Importance Of Business Environment

BUSINESS ENVIRONMENT

-: TABLE OF CONTENT:-

BLOCK – I: BUSINESS ENVIRONMENT - INTRODUCTION

Unit – 1 External Environment of Business – An Overview Introduction 12 Objectives 12 What is Business 13 Contemporary Objectives of Business 15 Meaning of Business Environment 19 Interrelationship Between Business and Environment 25 Types of Environment 28 Objectives and Uses of Environmental Analysis 37 The Process of Environmental Analysis 38 Limitations of Environmental Analysis 40 Summing Up 41 Model Examination Questions 42 Suggested Readings 43

Unit – 2: Internal Environment of Business – An Overview

2.1 Introduction 44

2.2 Objectives

This interaction helps in strengthening the business firm and using its resources more effectively. The business environment is multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of the business. To be more specific, proper understanding of the social, political, legal and economic environment helps the business in the following ways:

Dynamic Nature of Environment: Every day is environment is changing for business purposes due to change in either central or state government which results amendments in economic policies and thus introduce new policies. Structure of Economy: A large portion of a business depends upon the economy. While capitalistic economy supports such business which are in the hands of capitalist and mixed economy supports both capital intensive and labour intensive business. Determining Opportunities and Threats: The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises for meeting the challenges successfully. Optimum Utilization of Resources: Optimum utilization of resources is not possible without favourable business

The business environment has a bearing on all these integral and interrelated elements. Business dynamics is dependent on environmental dynamics. It is very important to formulate the business strategy thatshould be defined to achieve a perfect organization-environment fit. Also the vision, mission, objectives of an organization should be designed on the basis of assessment of an environment.Relation of business organization and its environment is obvious from the point ofanalysis ofstrengths, weakness, opportunity and threats of business. Organizationenvironment consists of internal environment and external environment. Internalenvironment factors are easily controllable and manage in the organization. Externalenvironment factors are uncontrollable factors due to changes in the legal, social,economic, and technical in business enterprise. External environment offers wide rangeof opportunities, problems, threats and pressures and thereby influence the structureof the business enterprise and its functions. Business enterprise can be treated assubsystem for drawing certain inputs of resource, information and values extractingfrom the external environmental system. These things transform into outputs inthe form of products and services, goals and satisfactions and exchange of properideas and it transmits to business