 Hello, learners. I welcome you to this session and in this session, we will discuss about business environment. This particular topic has been included in the MCOM syllabus. It is in the first semester of MCOM that is business environment. The first unit of this course is titled as business environment and today we will discuss about this aspect that is business environment. But before going to the topic, let us first discuss what we mean by the term environment. It simply means our surroundings. So, it is land, water, windfall, rainfall, summer, winter, anything that surrounds us. We term it as environment that is the natural environment where we live. So, we have adopted certain strategies to adjust according to the changing environment. So, in winter, we put on clothes which can protect us from cold, but in summer we do not wear such type of clothes that is the woolen clothes. So, these are certain strategies that we adopt to adjust ourselves to the changing environment. So, this is about environment and we can relate this to our business organizations also. Business organizations also exist within a certain environment and that environment we termed it as business environment. So, a business operate within that environment and just we put on the woolen clothes in winter that is our strategy to protect us from cold. Business organizations have also used some strategies to protect itself or to take advantage of the conditions means the environmental conditions. So, anything that surrounds the business is termed as business environment. So, in case of natural environment it is land, water, etcetera, etcetera that we have discussed. In case of business environment, it is certain factors which constitute the environment, business environment. For example, the economic factors, then political factors, legal factors, etcetera. All these constitute the components of business environment means the business have to act according to the changing components of the environment. So, we will discuss these things in detail now and one thing is that all these factors of the business environment may not affect all the business organization in the same way or some factors may affect all the firms within an industry in the same way. So, let us go into the details. For our understanding, we can classify the different components of business environment into two main groups. Number one, internal factors or internal business environment and external factors. So, let us first see what is internal factors. The internal factors or the internal environment of the business can be controlled by a business organization. So, these are the factors which can be controlled by the organization. Suppose you are the manager of a business firm. So, you can control these factors to increase the efficiency of the organization or to protect it from loss, etcetera, etcetera. So, there are certain factors which can be controlled by the firm internally and these are termed as internal factors of the business environment. Let us take certain examples or the what are the components within the internal environment of the business. Number one, human resources. So, human resource how the organization will recruit these are the internal policies and the organization have to see how we can recruit the most efficient person. So, this is the policy which can be controlled by the organization. The sources of recruitment from where the organization will recruit whether it will promote its existing employees whether it will introduce some new employees to the organization with new recruits. So, these are the policies which are controlled by the organization for the betterment of the organization. Then financial resources is another component of internal business environment that can be controlled by the organization like funding pattern, the different sources of income, etcetera. Then physical resources, the location of the business equipment is facilities, etcetera. Organizational objectives. What are the objectives of an organization? It is determined by the top management of the organization. This is internal. So, you can change your objectives in due course of time. So, these are all internal factors and can be controlled by the organization. Then organizational structure whether the organization wants to centralize its decision making or it wants to decentralize its decision making, it depends on the internal business environment. Then value system, then companies mission and vision. So, these are the internal business environment or the components within the business that can be controlled by the business. Regarding mission and statement, mission statement or vision, let us take the example of Tata Steel for a better understanding. Just there are two lines. The mission statement of Tata Steel consistent with the vision and values of the founder Jamsitji Tata, Tata Steel strives to strengthen India's industrial base through effective utilization of staff and materials. The means and measures to achieve these are cutting edge technology and high productivity consistent with modern management practices. So, this is the mission statement and the company has emphasized on the contribution of the company towards the India's industrial base, how it will contribute by effective utilization of staff means human resource and materials and it will use the latest technology for high productivity. Further, the mission statement states that Tata Steel recognizes that while honesty and integrity are essential, ingredients of a strong and stable enterprise, profitability provides the main spark for economic activity. So, the organization aims to earn profit, it aims at profitability, but how it will do that, how it will earn by through honesty and integrity. So, these are the internal factors means