Scribd
Upload
2 views

BE Introduction

The Business Environment encompasses the social, legal, economic, political, and institutional conditions that affect an organization's functioning and is divided into internal and external environments. The internal environment includes controllable factors like man, material, money, machinery, and management, while the external environment consists of uncontrollable factors categorized into micro (operating) and macro (general) environments. Key components of the macro environment include economic, political, socio-cultural, technological, natural, demographic, and international factors, all of which influence business operations and strategies.

Uploaded by

Melby Joseph
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
2 views

BE Introduction

The Business Environment encompasses the social, legal, economic, political, and institutional conditions that affect an organization's functioning and is divided into internal and external environments. The internal environment includes controllable factors like man, material, money, machinery, and management, while the external environment consists of uncontrollable factors categorized into micro (operating) and macro (general) environments. Key components of the macro environment include economic, political, socio-cultural, technological, natural, demographic, and international factors, all of which influence business operations and strategies.

Uploaded by

Melby Joseph
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 15

Business Environment

An
Introduction
Meaning
⚫The term Business Environment is composed of
two words ‘Business’ and ‘Environment’.
⚫In simple terms, the state in which a person
remains busy is known as Business. The word
Business in its economic sense means human
activities like production, extraction or purchase
or sales of goods that are performed for earning
profits.
⚫On the other hand, the word ‘Environment’ refers
to the aspects of surroundings.
⚫Therefore, Business Environment may
be defined as a set of conditions – Social, Legal,
Economical, Political or Institutional that are
uncontrollable in nature and affects the
functioning of organization.
⚫Business Environment has two components:
1. Internal Environment
2. External Environment
⚫Internal Environment: It includes
5 Ms i.e. man, material, money,
machinery and management, usually
within the control of business.
Business can make changes in these
factors according to the change in
the functioning of enterprise.
⚫External Environment: Those
factors which are beyond the control
of business enterprise are included
in external environment. These
factors are: Government and Legal
factors, Geo-Physical Factors,
⚫External Environment is of two types:
1. Micro/Operating Environment
2. Macro/General Environment
Micro/Operating Environment:
The environment which is close to
business and affects its capacity to work
is known as Micro or Operating
Environment. It consists of Suppliers,
Customers, Market
Intermediaries, Competitors and Public.
(1) Suppliers: – They are the persons
who supply raw material and required
components to the company. They must
be reliable and business must have
multiple suppliers i.e. they should not
depend upon only one supplier.
(2) Customers: - Customers are
regarded as the king of the market.
Success of every business depends
upon the level of their customer’s
satisfaction. Types of Customers:
(i) Wholesalers
(ii) Retailers
(iii) Industries
(iv) Government and Other
Institutions
(v) Foreigners
⚫(3) Market Intermediaries: - They
work as a link between business and
final consumers. Types:-
(i) Middleman
(ii) Marketing Agencies
(iii) Financial Intermediaries
(iv) Physical Intermediaries
⚫(4) Competitors: - Every move of
the competitors affects the business.
Business has to adjust itself
according to the strategies of
the Competitors.
⚫(5) Public: - Any group who has
actual interest in business enterprise
is termed as public e.g. media and
local public. They may be the users
or non-users of the product.
Macro/General Environment:
It includes factors that create opportunities
and threats to business units. Following
are the elements of Macro Environment:
(1) Economic Environment: - It is very
complex and dynamic in nature that keeps
on changing with the change in policies or
political situations. It has three elements:
(i) Economic Conditions of Public
(ii) Economic Policies of the country
(iii)Economic System
(iv) Other Economic Factors: –
Infrastructural Facilities, Banking,
Insurance companies, money markets,
⚫(2) Non-Economic Environment:
- Following are included in non-economic
environment:-
(i) Political Environment: - It affects
different business units extensively.
Components:
(a) Political Belief of Government
(b) Political Strength of the Country
(c) Relation with other countries
(d) Defence and Military Policies
(e) Centre State Relationship in the Country
(f) Thinking of Opposition Parties towards
Business Unit
Com - 1 - Business Environment, An
Introduction
⚫(ii) Socio-Cultural Environment:
- Influence exercised by social and cultural
factors, not within the control of business,
is known as Socio-Cultural Environment.
These factors include: attitude of people to
work, family system, caste system,
religion, education, marriage etc.
⚫(iii) Technological Environment: - A
systematic application of scientific
knowledge to practical task is known as
technology. Everyday there has been vast
changes in products, services, lifestyles
and living conditions, these changes must
be analysed by every business unit and
should adapt these changes.
⚫ (iv) Natural Environment: - It includes natural
resources, weather, climatic conditions, port facilities,
topographical factors such as soil, sea, rivers, rainfall
etc. Every business unit must look for these factors
before choosing the location for their business.

⚫ (v) Demographic Environment :- It is a study


of perspective of population i.e. its size, standard of
living, growth rate, age-sex composition, family size,
income level (upper level, middle level and lower level),
education level etc. Every business unit must see these
features of population and recognise their various need
and produce accordingly.

⚫ (vi) International Environment: - It is particularly


important for industries directly depending on import
or exports. The factors that affect the business are:
Globalisation, Liberalisation, foreign business policies,
cultural exchange.
Characteristics:-
⚫1. Business environment is compound in nature.
⚫2. Business environment is constantly changing
process.
⚫3. Business environment is different for
different business units.
⚫4. It has both long term and short term impact.
⚫5. Unlimited influence of external
environment factors.
⚫6. It is very uncertain.
⚫7. Inter-related components.
⚫8. It includes both internal and external
environment.
Thank you

You might also like