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Business Environment
Concept
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The term ‘business environment’ refers
to the sum total of all individuals, Business Environment is the
institutions and other forces that lie aggregate of all conditions,
outside a business enterprise but that events and influences that
may influence its functioning and surround and effect the
performance. business organization.
Features
1. Totality of External Forces
business environment —> aggregative in nature
it is the sum total of all factors and external to a business enterprise
2. General and Specific Forces
general forces —> economic, social, political, legal and technological
conditions
indirectly influence all the business enterprises
specific forces —> investors, customers, competitors, suppliers
influence an individual enterprise directly
3. Interrelatedness
different elements of the business environment are closely interrelated
4. Complexity
Business Environment 1
, complex in nature
consists of several interrelated elements which keep on changing
5. Dynamic
not static
keeps on changing
6. Uncertainty
uncertain nature
because it is very difficult to predict the future
7. Relativity
relative concept
differs from country to country and even from region to region
8. Multidimensional
several dimensions
eg: micro and macro
9. Mutual Dependence
10. Diversity
11. Non Controllable
Importance of Business Environment
First Mover Advantage
advantage of early opportunities instead of loosing them to competitors
Early Warning Signal
makes a firm aware of the impending threat or crisis so that the firm can take
timely actions to minimize the adverse effects
Customer Focus
Business Environment 2
Business Environment
Concept
💡
The term ‘business environment’ refers
to the sum total of all individuals, Business Environment is the
institutions and other forces that lie aggregate of all conditions,
outside a business enterprise but that events and influences that
may influence its functioning and surround and effect the
performance. business organization.
Features
1. Totality of External Forces
business environment —> aggregative in nature
it is the sum total of all factors and external to a business enterprise
2. General and Specific Forces
general forces —> economic, social, political, legal and technological
conditions
indirectly influence all the business enterprises
specific forces —> investors, customers, competitors, suppliers
influence an individual enterprise directly
3. Interrelatedness
different elements of the business environment are closely interrelated
4. Complexity
Business Environment 1
, complex in nature
consists of several interrelated elements which keep on changing
5. Dynamic
not static
keeps on changing
6. Uncertainty
uncertain nature
because it is very difficult to predict the future
7. Relativity
relative concept
differs from country to country and even from region to region
8. Multidimensional
several dimensions
eg: micro and macro
9. Mutual Dependence
10. Diversity
11. Non Controllable
Importance of Business Environment
First Mover Advantage
advantage of early opportunities instead of loosing them to competitors
Early Warning Signal
makes a firm aware of the impending threat or crisis so that the firm can take
timely actions to minimize the adverse effects
Customer Focus
Business Environment 2
