What Is Bussiness Environment

Topics: Economics, Natural environment, Environment Pages: 4 (778 words) Published: September 4, 2013
What Is Business Environment?
Meaning: - The term Business Environment is composed of two words µBusiness¶ and µEnvironment¶. 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 µEnvironment¶ 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 1. 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, Political Factors, Socio-Cultural Factors, Demo-Graphical factors etc. It is of two Types: 1. 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. Micro/Operating Environment of organization. Business Internal Environment has two components: Environment

(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 (i) (ii) (iii) (iv) (v) Foreigners (3) Market Intermediaries: - They work as a link between business and final...
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