powerpoint presentation on business environment

Business Environment Analysis: The Complete Guide (2023)

Here’s what you’ll learn today:

• What is a business environment analysis (and why you need it)
• The detailed 4-step process to performing a solid analysis of your business environment, so you can build better, stronger and likely more competitive business models .
• A case study of Blackberry’s business (along with the reasons why it failed)

Let’s dive right in…

What Is a Business Environment Analysis

Now, I want to start with a two-step definition.

The thing is, if you want to perform an analysis of your business, you need to understand a few concepts first.

Business models

“The business model describes a company’s core strategy to generate economic value […] and provides the basic template on how the firm is going to make money” ( source ).

Now, you might think:

Why should I actually perform a business environment analysis?

Well, see, ”business models are designed and executed in specific environments “.

So the secret to being successful in your business is to developing a good understanding of your organization’s environment. Because that will help you conceive stronger, more competitive business models.

“Continuous environmental scanning is more important than ever because of the growing complexity of the economic landscape, greater uncertainty, and severe market disruptions”.

Now, let’s wrap this up:

Business environment analysis = examine the environment in which your own business model functions.

Because let’s face it:

You can’t take the right decisions if you don’t analyze the factors surrounding your business.

And the truth is, many firms pay the high price of failing to grasp these factors. Some of them add their names to the endless list of those companies that didn’t make history.

Like BlackBerry, who demonstrated that even the most powerful market leaders can be blown away in a mater of months for taking the wrong decisions.

Now that you know what a business environment analysis is , it’s time to move on to the process.

Business Analysis Essentials (How to Perform a Solid Business Environment Analysis)

On top of this, I’m offering you a free, editable PowerPoint template to put in action what you’ve read.

Like I said, the way we’re going to approach business analysis today is rooted to the framework provided in the book below.

Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers

Your business model environment can be mapped in four main areas.

I’ve summarized each of these areas in the table below so you can quickly understand how things work.

1. Market Forces

The business environment analysis starts with the market forces area.

I’ll explain:

What this area does it to assess the attractiveness, dynamics and challenges of your market. And your customers are at the core of it.

2. Industry Forces

This area is here to help you understand which position your company occupies vs. other companies that produce similar products/services. It’s roughly a SWOT analysis .

Here are the exact questions you shall answer:

3. Key Trends

Sure, no one can be certain of what the future will look like.

However, you can predict the general direction in which your business is developing. Key trends are just about that:

4. Macro Economic Forces

Which large-scale general economic factors can affect your business?

Case study: The Business of BlackBerry (and How They Blew it…)

So how did BlackBerry go from being a premier mobile gadget to getting relegated to the back of the smartphone pack?

Let’s recall the previous steps to quickly assess what happened.

Market Issues

A big change was slowly on its way .

Mainstream consumers were starting to drive the smartphone revolution. BlackBerry kept focusing on its primary corporate market (enterprises), ignoring a big chunk of potential end customers.

Industry Forces

BlackBerry overlooked the threat of the iPhone.

The company’s co-CEO Jim Balisillie said at the time , referring to the iPhone’s impact on the industry:

“I would think that’s overstating it”.

Shall I also tell you that Steve Ballmer, Microsoft CEO’s, once said about the iPhone that “it doesn’t appeal to business customers because it doesn’t have a keyboard”?

So as you guessed it, BlackBerry allowed Apple to be laser-focused on the general-use smartphone market, while continuing to sell his products to business and government customers.

First, the emergence of the “app economy” drove massive adoption of the iPhone and Android-based devices. Second, smartphones’ functions evolved from communication devices to full mobile entertainment hubs.

And here’s what happened:

Blackberry didn’t anticipate that trend. AT ALL.

The Free Business Template

About 50% of new U.S. companies fail in their first five years .

Most of them dramatically fail at understanding the external forces impacting their business.

To create a competitive business model that works in your  environment, you must be able to understand your business surroundings and how they’re likely to evolve in the future.

Of course, the future it’s uncertain but it’s possible to develop consistent strategies that are aligned with your environment and competitors.

Continuously scan your business model’s environment and map the changes happening in it. You’ll be able to make more informed decisions, which will consequently lower the risk of making big, rookie mistakes.

Like I said earlier, the steps outlined in this post come straight out from Business Model Generation . It’s a fabulous guide that helps you build, pivot, and challenge your own business model.

So if you’re into creating more value for your customers, gaining a competitive advantage over your competitors, I believe you should check it out.

