Thảo luận nhóm TMU DISCUSSION REPORT the business environment

THUONGMAI UNIVERSITY
HOSPITALITY AND TOURISM FACULTY

DISCUSSION REPORT

Topic: The Business Environment

Lecturers : Ms. Vu Thi Thanh Hoa
Subject

: Technical English 1

Group

:4

Class code: 2082ENTI1011

Hanoi 2020


I. Introduction to Business Environment
The business environment consist of the surrounding factors that either help of
hinder the development of business. It needs living person, natural resources and
places and things to exist. The sum of all these factors and forces is called the business
environment. There are the five elements in the business environment; economic and
legal environment, technological environment, competitive environment and the last is
global environment. Marco environment is the force and institution outside of the
organization that can potentially affect the performance of the organization come
under the external environment of business consist of the economic demographic,
natural, cultural and political forces.

II.Features of Business Environment:
1.The totality of External Forces
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Business environment includes everything which is outside the organisation.

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If we add all these forces, they will form a business environment.
Example: When Pepsi and Coca-Cola got permission to set up their business in
India, it was an opportunity for them and threat for local manufacturers like gold spot,
camp-cola etc.
2.Specific and General Forces

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Specific forces are those forces which directly affect the operational activities
of the business enterprise.

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Example: Suppliers, Customers, Investors, Competitors, Financers etc.

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General forces are those forces which indirectly affect the functioning of
business enterprises.
Example: Economic, Social, Political, Legal and Technological conditions.
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(C) Inter-relatedness
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Different forces of business environment are interrelated to each other.

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One component of the business environment affects the functioning of other
components.
Example: The increased life expectancy of people and awareness of health
consciousness has increased the demand for many health products like diet coke, olive
oil, and so many health products.
3. Dynamic Nature
The business environment is dynamic in nature and keeps on changing in terms
of :
(a) Technological improvement,
(b) Shifts in consumer preferences,
(c) The entry of new competition in the market.
Example: Many established companies in FMCG (Fast Moving Consumer
goods) sector are focusing on producing the goods with natural ingredients with the
entry of ‘Patanjali Products’.
4. Uncertainty

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The changes in the business environment cannot be predicted accurately
because of future uncertainties.

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It is very difficult to predict the changes in the economic and social
environment.
Example: There has been a sharp decline in the prices of Android smartphones
due to the entry of many new companies.
5. Complexity
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All forces of the Business environment are interrelated and dynamic, which

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makes it difficult to understand.
Complex nature of Business environment can be understood if we study it in

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parts.
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Example: Increase in goods and service tax to 15 % would increase the
revenue of the government (economic), which would help the government to improve
social being of people (social) and reduce the personal disposable income of rich
people and thereby controlling inflation.
6. Relativity

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Business Environment differs from place to place, region to region and country

to country.
Example: In China, the electricity to the industry is provided at cheaper rates as
the consumption increases and hence, it leads to mass production whereas, in India, it
is otherwise, higher consumption of electricity leads to costly electricity which results
in lower production & higher cost of production.

III. Elements of the business environment
1 The Economic and Legal Environment
The economic and legal environment the part of the entrepreneur’s risk involves
in the economic system and how the government works with or against business.
1.1 What can government do?
Government can do a lot to lessen the risk of starting, businesses and thus to
increase entrepreneurships and wealth. Also, another way for government to actively
promote entrepreneurships is to allow the private ownership of business. Nowadays,
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government is selling those businesses to private individuals to create more wealth.
The best thing the government to develop the country is to minimize interference with
the free exchange of goods and services. In addition, the government can reduce
entrepreneurial risk by passing laws that can be enforced in court. The government can
also create one currency is traded in the world market. That is, we can buy and sell
goods and services anywhere in the world using the currency. The system relies on the
honesty, integrity and high ethical standards, and it is easy to see the damage caused
by poor moral behavior and ethical business number.
2 The Technological Environment
Since prehistoric times, human have left the need to create tools that make their
jobs easier. Few technological changes have had a more comprehensive and lasting
impact on businesses than the recent emergence of information technology (IT) that
are computers, modems, cellular phones and so on.

