business environment

Topics: Strategic management, Environment, Technology Pages: 7 (1075 words) Published: December 10, 2013

Lesson Objectives:

The factors that impact on business
The internal and external business environment

LESSON 1: The Factors That Impact on Business
According to Brooks and Weatherston (2000) business environment is a general concept which embraces the totality of external environmental forces which may influence any aspect of organizational activity.

Macro Environment
Micro Environment

Internal Environment
Mktg Intermediaries

Mission / Objectives
Management Structure
Internal Power Relationship
Physical Assets & facilities



Company image
Human resources
Financial Capabilities
Technological Capabilities
Marketing Capabilities

LESSON 2: The internal and external business environment
The Internal factors:
Any business has certain vision, mission and objectives and a strategy to achieve them. Formulation of strategy is defined as establishing a proper firm-environment fit. Indeed the objectives should be based on an assessment of the external environment and the organizational factors (internal environment).

 Vision
 Mission
 Objectives
 Management Structure
 Human Resources
 Financial Factors
 Company Image and Brand Equity

Micro Environment:
The Micro environment consists of different types of stakeholders - customers, employees, suppliers, marketing intermediaries, competitors. It is also known as the Task Environment and Operating Environment and has a direct bearing on the operations of the firm. Changes in the micro environment will directly affect and impinge on the firm's activities. Macro Environment

The macro environment consists of factors which are beyond the control of the business. There is a symbiotic relationship between business and the environmental factors, environmental factors are dynamic and a particular business firm, by itself, may not be in a position to change it’s environment. Macro Environment includes: 

Political Environment

 Economic Environment
 Technological Environment
 Socio-cultural Environment
 Global Environment.
 Technological is the systematic application of scientific or other organized knowledge to practical tasks.
 Technological environment hold new technological innovation, new products, the state of technology, the utilization of technology for maximum inputs and outputs, the

obsolescence of technology and the dynamic changes that frequently occur in technologies which enable firms to get a competitive advantage  Technology reaches people through business
 Helps in increased productivity
 Business needs to spend on R & D and keep up with the technological advances around them
 Technology leads to introduction of new products and older products becoming outdated and redundant.
 Technological advances leads to high expectations of consumers in terms of quality  Leads to system complexity
 Demand for capital
Political environment
Political Environment refers to the influence exerted by the three political institutions ie. legislature, executive and judiciary in shaping, directing, developing and controlling business activities.

 The constitution of a country
 Political Organization
 Political Stability
 Image of the country and its leaders
 Foreign Policy
 Laws governing business
 Flexibility and adaptability of laws
 The Judicial System
Economic environment
 Economic Environment refers to all forces which have an economic impact on Business.
 The economic environment consists of the demand dynamics, supply situation, pricing factors, degree of competitiveness, and impact of profitability. It includes the

fiscal policy, monetary policy and the taxation policy, the FDI norms, the investment criterion and financing decisions....

References: Brooks, I., Weatherston, J (2000). The Business Environment. Prentice Hall
Baron, D. Business and its Environment (2010). Prentice Hall
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