With that said, I hope you liked the post you just read!

Additional Resources

• How Airbnb built a rock-solid business model
• A free, editable PowerPoint business model canvas
• My favorite resources

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Business Environment

Apr 04, 2019

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Business Environment. By: Malik Abrar Altaf. Business Environment . The term ‘business environment’ connotes external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise.

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Business Environment By: Malik Abrar Altaf

Business Environment • The term ‘business environment’ connotes external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise. • These include customers, competitors, suppliers, government, and the social, political, legal and technological factors etc. While some of these factors or forces may have direct influence over the business firm, others may operate indirectly. Thus, business environment may be defined as the total surroundings, which have a direct or indirect bearing on the functioning of business. • It may also be defined as the set of external factors, such as economic factors, social factors, political and legal factors, demographic factors, technical factors etc., which are uncontrollable in nature and affects the business decisions of a firm.

Importance of Business Environment • There is a close and continuous interaction between the business and its environment. • This interaction helps in strengthening the business firm and using its resources more effectively. The business environment is multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of the business. • To be more specific, proper understanding of the social, political, legal and economic environment helps the business in the following ways:

(a) Determining Opportunities and Threats: • The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises for meeting the challenges successfully. • (b) Giving Direction for Growth: • The interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities. • (c) Continuous Learning: • Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business.

(d) Image Building: • Environmental understanding helps the business organisations in improving their image by showing their sensitivity to the environment within which they are working. For example, in view of the shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement of power. • (e) Meeting Competition: • It helps the firms to analyse the competitors’ strategies and formulate their own strategies accordingly. • (f) Identifying Firm’s Strength and Weakness: • Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments.

NON-ECONOMIC ENVIRONMENT • Social Environment: • The social environment of business includes social factors like customs, traditions, values, beliefs, poverty, literacy, life expectancy rate etc. • The social structure and the values that a society cherishes have a considerable influence on the functioning of business firms. • For example, during festive seasons there is an increase in the demand for new clothes, sweets, fruits, flower, etc. • Due to increase in literacy rate the consumers are becoming more conscious of the quality of the products. • Due to change in family composition, more nuclear families with single child concepts have come up. • This increases the demand for the different types of household goods. It may be noted that the consumption patterns, the dressing and living styles of people belonging to different social structures and culture vary significantly.

Political Environment • This includes the political system, the government policies and attitude towards the business community and the unionism. • All these aspects have a bearing on the strategies adopted by the business firms. • The stability of the government also influences business and related activities to a great extent. • It sends a signal of strength, confidence to various interest groups and investors. • Further, ideology of the political party also influences the business organization and its operations. • Most of the labour unions in India are affiliated to various political parties. Strikes, lockouts and labour disputes etc. also adversely affect the business operations. • However, with the competitive business environment, trade unions are now showing great maturity and started contributing positively to the success of the business organisation and its operations through workers participation in management.

Legal Environment • This refers to set of laws, regulations, which influence the business organizations and their operations. Every business organisation has to obey, and work within the framework of the law. • The important legislations that concern the business enterprises include: • (i) Companies Act, 1956 • (ii) Foreign Exchange Management Act, 1999 • (iii) The Factories Act, 1948 • (iv) Industrial Disputes Act, 1972 • (v) Payment of Gratuity Act, 1972 • (vi) Industries (Development and Regulation) Act, 1951 • (vii) Prevention of Food Adulteration Act, 1954

Technological Environment • Technological environment include the methods, techniques and approaches adopted for production of goods and services and its distribution. • The varying technological environments of different countries affect the designing of products. For example, in USA and many other countries electrical appliances are designed for 110 volts. But when these are made for India, they have to be of 220 volts. • In the modern competitive age, the pace of technological changes is very fast. Hence, in order to survive and grow in the market, a business has to adopt the technological changes from time to time. • It may be noted that scientific research for improvement and innovation in products and services is a regular activity in most of the big industrial organisations. Now a days infact, no firm can afford to persist with the outdated technologies.

Demographic Environment • This refers to the size, density, distribution and growth rate of population. • All these factors have a direct bearing on the demand for various goods and services. • For example a country where population rate is high and children constitute a large section of population, then there is more demand for baby products. • Similarly the demand of the people of cities and towns are different than the people of rural areas. • The high rise of population indicates the easy availability of labour. These encourage the business enterprises to use labour intensive techniques of production. Moreover, availability of skill labour in certain areas motivates the firms to set up their units in such area. • For example, the business units from America, Canada, Australia, Germany, UK, are coming to India due to easy availability of skilled manpower. • Thus, a firm that keeps a watch on the changes on the demographic front and reads them accurately will find opportunities knocking at its doorsteps.

