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CHAPTER

1

Business Environment

Contents

• Introduction

• Business

• Objectives of business

• Environmental influences on business

• Environmental analysis

• Characteristics of business environment

• Components of business environment

• The micro and macro environment

• Competitive environment

• Porter’s five forces model–competitive analysis

Learning Objectives

The present chapter aims at:

• Definitions and objective of business

• Examine environment analysis, characteristics components of the organisation. Let us

know the microenvironment and macro environment

• Understand the competitive environment

• Describe the Porter’s five-force model and its limitations.

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Strategic Management for Chartered Accountants

“Environment factors of constraints are largely if not totally external and beyond the control of

individual industrial enterprises and their arrangements. These are essentially the ‘givers’ within

which firms and their managements must operate in a specific country and they vary, often greatly

from country to country”.

Barry M. Richman and Melvyn Copen

“ The environment includes outside the firm which can lead to opportunities for or threats to the

firm. Although, there are many factors, the most important of the sectors are socio – economic,

technical, supplier, competitors, and government”.

Glueck and Jauch

“Analysis is the critical starting point of strategic thinking”

Kenichi Ohmae

“It is not the strongest of the species that survive, nor the most intelligent, but the one most

responsive to change”.

Charles Darwin

“Strategy is a deliberate search for a plan of action that will develop a business’s competitive

advantage and compound it”.

D.

Bruce D. Henderson

“Awareness of the environment is not special project to be undertaken only when warning of

change becomes deafening”.

Clifton Garvin, Kenneth R. Andrews

1.1 INTRODUCTION

The concept of strategy has been borrowed from the military and adapted for use in

business. This book has reviews of...