2.1 Technology and Productivity
Technology means everything from mobile phones and computers, a variety of
software programs that will make business processes more effective, efficient and
productive. There are many effective way to produce the desired results. Efficiency
means producing goods and services using the least amount of resources. Productivity
is the amount of output you generate a given amount of input. Technology affects
people in all industries, including agriculture. Because, they have access to technology,
it allows then to be more productive and make more money working.
2.2 The growth of E- Commerce
Apart from this, a recent change in the most important environment is the growth
of e-commerce, buying and selling goods on the Internet. There are two main types of

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transactions E-Commerce: Business-to-consumer (B2C) and business-to-business
(B2B). (B2C) is a business that produces a product to sell directly to consumers and
(B2B) is a business that produces a product to sell directly to other businesses. (B2B)
E-Commerce is at least five times as large as (B2C) E-Commerce. The rises of the
internet marketing are come so fast and furious that it attracts hundreds of competition
into the fray.
2.3 Responsiveness to customers
The way of traditional retailers can respond to the Internet revolution is to use
technology to become more responsive to customers as a business marked the items
with UPCS Product Code (bar code) Universal, their series of lines and numbers you
see in most of the packaged consumer goods. The database is an electronic storage file
where information is stored. Use a database to store large amounts of information
about the user.
3 The Competitive Environment
Competition among businesses has always come out, but it has never been

greater than today. Competitive advantage has been found by a number of companies
with a focus on quality. The goal for many companies is zero defects no mistake in
making the product. To offer value to customers, companies need to offer both high
quality products and excellent service at competitive prices.
3.1 Customer driven Organizations
Customers nowadays are very demanding and they do not just want good quality
at low prices, but they also want great service as well. Big businesses and small
businesses rely on their customers back and as a result should come out the way to
make customers feel as they are the kings of them, and theirs will and needs to be

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emphasized. Successful organizations now need to listen more closely to customers to
determine their wants and needs, and then tailor products, policies and practices of the
firm to meet their demands.
3.2 Employee Empowerment
Empowerment is meeting the needs of customers; firms must give their frontline
workers the responsibility, authority and freedom to respond quickly to customer
requests. The businesses must reorganize to help their employee’s become more
effective than they are now. Also, empowered employees need to be treated as partners
in the firm.
4 The Social Environment
Demography is the study of human population statistics with regard to size,
density, and other characteristics such as age, race, gender, and income. The U.S.
population is undergoing major changes; affect how people live, where they live, what
they buy and how they spend their time.
4.1 Managing Diversity
The managing of diversity is an important concern for business people.
Businesses are concerned about having a diverse, workforce for two main reasons.

First, a business can better serve customers with a diverse workforce. Second, a
diverse work environment brings about new, fresh ideas and perspectives. All this
affect each of everyone because each of us need to work with people of various ages,
races and backgrounds in order to be successful where we work.
4.2 Aging consumers
Another social issue and concern is the fact that the baby boomers are getting
older, and as they retire there will be more jobs than qualified people to fill those jobs.

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Businesses that cater to aging baby boomers will have opportunity to exceptional
growth in the near future.
4.3 Two- income families
Dual- income families play a role in the societal changes. One result of this trend
is a host of programs that companies have implemented in response to the demands of
bust two-income families. With more dual-income families, in the workforce, many
employees provide child care benefits of some types. Many companies are increasing
the number of part-time workers which the children can earn income.
4.4 Single parents
The rapid growth of single-parent households has had a major effect on
businesses as well. Many single parents struggle with the work-life balance, and they
have encouraged businesses to implement programs such as family leave and flextime.
5 The Global Environment
Two important environmental changes in recent years has been the growth of
international competition and increasing of free trade among countries. Free trade is
the reduction of trade barriers, such as the elimination of tariffs on goods brought into
other countries. Cooperation among businesses has the potential to create rapid
growing global market that can generate prosperity beyond the expectations of most
people. It is very important to note that all size businesses compete in the global

market.
5.1 Entrepreneurship vs. Working for others
There are two ways to succeed in a business, one is to work for others, get
experience and skills, and rise up though the rank, the other riskier path is to start your
own business.

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Working for others businesses: As you graduate from college and choose a
company, large or small, to work for; you may be happy to know that the earning
power of a college graduate far outpaces that of less- educated individuals. Once you
have the experience, you will have the ability and opportunity; you can start your own
business.
Entrepreneurial challenge: Millions of people from all over the world have taken
entrepreneurial challenge and succeeded. Woman also have the same opportunity to
engage in entrepreneurship is an attractive career path for an increasing number of
women.
5.2 Nonprofit organization or Government agency
Nonprofit organization: A non-profit organization is an organization that goals do
not include making a personal profit for the owners or organizers.
Government agency:Government Agencies is an organization responsible for
overseeing the functions of the government clarity. Concepts and principles that are
making businesses are more efficient and are used in government agencies and
nonprofit organizations as well.
IV.Importance of Business Environment:
Just like us, business operations do not survive in confinement. Every enterprise
is not an island to itself; it subsists, endures and develops within the circumstances of
the part and forces of its situation. While an individual enterprise is able to do minute
to change or manage these forces, it has no choice to reacting or modifying according

to them. Good knowledge of the environment by business managers allows them not
only to recognise and assess but also to respond to the forces outside to their

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enterprises. The significance of the business environment and its perception by
managers can be understood if we contemplate the below-mentioned following points:
1. It Helps in Identifying Opportunities and Making First Mover Advantage
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The environment provides numerous opportunities, and it is necessary to
identify the opportunities to improve the performance of a business.

