BUSINESS ENVIRONMENT

 

BUSINESS ENVIRONMENT

The word business environment indicates the aggregate total of all people. Everything that affects the working of a business is part of business environment. Here some factors affect business working internally and some factors affect externally. Business environment play a very important role in success of a business. Business environment includes Men Power, Machines, Management, Money, Material, Supply chain, Government policies etc. are part of business environment.

Business Environment is sum or collection of all internal and external factors. These factors affect the function of company and how a company works directly and indirectly. Such of these factors influences the companies or business organizations environment and situations.

INTERNAL ENVIRONMENT

It Include five “M’s” Man, Machine, Management, Money and Material usually with in the control of business. These are the factors who affect working of a business internally. These factors are controllable by business.

EXTERNAL ENVIRONMENT

- These factors are beyond the control of business enterprise are included in external environment.

- These factors are: Government and legal factors, Geographical factors, Political Factors etc.

- External factors are classified in two categories:

1. Micro Environment.

2. Macro Environment.

MICRO ENVIRONMENT

v  The environment which is close to business and effect it’s capacity of working known as Micro environment.

v  It consists of:

·        Suppliers.

·        Customers.

·        Market intermediaries.

·        Competitors.

·        Public.

 

Suppliers: The persons who supply raw material and required components to the company.

Customers: Customer are regarding as the king of the market. Success of every business depends upon the level of customer satisfaction.

Market Intermediaries: They work as link between business and final consumers. Type of market intermediaries are: Middle men, Marketing agencies, financial intermediaries etc.

Competitors: competitors are the businesses who create similar products in the market. Every move of competitors affects the business. Like- we take the example of coffee Brue and Nestle both are the leading coffee manufacturing brands, if price of Brue are increased by company so it is a positive effect for Nestle because by increasing competitive industry’s product price customers start consumption of nestle coffee.

Public: any group who entrusted in business enterprise is termed as public. Example: Media and Local public.

MACRO ECONOMICS

-        It includes factors that create opportunities and threats to business units.

-        Elements of Macro Economics:

1.      Economic Environment.

2.      Non- Economic Environment.

 

ECONOMIC ENVIRONMENT

It includes money related factors. It is very complex and dynamic in nature that keeps on changing with change in policies and political situations.

It has three elements:

1.      Economic conditions of public.

2.      Economic policies of country.

3.      Economic system.

4.       Some other economic factors.

NON ECONOMIC ENVIRONMENT

1.      Political environment.

2.      Socio cultural environment.

3.      Technological environment.

4.      Natural environment.

5.      International environment.

Political environment: It refers to the influence exerted by three political institutions-

1.      Legislature

2.      Executive

3.      Judiciary

In shaping directing, developing and controlling a business activities.

 Sociocultural environment: It refers to the activities who affect to environment of industry by society, culture, trend etc.

Technological environment: Technology is one of the most important things for an industry. Production of any industry depend on their machines if machines are updated and now so it produce huge units in minimum resources or if machine is old so it create much pollution and also want resources at high level.

Natural environment: the production of secondary sector are depend on primary sector resources in primary sector are natural resources like: milk, wheat, wood, cotton etc. are product by which finished goods are create by company for selling in market.

International environment: International environment mainly affect those industries which are directly depend on import and export. International environment is concerned with foreign policy, foreign exchange policy and international trade agreements.