environment-PESTLE
Political Factors
Political factors include government regulations and legal issues and
define both formal and informal rules under which the firm must
operate. Some examples include:
• tax policy
• employment laws
• environmental regulations
• Foreign trade regulations (trade restrictions and tariffs)
• political stability
Economic Factors
Economic factors affect the purchasing power of potential customers
and the firm's cost of capital. The following are examples of factors in
the macro economy:
• economic growth
• interest rates
• exchange rates
• inflation rate
Social Factors
Social factors include the demographic and cultural aspects of the
external macro environment. These factors affect customer needs and
the size of potential markets. Some social factors include:
• health consciousness
• population growth rate
• age distribution
• emphasis on safety
Technological Factors
Technological factors can lower barriers to entry, reduce minimum
efficient production levels, and influence outsourcing decisions. Some
technological factors include:
• R&D activity
• automation
• technology incentives
• rate of technological change
Legal Factors
There are certain laws that affect the business environment in a certain country while
there are certain policies that companies maintain for themselves. Some legal factors are:
• consumer protection laws
• safety standards
• labor laws
• labelling rules
• advertising standards
Political factors are usually bigger picture topics whereas legal factors tend to be more
specific and relate to topics such as discrimination laws, antitrust laws, or intellectual
property laws. However, they do overlap. Take, for example, labor laws which we consider
a political factor and workplace health and safety laws, which we consider a legal factor.
Environmental Factors
These factors include all those that influence or are determined by the
surrounding environment. This aspect of the PESTLE is crucial for
certain industries particularly for example tourism, farming, agriculture
etc.
• scarcity of raw materials
• changes in weather and climate
• use of eco friendly products
• waste management
Micro Environment
Micro environment factors, are factors close to a business that have a

direct impact on its business operations and success. Before deciding
corporate strategy businesses should carry out a full analysis of their
micro environment.
The diagram below shows the 6 stakeholders
involved in the Micro Environment
Micro Environment
1.Customers
As all businesses need customers, they should be Centred
(Orientated) around customers. The firm's marketing plan should aim to
attract and retain customers through products that meets their "wants and
needs" and excellent customer service.
2. Employees
Employing staff with relevant skills and experience is essential. This process
begins at recruitment stage and continues throughout an employee's
employment via ongoing training and promotion opportunities. Training and
development play a critical role in achieving a competitive edge; especially
in Service Sector Marketing. If a business employs staff without motivation,
skills or experience it will affect customer service and ultimately sales.
Micro Environment
3. Suppliers - Suppliers provide businesses with the materials they need to carry
out their business activities. A supplier's behaviour will directly impact the business
it supplies. For example if a supplier provides a poor service this could increase
time scales or product quality. An increase in raw material prices will affect an
organisation's Marketing Mix strategy and may even force price increases. Close
supplier relationships are an effective way to remain competitive and secure
quality products
4. Shareholders -As organisations require investment to grow, they may decide to
raise money by floating on the stock market i.e. move from private to public
ownership. The introduction of public shareholders brings new pressures as public
shareholders want a return from the money they have invested in the company.
Shareholder pressure to increase profits will affect organisational strategy.
Relationships with shareholders need to be managed carefully as rapid short term
increases in profit could detrimentally affect the long term success of the business.
Micro Environment
5.Media
• Positive media attention can â€œmakeâ€•an organisation (or its products) and
negative media attention can â€œbreakâ€•an organisation. Organisations need to
mange the media so that the media help promote the positive things about the
organisation and reduce the impact of a negative event on their reputation. Some
organisations will even employ public relations (PR) consultants to help them
manage a particular event or incident.
• Consumer television programmes with a wide and more direct audience can also
have a very powerful impact on the success of an organisation. Some businesses
recognise this and will change their reaction when consumers mention that they
are going to contact a consumer television programme or the newspapers about
the business.
.
Micro Environment
6. Competitors
The name of the game in marketing is differentiation. Can the organisation

offer benefits that are better than those offered by competitors? Does the
business have a unique selling point (USP)? Competitor analysis and
monitoring is crucial if an organisation is to maintain or improve its position
within the market. If a business is unaware of its competitor's activities they
will find it very difficult to â€œbeatâ€•their competitors. The market can
move very quickly for example through a change in trading conditions,
consumer behaviour or technological developments. As a business it is
important to examine competitors' responses to these changes so that you
can maximise the impact of your response.

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Business and Business Environment

Topic 1-Different Types of Organisations

Daw Ei Thandar Kyu

• For example, an increase in taxes by the government makes

• All businesses undertake the conversion of an input into an output; in

Micro environment factors, are factors close to a business that have a

The name of the game in marketing is differentiation. Can the organisation

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