CONGRATULATIONS! You have finished Module 1.

You
may now move to module 2.

MODULE 2. ENVIRONMENT OF BUSINESS

OVERVIEW

The second module is the environment of the business

environment and the various environmental factors that affect
the business enterprises. You cannot just make a product and
sell it is a vacuum. As it turns out, the environment in
which you will try to sell your product can greatly affect
your marketing strategy. It includes factors such as the
nature of your market, the nature of your competition, the
nature of the playing field, what the end up and upcoming
trends are, and how you can gather information about all of
this.

On Completion of these modules the student will be able to:

 Identify the various internal business environments;

 recognize the different external business environments;
 differentiate controllable and uncontrollable
environmental factors.

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At the end of this module, students are expected to explain:

1. Identify the various internal business environments;

2. Recognize the different external business environment;
and
3. Differentiate controllable and uncontrollable
environmental factors.

Self-Assessment
Task 1
a.Give an example of a trend that you believe is
happening right now. How can an entrepreneur
take advantage of this trend?

ASSIGNED READINGS and/or Enrichment

THE ENVIRONMENT OF BUSINESS

This module deals with the different environmental

factors that affect the business enterprise and the various
reasons behind the failure of an enterprise.

INTRODUCTION

Any kind of business organization works within an

environment. How a company deals with the environment
determines its success or failure. The business environment
consists of factors that a company can control and those that
are uncontrollable. Controllable business factors are internal
to the company. These include the marketing mix—product,
price, place, and promotion. Management decides what product
to produce, how to increase the level of production, how much
will be the selling price of the product or services, how the
products will be distributed, what market to cover, and what

MARKETING MANAGEMENT 2
medium of promotion to use to advertise products. Management
also has a big influence when it comes to establishing company
policies. It is responsible for the proper implementation of
the company's rules and regulations, and for organizing and
controlling its employees.

On the other hand, uncontrollable business factors

are external to the company. These include factors such as
demographic, economic, socio-cultural, political or
government, technological, and climate, or weather. Thus, for
any business entity to survive and to have a smooth and
continuous operation, the environment needs to be closely
monitored to be able to anticipate its effect on the different
marketing plans or programs of the company so that necessary
adjustments can be immediately made.

TYPES OF BUSINESS ENVIRONMENT

Internal Environment

These are forces that are close to the company and

affect its interaction with its market. Micro-environment
is another term for this environment. It consists of the
company, distribution channels, competitors, the
company's public, and suppliers.

1. Firm/Company – represents the business enterprise that

creates the product and sells or provides services to
the identified market.

2. Distribution Channel – represents the organizations

that assist a company to promote, sell, or distribute
products or services to actual and potential customers;
examples of channels are retailers, as well as
wholesalers. It is also considered as marketing
intermediaries.

3. Competitors – are business enterprises that offer the

same products or alternative products that other
companies also offer; competitors provide the market
with more choices.

4. Company's Public – are organizations or groups that

have a direct or indirect interest to a company;
financial institutions like banks, the media, the
general public, the government, and other citizen-
organized groups are some of the organizations that
have the interest in a company.

5. Suppliers - are firms that provide needed equipment,

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 raw materials, office, and other supplies to a company.

External Environment

The bigger environment or the macro-environment is

uncontrollable or more difficult for a company to
control. Macro-environment is composed of the following:

1. Demographic Factor – includes environmental factors

such as the consumers' profile—age, gender, education,
population, gender, nationality, and religion. These
factors are essential for a company to consider because
variables under demographic factors constitute the
characteristics of the market and these affect buying
behavior; an example is an issue of migration. The
influx of people in an area means a greater consumption
of necessities, like food, and an increase in demand
for clothing and housing. On the other hand, such
movement of people will mean a decrease in demand for
basic products in other areas

2. Political or Legal Factor – consists of existing laws,

ordinances, or government restrictions that affect or
influence the operation of a business.

3. Economic Environment Factor – includes those that

influence the spending pattern or buying power of
consumers. Examples of economic factors that are
essential to marketers are change in income level,
change in spending patterns, and change in income
distribution. Other factors that may affect the
economic environment are family size, cost of products,
and lifestyle of the market.

4. Socio-Cultural Environment Factor – includes those that

affect the values, behavior, or belief of society.

5. Technological Environment Factor – deals with those

factors that create or innovate products due to
technological advancement or modern machinery, gadget,
or equipment.

6. Natural Environment Factor – affects marketing

activities. Some issues in the natural environment are
increased pollution, shortage of raw materials, and
non-biodegradable packaging.

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 Before answering the
questions, please do
some stretching.

SELF-ASSESSMENT:
Task 2
Gap-Fill. Choose the right answer from the
words in the box. Write your answer on the line
provided before each number.

a. internal f. macro
b. technological g. socio-cultural
c. economic h. economic
d. demographic i. distribution channel
e. intermediaries j. competitors

________1. The environment where individuals have the

power to control
________2. Consists of new machinery, equipment
________3. Refers to inflation, employment rate, prices
________4. Factor consisting of a person's gender,
educational attainment, nationality, status
________5. Type of environment considered as
uncontrollable
________6. Decision influenced by beliefs, superstitions,
and way of living
________7. The factor that includes a change in spending
pattern, change in income distribution, a change in
income level
________8. Helps the company to promote and distribute
products to actual and potential customers
________9. A business enterprise that offers the same
products or alternative products that a company also
offers
________10. Represents the firms that assist the company to
promote, sell, or distribute products to the market

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 FEEDBACK

Congratulations for your excellent work. Clearly you were

able to understand, synthesize and apply the theories and
concepts. It manifest your readiness to progress to the
next step of learning. But continue working hard;
education is a lifetime commitment.

For those who have not got a perfect score, you need to
exert extra effort and commitment to improve. Your
inability to understand and apply concepts may be remedies
by further reading and research. But still,
congratulations for finishing the learning tasks, Just
don’t forget to be extra hardworking and goal-oriented to
get back stronger and better.

SUMMARY

Marketing is too important to be ignored. Products that take

considerable effort and time to produce may not be bought.
This is what happens to products that are not wanted, or in
the wrong place, or nobody knows they exist, and some other
reasons. Marketing refers to exchange activities conducted by
individuals or organizations to satisfy human wants with the
view of accomplishing individual or organizational objectives.

The marketing concept which calls for identifying the needs of

customers before actual production is deemed superior to the
product concept which emphasizes production, and the selling
concept which emphasizes on selling.

To implement the marketing concept, the formulation of a

marketing strategy is required. Marketing occurs when at least
two parties desire to satisfy their need, and they have the
means to communicate with each other, and each has something
to exchange.

In the attempt to achieve its marketing objectives, the firm

has reckoned with certain factors, namely: marketing mix
variables and marketing environment variables.

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 SUGGESTED READINGS

Web Reading
 Post-Demographic Consumerism in Asia
http://googl/zGssrS
This report by a market observer trendwatching.com lays
out the consumer attitude, opinions, and lifestyle that
are now becoming the norms in Asian counties for the year
to come.

REFERENCES/RESOURCES:

 Medina, Roberto Principles of Marketing, 2008 Revised

Edition.Rex Bookstore, Inc.
 Balasan, Ma. Nancy T. Marketing Basics A modular Approach
2014 Edition.Rex Bookstore, Inc.
 Philip Kotler, Marketing Management International Edition

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