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Importance of Business Environment: A good understanding of environment by business managers enables them not only to identify and evaluate, but also to react to the forces external to their firms. 

The importance of business environment and its understanding.

1. It enables the firm to identify opportunities and getting the first mover advantage: Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors. 

2. It helps the firm to identify threats and early warning signals: Threats refer to the external environment trends and changes that will hinder a firm’s performance. awareness can help managers to identify various threats on time and serve as an early warning signal. 

3. It helps in tapping useful resources: Environment is a source of various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources called inputs like finance, machines, raw materials, power and water, labour, etc., from its environment including financiers, government and suppliers. 

4. It helps in coping with rapid changes: Today’s business environment is getting \ increasingly dynamic where changes are taking place at a fast pace. 

5. It helps in assisting in planning and policy formulation: Since environment is a source of both opportunities and threats for a business enterprise, its understanding and analysis can be the basis for deciding the future course of action (planning) or training guidelines for decision making (policy). 

6. It helps in improving performance: The final reason for understanding business environment relates to whether or not it really makes a difference in the performance of an enterprise.

Features of business environment: 

1. Totality of External Forces: Business environment is aggregative in nature as it is the sum total of all things external to business firms.

2. Inter-relatedness: Different elements of business environment are closely related to each other, e.g., increased awareness of health care have increased the demand for many health products.

3. Dynamic Nature: The business environment is highly dynamic. It keeps on changing. Sometimes there is a change in technology, tastes and preference of consumer etc

4. Uncertainty: The environment cannot be predicted. It is highly uncertain and unpredictable.

5. Complexity: Since there are many elements of Business Environment and they are inter-related and dynamic in nature, it becomes very difficult to understand them as a whole.

Difference between Specific and General Environment There are two types of forces operating in Business Environment, Specific and General Specific forces affect the individual enterprises directly and immediately, e.g., customers, suppliers. General forces affect the firms and only indirectly e g, social conditions or political conditions.

It is important for business organisations to understand their environment because of the following reasons 

1. It enables the Firm to identify opportunities and getting the first Mover advantage: Environment provides numerous opportunities for business. Early identification of opportunities helps an enterprise to use it before instead of losing them to competitors.

2. It helps the Firm to identify threats and early Warning Signals. Environmental awareness can help managers to identify various threats on time and serve as an early warning signals. 

3. It helps in tapping useful Resources Environment is a source for the various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources called inputs. This can be done better by understanding what the environment has to offer. 

4. It helps in coping with rapid changes. All types of enterprises are facing increasingly dynamic environment. In order to effectively cope with these significant changes, managers must understand and examine the environment and develop suitable courses of action. 

5. It helps in assisting in Planning and Policy formulation. Since environment is the source of opportunities and threats, it’s understanding and analysis becomes the base for various policies to be framed and strategies to be made. 

6. It helps in improving performance The enterprises that continuously monitor their environment and adopt suitable business practices are the ones which not only improve their present performance but also continue to succeed in the market for a longer period.

The term ‘Business environment’ means the sum total of all Individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance. The economic, social political, technological and other forces which operate outside the business enterprise are part of its environment.

Due to globalisation and privatisation, more retailers from India and abroad are encouraged to make investments in organised retailing The competition has increased, the consumers are more demanding and expert working force is required in order to cope up with the changes, which have taken place and are further changing.

Privatisation: The new set of economic reforms aimed at giving greater role to the private sector in the nation building process and a reduced role to the public sector. This was a reversal of the development strategy pursued so far by Indian planners. To achieve this, the government redefined the role of the public sector in the New Industrial Policy of 1991, adopted the policy of planned disinvestments of the public sector and decided to refer the loss making and sick enterprises to the Board of Industrial and Financial Reconstruction.

The term disinvestments used here means transfer in the public sector enterprises to the private sector. It results in dilution of stake of the Government in the public enterprise. If there is dilution of Government ownership beyond 51 percent, it would result in transfer of ownership and management of the enterprise to the private sector.

Decision-making.

Manager develops and maintains a network of contacts and informers, both outside and inside the organisation, which is very much essential for coordination and exchange of information between organisational departments and outside parties.

• Management is a social process, as it basically depends on mutual relationship between people. 
• This process of achieving goals is applicable from an individual to all big-small business and non-business organisations. Therefore it’s a universal process.

10% time does middle level management spend on controlling.

Negotiation means to bargain and settle the deal with other individuals or groups (within and outside the organisation) in order to benefit the organisation. A manager generally does this. In this role, the manager acts as a mediator/arbitrator in case of conflicts within various organisations.

