2. INTRODUCTION
This is the outline of our lesson:
1. Introduction to Business Environment
2. Characteristics of Business Environment
3. Internal and External Business Environment
4. Synchronous Activity
3. Introduction to Business Environment
•An understanding of this as well as its importance is vital to an
individual who wants to to start a business.
•Understanding the relationship between business environment and
business opportunity can help an entrepreneur achieve his/her
objectives.
•An analysis of the business environment helps a person identify
opportunities that can assist in starting or expanding the business unit.
5. Business Environment
In general, the business environment can be defined according to some
characteristics.
1. It is compound in nature.
2. It is constantly changing.
3. It differs from business unit to business unit.
4. It has both long term and short term impacts.
6. Business Environment
5. It has unlimited influence on external environmental factors.
6. It is very uncertain.
7.It has interrelated components.
8. It includes both internal and external environments.
7. Business Environment
The business environment is represented through the diagram below.
Business Environment
Internal EnvironmentExternal Environment
● Value System
● Mission and
Objectives
● Organizational
Structures
● Corporate culture
● Quality of human
resources
● Physical
Resources and
Technological
Capabilities
● Suppliers of
inputs
● Customers
● Marketing
Intermediaries
● Competitors
● Public
● Economic
● Political-legal
● Technological
● Global
● Socio-Cultural
● Demographic
● Natural
● Ecological
Micro Environment Macro Environment
8. Internal Business Environment
1. Internal Environment- Includes factors that are usually within the
control of the business.it is represented by 5Ms:
Man
Machinery
Materials
Money
Management
9. External Business Environment
2.External Environment- includes factors that are beyond the control of
the business enterprise.
There are two types of external environment: micro or operating
environment and macro or general environment.
10. 2 types of External Business Environment
1.Micro or operating environment- Includes factors that are close to
the business and affects the business’ capacity to work or function.
5 Forces: Suppliers, Costumers, Marketing Intermediaries,
Competitors and Public
2. Macro or general environment- Includes factors that create
opportunities and threat to business units.
7 Forces: Economic, Political, Socio-cultural, Technological,
Demographic, Natural and International