Business Environment

1. Business Environment Session-1&2 Understanding BE Performance measure and adjustment

2. Category of Environment • Ethics and social responsibility:- Purpose of the firm. Whose interest it serves? Manager’s responsibility towards individual and organization. • Government and global competition:- Budget, taxes, regulations, openness, forex policy and competitive advantages of nation • Business and Nature:- Taking from nature and disposing waste, hazardous, global warming etc. • Legal and Technology system:- New product, new tech process of management and implications of legal system.

3. Understanding BE • Broad Approach:- Covers culture, beliefs, values, ethic, politics, economics ideology and global system • Industry structure model:- Michel Porter – five forces • Cognitive model:- Manager's perceptions about objective reality, process of Enactment, Selection and retention • Critique;- It may lead to psychoanalysis of managers ignoring objective reality, managers face uncertainties of State, Effect and Response. • Organization field model:- Organization’s interact with other organizations more than Porter model, supportive organizations, forging ties with them and receive resources from them. Resource flow face environment turbulence like frequency, amplitude and directional deviations.

4. Performance of organisation • Level of analysis:- Individual, organizational , unit level • Organizational effectiveness:-Encompasses performance related to all stakeholders • Measurement: - Accounting measures- Sale growth, profitability, earning per share- based on past record • Financial measures :- stock evaluation, replacement ration, Q theory, - future potential like bio-tech firms • Operational success:- Market share, new product, quality, market effectiveness, managerial perceptions- difficult to measure • Static climate:- profitability, cash flow, relative market share • Dynamic climate:- Growth in above

5. Continue • Fit:- Industry structure and competitive context, organisational structure and environment, management system and org. structure, Management style and context • It includes seven ‘s’ strategy, structure, systems, shared values, staff, skill and synergy • Financial Screen:- Peter and Waterman- Out of six in four measure in top half. Measures are; compound asset growth, compound equity growth, ratio of market value to book value, average return on total capital, equity, and sales . • They do not capture quality of internal processes, ability of managers to meet external stakeholders expectations. • Innovativeness:- Peter and Waterman- single indicator of innovativeness only. • Nearness to bankruptcy, slack and reputation:- Chakarborty- Exhibit- • Social performance:- Social cost benefit analysis etc. Lack of standards and adding more dimensions of calculations

6. Adjust to Change • Connecting social performance with financial performance- it may be positive, negative, no relation and inverted ‘u’ shape. • Positive:-Cause and effect issues:- financial health enable to perform social goal. • It pays to be good:- quality and skill, goodwill, employee moral, customer loyalty and favor from government. • Cyclical :- benefit cycle and vicious cycle • Negative:- Social performance bears costs • Inverted ‘u’ shape:- maximum at center neither small nor too big perform better

7. Strategy for change • It has two dimensions- content and process • Content at corporate level and business level • Content:- Typologies are Adaption, Uniqueness, and life cycle • Process:- data collection, reporting, tracking, monitoring, guiding, alert massages and how managers handle discrepancies? • Outcome:- can mangers make change:- Ecology model- variation, selection, retention and survival. • Institutional Theory:- Manger’s can make change- by scanning environment and searching options. Analyzer and reactive are most common. • Aligning multiple congoruences:- Macro with micro environment to employee level . • Continuous and discontinuous change :- pressure to come with new ideas. • Pressure for change:- Pressure should be enough to come out from inertia .it depends on capacity and desire to change.