This document provides an introduction to business environment. It defines business as a commerce, occupation, and organization. It explains that business enterprises exist within an environment and are influenced by internal and external factors. The external environment includes the market, economic, social, technological, political, and legal dimensions that businesses must consider. Understanding the business environment is important for identifying opportunities and threats and informing strategic decisions.

1. INTRODUCTION
TO
BUSINESS
ENVIRONMENT
Dr. Payel Chaudhuri

2. WHAT IS BUSINESS?
 Business as a commerce is the process that people
produce, exchange and trade goods and services
 The company’s business model not only outlines the
plan for the resources but creates a competitive
advantage in the value of its product and generates
profitable sales revenue
 By reinvesting the profits the business increases its
capital and contributes to the wealth of the owners

3. WHAT IS BUSINESS?
DIMENSION
S
A COMMERCE AN
OCCUPATIONAN
ORGANIZATION
as an occupation
acquired set of
specialized skills and
abilities that allows
people to create valuable
goods and services
as an organization is the
system of task and authority
relationship that coordinates
and controls the interactions
between people so that they
work toward a common goal
as a commerce is the
process that people
produce, exchange
and trade goods and
services

4. WHY TO STUDY BUSINESS
ENVIRONMENT?
 Business enterprises cannot function in isolation
 Business enterprises exist in and are surrounded by
an ‘environment’ – the business or organisational
environment
 Society and business enterprises are mutually
dependent
 Business enterprises satisfy societal needs
 Relationship between society and business
enterprises takes place in a changing environment

5. BUSINESS
DECISIONS
Economic
factors
Social factors
Technological
factors
Demographic
factors
Political
factors
Legal factors

7. CHANGE
IS
THE ONLY CONSTANT…….

8. COMPONENTS OF THE BUSINESS ENVIRONMENT
 Different environmental variables exist internally and
externally to the business enterprise
 Environmental variables have a positive or negative
influence on the enterprise
 Mutual relationships exist between these environments
• Within organisation
Internal (micro)
environment
• Market environment
• Macro environmentExternal
environment

9. ENVIRONMENTAL SCANNING
 Identification and forecasting phenomena in the
environment
 Ongoing environmental scanning is essential for strategy
formulation
 Enterprises continuously engage in identifying and
forecasting opportunities and threats
 Enterprises need to proactively or reactively respond to
changing conditions in the environment
 Various sources of information are available to assist with

10. IMPORTANCE OF BUSINESS ENVIRONMENT
Business environment is complicated and
active in nature and has a far-reaching
impact on the survival and growth of the
business.
1. Determining Opportunities and Threats
2. Giving Direction for Growth
3. Continuous Learning
4. Image Building

11. INTERNAL ENVIRONMENT
Important internal factors which have a bearing on the
decisions of a business firm are:
1. Value system
2. Vision, mission and objectives
3. Management structure and nature
4. Internal power relationship
5. Human resources
6. Company image

12. EXTERNAL ENVIRONMENT
 Micro environment consists of the actors in the
company’s immediate environment that affect the
performance of the company. They are more
intimately linked with the company.
 Macro environment consists of larger societal
forces that affect all the actors in the company’s
micro environment.