Concept of Business Environment

1. BUSINESS
ENVIRONMEN
T
ASST. PROF.
SUNITA SAINI

2. “Business opportunities are like buses,
there’s always another one coming.” –
Richard Branson

3. Environment means the
surroundings within which
something exists.
BUSINESS ENVIRONMENT
ENVIRONMENT
BUSINESS
activities of buying and selling
goods, manufacturing goods or
providing services in order to make
profit

4. •Meaning/ Concept:
Environment means the surroundings within which something exists. Similarly business has
to operate within the situation created by its environment. Business Environment means a
collection of all individuals, entities and other factors, which may or may not be under the
control of the organisation, but can affect its performance, profitability, growth and even
survival. It refers to those aspects of the surroundings of business enterprise which affect or
influence its operations and determine its effectiveness.
•Definitions:
• According to B. O. Wheeler – “The Total of all the things external to firms and industries
which affect their organisation and operation.”
• According to Keith Davis, “Business Environment is the aggregate of all conditions,
events and influences that surround and affect it”.
BUSINESS ENVIRONMENT

5. INTERFACE BETWEEN BUSINESS AND
ENVIRONMENT
1. Business and its environment
are inseparable:
Relationship between business
and its environment is similar to
relationship between a Fish and
surrounding water.

6. INTERFACE BETWEEN
BUSINESS AND
ENVIRONMENT
2. Continuous
interaction with
environment
required:
A Businessman has
to function like a
Captain of a Ship.

7. INTERFACE BETWEEN
BUSINESS AND
ENVIRONMENT
3. Closely Related
Concept:
Neglect of environment is
just not possible in the
present competitive and
dynamic business world.

8. 1. Totality of External Forces
● Business environment includes everything which is outside the organisation.
FEATURES OF BUSINESS
ENVIRONMENT

9. 2. Specific and General Forces
● Specific forces are those forces which directly affect the operational activities of
the business enterprise.
Example: Suppliers, Customers, Investors, Competitors, Financers
etc.
● General forces are those forces which indirectly affect the functioning of business
enterprises.
Example: Economic, Social, Political, Legal and Technological
conditions.

10. 3. Inter-relatedness
● Different forces of business environment are interrelated to each other.
● One component of the business environment affects the functioning of other
components.

11. 4. Complexity: Consists of various interrelated elements which makes it difficult
to understand.
5. Dynamic
The business environment is dynamic in nature and keeps on changing in terms of :
(a) Technological improvement,
(b) Shifts in consumer preferences,
(c) The entry of new competition in the market.

12. 6. Uncertainty
● The changes in the business environment cannot be predicted accurately because
of future uncertainties.
● It is very difficult to predict the changes in the economic and social environment.
Example: There has been a sharp decline in the prices of Android smartphones due to
the entry of many new companies.
7. Relativity
● Business Environment differs from place to place, region to region and country to
country.

13. 8. Multidimensional
● Business environment has several dimensions such as micro and macro.
9. Mutual Dependence
● Business Environment components are interdependent.
10. Diversity
● A particular change in the environment may be viewed differently by different
businessmen.
11. Non Controllable
● Factors beyond the control of business organisation.

14. THANK YOU