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What Exactly is Business Environment?

24th Aug, 2016, Published by PU-Staff

Businesses do not function in isolation. Manpower, time, and resources are needed to run a business and an integration of all three is the perfect formula for success. The sum total of all the internal and external factors having an influence on the business is defined as the ‘Business Environment’. Internal factors over which the business has control are the organisational structure, management strategy, staffing, location of the industry and choice of technology.

The internal factors that have a bearing on the business can be altered to suit the policies and practices of the organisation. However, there are a host of external factors over which an organisation cannot exercise control, but has to sail along to sustain itself in the business environment.

The external factors in a business environment include

Macro-economic factors: Recessionary conditions, inflation, currency exchange rates, consumer income, consumer savings rate, and interest rate fluctuations affect the economy as a whole. These have a significant impact on your business and it is beyond your capacity to alter these factors.

Micro-economic factors: Demand-supply conditions, size of the market, relationship with vendors, and competitors are some of the micro-economic factors that can affect your business.

Political factors: A business has to abide by the governmental laws and regulations. Political unrest, trade barriers, tax rate structure, laws and regulations can affect your business.

Technological factors: Technology innovations can have a positive as well as a negative effect on your business. On one side internet marketing can widen your consumer base and rake in profits; the flip side is counterfeiting and copying can lead to loss of brand value.

Social factors: Change in fashion trend, opting to “Go Green” are welcome moves that change the attitudes of the society as a whole. These widespread social changes definitely have a profound bearing on the business environment.

To sustain itself in a dynamic environment, a business needs professionals who can analyse the causative factors and alter business strategies such that the organisation can perform at its optimum within the business environment. Online education has opened the doors for professionals to get updated with the latest developments in their area of work. These industry specific courses have helped businesses to employ professionals who can efficiently lead the organisation towards its set goals.


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