Communication

(d) Ralf Davis

Middle level executives of an organisation are as follows : 

1. Regional manager 

2. Departmental manager 

3. Operations manager 

4. Plant manager/superitendent 

5. Factory heads 

6. Area manager.

Top level management, middle level management, lower level management.

Need of Managerial Levels :

In every organisation, the work, functions and authorities are divided among employees of top to lower level. Accordingly, superior-subordinate relationship is created. This hierarchy of management interlinks all the superiors and the subordinates. It is not possible for the real owners to initiate all the business activities on their own. So, they divide the work and authorities, creating three levels. On the top comes the apex level, which works for the welfare and achievement of organisation. It enjoy maximum degree of authority.

One which works in between the top and lower is middle level. It is responsible for implementation of plans, policies. Lastly, comes the lower level which works at the lowest level. It is responsible for day to day operative plans and assigning jobs to the operating employees.

Functions of Management Levels : 

Three levels of management are 

1. Top level management 

2. Middle level management 

3. Lower level management

Functions of Top Level Management : 

1. To set the organisational goals, objectives. 

2. To being long-term stability in the enterprise. 

3. To act, build and maintain relations with the stakeholders. 

4. Role related to legal matters. 

5. To coordinate the activities of all the departments to achieve organisational goals. 

6. To maintain high standard of efficiency and economy in the employees. 

Functions of Middle Level Management : 

1. To interpret and explain policies and plans of the organisation. 

2. To prepare and issue instructions regarding implementation of plans and policies. 

3. To train, develop and motivate the first-line managers. 

4. To participate in first-line decision-making.

 5. To organise and give training to supervisors. 

6. To submit progress reports and other important data to the top management.

Function of Lower Level Management : 

1. To make day to day plans and budgets. 

2. To assign jobs, to advise and assist employees in understanding the plans, procedures, methods and systems.

 3. To impart training to the employees. 

4. To evaluate the performance of workers. 

5. To coordinate between different operative units. 

6. To maintain cordial human relations in their units

Management process consists of various steps, which start from planning and end at controlling for the attainment of organisational goals.

Henry Hintzberg and his colleagues.

Top level management.

Planning is a selection process and the process of planning takes place with discovering , the alternatives ways of completing any work.

1. To interpret and explain policies and plans of the organisation. 

2. To prepare and issue instructions regarding implementation of plans and policies.

20% time does top management spend on planning.

(c) decision-making

Subject matter of Hintzberg’s research work is the study of actual activities of five chief executives of an organisation.

(b) three types

(b) top level

(c) H. Hintzberg

(a) Peter F. Drucker

1. Interpersonal role 

2. Informational role 

3. Decisional role.

Top level management.

Peter F. Drucker has regarded innovation as the most important and a major function of management.

In the process of management, various functions are involved. These functions are known as management functions.

Top or executive management level refers to that group of executives which constitutes the highest level of management. The executives at this level represent the owners and are regarded as the centre of authority. They are responsible for taking care of crucial decisions. It is the ultimate source of authority which establishes goals, policies for the enterprise. This level consist of BODs, the chief executive officer, etc.

Functions of supervisory level of management are : 

1. To make day to day operative plans within the goals set by middle managers. 

2. To assign jobs, to advise, assist employees in understanding the plans, etc. 

3. To oversee the performance of workers, to correct their performance. 

4. To impart training to the employees.

 5. To guide the workers and to solve their problems.

The planned efforts or set of such efforts for achievement of targets is known as Management. Management is a series of inter-related, interdependent functions. This is known as Process of Management. Management process consists of a number of functions, but the primary functions commonly performed are planning, organising, staffing, directing and controlling. 

Characteristics of Management Process:

1. Management is a process of continuous and dynamic functions.

2. All the functions of management are performed by managers. Therefore, it is a human process. 

3. The process of management basically depends on mutual relationship between people. Thus, it’s a social process.

4. Management makes attempts to achieve goals through its effect. Thus, it is an effective and result-oriented process.

5. This process of achieving goals is applicable from individuals to all big-small business and non-business organisations. Therefore, it is a universal process.

Innovation consists of developing new and better ways of doing things.

MacGill University.

“Process is a systematic way of doing things.” It is said by:  Sloner

(c) two types

1. Top level management 

2. Middle level management 

3. Lower level management

10/Ten related roles.

Supervision management means those managers who provide operating leadership and their main function is to personally monitor and give instructions to the operative employees.

1. Entrepreneur’s role 

2. Resource Allocator’s role.

Earnest Dale.

The first line managers.

Middle level management.

pp level management.

Innovation is regarded as the most important and a major function of management.

1. Short-term planning 

2. Long-term planning.

Process is a systematic way of doing things, or a systematic method of doing things.