It is also an organization because it is a election of people working together in a coordinated and structured fashion to achieve one or more goals What is Environment? Everything that surrounds a system/organization. What is then Business environment? The environmental influences surrounding the business is called business environment. External environment: Everything outside an organization’s boundaries that might affect it. The uncontrollable environment. It consists of the * Macro environment * Micromanagement Internal environment: The conditions and forces within an organization.The controllable environment. Conditions and stakeholder forces within an organization * Owners. * Board of directors Employees (marketing, finance, HER.
Finance, production etc) Physical work environment * Owner: someone who has legal property rights to a business. * Board of directors: governing body elected by a corporation’s stockholders and charged with overseeing the general management Of the firm. * Employees: those employed by the organization. Physical work environment: the firm’s facilities Why study Business Environment? Businesses suffer: * When they fail to understand their operating environment.When they fail to respond to change in the environment. Result: gradual decline of profitability and popularity or reputation Examples; * Marks ; Spencer * McDonald (healthy eating) Businesses gain: When they identify the changes in the surrounding environment and respond to them. Examples * Supermarkets (organic food products)- consumers concern for purity.
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Auk’s Brewers – changing layout of Pubs into restaurants and Eating places(due to changing social behavior, for drinking and meeting family/ friends etc) How organizations interact with their environmentInputs and Outputs inputs Goods and services that organizations take in from suppliers and use them to create products or services Outputs: The products and services that organizations create to sell to customers/consumers Economics: Factors of production * Resources * capital * Labor * Entrepreneurship Natural resources: Gifts of nature” that make production possible, including Land, water, animals and minerals Labor; the nation’s workforce, anyone who works to produce goods and services.Capital : The manufactured goods used to make other goods and services. Instruments, machinery, buildings and other constructions that have been produced in the past and now businesses use them to produce goods and services Entrepreneurship; individuals who start new businesses, introduce new products and improve processes-the human resources that organism the other factors Of production.
Make business decisions and bear risks arising from these decisions.Scarcity, choice and opportunity Cost Scarce Resources: Productive resources (also called factors of production) such as land, labor, and capital, for which the limited amount available is less Han the amount that would be demanded if the resource was given away for free. . Choice: Because resources are scarce, people must decide how to use them emitted Resources Versus Unlimited Wants A) Human wants (the amounts of goods that would be desired if they were free) are unlimited but resources are limited.Thus, the law of scarcity states that wants always exceed society ability to meet them. Therefore, every society faces the Economic Problem of somehow choosing what to produce, how to produce, and for whom to produce. B) The three basic questions in this decision are: . What: What goods and services should be produced? 2.
How: What combinations of resources should be devoted to manufacturing the goods and services produced? 3.For Whom: How many of the goods and services produced will each individual receive? C) The imbalance between wants and the ability to meet them requires an economic system to provide for orderly allocation of scarce resources. Ill. Opportunity Cost A) The Opportunity Cost of any action is the loss of the next best alternative that the action eliminates. B) A Free Good has zero opportunity cost because o other good has to be given up in order to have more of the free good.
C) A Scarce Good has a positive opportunity cost, because in order to have more of it some other good must be sacrificed. Class activity It is F-radar night, the end Of the week and time to relax. How will you spend it? * What is the scare resource ? * List of three possible things you could do with such a scare resource on this F-radar night this week. * State other three things you could possibly not be able to do instead of the above three things – opportunity cost.
