Business environment established and operated in the environment. The sum total of all factors and forces that affect and influence the operation of a business is called business environment. It is a surrounding where the business organization exists. Business starts operate and die in an environment. Business environment either provide opportunities or threat. Monitoring environmental changes have a very important place and role in the efficient functioning of a business. 

According to S.P Robbins, "Environment refers to the institution or forces that affect business performance”

According to Keith Davis, "Business environment refers to institutions or forces that affect the organization's performance.

Business is surrounded by many factors like employees, political, technological, suppliers, customers, etc. A business institution gets the input from the environment and transfers them into the output to supply again in an environment. When the environment in the business is supportive it will be a reason for success. In another case, it will import the threat to business.

In conclusion, business environment refers to the aggregate of all the factor which influences the business operation. It is composed of an internal and external environment. The internal environment is controlled by business whereas externally is not controllable by business

Business environment has two factors
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Components of External environment:

  1. General Environment
  2. Political/Legal Environment
  3. Economic Environment
  4. Socio-cultural Environment
  5. Technological Environment
  6. Specific/Task environment


Components of Internal environment:

  1. Employee
  2. Organizational Structure
  3. co-operative Culture
  4. Shareholders
  5. Employee Union

ThBusiness Organization establishes,  grows , operates in the environment. The sum total of all factors and forces that affect and influence the operation of a business is called business environment. It is a surrounding where the business organization exists. Business starts operate and die in an environment. Business environment either provide opportunities or threat.

According to S.P Robbins, "Environment refers to the institution or forces that affect business performance”

According to Keith Davis, "Business environment refers to institutions or forces that affect the organization's performance.

Business is surrounded by many factors like employees, political, technological, suppliers, customers, etc. A business institution gets the input from the environment and transfers them into the output to supply again in an environment. When the environment in the business is supportive it will be a reason for success. In another case, it will import the threat to business.

In conclusion, business environment refers to the aggregate of all the factor which influences the business operation. It is composed of an internal and external environment. The internal environment is controlled by business whereas externally is not controllable by business.

 

Components of Business Environment

Internal Environment
 The sum total of all factor and process that are inside the business and affects the operation of a business is called internal environment. The environmental factors such as employee, organization, structure, corporate culture, employees, union etc. compose the internal environment. Internal Environment includes all those factors which influence business and which are present within the business itself. The components of internal environment are described below:

  1. Employee
  2. Organizational Structure
  3. co-operative Culture
  4. Shareholders
  5. Employee Union

Employee
They are the people who work for the organization for salary. They provide mental and physical when employees are talented, skilled, experience, it will make the business strong. In opposite case, the organization will be weak. They are the assets of an organization and part of the organization.

Organizational Structure
Organizational structure is concerned with an overall  framework for different roles, functions, and authority. The flow of communication and proper position relation in business is called organizational structure. It is a framework of an organization. The structure of the organization as well has the impact operation of business. When the organization structure is simple and easy to understand it will help in the achievement of an objective.

Co-operative Culture
The feeling that members in ana organization share is called culture.  The production organization supportive of goal achievement. The non-cooperative and conflicting culture makes organization weak.Sometimes, companies allot shares to its employees which encourage employees to work hard. Therefore, co-operative culture is an important internal environment to affect the business operation.

Shareholders
The shareholders are the owners and have a direct interest in the performance of business.  They are the key people to elected board of directors. The experiences effective directors are available only when there are educated shareholders. Therefore, the e shareholders of the company are important internal environment factors.

Employee Union
The labour union is formed to solve the problems of labour involved in the organization. It is there a preventive body of employees. It helps and solves the employee's problem when employees union is stronger and against to the business. Some business includes labour union leaders on the management board. They involved in decision-making process of an oganization

Business environment is classified into internal and external which are explained below:

 Internal Environment
 The sum total of all factor and process that are inside the business and affects the operation of a business is called internal environment. The environmental factors such as employee, organization, structure, corporate culture, employees, union etc. compose the internal environment. Internal Environment includes all those factors which influence business and which are present within the business itself. The components of internal environment are described below:

  1. Employee
  2. Organizational Structure
  3. co-operative Culture
  4. Shareholders
  5. Employee Union

Employee
They are the people who work for the organization for salary. They provide mental and physical when employees are talented, skilled, experience, it will make the business strong. In opposite case, the organization will be weak. They are the assets of an organization and part of the organization.

Organizational Structure
Organizational structure is concerned with an overall  framework for different roles, functions, and authority. The flow of communication and proper position relation in business is called organizational structure. It is a framework of an organization. The structure of the organization as well has the impact operation of business. When the organization structure is simple and easy to understand it will help in the achievement of an objective.

Co-operative Culture
The feeling that members in ana organization share is called culture.  The production organization supportive of goal achievement. The non-cooperative and conflicting culture makes organization weak.Sometimes, companies allot shares to its employees which encourage employees to work hard. Therefore, co-operative culture is an important internal environment to affect the business operation.

Shareholders
The shareholders are the owners and have a direct interest in the performance of business.  They are the key people to elected board of directors. The experiences effective directors are available only when there are educated shareholders. Therefore, the e shareholders of the company are important internal environment factors.

Employee Union
The labour union is formed to solve the problems of labour involved in the organization. It is there a preventive body of employees. It helps and solves the employee's problem when employees union is stronger and against to the business. Some business includes labour union leaders on the management board. They involved in the decision-making process of an organization.

External Environment
External environment includes all those which influence business and exist outside the business. It is also referred as macro-environment. The environmental factors like legal-political technological, social, competitors, customer’s suppliers, etc. are the element of the external environment. As these factors are outside the business they can't be controlled by business. Business has to accept and adopt the external environment will provide opportunities and the threat to business. The following are the components of external environment:

  1. General Environment
  2. Political/Legal Environment
  3. Economic Environment
  4. Socio-cultural Environment
  5. Technological Environment
  6. Specific/Task environment
    .
    General environment:
    The environmental factors that are outside and business has long term. A business can only adopt this environment to exist. At the impact of the general environment in business can be seen after a long time.

    Political/Legal Environment:
    Political ideologies and thinking also affect the business. The environmental factors that are outside and business has long term. A business can only adopt this environment to exist. At the impact of the general environment in business can be seen after a long time. Political environment consists of government in power, its attitude towards industries and rules and regulations form by the government

    Socio-cultural Environment:
    It involves goods, norms system values and beliefs of society. The culture of society as well as provided the basis for accepting specific business and its product. A business has to accept ermine succeed respect the social culture where it does exist. Therefore, social culture is the important external environment to determine business success failure.

    Technological Environment:
    It consists of new products, new techniques and new approaches to production, new methods  and new equipment.  The technological factors like new methods of production new communication tools modernized equipment are the key factors for business success. Therefore, a business has to consider the technological environment.
     
    Specific/Task Environment:

    The environmental factors which are outside the business and are not controllable but can be manage are called task specific environment. The effects in task environment in business can be seen directly in the general environment. The task environment is composed of the following factors:

  • Customers
  • Suppliers
  • Competitors
  • Government
  • Pressure groups 
  • Financial institution