Meltem Özturan misprivate.boun.edu.tr/ozturan/mis301 1 BP-CIS : Business Perspectives of CIS Fundamentals of Business Environment Business Functions Business Organizations Business Processes 2 1
What is Business Environment? «Business» is the continuous production and distribution of goods and services with the aim of earning profits under uncertain market conditions. «Environment» refers to all external forces which have a bearing on the functioning of business. «Business Environment» is the aggregate of all conditions, events and influences that surround and affect it. 3 BP - CIS : Fundamentals of Business Environment Types of Business Environment Internal Environment Refers to all the factors that are within an organization which impart strengths or cause weaknesses of strategic nature. External Environment Includes all factors outside the organization which provide opportunities or pose threats to the organization. 4 2
Major Factors of Business Environment http://www.leoisaac.com/planning/strat016.htm 5 BP - CIS : Fundamentals of Business Environment Internal Business Environment - Organizational Culture The attitudes of staff and volunteers make a very significant difference. Negative attitudes can severely impact on the organization's ability to implement strategies for development despite however thorough the planning processes. Positive attitudes will not only make the management task easier but also will be noticed and appreciated by customers of the business or members of organization. 6 3
Internal Business Environment Human Resources The knowledge, experience and capability of an organization's workforce is a determining factor of success. Organizations pay particular attention to the recruitment of staff and also to engage in the training of staff and volunteers to build the organization's capability. In pursuing both recruitment and training strategies, an organization is often limited by its financial strength. 7 BP - CIS : Fundamentals of Business Environment Internal Business Environment - Organization Structure Organization structure is essentially the way that the work is divided among its workforce. In a non-profit organization, the organization includes the management board or committee, the salaried staff of the organization and all the volunteers that have roles as coordinators of various business functions. When an organization is a for-profit business that operates in a very competitive environment, its organization structure may help or hinder the ability of the organization to react to change. 8 4
Internal Business Environment - Physical Assets The internal environment of the organization can be made richer or poorer by its assets. The organization's premises can be pleasant and uplifting, or demure and depressing. The availability of equipment can significantly impact on the internal environment. Equipment not of the expected standard may hinder the performance of staff. 9 BP - CIS : Fundamentals of Business Environment Internal Business Environment - Profit and Cash Flow Financial strength (profit and cash flow) is a factor in its own right that influences the internal environment of the organization. Despite however good other internal factors may be, it is very difficult for an organization that is too short of cash to implement strategies within the strategic plan. If the organization struggles financially this can impact on staff morale as budgets need to be excessively tight. 10 5
Internal Business Environment - Management The capability of the management team and the leadership styles employed by managers will also have a major impact on the morale of staff (and volunteers in a non-profit organization) and organization culture. More contemporary forms of management involve workers İn decision making processes and trusting that, although managers and workers have different viewpoints, they largely benefit by working together to achieve the business objectives. 11 BP - CIS : Fundamentals of Business Environment External Business Environment - Climate Climate change is an threat because the jump of change may be recognizable only if considered on a decade-by-decade basis. The effect of climate change will not fall equally on all nations and all businesses. Businesses that depend directly on a good supply of water will be adversely effected if climate change results in reduced rainfall. 12 6
External Business Environment - Economy Prevailing economic conditions of the nation will have an effect on the spending patterns of citizens. Increases in interest rates and/or a high level of unemployment will depress consumption of non-essential goods and services. Economic conditions are global as well as national, and when there is a global financial crisis, changes in external environment can be dramatic. 13 BP - CIS : Fundamentals of Business Environment External Business Environment - Technology Technological change has been rapid in the last 50 years and is a factor in the external environment that constantly exerts pressure on the business or organization. If businesses do not adapt sufficiently quickly to technological change, they risk losing market share. It's not just that technological change affects the design of products, but even delivery of services can change. 14 7
External Business Environment - Political Like law, changes in government policy can be well notified and discussed, or without warning. Organizations depend on government financial assistance can be effected when there is a change of government where such funding assistance can disappear in a short space of time. 15 BP - CIS : Fundamentals of Business Environment External Business Environment - Legal Taxation is one of most obvious changes in law through regulation. Sometimes taxation changes occur overnight with little warning and sometimes there is plenty of time for the business to prepare. Other law changes that commonly affect business include Workplace Health and Safety, Industrial Relations, Consumer Protection and Environmental Law. 16 8
