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Business Environment Definition

1306 Words6 Pages

1.1 Objectives:

After going through the chapter, you will be capable of:
i. Understanding Business Environment concept. ii. Significance of Business Environment. iii. Defining the nature and scope of Business Environment. iv. Environmental INTERNAL & EXTERNAL factors affecting business.
v. Describing the complexity of ‘external environment’ which functions the business. vi. Understanding business’s’ response to changing environmental factors to function successfully. vii. Also, how business try to influence environment.

1.2 Introduction

The term ‘environment’ is derived from a French word “Environia” which means ‘to surround’ in which organisms live. It refers to both non-living and living factors which constitute environment. Environment …show more content…

These include customers, competitors, suppliers, government, and the social, political, legal and technological factors etc. While some of these factors or forces may have direct influence over the business firm, others may operate indirectly. Thus, business environment may be defined as the total surroundings, which have a direct or indirect bearing on the functioning of business. It may also be defined as the set of external factors, such as economic factors, social factors, political and legal factors, demographic factors, and technical factors etc., which are uncontrollable in nature and affects the business …show more content…

It is clear that every business functions in a particular environment and each business unit has its own environment. Business is a mechanism of allocation the resources available to society between various possible uses (of competing wants and needs), the methods of production and the distribution of the output, in a situation of scarcity where not all wants can be satisfied.

1.6 Chief Characteristics of the Business Environment:

(1) Totality of External Forces: Business environment is the composition of all the totals forces which are present outside the business and business has no control over them. Due to the presence of different groups of such forces that is why, it has nature is of totality.

(2) Specific and General Forces: The forces present outside the business can be divided into two parts – specific and general.
(i) Specific: These forces affect the firms of an industry separately, e.g., customers, suppliers, competitive firms, investor etc.
(ii) General: These forces affect all the firms of an industry equally, e.g., social, political, legal and technical

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