the business will be run according to this value system. They will earn profit, they will use latest technology, they will contribute towards India's industrial growth. So, this is the philosophy that works within the organization to run the business. So, these are all the internal factors that are controlled by the business organization. So, let us go to the next part that is the external environment. External environment, again you can classify it into two categories. Number one, microenvironment and number two, macroenvironment. So, we have classified the external factors into these two broad categories. Microenvironment means the operating environment of the business, the firm or the organization operates within this environment. So, what are the components of the micro external environment? Number one, customers, then competitors, suppliers, intermediaries, etcetera. So, these factors may affect only one particular organization while these factors may not affect other business organizations. But somehow the organization may control these factors or may not control or may not be able to control these factors. For example, suppose we have a manufacturing enterprise and we collect the raw materials from supplier. Now, in case of one supplier, means in the supplier's firm certain labor unrest was reported and due to labor unrest the functions of the supplier's firm has been restricted and they are unable to supply the raw materials that we want and therefore our production line also suffers. So, this is the factor which actually hampers the supplier's firm, their productivity has stopped because of labor unrest and they affect our business, means they are unable to supply the raw material that we want for our production and therefore it leads to disruption in our production schedule. So, this is the micro external environment. It is not within our control directly and it is in the environment that we operates. So, this is a micro external environment. We cannot directly control this. So, this type of situations may arise in the business. So, in that case the strategy of the business organization, the manufacturing firm in our example, it can contact some other suppliers or it is always better to have more than one source of supply. So, if one supplier fails to supply the required raw materials to us, then we can collect the raw materials from other sources from other suppliers. So, we can protect our firm, we can manage our production schedule in this way. So, these are the strategies we have to follow, we have to adopt to adjust to the changing environment. Then competitors, another factor in the micro external factor or micro external environment. Suppose a competitor has launched a new product in the market and that product is gaining popularity, but it adversely affects our business, our products. So, we have to launch a new product or we have to upgrade our existing product to face the competition. So, the product launched by the competitor, but it affects our business. So, in this way, the defined business components can affect our business which are not within the control of the business organization, but the organization have to adjust it according to the changing needs or changing the environmental factor. So, in this way, a business firm, just we put on the woolen clothes in the winter and we do not put on woolen clothes in summer, the organization have to take up certain strategies to face the different competition or different types of challenging environment by following new strategies. So, these are different factors, suppliers are there, competitors are there, customers are there, how a business can satisfy the customers better from your competitor. So, these are certain policies or strategies that the business organization have to take up. So, let us go to the macro environmental factors. So, these are the main factors of the business organization which are beyond the control of any individual company. As a manager, you can adopt strategies to face these factors, but you cannot control, you do not have any control over these factors. So, no individual company can influence these factors, but have to adjust according to the sensing pattern of these factors. So, what are these factors? That is number one, business environment. In business environment, it is the economic environment. Economic environment of the country, it consists of different factors. For example, the economic system, economic policy, level of development, economic resources available, distribution of income and assets, consumption pattern, etc. So, these are the constituent part of the economic environment and according to the sensing pattern of these factors, the business have to follow the strategies. Let us take an example. On July 5, 2019, the budget, budget for 2019 have been announced. The budget proposed a 20 percent tax on buyback of shares. So, this is the proposal given in the budget that for any buyback of shares, the company will be charged 20 percent tax. A buyback of shares means the company buy its own shares to reduce the number of shares available in the open market. So, this is a strategy or this is a policy of the company. If you want to know more about buyback of shares, then you can follow the link that we have given here, buyback of shares. So, now let us come to our example. If the company have planned the strategy of buybacking of shares before the budget and after the budget, the company finds that there is a new proposal in the budget that 20 percent tax will be surged on the buyback of shares. So, the individual company cannot change this budget, but it can change or how it can reverse its decision not to go for buyback of shares right now. So, this is the given factors, the 20 percent tax on buyback of shares, the company