Posted by / Tuesday 24 October 2017 / No comments

Business Environment

Business Environment describes all the internal and external factors which can affect the way the business functions. These factors include the kind of employees, the nature of the customers and their expectations, the style of management, the laws and regulations that the business must follow, and the demand of the business' goods or service. These factors which forms the environment in which the business operates in have the potential to influence how fast or slow the business develops or grows. They also are able to affect how well the business performs and what becomes of the business in the end. 

Having a good understanding of the environment in which your business is operating is very important for you to be able to run the business successfully. Therefore, it is very critical for the manager of the business to learn about the factors that comes together to form the business environment. Sometimes these factors are also called the components of the business environment.

Meaning of Business Environment 
As we mentioned earlier, for a business to succeed, the manager must carry out the business activities in such a way that the business can change in response to the changes going on in the Business Environment.  For example, when a government comes out with a new policy, all well managed business must change the way they manage the business to conform to the government's new policy. Another example could be given for a new technology which makes the existing one seem outdated. A typewriter may be replaced by a computer because it is more efficient and easier to use. Another way to look at the business environment is think of how changes in fashion trends can reduce the number of people stuck with the old dressing mode. When jeans trouser came on the scene, the demand for other traditional clothes fell significantly. These changes are external factors that may not be within the control of the manager. What the manager can do is to find ways in which the business can adapt to these changes if it must remain in business.  

Another way of explaining what constitute Business Environment is to describe it as those external forces, factors and institutions which are out of the control of the business manager but which can affect the way the firm conducts its business. These factors consist of customers, competitors, suppliers, government, and the social, political, legal and technological factors etc. 

One must understand that whereas some of these elements or factors or forces could affect the business directly, other can only have an indirect impact on the company. Therefore, a business environment can be defined as the entire surrounding of the business which can affect the business either directly or indirectly such as economic factors, social factors, political and legal factors, demographic factors, technical factors etc., which cannot be controlled but which affects the decision taken by the management of the company.

Things to Know about the Business Environment
From the discussion we have had so far we can summarize the characteristics/features of the business environment as follows. 

1. The business environment is all the factors or forces or components which are external to the business or outside the company but which has a strong possibility of affecting the way the business operates. 

2. The business environment covers factors such as customers, competitors, governments, socio-cultural political technological and legal conditions 

3. The Business environment keeps changing. that means it is dynamic and not static. 

4. The changes which take place in the business environment are not easy to predict. The exact way in which the changes will occur and the extent of the changes are more often than not, unpredictable. 

5. The Business Environment is can be different from one place to another, from one country to another. This means that what we term as business environment is not the same in all places 
In the next section we will look at some of the components of Business Environment or factors in the 
Business Environment. 

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