NaturalEnvironment • The natural environment includes geographical and ecological factors that influence the business operations. • These factors include the availability of natural resources, weather and climatic condition, location aspect, topographical factors, etc. • Business is greatly influenced by the nature of natural environment. For example, sugar factories are set up only at those places where sugarcane can be grown. • It is always considered better to establish manufacturing unit near the sources of input. • Further, government’s policies to maintain ecological balance, conservation of natural resources etc. put additional responsibility on the business sector.

Economic Environment • The survival and success of each and every business enterprise depend fully on its economic environment. • Economic Conditions: The economic conditions of a nation refer to a set of economic factors that have great influence on business organisations and their operations. • These include gross domestic product, per capita income, markets for goods and services, availability of capital, foreign exchange reserve, growth of foreign trade, strength of capital market etc. All these help in improving the pace of economic growth.

Economic Policies: All business activities and operations are directly influenced by the economic policies framed by the government from time to time. Some of the important economic policies are: • (i) Industrial policy • (ii) Fiscal policy • (iii) Monetary policy • (iv) Foreign investment policy • (v) Export –Import policy (Exim policy). • The government keeps on changing these policies from time to time in view of the developments taking place in the economic scenario, political expediency and the changing requirement. Every business firm has to function strictly within the policy framework and respond to the changes therein.

Important Economic Policies • (i) Industrial policy: The Industrial policy of the government covers all those principles, policies, rules, regulations and procedures, which direct and control the industrial enterprises of the country and shape the pattern of industrial development. • (ii) Fiscal policy: It includes government policy in respect of public expenditure, taxation and public debt. • (iii) Monetary policy: It includes all those activities and interventions that aim at smooth supply of credit to the business and a boost to trade and industry.

(iv) Foreign investment policy: This policy aims at regulating the inflow of foreign investment in various sectors for speeding up industrial development and take advantage of the modern technology. • (v) Export–Import policy (Exim policy): It aims at increasing exports and bridge the gap between expert and import. Through this policy, the government announces various duties/levies. The focus now-a-days lies on removing barriers and controls and lowering the custom duties.

Economic System: The world economy is primarily governed by three types of economic systems, viz., • Capitalist economy. • Socialist economy. • Mixed economy. India has adopted the mixed economy system which implies co-existence of public sector and private sector.

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Business Environment. Lecture 1 8 ( L5/S2) – Entrepreneurship & Enterprise Milena Malinowska. Definitions. Enterprise & entrepreneurship are key concepts ascribed to business activity

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Business Environment. Lecture 15&16 ( L2&3/S2) The EUropean Environment Milena Malinowska. Definitions. The EU is a unique union of sovereign states, which cooperate in multi-tier structure

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Business Environment. Lecture 9 – The Ethical Aspect of Business Environment Milena Malinowska. Definitions. Leading business companies engaged into serious malpractice during the 1980s-90s as well as late 2000s

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Business Environment. Conducting an Effective Environmental Analysis. The Firm. An organism which survives by continually adapting to changing environmental circumstances by continually scanning the environment creating sustainable competitive advantage. Tools. Three layers of environment

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Business Environment. Lecture 1 4 ( L1/S2) – Opportunities in BE Milena Malinowska. Definitions. Work-life balance is a central social and economic issue of modern societies Equality of opportunity is not only a democratic virtue

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Business Environment. Lecture 23 ( L10/S2) International Financial Management Milena Malinowska. Definitions. Money is the blood of business MNC face numerous difficulties when they need to move and position funds among their subsidiaries

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BUSINESS ENVIRONMENT. Department – MBA Presented by- Shumeet K. Grewal. Technological Environment. Technology can be defined as knowledge of methods to perform certain tasks efficiently and solve problems pertaining to products and services

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Business Environment. Lecture 1 9 ( L6/S2) Global Financial Environment Milena Malinowska. Definitions. The balance of payments is a form of state book keeping, where monetary inflows and outflows are recorded The number of transaction depends heavily on the exchange rate

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Employees are the face of the organization as they have direct interaction with customers.

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Business Environment. Business ENVIRONMENT. What is “ Environment ”?. Environment => everything which surrounds a system. What is “ Business Environment ”?. Business Environment =>.

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