am going to explain to you what is a business environment, its salient features, and components. Business environment in simple words, the term business environment can be understood as the surrounding in which the business enterprise operates, it covers all the factors which can be affected by its plans, strategies, policies, and moves as well as the factors which can affect the firm’s plans, policies, strategies, and operations.
Basically, it is the combination of all the individual’s forms, forces, and factors that may or may not be under the control of the business organization and has a direct or indirect impact on its survival, growth, performance, and profitability.
So, we can say that each and every element which can influence and be influenced by the business enterprise is covered under the term business environment.
Now, we will discuss the salient features of the business environment.
Dynamic as a natural environment, the business environment is ever-changing in nature because there are a number of factors that exist in the business environment, whose influence can lead to change in the shape, character, policies, plans, and business strategy of the company. the multifaceted business environment is multifaceted that is a small change in the environment can be viewed differently by different experts, analysts, and observers far-reaching impact business environment have a widespread impact meaning that a single change can affect the survival growth profitability, and performance of the enterprise relativity, the business environment is very much affected by the local conditions and situations in which the business is set up. And that is why business environment is different in different geographical locations. complex business environment is a plethora of different factors, events and conditions arising from a number of factors. So, it is quite difficult sometimes to identify which factor is causing it to change uncertain, uncertain, it is the basic characteristic of business and so does the business environment as one can not say exactly what can happen in future only predictions can be made interrelatedness there are many factors in the business environment, which are interrelated and that is why sometimes a small change in one factor can lead to the change in another factor also. Now, we will discuss the components of business environment. business environment is divided into two categories, internal environment and external environment furthers the external environment is subdivided into micro environment and macro environment. What is internal environment, internal environment refers to the environment that contains those factors which affects the business enterprise directly these factors can be controlled by the firm as well as the firm can modify it accordingly. So as to be in sync with the overall business environment. Basically, the internal environmental factors reflects the pillars of the business which imparts strength or cause weakness to the organisation. Now, we will discuss internal environmental factors value system, a company’s value system covers the culture climate policies and norms. In short, it is a basic framework of the organisation and every member of the organisation has to work within this framework, which can be modified as per the requirement, vision mission and objectives. A company’s vision says about its future destination mission defines its business and the reason of its existence whereas objective state its ultimate aim and the ways through which it can achieve those objectives. organisational structure a firm’s organisational structure describes the way its activities and operations are directed such as organisational hierarchy, delegation of tasks, composition of board of directors etc. corporate culture, corporate culture refers to the organization’s values, beliefs and behaviour, which determines the way in which organisations employees and management communicate human resources, human resources that is employees and workers are the most valuable asset of the company which decides its success and failure, physical resources and technical capabilities. The tangible assets which a company owns comes under physical resources, which determines its competitiveness. Secondly, technical capabilities determine its technical know how
external environment, external environment refers to the environment which can affect the business directly or indirectly as it contains those elements which are not under the control of business. These factors provide opportunities of post trade to the business it contains microinverter environment micro environment covers those factors which fall under the immediate periphery of the business enterprise. Macro environment, macro environment covers those factors which are outside the control of business and can directly affect its functioning efficiency strategies performance and profitability. Now, we will talk about factors covered by micro environment. Suppliers suppliers are the individuals and forms that supplies raw material and various factors of production required for running the business customers customers are the individuals that purchase the product and pays the price for it customers are regarded as King of business the primary purpose of the firm is to satisfy its customers by providing the best quality product at reasonable prices. intermediaries, intermediaries implies the channel of distribution opted by the company for the distribution of its product. competitors, competitors are the business rivals, they can be market leaders, followers, challengers etc. employees. As we have already discussed, employees are the biggest asset of an enterprise which creates a difference and eligible and qualified workforce can do miracles to the company. The company’s success or failure depends on them. stakeholders. Stakeholders include all the interested parties which can be directly or indirectly affected by company’s actions. It includes debtors, creditors, shareholders, etc. Lastly, media media owns the strongest place at present, every company requires media to promote its products and services. Further, any negative news regarding the company or its offerings may lead the company to losses. Come let’s have a look on macro environmental factors political and legal environment. The political and legal environment of the country in which the company operates has a great influence on it whenever there is any change in the government or legal rules and policies economic environment, the economic conditions of the country and the performance of the company are interdependent as the form is dependent on economic for various factors of productions. And so, if the economy is doing well, it will be reflected in the performance of the enterprise socio cultural environment. A company has certain social and cultural values, which are reflected in its corporate social responsibility implemented by the company it is just a way of paying back to the society and nature for the resources used physical environment. physical environment refers to the environment in which the form is set up. The geographical location often affects and determine most of the business plans and decisions such as availability of raw material, locational decisions, nearby market, transportation facilities, etc. Technological environment as we all know that technology is changing rapidly with time and in the last few years, we have seen a drastic change in the way we communicate, travel and socialise. So a company has to continuously work on the technology to walk a step ahead of its competitors or else the survival would be difficult global environment. There are some companies which operate in multiple countries. And so along with the National environment, they also have to look after the global environment. The factors that affect the multinational companies include foreign policies, foreign trade, foreign investment policies, trade practices, trade rules, etc. So friends this brings me to the end of this lesson. I hope this concept has been cleared from today’s lesson, too Guys, please like this video, share it with your friends, and if you have any queries or feedback for me, then feel free to comment below. Don’t forget to subscribe our channel and hit the bell icon. If you haven’t subscribed yet to never miss an update from key references. Until next time, this is Miss will be signing off