The document discusses the relationship between businesses and their external environments, emphasizing the role of external influences such as political, economic, sociocultural, technological, legal, and ecological factors. It outlines stakeholder involvement, highlighting their influence on business objectives and success, and introduces the open system model to explain how businesses interact with their environments. Additionally, it examines the impact of digital environments and technologies on business operations, illustrating the shift from traditional to digital transactions.

1. University of Lagos
Faculty of Management Sciences
Department of Business Administration
B.Sc. Business Administration
Course: BUS 221/261 – Introduction to Management and
Nigerian Business Environment
Topics: The Business and Environment
Lecturer Notes
By
Simeon E. Ifere, Ph.D., FNIM

2. BUSINESS
In a broad sense, business may be a profit on non profit
making organization.
However, business is often seen as a profit oriented
organization which is formed to make returns for its
owner(s). In this context, business includes:
• Industry responsible for manufacturing and production
of goods
• Commerce which involves buying and selling
• Services, including banking, financial services,
insurance, and professional services
• Agro, which involves farming
RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT

3. • A business may be defined as an activity concerned
with provision of goods and services to meet the needs
of consumers / customers in order to earn a profit or
achieve a predetermined objective.
RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT

4. THE (BUSINESS) ENVIRONMENT
• The Environment includes the issues, trends and
events outside the boundaries of the business
organisation which influence internal decisions and
behaviours (Buchanan & Huczynski, 2004).
• The elements in the external environment are political,
economic, sociocultural, technological, legal and
ecological (PESTLE), which cannot be controlled by
the business organisation but it has to respond to them
because of their pervasive influence on it.
RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT

5. External environment (PESTLE)
1,000 units
Objectives = 500
Internal Environment (Resources)
SW-OT
Demand = 4,000 units/day
Supply = 5,000 units/day
Business opportunity =1,000
units/day

6. STAKEHOLDERS OF THE BUSINESS
ENVIRONMENT
Business owners or organisations always consider the
internal and external stakeholders in their plans.
• Stakeholders are individuals or groups that affect or
are affected by the activities of the business
organisation.
• In other words, stakeholders are groups or individuals,
which depend on an organisation for fulfilment of
their goals and upon whom the organisation depends
for the realisation of its own goals (Whittington,
Regner, Angwin, Johnson & Scholes, 2020).
RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT

7. The Stakeholders of a business organisation include
shareholders, employees, customers, suppliers,
government, non-governmental organisations (NGOs),
competitors, and community or operating evironment.
Discuss why each of the above is a stakeholder
RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT

8. THE OPEN SYSTEM MODEL OF BUSINESS
ORGANISATION’S RELATIONSHIP WITH
ENVIRONMENT
• In the open system, business organisation interacts in a
purposive way with its external environment in order
to survive.
• The society is also concerned about what happens in
organisations / businesses because they produce goods
and offer services that meet the needs of society.
• The success of a business organisation depends on
how well it interacts with the business environment.
RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT

9. The Models
THE OPEN SYSTEM CONT’D
A business organisations is a part of the society
environment or broad society system.
A
B
Input
Transformat
ion/
Conversion
Output
Input
Transformat
ion/
Conversion
Output
RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT

10. The Models
Cont’d
C Input
Transformat
ion/
Conversion
Output
Feedback
RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT

11. RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT
A.
• Input – Takes resources, such as people, materials,
equipment, information and money from the
environment;
• Transformation or conversion - Transforms or
converts the resources into new products, trains
people or provides services
• The system then sends or exports the new products
or trained people (services) into the environment.

12. RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT
B.
• Cyclical system – Products or services as output
from the system are sold for money and money is
used to purchase input / recourses to perpetuate the
cycle.
C.
• Information / Feedback – This is information input
that comes from the environment. Feedback from
the environment helps the system to know how it is
performing in its relationship with the environment.
If the feedback is negative, it helps the organisation
to make adaptive changes in order to survive.

13. RELATIONSHIP BETWEEN BUSINESS AND ENVIRONMENT
THE CLOSED SYSTEM
• The closed system interacts within the system only,
no interaction with the external.

14. MODELS OF RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT
THE DIGITAL ENVIRONMENT AND ITS
EFFECT
Digital environment is one in which digital devices
carry out activities and communicate. Here,
electronic technology is used to generate, store,
process data and share information.
• The components of the digital environment
include websites, search engines, cloud servers,
social media outlets, mobile apps, and cloud
servers.

15. MODELS OF RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT
• Digital technologies or platforms are changing the
way business is carried out.
• Digital tools, such as computer and smartphones,
are becoming platforms/‘shops’ for business
transaction rather that ‘brick and mortar’ or
physical offices and shops.
• Digital payment and mobile banking are now
preferred to physical transaction in bank or
between individuals or groups.

16. MODELS OF RELATIONSHIP BETWEEN BUSINESS AND
ENVIRONMENT
• Competences in the use of digital technology in
todays business environment is critical to business
success.