The document defines business environment as all internal and external factors that affect how a company operates, including employees, customers, management, supply and demand, and business regulations. It notes that the business environment provides opportunities to identify threats and opportunities for growth, helps companies learn continuously and build their image, meet competition, and identify their strengths and weaknesses. Understanding the business environment also allows companies to maintain stability and dynamism by adapting to changes.
2. What Is Business Environment?
Business environment means all of the internal and external factors that
affect how the company functions including employees, customers,
management, supply and demand and business regulations.
3. Keith Davis (1986): “Business environment is the aggregate of all conditions,
events and influences that surround and effect a business.”
V.P. Michael: “Business environment is the sum total of the environmental
factors which provide an atmosphere for business.”
5. Determining Opportunities and Threats:
to identify Opportunities and getting the first mover
advantage.
to identify threats and early warning signals.
6. Giving Direction for Growth:
to opening up new opportunities of growth for the business
firms.
to identify the areas for growth and expansion of their
activities.
7. Continuous Learning:
Easy in dealing with business challenges.
Managers are motivated to update their knowledge and
skills.
8. Image Building:
by showing their sensitivity to the environment within which
they are working.
9. Meeting Competition:
analyze the competitors’ strategies and formulate their own
strategies
alliance with other organization for mutual gain.
10. Identifying Firm’s Strength and
Weakness:
analyze external environment.
to identify the individual strengths and weaknesses in view
of the technological and global developments.
11. Stability:
Identify the impact of environmental changes,
develop action plan to cope with changes to maintain
stability.
