BUSINESS ENVIRONMENT FACTORS AFFECTING BANKING INDUSTRY
Business environment includes the internal as well as external factors that affect the operation of a business. Therefore, business environment is the sum total of the forces or the surroundings that have an influence on the business operations. The internal environmental factors are usually controllable because the management has control over it. Whereas the external environmental factors are difficult to control by the company. There are two types of external environment: Microenvironment and Macro environment.
It is important for every company to do environment analysis that is scanning the environment so that it may identify its threats and opportunities and improve its planning process.
1. Rebound in the housing market-
According to the recent reports, there have been some improvements in the national housing market this year. The average sale price for existing homes in June 2012 showed an increase of 7.9% when compared to the last year according to the National Association of REALTORS (NAR) reported that The median home sale price in York County for August was $142,000 down from $142,500 in 2011 according to a report by The REALTORS Association of York and Adams Counties (RAYAC) . There were around 349 properties sold in August 2012 compared to 322-sold last year. In August 2012, Adams County’s median home sale price was $162,000 with a total of 73 properties sold compared to 2011 when the median home sale price was $163,000 and 58 properties sold according to the report by RAYAC
2. Competitors-
The mortgage and banking industries have always been very competitive. (In York County alone, there are 275 banking and lending institutions.) The historically low intere...
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... RATIO = Debt/Equity
For the year 2012: 324/30308
=0.01
For the year 2013: 370/37127
=9.9
Interpretation:
It is a leverage ratio, which indicates a relationship between the debt and equity. The ratio indicates the total liabilities of the firm and the total shareholders’ equity both the figures are present in the company’s balance sheet.
Lower the ratio, better it is. Higher the ratio, higher the risk. The ideal ratio is 1:1. In the year 2012, the HDFC bank’s ratio is 0.01. This means the company relies less on the outsiders and loans. This is a good indicator, which means the company was doing well in the last year. But in the year 2013, the ratio increased drastically. The ratio in the year 2013 was 9.9, which means that the bank borrowed a lot of money from the outsiders.
Suggestion:
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Equity ratio and debt ratio are both very important because it shows how much of the assets used for production is really owned by the owner of a company. According to calculations in the appendix, RBC has the highest equity ratio and the lowest debt ratio. This is considered favourable compared to Sun life and BMO’s equity and debt ratio. When it comes to return on total assets BMO has the highest return. Meaning it is earning more per assets than RBC and Sun
Sase, J. F., and Gerard Senick. Another Mortgage Tsunami? “Let Them Eat Cake” (Part Two). 2010. Print.
Current Ratio. The current ratio can indicate a company’s liquidity and is considered one of the most valuable ratios in analyzing
From the table 3 it is indicated that the current ratio of British Petroleum is higher than one both in the recent financial statements i.e. of 2014 and in the financial statement of previous year i.e. of 2013. In 2013 the current ratio of British Petroleum is 1.33 which indicates that the company has sufficient current assets to satisfy it short term liabilities. However, the current ratio in 2014 is 1.37 (BP Global, 2014) indicating increase and depicting that is in position to satisfy its short term debts. Thus this indicates the strength of company in satisfying its debt.
A majority of mortgage defaults that Americans used were on subprime mortgage loans, which were high-interest-rate loans lent to people with high risk credit rates (Brue). Despite knowing the risks, the Federal government encouraged major banks to lend out these loans to buyers, in hopes, of broadening ho...
It is important to recognise the main features that affect a business in view of the macro and micro-environmental factors.
In the captivating, mysterious, and perplexing novel Fifth Business by Robertson Davies, the role of women is not only a vital but a pivotal aspect throughout the life and psychological journey of Dunstan Ramsay. Robertson Davies is famous for under-developing female characters in general; not fully creating female characters the audience can entirely understand, discover and engage, at least not to the same degree with which he develops male characters. Although the portrayal of female characters is limited, their true purpose may be much more significant than it initially appears:
Environmental – External environmental factors are forces or trends that can affect a business whether it is an opportunity, threat, or constraint. They can be divided into three interrelated subcategories of remote, industry, and operating environments. The remote environment includes factors beyond a company’s operating situation such as the economic, social, political, technological, and ecological factors. The industry environment includes factors that have more of a direct influence on a company’s business such as entry barriers, competitor rivalry, the availability of substitutes, and the bargaining power of buyers and suppliers.
There are many business environments these environments are divided to internal & external environment, as followed:
Introduction to Macro & Micro frameworks: The Business firm consist of a set of internal factors and is confronted with a set of external factors (i.e., Environment). This is the relation between a firm and its environment. Business environment (external factors) is classified as
Environmental scanning is the process of gathering information about events and their relationships within an organization's internal and external environments. The basic purpose of environmental scanning is to help management determine the future direction of the organization (Barnat, 2004). For a business to succeed, it is important to study the business environment of the firm that consists external and internal influences that affect the firm’s decisions and performance (Grant, 2010). Environmental scanning includes the assessment of Macro and Micro environmental analysis.
A diversified company has two levels of strategy: business unit (or competitive) strategy and corporate (or companywide) strategy. Competitive strategy concerns how to create competitive advantage in each of the businesses in which a company competes. Corporate strategy concerns two different questions: what businesses the corporation should be in and how the corporate office should manage the array of business units.
Entrepreneurship - a special kind of activity. Its constant conditions are limited resources, competition and uncertainty of the situation. The main tools of the entrepreneur are: thrift, cooperation and innovation. Consequently, enterprise is the independent economic entity, with rights of a legal entity, which is based on the use of labor collective property produces and sells products, works, and provides services.
Nowadays, entrepreneurship becomes most popular career, where our government encourages our graduated student to involve in business so that unemployment will not happen in our country. Policymakers, academics, and researcher agree that entrepreneurship is a vital route to economic advancement for both developed and developing economics (Zelealem et al., 2004). Entrepreneurship has many types for example small business and others. Today small business, particularly the new ones, is the main vehicle for entrepreneurship, contributing not just to employment, social and political stability, but also to innovation and competitive power (Thurik & Wennekers, 2004).
Environmental factors cater for the protection of the environment. A business must carefully be able to look at its surroundings to see for benefits and ensure that its daily production does not interfere with society.