Business environment consists of certain micro elements. What are those? Describe in detail.
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Business environment consists of certain micro elements. What are those? Describe in detail.
need 5 mark ans
The factors or elements in a firm's immediate environment which affect its performance and decision-making; these elements include the firm's suppliers, competitors, marketing intermediaries, customers and publics.
The micro environment of the organisation consists of those elements which are controllable by the management.
Most important factors of micro environment of business are as follows:
1. Competitors:
The competitive environment consists of certain basic things which every firm has to take note of. No company, howsoever large it may be, enjoys monopoly. In the original business world a company encounters various forms of competition.
2. Customers:
According to Peter. F. Drucker, “There is only one valid definition of business purpose, that is to create a customer.” The business enterprises aim to earn profit through serving the customer demand. It now thinks more in terms of profitable sale rather than more sales volume for its sake. Today marketing of a firm begins and also ends with the customers.
Now a days, a business firm to be successful, must find customers for its products. This is the reason the customers thus constitute the most important element in the micro environment of business. Products sales depend mainly on the degree of consumer satisfaction.
3. Suppliers:
Regarding the suppliers, the organisation can think of availing the required material or labour according to its manufacturing programme. It can adopt such a purchase policy which gives bargaining power to the organisation.
According to Michael Porter, “the relationship between suppliers and the firm epitomises a power equation between them. This equation is based on the industry conditions and the extent to which each of them is dependent on the other.”
4. Public:
Literally word ‘public’ refers to people in general. According to Philip Kotler, “A public is any group that has an actual or potential interest in or impact on a company’s ability to achieve its objectives.” The environmentalists, consumer protection groups, media persons and local people are some of the well-known examples of publics.
5. Marketing Intermediaries:
Market intermediaries are either individuals or business houses who come to the aid of the company in promoting, selling and distributing the goods to the ultimate consumers. They are Middlemen (wholesalers, retailers and agents), distributing agencies, market service agencies and financial institutions. Most of the companies find, it is too difficult to reach the consumers. In such a cases the agents and distribution firms help to reach the product to the consumer.
Any type of intermediary the company must take into active consideration, the following aspects:
(i) The company has also to constantly review the performance of both middlemen and others helping its efforts periodically. If necessary, it may take recourse to replacement of those who no longer perform at the expected level.
(ii) Middlemen come into being to help overcome the discrepancies in quantities place, time, assortment and possession that would otherwise exist in a given condition.
(iii) It is advantageous and also efficient to work through the established Marketing channels instead of creating one and thus going for experiments.(iv) The manufacturer has to decide the most cost-effective method of intermediaries to reach the product to consumer that will help to increase the profit.
6. Workers and Their Union:
As per the production function theory, the labour gets more importance. He is also one of the pillars of the company. The organised labours is highly secured their position compare to unorganised workers So, the workers now prefer to join labour unions which invariably resort to collective bargaining and thereby makes them less vulnerable to employer’s exploitation.