External Business Environment - Competition The strength of business competition is a constantly changing factor in the external business environment. Not only will competitors come and go, but they will also change marketing strategies, product lines and prices. Often such changes are not heralded and business managers must be alert as to what competitors are doing. 17 BP - CIS : Fundamentals of Business Environment External Business Environment - Media The media is undergoing rapid and significant change. The main driver of this change is technology and the rise of the internet. Newspapers once carried many pages of job adverts but now this business is conducted by online recruitment companies such as Seek. 18 9
External Business Environment - Demographic There is constant change in the make-up of the population. Some of these changes include an increasing proportion of elderly citizens, increasing number of two-income families, increase in the age at which people marry, increasing ethnic diversity, suburbs which were once dominated by young families now have few. These demographic changes can have a significant effect locally. https://blogs.ntu.edu.sg/hp331-2012-celestine/theories-ofattitudes-and-practices/attitudes/environmental-attitudessocio-demographic-variables/ 19 Business function is a process or operation that is performed routinely to carry out a part of the mission of an organization. Major business functions are; Accounting / Finance Production / Operations Sales / Marketing Human Resources Administration Information Technology Purchasing Research and Development 20 10
Accounting / Finance Accounting recording and reporting financial activity and transactions. Finance investment decisions, financial decision, dividend decisions. http://heyaccounts.com/accounting-system-integration/ 21 Production / Service Delivery The process of converting raw materials into finished goods and services, for the customer. ww.slideshare.net/blackwell3/bm11-business-functions-and-sectors-presentation Issues to be considered: plant location and layout, plant building, production planning, repair and maintenance and quality control. 22 11
Sales / Marketing Marketing is the process of identifying, anticipating and then meeting the needs and requirements of consumers in order to make a profit. In contrast, selling involves persuading customers that your products or services provide the benefits that they are looking for. http://myimagecollection.net/marketing+and +sales+tools?image=583651484 23 Human Resources Support systems responsible for personnel sourcing and hiring, applicant tracking, skills development and tracking, benefits administration and compliance with associated government regulations. http://www.pptssolutions.com/blog/odoobenefits-for-hrms/ 24 12
Administration It is tasked with providing administrative and logistical support to the entire organization. General Office Management and Running Transport Management Registry Management Assets Management Property Management Security and Safety 25 Information Technology Responsible for the maintenance of IT infrastructure and associated processes together with the maintenance of telecommunication infrastructure and associated processes of the organization. 26 13
Purchasing Buying of goods/services required by the organization to deliver its services or make its products. http://www.gobusiness.net.au/pages/pu rchasing.aspx 27 Research and Development Issues to be considered: new product development, product improvements, competitive advantage, product testing, efficiency gains, cost savings. http://www.gison.com.tw/tr/page/res earch.html 28 14
BP - CIS : Business Organizations Business organization is a social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems; they affect and are affected by their environment. Main types of organizational breakdown structures are as follows. Functional Matrix Pure Project 29 Functional BP - CIS : Business Organizations This traditional organization, functional structure is based on the subdivision of product lines or disciplines into separate departments, together with their vertical hierarchy. Essentials of Project Management, Kamaraju Ramakrishna, 2010 30 15
BP - CIS : Business Organizations Matrix The topology of the matrix structure has the same format as a mathematical matrix, in this case the vertical lines represent the functional departments s responsibility and authority, while the horizantal lines represent the project s responsibility and authority. Essentials of Project Management, Kamaraju Ramakrishna, 2010 31 Pure Project BP - CIS : Business Organizations The pure poject organization structure is similar in shape to the functional organizational structure except now all the departments are dedicated to the project. Essentials of Project Management, Kamaraju Ramakrishna, 2010 32 16
BP - CIS : FBE, BF, BO CourseWork State three external and three internal factors of business environment. Then give an example for each factor you ve stated considering the Car Rental System and finally explain briefly effect of each factor on the Car Rental System. Give a process example for each business function. Compare types of business organizations in terms of advantages and disadvantages for the Car Rental System. 33 17