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Early identification gives an opportunity to an enterprise be the first to identify
opportunity instead of losing them to competitors. Example: ‘Airtel’ identified the
need for fast internet and took first-mover advantage by providing 4G speed to its
users followed by Vodafone and Idea.

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Asian paints lost market share to Nerolac because it failed to match its
technology.
2. It Helps the Firm Identify Threats and Early Warning Signals

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The business environment helps in understanding the threats which are likely to

happen in the future.

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Environmental awareness can help managers identify various threats on time
and serve as an early warning signal. Example: Patanjali products have become a
warning signal to the rest of the FMCG

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The sector to develop similar products. Similarly, if an Indian firm finds that a
foreign multinational is entering the Indian market with new substitutes; it needs to
prepare accordingly.

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Chinese mobile phones have become a threat for Indian mobile phone
manufacturers.
3. It Helps in Tapping Useful Resources

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Business and industry avail the resources (inputs) from the environment and
convert them into usable products (outputs) and provide to society.

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The environment provides various inputs (resources) the like finance, machines,
raw materials, power and water, labour, etc.

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The business enterprise provides outputs such as goods and services to the
customers, payment of taxes to the government, to investors and so on.
Example: With the demand for the latest technology, manufacturers will tap the
resources from the environment to manufacture LED TVs and Smart TVs rather than
collecting resources for colour or Black & White TVs.
4. It Helps in Coping With Rapid Changes

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The business environment is changing very rapidly, and the industry is getting
affected by changing market conditions.

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Turbulent market environment, less brand loyalty, divisions of markets, changes
in fashions, more demanding customers, and global competition are some examples of
changing the business environment.
Example: Jack Ma started Alibaba as he could see the potential of interest in ECommerce.
5. It Helps in Assisting in Planning and Policy Formulation

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The business environment brings both threats and opportunities to a business.

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Awareness of business environment helps in deciding future planning or
decision making.
Example: Multiple entries of Chinese phones like VIVO, Gionee, OPPO, etc.
have posed a threat to local players like Micromax, Karbonn, Lava etc. to think afresh
how to deal with the situation.
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6. It Helps in Improving Performance
Environmental studies reveal that the success of any enterprise is closely bound

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with the changes in the environment.
The enterprises which monitor and adopt suitable business practices not only

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improve their performance but become leaders in the industry also.
Example: Apple has been successful in maintaining its market share due to its
proper understanding of the environment and making suitable innovations in its
products.
7. Why It is Important for Business Enterprises to Understand Their
Environment?
7.1. It Benefits in Tapping Useful Resources
Business and industry avail the resources (inputs) from the environment and

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convert them into usable products (output) and provide to society.
The environment provides various inputs (resources) like finance, machines,

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raw materials, power and water, labour etc.
The business enterprise provides outputs such as goods and services to the

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customers, payment of taxes to the government, interest/dividend to investors and so
on.
Example: With the demand for the latest technology, manufacturers will tap the
resources from the environment to manufacture LED TVs and Smart TVs rather than
collecting resources for colour or black & white TVs.
7.2.It Helps in Coping With Rapid Changes
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The business environment is changing very rapidly and the industry is getting
affected by changing market conditions.
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•

Turbulent market environment, less brand loyalty, divisions of markets, changes
in fashion, more demanding customers, and global competition are some examples of
changing the business environment.
Example: Jack Ma started Alibaba as he could see huge potential in ECommerce.
V. Conclusion to Business Environment

The word ‘business environment’ indicates the aggregate total of all people,
organisations and other forces that are outside the power of industry but that may
affect its production. According to an anonymous writer- “Just like the universe,
withhold from it the subset that describes the system and the rest is environment”.
Therefore, the financial, cultural, governmental, technological and different forces
which work outside an enterprise are part of its environment. The individual customers
or facing enterprises as well as the management, customer groups, opponents, media,
courts and other establishments working outside an enterprise comprise its
environment.

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