INTRODUCTION TO BUSINESS ENVIRONMENT
The Progress of every business depends largely on its ability to become accustomed to
environment. For instance, if the government changes its economic policies, the firm should
appropriately respond to that change. Likewise, a firm should keenly observe and respond properly to
the technological changes capable of rendering the existing products obsolete. Thus it can be identified
that the association between business and its environment is very close and continuous. This association
helps the business firm to reinforce its capabilities and allocate its resources more efficiently.
As if living beings, business too has an ecology. To survive in this vibrant ecology, a firm needs its
intrinsic abilities and strengths.
Meaning and definition of Business Environment
Business Environment can be defined as the combination of internal and external factors that
influence a company’s operating situation. The Business Environment can include factors such as: clients
and suppliers; its competition and owners; improvements in technology; Laws and government
activities; and market, social and economic trends.
Business Environment literally means all those aspects that have a bearing on the business such as
its strengths, weaknesses, internal power relationships and orientations of the organization;
Government policies and regulations; nature of the economy and economic conditions: socio-cultural
factors: demographic trends; natural factors; and, global trends and cross-border developments.
Business environment plays a key role in shaping the business decisions and strategies of a firm.
The opportunities and threats for a business come mainly from its external environment which includes
factors like economic, political, technological and social. Similarly, the internal factors like managerial
capabilities, efficiency in resource utilization etc make an organization strong or weak.
Characteristics of Business Environment
Business environment has the following characteristics:
1. Environment is Complex
Business environment is complex because it is continuously exposed to countless challenges, like
technological disruptions, global competition, leadership change, shifting economic, social, and
regulatory conditions etc. It is very stressful for a firm to survive and prosper in such an environment.
2. Environment is Dynamic
Both the internal and external environments of business are highly dynamic or vibrant owing to the
following:
• Customer Preferences keep evolving,
• New competeters enter the market.
• Arise of novel technology.
• New marketing channels.
The Progress of every business depends largely on its ability to become accustomed to
environment. For instance, if the government changes its economic policies, the firm should
appropriately respond to that change. Likewise, a firm should keenly observe and respond properly to
the technological changes capable of rendering the existing products obsolete. Thus it can be identified
that the association between business and its environment is very close and continuous. This association
helps the business firm to reinforce its capabilities and allocate its resources more efficiently.
As if living beings, business too has an ecology. To survive in this vibrant ecology, a firm needs its
intrinsic abilities and strengths.
Meaning and definition of Business Environment
Business Environment can be defined as the combination of internal and external factors that
influence a company’s operating situation. The Business Environment can include factors such as: clients
and suppliers; its competition and owners; improvements in technology; Laws and government
activities; and market, social and economic trends.
Business Environment literally means all those aspects that have a bearing on the business such as
its strengths, weaknesses, internal power relationships and orientations of the organization;
Government policies and regulations; nature of the economy and economic conditions: socio-cultural
factors: demographic trends; natural factors; and, global trends and cross-border developments.
Business environment plays a key role in shaping the business decisions and strategies of a firm.
The opportunities and threats for a business come mainly from its external environment which includes
factors like economic, political, technological and social. Similarly, the internal factors like managerial
capabilities, efficiency in resource utilization etc make an organization strong or weak.
Characteristics of Business Environment
Business environment has the following characteristics:
1. Environment is Complex
Business environment is complex because it is continuously exposed to countless challenges, like
technological disruptions, global competition, leadership change, shifting economic, social, and
regulatory conditions etc. It is very stressful for a firm to survive and prosper in such an environment.
2. Environment is Dynamic
Both the internal and external environments of business are highly dynamic or vibrant owing to the
following:
• Customer Preferences keep evolving,
• New competeters enter the market.
• Arise of novel technology.
• New marketing channels.