cannot change it, though it have planned for buybacking of shares. Now, what the company will do? The company may go with the plan, but in that case, it have to go for 20 percent tax. So, it is better to reverse the policy now for the time being, it will stop this particular strategy. So, in this way, the economic factors may put certain restrictions on the business decisions or business decisions are influenced by these factors. Again, certain factors may give up some new opportunities for business, that is the distribution of income assets, increase in the spending amount at the hands of the consumer opens up new opportunities for business. Consumption pattern, if there is change in consumption pattern, then consumer will go for new food items. So, in this way, defined opportunities may come. We will again discuss with certain examples in the following discussion. So, next environmental factor that is external environmental factor is political and legal environment over which the business organization do not have any control. So, political and legal environment determine business policies. In India, through various laws, government control the business. So, government passed various acts, various laws to control the business organizations or their activities. For example, the factories act, the consumer protection act, the contract act, the companies act. So, in this acts, certain rules have been prescribed and the company have to perform its functions, have to carry on its activities according to the laws, according to the provisions stated in this particular acts. The company cannot violate these norms. If the company violates, then there is a provision of penalty. So, the company have to move according to the provisions of these laws and individual company cannot have any control over these acts, over these laws. So, there are various regulatory organizations through which the government controls the business activities and the business have to follow the regulatory system. For example, we have SEBI, Securities and Actions Board of India. The banks have to follow the directions of the Reserve Bank of India. Then there are some life insurance corporations have to follow the IRDA policy, etc. Incidents regulatory and development authority. So, business environment is controlled or is regulated by these factors and the companies have to move according to the formula or according to the provisions given by these regulatory bodies. One example you can take about privatization in political and legal environment. If government wants to privatize certain public sector enterprises, then the government will withdraw its shareholding from these organizations. So, this is the policy to privatize a public sector enterprise and accordingly the government will follow the rules and the public sector enterprise will be handed over for private organization management. So, these are the policies and accordingly the business have to move. The next factor in the external environment is socio-cultural environment. Sociocultural environment includes various factors like social values, customs and habits, language, religion, social pattern, social system, then tradition, family system, lifestyle, demographic factors like size, distribution, density and growth of population is gender mix of population, urbanization, then social change. So, these are the factors within the socio-cultural environment which influence the business decision making. For example, the social change. The society has changed. As a result, there are some business opportunities. For example, you have heard about the company Swiggy that delivers food at your doorstep. So, this is the changing pattern of the society that nowadays we can order our food over a mobile app and food will be available at our doorstep. Similarly, there are different online business. So, we are not required to go to shop for our requirements, just we can order it over our mobile phone and that will be delivered at our doorstep. See, this is the example of change in social pattern, social change and this has given up certain opportunities for business. So, accordingly some customs and habits have changed and accordingly there may be some opportunities for business organizations to take up new business activities. So, business have to operate within the society. It cannot violate it, but it have to adjust itself according to the changing need of the society. These socio-cultural factors are more important for international business. In India, suppose we have we have multicultural society and we are aware about this societal pattern, but for a foreign country, the manager may not be able to understand the societal need of that country. So, in international business these factors are more important that first of all you have to understand the society. You cannot violate the social norms, the social customs, the tradition of the country. So, if you understand the country in this way, then you can find out the new opportunities in the environment so that you can take up your business. So, these are important factors which influence your decision making about launching a new product or adjusting your existing product or how to go for export market etc. etc. Then we will discuss the technological environment. Let us take the example of technological change, how it can affect. Suppose, your firm has purchased a new machine and that cost you rupees 10 lakhs. You have installed it and you have started operating this machine. After one month, you find that a new machine of similar kind, but with better capacity means it can produce more than your machine that you have purchased last month. That machine can produce more from your machine and also it cost less. This has been introduced in the environment. So, you have purchased