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BUSINESS ENVIRONMENTNATURE AND SIGNIFICANCE

PRITPAL SINGH DHILLON

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BASIC CONCEPT

Business environment refers to thetotal of all things external to firmsands industries which affect their

organization and operation. Business environment encompasses

the climate or set of conditions,

economic, social, political, orinstitutional in which businessoperations are conducted.

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NATURE OF BUSINESS ENVIRONMENT

AGGREGATIVE- Business environment isthe totality of all the external forces whichinfluence the working and decision-making

of an enterprise. INTER-RELATED- Different elements of

business environment are closelyinterrelated and interdependent.

RELATIVE- Business environment is arelative concept. It differs from country tocountry even region to region.

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CONTD

INTER-TEMPORAL-Business environment isalso an inter-temporal concept as it changesover time.

UNCERTAIN- Business environment is largelyuncertain because it is very difficult toforecast the future environment.

CONTEXTUAL- Business environment

provides the macro framework within whichthe business firm operates.

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SIGNIFICANCE OF BUSINESS ENVIRONMENT

FIRST MOVER ADVANTAGE- Awareness ofenvironment helps an enterprise to takeadvantage of early opportunities instead oflosing them to competitors.

EARLY WARNING SIGNAL- Environmentalawareness makes a firm aware of impendingcrises so that the firm can take timely action.

CUSTOMER FOCUS- Environmental

understanding makes the managementsensitive to the changing needs andexpectations of customers.

STRATEGY FORMULATION- Environmentalmonitoring provides relevant informationwhich serves as basis for strategy making.

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CONTD

CHANGE AGENT- Business leaders acts asagents of change by understanding theaspiration of people and other environmentalforces through environmental scanning.

PUBLIC IMAGE- A business firm can improve itsimage by showing that it is sensitive to itsenvironment and responsive to the aspirationsof public.

CONTINUOS LEARNING- Environmentalanalysis serves as broad based and ongoingeducation for business executives.

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ENVIRONMENTAL SCANNING

Environmental scanning is theprocess by which organizationsmonitor their relevant environment

to identify opportunities and threatsaffecting their business.

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CONCLUSION

Business environment exercises tremendousinfluence on the working and success ofbusiness firms. Therefore, management of a

business enterprise must have a deepunderstanding and appreciation of theenvironment. The changes taking place inenvironment must be continuously monitored

to judge their impact on business. Appropriateand timely steps must be taken to face theenvironmental changes.

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THANK YOU