1. CHAPTER II: THE ENVIRONMENT OF BUSINESS
In this chapter we will be tackle the different environmental factors that
affect the business enterprise and the various reasons behind the failure of an
Any kind of business organization works within an environment.
Environment determines a company’s success or failure. There are factors that a
company can control and so as those which are uncontrollable. Controllable
business factors are internal and Uncontrollable factors are those external to the
TYPES of BUSINESS ENVIRONMENT
These are forces that are close to the company and affect its interaction
with its market. Another term for it is Micro-environment.
1. Firm/Company – represents the business enterprise that creates product
and sells or provides services to identified market.
2. Distribution Channel – represents the organizations that assist a
company to promote, sell, or distribute products or services to actual and
3. Competitor - are business enterprises that offer the same products or
alternative products that other companies also offer. Competitors mostly
provide the market with more choices.
4. Company’s public – are organizations or groups that have direct or
indirect interest to the company.
5. Suppliers – are firms that provide needed equipment, raw materials,
office and other supplies to a company.
2. EXTERNAL ENVIRONMENT
Also known as Macro-environment is more bigger than Internal
Environment which causes difficulty for a company to control.
1. Demographic Factor – includes environmental factors such as the
consumers’ profile- age, gender, education, population, nationality and
religion. These factors essential for a company to consider because
variables under these factors constitute the characteristics of the market
and these affects buying behavior.
2. Political or Legal Factor – consist of existing law, ordinances, or
government restrictions that affect or influence the operation of a
3. Economic Environment Factor – includes those that influence the
spending pattern or buying power of consumers.
4. Socio-Cultural Environment Factor – includes those that affect the
values, behavior or belief of society.
5. Technological Environment Factor – deals with those factors that
create or innovate products due to technological advancement or modern
machineries, gadget, or equipment.
6. Natural Environment Factor – affects marketing activities. Some issues
in the natural environment are increased pollution, shortage of raw
materials, and non-biodegradable packaging.