The document discusses the business environment and its various components. It defines the business environment as the set of external conditions including economic, social, political, and technological factors that are beyond a business's control but influence its operations. The business environment can be categorized into the micro environment comprising suppliers, customers, competitors, and other actors in close proximity to the business, and the macro environment consisting of broader forces like economic, political, social, and technological conditions affecting all businesses.

2. Business environment includes the ‘climate’ or set of
conditions: economic, social, political or institutional
which have a direct or indirect bearing on the functioning
of business
It signifies external forces, factors and institutions that are
beyond the control of the business and they affect the
functioning of a business enterprise.

3.  Business environment is the sum total of all factors internal &
external to the business firm that greatly influence their
functioning
 It covers factors and forces like
customers, competitors, suppliers, government, and the
social, cultural, political, technological and legal conditions.
 The changes in business environment are unpredictable.
 Business Environment differs from place to place, region to
region and country to country. Ex: Political conditions in
India differ from those in Pakistan. Taste and values
cherished by people in India and China vary considerably.

4. Business environment is complicated and active in nature
and has a far-reaching impact on the survival and
growth of the business.
 Determining Opportunities and Threats
 Giving Direction for Growth
 Continuous Learning
 Image Building
 Meeting Competition
 Identifying Firm’s Strength and Weakness: Business
environment helps to identify

5. Types of environment
Internal environment External environment
Micro environment Macro environment
ENVIRONMENT OF BUSINESS

6. The internal environment is the environment
that has a direct impact on the business.
 Important internal factors which
have a bearing on the decisions of a
business firm and which are
generally controllable because
the company has control over
these factors:
 Value system
 Vision, mission and objectives
 Management structure and nature
 Internal power relationship
 Human resources

8. Ranbaxy’s mission: “ to become a
research based international
pharmaceutical company”- has
driven
it to enter the foreign markets
and development.
Thus the business domain of the
company, priorities, direction of
development, business
philosophy, business policy etc,

9. Organizational structure, composition of
board of directors, extent of
professionalisation of management
sometime delay decision making while some
others facilitate quick decision making.
Board of directors is the highest decision
making body and it overseas performance of
the organization and so its quality is very
important.
The share holding pattern can also have
important managerial implications.

10. The amount of support the top
management enjoys from different
levels of employees, shareholders
and board of directors have
important influence on the decisions
and their implementation.
For example: relationship between
the
members of the board of director

11. The characteristics of human
resources like
skill, quality, morale, commitment, at
titude etc. could contribute to the
strength and weakness of an
organization
Ex: Some organizations find it
difficult to carry out restructuring or
modernization because of resistance
by employees whereas they are

12. While raising finance, forming
joint ventures or other
alliances, soliciting marketing
intermediaries, entering purchase or
sale contracts, launching new
products etc. the image of the
company matters the most.

13. 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.

14. o Micro environment
 Suppliers
 Customers
 Competitors
 Marketing intermediaries
 Financiers
 Public

15.  Suppliers:
 An important force in the micro environment of a
company is the suppliers, i.e., those
who supply the inputs like raw materials and
components to the company. The importance of reliable
source/sources of supply to the smooth functioning of
the business is obvious.

16.  Customers:
The major task of a business is to create and sustain

customers. A business exists
only because of its customers. The choice of customer
segments should be made by considering a number of
factors including the relative
profitability, dependability,
stability of demand, growth prospects and the extent of
competition.
The business firm should not be dependent on a single
customer

17.  Competitors:
 Competition not only include
the other firms that produce
same product but also those
firms which compete for the
income of the consumers the
competition here among these
products may be said as desire
competition as the primary
task here is to fulfill the
desire of the customers.

18.  Marketing Intermediaries
 The marketing intermediaries
include middlemen such as
agents and merchants that help
the company find customers or
close sales with them. The
marketing intermediaries are
vital links between the
company and the final

19.  Financiers:
The financiers are also important factors of
internal environment. Along with financing
capabilities of the company their policies and
strategies, attitudes towards risk , ability to
provide non-financial assistance etc. are very
important.

20.  Public :
 A public is any group that has an
actual or potential interest in or
impact on an organization’s ability
to achieve its interests. Ex-
media, citizens, local public etc.
 NGOs have been protesting against
child labour, cruelty against
animals, environmental
problems, deindustrialization
resulting from imports etc.

21. Input
suppliers
Workers & Public
their unions
BUSINESS
Customers Competitors
Marketing
intermediaries

22. Macro environment
 Economic environment
 Political environment
 Technological environment
 Social environment
 Global environment

23.  Economic environment refers to the
aggregate of the nature of economic
system of the country, business
cycles, the socio-economic
infrastructure etc.
The successful businessman visualizes
the external factors affecting the
business, anticipating prospective
market situations and makes suitable
to get the maximum with minimize

24.  It includes factors such as
characteristics and policies of the
political parties, nature of
Constitution and government system
relating to business policies and
regulations.
 Important economic policies such as
industrial policy, policy towards
foreign capital and technology, fiscal
policy and foreign trade policy are

25.  The business in a country is greatly influenced by the
technological development.
 The technology adopted by the industries determines
the type and quality of goods and
services to be produced and the type and quality of plant
and equipment to be used.
Technological environment influences the business in
terms of investment in technology,consistent
application of technology and the effects of technology
on markets.

26.  The social dimension or environment of a nation
determines the value system of the society which, in turn
affects the functioning of the business.
 Sociological factors such as costs structure, customs and
conventions, mobility of labour etc. have farreaching
impact on the business. These factors determine the work
culture and mobility of labour, work groups etc.

27.  The global environment refers to those factors
which are relevant to business such as:
 WTO principles and agreements
 International conventions
 Treaties, agreements, declarations, protocols, eco
nomic
 Sentiments in other countries, hike in crude oil
prices etc.

28. Macro environment
BUSINESS