Question

1. What is business environment? Discuss the components
of business environment.
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Answer 1

Economic Environment, Technological Environment, Social Environment, Demographic Environment and a Few Others. The general environment of an organisation is made up of vital components such as economic, technological, social, demographic, political and legal and global forces.

Answer 2

Answer:

Business environment refers to those aspects of the surroundings of business enterprise which affect or influence its operations and determine its effectiveness.

Andrews has also rightly defined the environment of a company as the pattern of all external influences that affect its life and development. Keith Davis too has also observed that business environment is the aggregate of all conditions, events and influences that surround and affect it.

Some of the components of business environment are as follows:-

A. Internal Environment – 1. Financial Capability 2. Marketing Capability 3. Operations Capability 4. Personnel Capability 5. General Management Capability B. External Environment – 1. Micro Environment 2. Macro Environment.

Additionally, also learn about the other components of business environment:-

1. Economic Environment 2. Technological Environment 3. Social Environment 4. Demographic Environment 5. Political and Legal Environment 6. Global Environment.

Component # 1. Internal Environment:

It refers to all the factors within an organization which affect its functioning. These factors are generally regarded as controllable i.e. the organization can alter or modify such factors.

Component # 2. External Environment:

The external environment consists of all the factors which provide opportunities or pose threats to an organization. In a wider sense, the external environment encompasses a variety of factors like international, national and local economy. Social changes, demographic variables, political system, technology, attitude towards business, energy sources, raw materials and other resources and many other macro level factors make up the external environment.