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Business Environment – BBA Subject -College study guide

Meaning :

Business environment is the set of external factors such as the economic factors. Social-cultural factors demographic factors which are uncomfortable natural and affect on company decision of a firm on company the environment of the business is always changing and uncertain.

Definition :

According to Gerald Bell” an organisation external environment consist of those things outside an organisation such as customer competition government units, supplies, financial firms and labour pools that are relevant to an organisation Operations.

Environment factors :

The term business environment generally refers to external environment which are outside the enterprise.some of the external factors have a direct and intimate impact on the business enterprise.

Type of business environment :

(1). Internal environment

(2). External environment.

Internal environment :

Internal environment refers of all the factors existing within a business firm. The internal factors are considered contralable because the enterprise has cantoal over there factors.

* culture

* mission and objective

* top management structure

* power structure

* company image and brand equity

* human and other resources.

Culture :

The value beliefs and attitudes of the founders and top management of the company exercise a strong influence on what the company stands for similarly the strong culture have contributed to the success to Wipro corporation and tate street.

Mission and objective :

The business philosophy and purpose of a company gaide its. Priorities, business strategies product market scope and development process the mission of Dhirubhai Ambani to mark reliance the biggest group in private sector.

Top management structure :

The composition of the heard of distribution the degree of professionalisation of management stucture of a company have important bearing on its business decisions.

Power stucture :

The internal power relationship between the board of directors and the chief executive is an important factor.

Company image and brand equity :

The image and brand equity of the company Play a significant role in raising finance forming alliances choosing dealers and suppliers launching new products entering foreign markets etc..,

Human and other resources :

The competence moral and motivation of employees play a vital role in the suecss of the firm.

External environment :

The external environment of business comprising of micro environment and macro environment.

Micro environment :

Micro environment or task environment. refers to those individucalls groups and agenesis with which are organisation come in to direct and frequent contact in the course of its functioning micro environment functors exercise a direct influence on the operation of the enterprise.

Micro environment :

* customers

* competitors

* suppliers

* marketing intermediaries

* Fing

* publics.

Customers :

The people who bay a firm’s products and services are it’s customers. A business exists to create and satisfy customers. A firm mag have different types of customer like individuals households government departments commercial establishments etc …,

Competitors :

A company may have both direct and indirect competitors. Direct competitors are the other firm which offer the same or similar products and services. For example song TV faces Direct competition from other brands like LG , Samsung ,oida, Videocon,BPL etc…,

Suppliers :

Suppliers refers the people and groups who Supply raw materials and competitors the company.

Marketing intermediaries :

Several marketing intermediaries help a company in promoting selling and distributing its. products to consumer middleman like agents wholesaler and retailer service as a like between the company and its customers.

Financiers :

Financial capacity policies and ottitudes of financier are important factor for the company.


Public include all these group who have an actual of potential interest in the company to who influence the company ability to achieve its objectives.

Macro environment :

Macro environment refers to the general environment or remote environment within which a business firm and forces in its micro environment operate.

* political and legal environment.

* social and cultural environment.

* economic environment.

* financial environment.

* Technological physical environment.

* natural environment.

Political and legal environment :

Political environment price the elements relating to government affairs. It serves as the regulatory firm work of business.

Social and cultural environment :

The economic environment comprises the nature and stavcture of the economy, the stage of economic development economics resources the level of income economic policies distribution of income etc …,

Economic and financial environment :

The economic environment comprises the nature and stavcture of the economic development, economic policies distribution of income.

Technological and physical :

The main elements of technological and physical environment.

Rate of technological change.

Approaches to production of goods and services.

Natural environment :

* the main natural forces.

* climatic conditions.

* agricultural, commercial and other natural resources.

* economical systems.

* levels of pollution.

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