An Overview Of Business

Environment

Concept Of Business Environment

Business Environment means the
aggregate of all the forces, factors and
institutions which are external to and
beyond the control of an individual
business enterprise but which exercise a
significant influence on the functioning
and growth of individual enterprises.
Nature of Business Environment
Aggregative: totality of all the external
forces which influence the working and
decision making of an enterprise.
Inter-related: various elements are
closely interdependent and any change in one
element affects the other elements.
Relative: it differs from country to country
and even region to region.
Contd.
Inter-temporal: it changes over time,
specially in long run, it changes
certainly.
Uncertain: business environment is
volatile so it becomes very difficult to
forecast.
Contextual: business environment
provides the macro framework within
which the business firm (a micro unit)
operates.
Significance of Business
Environment
First mover advantage
Early warning signal
Customer focus
Strategy formulation
Change agent
Public image
Continuous learning

Types of Business
Environment
Business environment
Internal environment External environment
Micro environment Macro environment
Factors of Internal Environment
Factors
culture
Mission & objectives
Top management structure
Power structure
Company image & brand equity
Human & other resources
Elements of Micro Environment
Micro Environment
customers
Competitors
suppliers
Marketing intermediaries
financiers
publics
Various components of Macro
Environment
Political & Legal Environment
The constitution of
the country
Political organization
Political stability
Defence & military
policy
Laws governing
business
The judicial system
Social & Cultural Environment
Demographic forces
Caste structure &
family organization
Educational system
& literacy rates
Customs, beliefs &
life styles
Taste & preference
of people.
Economic & Financial
Environment
Nature of economic
system
Economic structure
Economic policies
Economic
infrastructure

Technological & Physical
Environment
Rate of technological
change
Approaches to
production of goods
& services
Research &
development
systems
New approaches &
equipments
Natural Environment
Climatic conditions
Agricultural,
commercial & other
natural resources
Ecological system
Levels of pollution
Global Environment
International
agencies
Treaties &
agreements
Economic &
business conditions
in other countries

Coping with Environmental
changes
Buffering
Leveling
Anticipation
Rationing
Dominating
Changing

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