Concept of Business EnvironmentA business firm is an open system. It gets resources from the environment and supplies its
goods and services to the environment. There are different levels of environmental forces.
Some are close and internal forces whereas others are external forces. External forces may
be related to national level, regional level or international level. These environmental forces
provide opportunities or threats to the business community. Every business organization
tries to grasp the available opportunities and face the threats that emerge from the
business environment. Business organizations cannot change the external environment but
they just react. They change their internal business components (internal environment) to
grasp the external opportunities and face the external environmental threats. It is,
therefore, very important to analyze business environment to survive and to get success for
a business in its industry. It is, therefore, a vital role of managers to analyze business
environment so that they could pursue effective business strategy. A business firm gets
human resources, capital, technology, information, energy, and raw materials from society.
It follows government rules and regulations, social norms and cultural values, regional
treaty and global alignment, economic rules and tax policies of the government. Thus, a
business organization is a dynamic entity because it operates in a dynamic business
Features of Business EnvironmentOn the basis of the above discussion the features of business environment can
be summarized as follows.
Business environment is the sum totals of all factors external to the business firm and that
greatly influence their functioning.
It covers factors and forces like customers, competitors, suppliers, government, and the
social, cultural, political, technological and legal conditions.
The business environment is dynamic in nature that means, it keeps on changing.
The changes in business environment are unpredictable. It is very difficult to predict the
exact nature of future happenings and the changes in economic and social environment. .
Business Environment differs from place to place, region to region and country to country