Business DefinitionBusiness may be defined as the organized

effort by individuals to produce goods and services, to sell these goods and services in a market place and to reap some reward for this effort.

- Keith Davis

Features of Business

Model Of Economic Management Old New

Closed economy Open economy

Self reliance Integrate with world economies

Pre-reform StrategiesState – led economic growth

Economic reform StrategiesMarket determined economic growth

License dominated regime Delicensing, deregularisation, debureaucratisation

Import substitution strategies Export –oriented strategies

Frequent State interventions Selective and effective state interventions

Political administered prices Market-determined prices at large

Dominance of PSUs Divestment from the are of Pvt. Interest

Underdeveloped Capital Market Reforms in Capital Market

Restriction of FDI and MNCs Inducement of FDI and MNC

Restrictions on currency movements Liberalisation of restrictions

Environment Environment refers to surroundings in which a particular organization or object is expected to work. It consists of all the forces with the potential to influence the organization or a system and its performance.

Business Environment Refers to all those external forces, such as economic, social, political, regulatory, technological, natural and competitive factors which affect the business.

“Business environment is defined as the sum aggregate of all conditions, events and influence that surround and affects it.”

- Keith Davis

Business Environment “A company’s environment consists of factors and forces that are external to the business management function of the firm and impinge on the management's ability to develop and maintain successful transactions with its customers.”

- Philip Cotler

Business Environment Business Environment as the aggregate of all conditions, events and influence that surround and affect it .

“ An Organization's external environment, consists of those things outside an organization such as customers, competitors, government, suppliers, financial firms and labour pools that are relevant to organization's operations.”

- Gerald Bell

Features of Business Environment

Scope of Business Environment

Internal environment are those factors which are within an organization and impart strength or cause weakness in management process. The forces are owners, share holders, employees, organization, culture.

External environment incorporates all the factors which are outside the organization and influence the ability to achieve organizational goals. These are outside the organization and provide opportunities and pose threats. There are two approaches viz. direct and indirect elements. Direct action elements are those elements which directly affect the business operation from its outer world such as suppliers, customers, competitors, financial intermediaries.

Indirect action elements are the factors which affect the climate in an organizations’ activities take place but do not affect the organization directly. These elements are political variables, economic variables, social variables, technological variables and international variables.

Specific/ General : Part of the environment that is directly relevant to the achievement of an organization’s goal. Decrease in rupee value, increase in petrol prices. General environment is the portion of external environment that contains the external forces that have a more general influence on the organization. Economic policy, political conditions, socio-cultural influences , technological conditional and globalization issues are some examples. Political unrest in Arabian

countries, recession in Europe

Controllable / Uncontrollable environment : includes all those factors which are governed by the organizational control process. Internal factors are treated as controllable factors as organization has full freedom to shape or adjust the situations as per its requirements. Uncontrollable factors are external factors and beyond the control of organizations. It is for the organization to define its operational strategies and adjust within the framework.

Micro / Macro : Micro environment is concerned with immediate environment of business organization. Macro environment deals with the external environment in which organization opertaes.