Business Environment

Concept of Business Environment

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source:www.slideshare.net

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

source:blendedstuff.blogspot.com
source:blendedstuff.blogspot.com

The business environment is broadly categorized into two type that is an internal and external 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 makes the organization stronger or weak if they are supportive and against the business respectively. Internal environment factors are controllable and can manage by business. The elements of internal environment are as follows:

  1. Employee
  2. Organizational Structure
  3. Co-operativeCulture
  4. Shareholders
  5. Employee Union

  1. Employee

They are the people who work in the organization for salary. They provide mental and physical ability when employees are talent, skilled and experience and this will make the business strong. In opposite case, the organization will be weak.

  1. Organizational Structure:

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 in operation of business. When the organization structure is simple and easy to understand it will help in the achievement of an objective.

  1. Co-operative culture:

The norms, values, system and beliefs of the organization refer to the organization culture. The organizations that haveco-operativeculture help in achieving goal effectively. The non-cooperative and conflicting culture makes organization weak. Therefore, co-operative culture is an important internal environment to affect the business operation.

  1. Shareholders:

They are the investor 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.

  1. Employees Union:

It is a preventive body of employees. It helps and solves the employee's problem, when employees union is stronger and against the business. It makes the organization weak. To becomesuccess, a business needs supportive employees union.

External Environment

The sum total of all the factor and forces that are outside the business and affects the operation of business is called external environment of business. The environmental factors like legal, political, technological, social, competitors, customers, 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 that will provide opportunities and the threat to business.

The external environment is broadly classified in the following ways:

  1. General Environment
  2. Specific/Task environment

1. General environment:

The environmental factor that belongs to external environment and business has long term effects with this. Some of the factors of general environment are as follows.

  • Political/Legal Environment:

The number of political parties and their ideology represent the political environment. The legal environment like the legislature, executive, judiciary etc. has the impact in an operation of a business. A business must be proactive to know the changes in this environment and to adopt in this business because this environment is not the controllable factors.

  • Economic Environment:

The Economic system determines the economic environment. The factors like level of income (per capita income), output of a country, a rate of influences etc. make economic environments. A business has the higher chance of growths expansion in a good economic environment.

  • Socio-cultural environment:

It involves norms, values and beliefs of society. The culture of society provides the basis for accepting specific business and its product. A business has to accept and respect the social culture where it does exist. Therefore, social culture is the important external environment to determine business success or failure.

  • Technological Environment:

The method and forces of converting raw materials into output largely depend upon the level of technology. The application of modernized technology in business operation will help in the achievement of objectives efficiently and effectively. The technological factors like new methods of production, new communication tools and modernized equipment are the key factors for business success. Therefore, a business has to consider the technological environment.

2. Task/Specific 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: They are the people who purchase product or service by paying money. A satisfied customer is an important element for business success. Therefore, a business must understand changing needs, interest and preference of a customer.
  • Suppliers: They are the people and institution who provides resources and materials to business. To become success, an enterprise has to maintain the warm and healthy relationship with suppliers.
  • Competitors: They are the business institution who provides similar kind of product or services. If the business doesn't give care about competitor’s activities, the business may lose its customers. Therefore, a manager must be careful regarding the activities of competitors.
  • Government: It is a regulatory institution who provides laws and facilities for business control and growth. A business has to understand changing rules, regulation and laws of government regarding business because business cannot go against government rules.
  • Pressure groups: The organization like customer rights association, social clubs, media clubs, environmental list etc. form pressure group for business. For any business, to become success, it has to maintain healthy relation with pressure groups.
  • Financial Institution: It consists of commercial and development bank, finance, companies, insurance etc. These institutions provide loan facilities to business in case of money shortage. Therefore, a business has to maintain good relation with financial Institution.

References:

Khanal, Soma Raj, Surendra Thapa Aslami and Sitaram Dhakal.Business Studies.Kathmandu: Taleju Prakashan, 2067.

Pant, Prem R., et al.Business Studies.Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd., 2010.

  1. The sum total of all factors and forces that affect and influence the operation of a business is called business environment.
  2. Business is surrounded by many factors like employees, political, technological, suppliers, customers, etc
  3. The sum total of all factor and process that are inside the business and affects the operation of a business is called internal environment.
  4. The sum total of all the factor and forces that are outside the business affects the operation of a business is called external environment of business

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
source:blendedstuff.blogspot.com:

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
0%
  • According to __________"Business environment is the aggregrate of all conditions,events,and influences that suround and affect it"

    L.H Haney
    James Stephenson
    Keith Davis
    R.N ownes
  • According to______"Environment refers to institution or forces that affect the organization's performance"

    L.H Haney
    R.N ownes
    Keith Davis
    Robbins and Coulter
  • ________are the Internal Environment of Business.

    All
    Board of directiors
    Organizational structure
    The shareholders or owners
  • _________are the external Environment of Business.

    Economic
    All
    Political
    Social
  • The legal surroundings which affect the business activities are called_________.

    Political
    Economic
    legal componets
    Technological
  • The representatives of the shareholders of a joint stock company are called_____________

    Organizatinal resources
    Organizational structure
    Boarad of directors
    Orrganizational culture
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