Business Environment - Chapter 1 Summary

Jul 28, 2024

Notes on Business Environment

Introduction

  • Instructor: Ashwin Jaiswal from Ashwin's Commerce World.
  • Focus: ISC Commerce Class 12 syllabus.
  • New updates for the chapter relevant to the 2025 exams.
  • Important Note: Do not watch old videos; only use the latest materials.

Syllabus Overview

  • 15 chapters in total with marks distribution based on past trends.
  • Preparation for upcoming exams emphasizes recent changes due to New Education Policy 2020.

Chapter 1: Business Environment

Definition

  • Business Environment: The sum of all external factors that affect a business, including individuals, institutions, and market forces like demand and supply.
    • Key Point: Simple definition for 2-mark questions is crucial.

Features of Business Environment

  1. Totality of External Forces: We cannot control external factors (e.g., government regulations).
  2. General and Specific: Factors affect all (general) or just the business (specific).
  3. Interrelatedness: Changes in one factor can lead to changes in others (e.g., health awareness affecting demand for healthy foods).
  4. Complexity: Understanding the business environment is complicated.
  5. Dynamic: The environment is constantly changing.
  6. Uncertainty: Future conditions cannot be accurately predicted.
  7. Relativity: Business environments differ based on location and cultural context.

Memory Trick for Features

  • Use IDC:
    • I: Interrelatedness
    • D: Dynamic
    • C: Complexity
    • U: Uncertain
    • R: Relativity

Importance of Understanding Business Environment

  1. First Mover Advantage: Being proactive in recognizing trends can lead to success (e.g., Maruti's affordable cars).
  2. Early Warning Signals: Being alert can help anticipate changes (e.g., adapting during COVID).
  3. Focus on Customer: Businesses must prioritize customer needs for success.
  4. Strategy Formulation: Understanding the environment is key to effective planning.
  5. Coping with Change: Businesses must adapt to survive, like Tata Motors' evolution.
  6. Public Image: A strong image aids in securing loans and fostering partnerships.

Dimensions of Business Environment

Micro Environment

  • Internal Factors (specific to the business):

    • Business culture and values.
    • Mission and objectives.
    • Quality of top management.
    • Power structure (distribution of authority).
    • Company image.
    • Human and other resources.

  • External Factors (specific influencers on the business):

    • Customers.
    • Competitors.
    • Suppliers.
    • Market intermediaries.
    • Financial institutions.

Macro Environment (PESTEL)

  • PESTEL Components:
    • Political: Government policies affecting the business.
    • Economic: Economic factors such as inflation.
    • Social: Societal trends and consumer preferences.
    • Technological: State of technology in the industry.
    • Legal: Laws and regulations governing business activities.

SWOT Analysis

  • Components:

    • Strengths: Internal advantages.
    • Weaknesses: Internal disadvantages.
    • Opportunities: External conditions favorable to growth.
    • Threats: External challenges.

  • Purpose: Helps in formulating effective strategies based on internal and external environments.

Conclusion

  • Engage with supplementary materials, including notes found on Telegram for comprehensive preparation. The app promises coverage for 35 marks of the 80-mark exam.
  • Feedback on videos is encouraged, and students are welcomed to share their suggestions.

Final Notes

  • Restate the key content and encourage ongoing learning through available resources.