Understanding the World of Business Environment

Business environment means the sum total of all institutions, individuals and other forces which is located outside the enterprise but has influence on the functioning and performance of the business enterprise. 

Features of Business Environment that are essential for help in homework or assignment help usa in Commerce: –

  1. Totality of external forces: Since business environment is the sum total of all factors and external to business enterprise that is why it is aggregative in nature. 
  2. Interrelatedness: Business environment has different closely related elements. For example, increase in the demand for health food and health resorts has been increased due to growing awareness for health care. 
  3. Complexity: As the business environment contains several interrelated elements which keep on changing, it is complex in nature. For example, it is very difficult to know the impact on social, technological, economic, political and other forces on change in demand for products.
  4. Uncertainty: Since it is very difficult to predict the future events especially changes in fashion and technology the occurrence of which is very fast and frequent, business environment is largely uncertain. 
  5. Relativity: Since the business environment differs from region to region as well as from country to country, it is known as a relative concept. For example, sarees’ demand is quite high in India but is almost non-existent in Japan. Similarly, political conditions in Iraq are way much different from the political conditions in India.

Importance of Business Environment, that must be noted for help in homework or homework help usa on the topic: –

  • Both opportunities and constraints are provided by the environment to the business.
  • If we have knowledge about the environmental changes, it would be very helpful to formulate and implement the business policies.
  • Before formulating strategic plans and establishing objectives, it is essential to forecast environmental conditions.

DIMENSIONS OF BUSINESS ENVIRONMENT 

Micro environment: 

Micro environment means those internal and external factors which directly influence the performance and working of an individual business organization. It is classified into two categories which are as follows: 

  • Internal factors: 

Internal environment means all the factors which exist in the business firm. Since the enterprise has control over them, the internal factors are considered controllable. There are some main internal factors which are responsible to influence business organization:

  1. Corporate Culture: The beliefs, values and attitudes of the top management and founders of the company have a very strong influence on how the company does things, what it stands for and what it considers important.
  2. Mission and Objectives: The purpose of the company and its business philosophy guides its business strategies, development process, priorities and product market scope.
  3. Company Image and Brand Equity: The company’s image and brand equity have a very strong significance in forming alliances, launching new products, raising finance, choosing dealers and suppliers, entering foreign markets, etc.
  4. Human and other Resources: The morale, motivation and strong influence of employees has a very strong influence for the firm to succeed. A large-scale modernization and restructuring could be easily carried out by Tata Steel.
  5. Top Management Structure: The degree of professionalization of management, the composition of the board of directors and the organizational structure of the company has a strong influence on its business decisions
  • External factors: 

The individuals and groups or agencies which comes into direct and frequent contact with a particular business organization, in the course of its functioning, are called external factors. There are some main external factors which are responsible to influence business organization:

  1. Customers: Due to increasing liberalization and globalization of the economy, the customer environment is becoming global. The customer is becoming more global in the matter of shopping due to the opening up of the Indian market and foreign market.
  2. Competitors: Indian companies are now facing competition from both multinational corporations and domestic firms due to economic globalization and liberalization. 
  3. Marketing intermediaries (Middlemen): There are several marketing intermediaries who help a company to sell, promote and distribute its products to consumers. Middlemen like wholesalers, agents and retailers act as a link between the company and its customers.
  4. Financiers: The financial institutions, banks, shareholders and debenture holders provide finance to a company. Policies, financial capacities and attitudes of financiers are important factors for the company. 
  5. Publics: Those groups which have actual or potential interest in the company or who have the power to influence the ability of the company to achieve its objectives, are called publics. For example, environmentalists, local community, media groups, non-government organizations, etc.

Macro environment: 

Micro environment means the general environment or remote environment under which the forces in its micro environment and business firm operates. There are following components which the macro environment consists of:

  1. Economic Environment: The factors and forces concerning means of production and distribution of wealth are related to the economic environment. It has some main components:
  1. Economic policies such as monetary policy, trade policy, etc.
  2. Industrial infrastructure such as communication, transport, power, etc.
  3. Market conditions that are, degree of competition. 
  4. Social environment: The social and cultural forces within which business firms operate is related to the social environment. It has some main components:
  1. Demographic trends such as age compositions, rural-urban mobility, size and distribution of population, life expectancy, etc.
  2. Customs, rituals, lifestyles, social attitudes, traditions, culture, etc.
  3. Social concerns regarding corruption, role of media, pollution, status of women and minorities, etc.
  4. Technological environment: Technological environment means the state of technology and science in the country and also the related aspects such as institutional arrangements for the development and applications of new technology, equipment, rate of technological change, manufacturing processes, etc. It has some main components:
  1. Facilities which are provided for research and development.
  2. Legal protection given to intellectual property rights.
  3. Spirit of innovation and invention among people.
  4. Political environment: The forces which are concerned with management of public affairs and their impact on business, are related to the political environment. It has some main components:
  1. The stability and political philosophy of the government.
  2. The political structure that is center-state relations. 
  3. Defense policy of the country. 

Leave a Reply