one machine last month by paying rupees 10 lakhs. Now, a new machine has come to the market. Now, what will you do? If your competitor purchase this machine and starts production more than your firm, then you may suffer loss. You may lose the competition. So, this is the change in technological environment that results in invention of latest technology than your technology. So, it will affect your business. Now, it is your decision whether we will purchase the latest machine that has been introduced which can produce more. What will you do? You have spent rupees 10 lakhs last month. Now, a new machine has come. What will you do? So, these are the certain restrictions within which you have to operate. So, the technological change, you cannot stop it. The individual company cannot stop any technological advancement. It have to adopt or it have to change these policies according to the changing pattern of business environment. Another example, nowadays people just go to ATM and take out cash. Earlier, people have to move to bank, write a check, then collect the cash and now it is all just put your card in the ATM machine. So, these are the technological change and accordingly banks have adopted these technological change and they have spread the capacity of ATMs. ATMs are available and you can collect the cash as required by you and you are not required to go to bank to collect the money. So, it has become easy and banks have also adopted this latest technology to deliver better service to the customers. Then electric vehicles are, you have heard about electric vehicles now. So, gradually the electric vehicles will also come. This is the example of technological change. So, companies producing car will now go for electric vehicles, electric cars. So, the companies have to adopt it. It cannot change or it cannot stop the technological advancement. Then again, online businesses over the web, we have different platforms. We can order, we can book our cinema etc. etc. Then you have heard about also Ula, Uber. These are the app-based business. So, you can just book a car and it will come to your house. So, these are all technological changes and companies have to adopt these changes. Otherwise, it will perish in the market. There is no scope for non-adopters. Then, natural environment. Business is also responsible to protect the natural environment. A business cannot destroy the natural environment. So, you have to protect the natural environment. The National Green Tribunal has been established by the government through National Green Tribunal Act 2010. And this tribunal will deal with the cases relating to environmental protection and conservation of forest and other natural resources. And companies, if they have violated something, then this tribunal may do activities against these companies. Then, global environment. Global environment. So, global environment is important because we have MNCs. Now, we live in a world that is the integrated world. Any happenings in any part of the world can affect our business. A simple example is the increase and decrease in petrol and diesel prices. So, any change in crude oil prices in the global market affects the prices in Guwahati or in any other areas of the world. So, these are the global factors and we cannot control these factors. So, this again depends on the different aspects like demand and geopolitical issues, etc. So, these factors have affected certain parts, but that effect will be felt in our society, in our country, in our state. So, these are the global factors that affect the business. You have also heard about the recent trade war between USA and China. So, these are the factors which may create some opportunities for new business or create opportunities for some countries and may put certain restrictions on Chinese companies or China may put certain restrictions on US companies. So, these are the factors that affects the business environment as a whole. If war broke out between two countries, then the export business suppose India export some goods to other country and because of war, that particular business may get affected adversely. So, we cannot control these factors, rather we have to adjust our policies, we have to adjust our business organization according to the changes in these factors. So, business environment creates different opportunities or put restrictions on business and accordingly the business manager's responsibility is to cope up with these factors by framing the strategies. So, the business manager have to understand these factors. The importance of stunning business environment lies there that the business manager have to understand each and every aspect. We are not alone that we can run the business according to our own wishes. We have to follow the government guidelines, we have to follow the competitors, we have to satisfy our customers and competitors are also satisfying our customers also. So, we have to formulate the strategies and accordingly we can go forward by keeping in mind that any change in these environmental factors will affect our business. So, learn this is all about business environmental factors. We have discussed the environmental factors by classifying it into internal and external factors and then we have classified the external environment into micro environmental factors and macro environmental factors. In case of internal factors, the company have certain control over these factors. In case of micro external factors, the company to a great extent are not able to control the factors and in case of external macro environmental factors, there is at all no control and therefore, and accordingly the business have to perform itself by framing the strategies. Thank you. Thank you very much and we will again discuss some other issues. Thank you.