Page 25 - DMGT401Business Environment

Business Environment

Notes The budget of 1997-98 and the monetary policy for the first half of 1997-98 are considered
landmarks in the process of economic reform in India. In the budget of 1997-98, there are some
elements of great relevance to the financial sector, while the monetary policy announcement
that followed has been described as a 'big bang' in financial sector reform.

1.3 Techniques of Environmental Scanning and Monitoring

The process by which organization monitors their relevant environment to identify opportunities
and threats affecting their business is known as environmental scanning.

Notes Factors to be Considered for Environmental Scanning
The external environment consists of variety of factors we can explain them as follows:
1. Events are important and specific occurrences taking place in different environment
sector.

2. Trends are the general tendencies or courses of action along which events takes
place.
3. Issues are the current concerns that arise in responses to events and trends.
4. Expectations are the demands made by interested groups in the light of their concern
for issues.
Source: Aghor Kazmi, TATA McGraw Hill, p. 118

1.3.1 Environmental Analysis

Collection of Information

Analysis is done by means of a search of verbal and written information, spying, forecasting and
formal studies and information system.

At first there is the gathering of verbal information, the sources of verbal information are:
1. Media such as radio and television
2. The firm's employees such as peers, subordinates and supervisors.
Other sources of verbal information outside the firm are:- Customers of the enterprise, persons
in industry channel (such as wholesalers, brokers, distributors, etc.), suppliers doing business
with the firm, competitors and their employees, financial executives such as bankers, stockholders,
and stock analysts, consultants and the government.
Besides verbal sources, information can be gathered by reading. Information about the
environment is readily available in newspapers, trade journals, industry newsletters, journals
and publications, government reports, reports of various marketing research agencies such as
Gallup, ORG, etc. It is said (is it not true?) that behind every business activity there is one
government department and one association. This department or association publishes
information related to business on regular intervals.
The second solution to environmental analysis is to design a Management Information System.
A formal MIS gives quick relevant information to the decision-makers, which helps a lot in
making timely decisions. Beside this, information regarding competitors can be gathered through
Corporate Intelligence and Spying.

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