Introduction To achieve success and productivity in any business organization, it’s always important to first scan the environment very well. As we know that the environment is hugely affected by the external forces, so it’s important to have a brief idea about those factors that can affect the long-run productiveness of the organization. Some of these well-known factors are related to Natural calamities, socio-culture, technological, political and so on . Any business environment consists of some internal and external forces that can affect most of the decisions made by the business organizations .
It consists of various features that can affect the most of the operations of the organizations which are difficult to be controlled by the individual’s . In addition the term Business Environment is a set of two different terms, i. e. , business and environment. The word Business in its general terms means any action which helps in the maximization of profit. Conversely, the word ‘Environment’ refers to the surroundings. Characteristics of the Business Environment (1) Business Environment Changes Frequently: The Factors in the environment change frequently.
The business environment today is completely different than it was in the past. The Future environment is the product of past & present environment. (2) Environment is very Complicated to understand: Business environment has become more complicated to understand in today’s world, as the interference of the government in most of the business decisions is a common thing. In addition, the external factors have made it a more complicated phenomenon. (3) Environment is Versatile: Environment changes are very numerous but it most importantly depends on the viewer, how they view it.
For example, some business men’s take changes as opportunities, and some take it as threats which can make it difficult for them to survive for a long time. (4) Environment is Vibrant: The environments of the business are vibrant and continuously developing in today’s era. External forces such as economical, social, international, technological and demographic affect the business operations widely. Importance of Business Environment The business and its environment have a close and constant interaction. Such kinds of interactions help a business firm in strengthening and using its resources in a more efficient and productive way.
As explained above, the business environment is versatile, complex, and has a far-reaching influence on the survival and growth of the business. Internal and External environmental factors help the business in following ways:- (a) It helps in knowing the individual weaknesses and strengths of the organization in global sense. (b) It helps in improving their reputation by understanding and being able to work with such environmental forces. (c) It helps in continuous learning by updating their knowledge and skills to meet the future assumption changes in the business world.
(d) It helps in the expansion of their activities. (e) It helps in knowing the opportunities and threats outside the organization. (f) It helps an entrepreneur in meeting the challenges and being able to face the risks successfully. (g) It helps in meeting competitions by analyzing the competitor’s plans, strategies and generate their own strategies accordingly. Types and factors of Business Environments Environments of the business are divided in to two parts:- (1)External Business Environment (2)Internal Business Environment External Business Environment:-
The external environments are factors like Natural calamities, competitors etc, which are outside the boundary and control of the organization. Analyzing such factors helps the organization in improvising their plans and decisions . External environments can influence the organization in either a positive or negative way. External factors of the business:- There are six different types of external environments which are as follows, (1)Social Environment (2)Political-Legal Environment (3)Technological Environment (4)Demographic Environment (5)Natural Environment.
(1)Social Environment:- Social environment consists of social values, beliefs, preferences of individuals. Every individual is very well aware and possessive while making any decision in purchasing a particular product. So demand goes according to their likes and dislikes. (2) Political-Legal Environment:- Political and legal environment is the involvement of government with certain sets of rules and regulations in the operations of the business. It highly depends on their decisions, like what a business can and cannot do. (3) Technological Environment :-
Advancement in technology can influence many organizations in making most of their decisions. Sometimes, it can help in bringing new ideas in the development of their products. It includes new machines, ides, equipments etc. (3)Demographic Environment :- Demographic environment is an environment in which an organization functions. It consists of different characteristics of the population of a particular country such as age, martial status, gender, income, status, occupation, religion, culture, death, size of the family etc . (4)Natural Environment:-
Natural environment includes natural calamities like earth quake, drought, tsunami, floods, weather conditions and many other natural forces which influence the environment of the business to a great extent, especially in the process of agricultural farming. Such natural forces destroy the farms and many other agricultural activities of the farmers which lead to a great depreciation in the financial performance of the business. Internal Business Environment Internal environment consists of factors within the organization. It includes employees working within the organization, policies of the organization, strengths and weakness points etc.
The management must do a deep internal analysis to understand and strengthen its roots. Internal factors of the business There are three internal factors of the business environment:- ? Organizational structure ? Production ?Marketing (1)Organizational Structure :- The organizational structure is way of arranging the jobs or works within the organization in a way from which the organization can achieve its goals productively. If the structure of the organization is well organized then the business will no doubt lead to a great success.
In case, if the organizational structure is not done perfectly, it may affect the entire process of the business and in turn will lead it to a great loss. Therefore, it is an important factor for any kind of business, whether it is a small or a large business. (2)Production:- Production is another important internal factor of the business environment. It is a way of transforming tangible substances like finished goods, raw materials etc. , and intangible inputs like information, skills, knowledge into goods and services which satisfies the needs and wants of its consumers.
Business organizations should be very careful in designing their products; they have to keep the market demand and the consumers preferences into their considerations. (3)Marketing :- Marketing is a very essential internal factor of the business environment. It plays very important role in the success or loss of any business operations. It’s a process by which the goods and services are produced in the market and are taken from the place of production to the consumers. This process consists of four factors which are known as 4 P’s of the market. (a)Product (b)Price (c)Place (d)Promotion Product :-
The first process of marketing starts with product. Product is a good, service or an idea used to design a product in a way which can satisfy the needs and wants of the customers. Marketers should be very careful to product the goods or services, if they are not designed according to the needs and wants of the customer then the product will have no value in the market which will directly lead to big loss in the other business and other stages of marketing. Price:- Price is the second stage in the marketing process. It is a very critical stage, of course. The marketers should be very careful while deciding the price.
They should try their best to balance the price of the product, which means they shouldn’t charge high nor low prices. Fewer prices on products will always lead to a great demand for the product. Place:- Place is the third step in marketing the product. It is also an important decision. It decides the location in which the product has to be transferred from the producer to its consumers. Promotion:- Promotion is a way of attracting the customer by means of different sources such as advertisement, publicity, magazines and other sources from which they can make their customers aware of the product and its benefits. CONCLUSION.
This assignment was mainly based on business environment. I have now understood that business environment is a set of internal and external environments. It consists of all environmental features that can affect the functioning of the business. I have also been familiarized with some types of environments which can influence the business operations. Such factors include internal power relationships, associations, government strategies and laws, nature of the economy and economic conditions, socio culture factors, technological factors, geographical factors etc. Business environment consists of two environments:- ?
External Business Environment ?Internal Business Environment I, now have a clear idea about these two environments. External environment includes factors like natural calamities, technological factor, and political-legal factors etc, which are outside the boundary of the organization and which can affect it. Internal factors are factors within the business organization such as employees, organizational structure, production and marketing processes etc. This assignment was very helpful to me as I acquired lots of knowledge about Business Environment. It gave me more important and valuable information that was important to know.