Business Environment and Ethics - Explained Notes
PART 1: BUSINESS ENVIRONMENT (Detailed Explanation)
1. Introduction to Business Environment:
Business Environment refers to all the external and internal factors that influence business
operations. It includes customers, competitors, laws, social trends, economic conditions, and
technology.
2. Scope of Business Environment:
- Internal Environment: Within the company - includes employees, management, and organizational
culture.
- Micro Environment: Immediate external forces like customers, suppliers, competitors, market
intermediaries.
- Macro Environment: Broader external forces such as Political, Economic, Social, Technological,
Legal, and Environmental (PESTLE).
- Global Environment: International trends, WTO rules, foreign investments, and multinational
corporations.
3. Economic Environment:
- Includes GDP growth, inflation, interest rates, and economic policies.
- Determines purchasing power, investment decisions, and production planning.
- Examples: Demonetization, economic reforms, inflation rate.
4. Political and Legal Environment:
- Political stability, tax policies, government regulations, and legal systems.
- Laws like the Companies Act, Competition Act, Labour Laws, etc., influence business conduct.
- Example: Ban on single-use plastic affects packaging industries.
5. Technological Environment:
- Refers to innovations, automation, digital transformation.
- Affects production, marketing, and customer service.
- Example: Rise of e-commerce and digital payments.
6. Global Environment:
- The impact of international trade, foreign policies, and global economic trends.
- Involves globalization, international organizations like WTO, IMF, etc.
- Example: Import-export policies, global recession effects.
PART 2: BUSINESS ETHICS (Detailed Explanation)
1. Introduction to Business Ethics:
Business Ethics refers to moral principles that guide the way a business behaves. Ethical
businesses follow laws, treat employees fairly, and do not harm society or the environment.
2. Importance of Business Ethics:
- Builds trust with customers and investors.
- Reduces legal issues.
- Enhances company reputation.
- Supports long-term sustainability.
3. Corporate Social Responsibility (CSR):
- CSR means responsibility of companies towards society and the environment.
- Includes activities like supporting education, reducing pollution, donating to charity.
- Example: TATA Group's CSR in education and health.
4. Corporate Governance:
- A system to control and direct companies.
- Principles: Transparency, Accountability, Fairness.
- Role of Board of Directors and SEBI (in India).
- Example: Following rules for financial reporting.
5. Ethical Issues in Business:
- Marketing: Misleading advertisements.
- Finance: Insider trading, fraud.
- HR: Discrimination, unfair treatment.
- Environment: Pollution, wastage of resources.
6. Environmental Ethics:
- Focus on sustainability and eco-friendly practices.
- Includes recycling, reducing carbon footprint, conserving resources.
- Example: Switching to solar energy.
Study Tips:
- Understand the concept.
- Break down into small points.
- Use real-life examples.
- Practice diagrams and PESTLE analysis.
- Revise with case studies and MCQs.
