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Several internal and external factors directly or indirectly influence business operations. While some of these are within the business’s control, most of these are not; and the business has to adapt itself to avoid being affected by changes in such factors. Both of them combined forms the business environment. Today’s fast-paced business world witnesses a trend of a rather dynamic business environment – that is, it’s never stable. Hence, keeping track of these changing trends, demands, strategies, and policies is crucial in the business world. But first, what is a business environment and what are the factors that influence it? What Is Business Environment?A business environment is a combination of internal and external factors and forces that significantly influence the operations of a business. The business environment comprises an internal and external environment that directly or indirectly affects business operations.
Components Of Business EnvironmentThe business environment can be categorised into two types based on the factors within the control or outside the control of a business. Internal EnvironmentThe internal business environment constitutes several internal forces or elements within the control of a business that influences its operations. These include:
External EnvironmentExternal components are those factors that a business cannot control. These exist beyond a business’ jurisdiction and supervision limit. External components influencing a business environment are further classified into two categories:
Micro EnvironmentMicro environment is the business’s immediate external environment that influences its performance as it has a direct bearing on the firm’s regular business operations. It includes factors outside of the business’s control but can be analysed and worked upon by managing the business to prevent any business losses. Micro factors include:
Macro Environment: PESTLEThe macro environment includes remote environmental factors that influence an organisation. The extent of influence a macro element can have on a business is significant as they usually affect the industry as a whole. These factors are classified under PESTLE: P – Political, E – Environmental, S – Social, T – Technological, L – Legal, E – Economical.
Importance of Business EnvironmentThe market is essentially flooded with competing businesses. It is, thus, integral for a business to keep a lookout for the forces that affect it. Emphasis is laid on maintaining continuous interaction with a company’s business environment. Understanding this environment allows companies to –
Features Of Business EnvironmentA business environment is:
Go On, Tell Us What You Think!Did we miss something? Come on! Tell us what you think of our article on the business environment in the comments section. A startup enthusiast who enjoys reading about successful entrepreneurs and writing about topics that involve the study of different markets. |