A management system describes the organization and the set of significant interacting institutions and forces in the organization's complex and rapidly changing environment that affect its ability to serve its customers. A business firm must continuously monitor and adapt to the environment if it is to survive and prosper. Disturbances in the environment may spell profound threats or new opportunities for the firm. The successful firm will identify, appraise, and respond to the various opportunities and threats in its environment.
Business environment is the surrounding or atmosphere under which business is conducted. Business cannot work in vacuum or isolation and needs favorable surroundings to survive and grow. The environment of business includes all forces like legal, social economic, political, technological, cultural and other factors, which provide resources for production (like energy, air, water materials, land) and a place for disposal of finished goods and waste products.
The management system can be conceptualized on two levels. The first level involves the organization's internal environment. Internally, an organization can be viewed as a resource conversion machine that takes inputs (labor, money, materials and equipment) from the external environment (i.e., the outside world), converts them into useful products, goods, and services, and makes them available to customers as outputs.
The second level of the management system involves the organization's external environment. It consists of all the outside institutions and forces that have an actual or potential interest or impact on the organization's ability to achieve its objectives: competitive, economic, technological, political, legal, demographic, cultural, and ecosystem.
Environmental forces create challenges and opportunities for the organization. Managers must react and adapt to changes in their internal and external environment. Globalization is an example of an opportunity for an organization. Improving technologies, such as transportation and communications, have enabled companies to expand into global or worldwide markets. Globalization affects how organizations are managed. Managers must learn to deal effectively with multiple cultures and political systems in the midst of rapidly changing markets and technology. They must be able to anticipate this changing environment and develop the vision and competencies at all levels in their organizations to embrace this dynamic future.
BUSINESS ENVIRONMENT IN INDIA:
A new spirit of economic freedom is at work in India, bringing with it great change. A series of ambitious economic reforms, aimed at deregulating the country and stimulating foreign investment have taken place.
India is a democracy of one billion people, and economic reform is a consensus shared by its many political parties. They have been quick to embrace free market enterprise, which has attracted a number of foreign companies.
In the past, India's business environment was very inefficient and unproductive. The mentality of most companies was, “let's stay home, let's copy or imitate, and let's compete on price”. That didn't lead to many competitive companies. That explains why more Indian companies don't show up in the top global lists.
Indian firms face a really compelling logistical disadvantage over companies in China in terms of getting goods and services to market. But the most pernicious problems in India--which are still not being confronted head-on - are the pervasive barriers to competition.
Ideally, Indian companies should use international investment to upgrade their strategy over time. The big risk is that they will go and make a lot of acquisitions to be big and to claim that they have a global position without having any strategic clarity or focus about how they are going to be different from all...
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