Business Environment & Importance of Strategic Planning for Business Success

1. Business Environment & Importance of Strategic Planning for Business Success

2. Introduction The term Business Environment is composed of two words ‘Business’ and ‘Environment’. In simple terms, the state in which a person remains busy is known as Business. The word Business in its economic sense means human activities like production, extraction or purchase or sales of goods that are performed for earning profits

3. Introduction • On the other hand, the word ‘Environment’ refers to the aspects of surroundings. Therefore, Business Environment can be defined as a set of conditions – Social, Legal, Economical, Political or Institutional that are uncontrollable in nature and affects the functioning of organization.

4. Introduction • Business Organization as a system. • Business Organization as an efficient Arrangement to create wealth. • Source of efficiency of a Business Organization. • Measure of efficiency & Governance Issue • Measure of success of business organization

5. Environmental Forces Affecting the Prospects of a Business

6. Environmental Forces Affecting the Prospects of a Business • The Regulatory system of the Country or the Government. • Economic Liberalization & Instability of Business Environment • Active state legislatures for protection of consumer right & living environment. • Government tax policy in annual budget. • Environmental regulations • Change in labor laws

7. Environmental Forces Affecting the Prospects of a Business • Social Forces • Slower population Growth & Other Demographic Changes. • Consumer Income,Education,Awareness of Rights,& Changing preferences. • Cultural Change & Its Effects on Business. • Political Process & its Effect on Business

8. Environmental Forces Affecting the Prospects of a Business • Forces of Competition • Economic Liberalization & change in structure of Industry • Vanishing Industrial Boundary • Joint venture, Strategic Alliances & Competitive forces • Entry with large operations in many countries

9. Environmental Forces Affecting the Prospects of a Business • Technological Change • Technological Change with its Effect on product Life cycle • Product standardization, widespread Use of IT & decline in manufacturing Plant Size. • Importance of innovation in Business Practice.

10. Human Resource Environment: A Brief Overview • Changes in the economic,business,social & cultural environment have brought about a transformational in the HR function & the roles & responsibilities.

11. Environmental trends affecting HRM

12. Recent Trends in the business Environment • Globalization of business for e.g.:- buildings are conceptualized in us, designed in India , & built in china. HR Challenges:- increase employee productivity, reduce cost because of competition, legal compliance, availability of employees having global assignments skills, diversity in workforce. • Mergers and acquisitions for e.g.:-Hero Honda , Maruti Suzuki , Axis group& IT&T are mergers & one of the biggest acquisition is done in canada by Adityabirla group with St. Anne-Nackawic pulp ltd. HR Challenges:-retrenchment of employees,decrease insecurity for job in future&balancing attrition rate,managing employee morale,continue employee productivity. • Downsizing for e.g.:-In 1986,mittal steel company had 13000 workers which was downsized to1300 in 2006. HR Challenges:- maintain relationship with existing workers , relocation of employees outside, provide personal & family counseling to employees who loosed their job,managing morale of survivors.

13. Changing Nature of Work • Industry and occupational shifts There has been a shift from manufacturing jobs to service jobs. For e.g.:-larsen & toubro ltd.(L&T) needs engineers but engineers are attracted more to IT companies. HR Challenges:-managing workforce with flexible working patterns ,focusing on competencies during hiring process , designing incentive-based compensation , developing proactive employee development programmes. • Technological advancements HR Challenges:- managing a virtual workforce and employee alienation , provide training and conduct programmes to increase employees skills , to upgrade the skills of employees , providing work – life balance initiatives . • Outsourcing for e.g.:- firm hire advertising firms to handle legal issues,law firms to handle legal issues. HR Challenges:- managing employee concerns about losing jobs,managing employee morale & productivity.

14. Flexible work arrangements Now-a-days part time, flexible working hours, temporary jobs & teleworking or distance working has increased in India for e.g.:-1. IBM has a long tradition of flexible working hours. 2.Insurance , IT & telecom companies currently employ over 50,000 jobs to temporary employees. HR Challenges:- Managing the loss of organizational control over work, developing programmes for motivating the flexible workforce &ways of ensuring commitment of the flexible workforce to the firm.

15. Demographic, Societal & Workforce Trends Changes in the composition of employee age,education,gender and background throw up significant HR challenges since these bring about a change in the nature of workforce. The nature of jobs on offer also affects attitudes towards education which, in turn, influence a type of labor supply. The demographic and workforce trends are discussed as follows..

16. Workforce Diversity: (1) Workforce Composition (2) Workforce availability • Shortage of skilled talent • Ageing population and ageing workforce • Education and knowledge workforce • Women in workforce • Changing family structures • Global workforce • Contingent workforce and workforce flexibility

17. Changing Nature of Employment Relationship • The nature of employement relationship has important implications for HR practices. • Different employee groups require and value different things in an employment relationship. • The new employement relationship has made employee commitment more important and central. • The HR managers will face the challenge of developing technical and interpersonal skills.

18. HRM in knowledge economy Human capital steward Knowledge facilitator Organitional capability Rapid deployment specialist Relatioship builder

19. HRM: A changing function Human resource management is placed at the centre of business strategy today. High uncertainty in the environment has been a major reason for the increasing influence of the HR function.

20. HRM Function Roles associated with HRM Partnership of HR & Line manager Administrative Role Devolution Decentraliz-ation Strategic Role

21. HRM: A changing function • Roles Associated with management of HR • Partnership of HR & Line managers • HR Outsourcing • Value of HR activities • Uniqueness of HR activities

22. Technology & HRM

23. HRM & Change • Role of HRM in managing Organizational Change & transformation • Define the future state, or where the organization wants to be; • Diagnose the present state, or where the organization today • Define new process • Strategize a plan for transformation.