• Skip to main content
  • Skip to primary sidebar
  • Accounting
  • Banking
  • Business
  • Statistics
  • Economics
  • Finance
  • HR
  • Law
  • Marketing
business-jargons-site-logo

Business Jargons

A Business Encyclopedia

Business Environment

Definition: Business Environment means a collection of all individuals, entities and other factors, which may or may not be under the control of the organisation, but can affect its performance, profitability, growth and even survival.

Every business organisation operates in a distinctive environment, as it cannot exist in isolation. Such an environment influence business and also gets affected by its activities.

Salient Features of Business Environment

The salient features of the business environment are given hereunder:salient features of business environment

  1. Dynamic: The environment in which the business operates changes continuously because there is a wide variety of factors that exist in the environment, causing it to change its shape and character.
  2. Complex: There are many forces, events and conditions that constitute business environment, arising from various sources. So, it is a bit difficult to understand the relative influence of a particular factor, on the operation of the organisation.
  3. Uncertain: Uncertainty is an inherent characteristic of the business environment because no one can predict what is going to happen in future.
  4. Multi-faceted: A single change in the business environment, can be viewed differently by different observers because their perceptions vary.
  5. Far-reaching Impact: The survival, growth and profitability, of a business enterprise, depends largely on the environment in which it exists. A small change in the environment has a far-reaching impact on the organisation in different ways.
  6. Relative: The notion of a business environment is relative since it varies from one location to another.

Components of Business Environment

The Business Environment is broadly classified, into two categories:classification of business environment

  1. Internal Environment: The factors which exist within the organisation, imparting strength or causing weakness to the organisation, comes under internal environment. It includes:
    • Value System
    • Vision and Mission
    • Objectives
    • Corporate Culture
    • Human Resources
    • Labor Union
  2. External Environment: External Environment consists of those factors which provide an opportunity or pose threats to the business. It is further classified as:
    • Micro Environment: The immediate periphery of the business that has a continuous and direct impact on it is called Micro Environment. It includes suppliers, customers, competitors, market, intermediaries, etc. which are specific to the business.
    • Macro Environment: Macro Environment, is one such environment that influences the functioning and performance of every business organisation, in general. It comprises of the demographic, socio-cultural, legal, political, technological, and global environment.

All business enterprises, functions within an environment, called as the business environment. An individual business firm survives and grows within the periphery of its environment.

A firm is only a part of a big environment, and so there are only a few factors which are under the control of the firm.

So, the firm has no other option, but to respond and adapt accordingly. If business persons possess a good understanding of the business environment, they can easily recognise, analyse and react to the forces that affect the firm.

Related terms:

  1. Marketing Environment
  2. Macro Environment
  3. Micro Environment
  4. Business Ethics
  5. Internal Environment

Reader Interactions

Comments

  1. Suman Pandit says

    January 31, 2020 at 7:12 pm

    Nice Article.

    Reply
  2. ishika says

    September 25, 2020 at 7:32 pm

    helped a lot

    Reply
    • Julien Nachinsambwe says

      September 6, 2023 at 10:43 pm

      Nice information

      Reply
  3. Nasir says

    March 27, 2021 at 10:08 pm

    Thanks alot for your help

    Reply
  4. Richard . U . Noliwafu says

    April 5, 2021 at 5:42 pm

    Thanks, very nice, straight forward and understandable.

    Reply
  5. Slindile says

    May 31, 2021 at 6:32 pm

    It is understandable ,and it helped me a lot.

    Thank you

    Reply
  6. Dee says

    June 26, 2021 at 11:53 am

    Very Useful and understandable

    Reply
  7. abdul qadir says

    October 6, 2021 at 4:00 pm

    Very nice article

    Reply
  8. Rani says

    October 18, 2021 at 4:43 pm

    Usefull and understanding

    Reply
  9. S.Divya Pillay says

    December 26, 2021 at 11:29 am

    Thank you! it helped me a lot.

    Reply
  10. Yubraj Gautam says

    November 4, 2022 at 12:24 am

    Got a Clear Information of Business Environment Introduction

    Reply
  11. kiran says

    January 26, 2023 at 10:53 pm

    Its an better way to understand the concept .
    Thank you..!

    Reply
  12. sony rajan says

    July 21, 2023 at 12:49 pm

    SO THANKFUL FOR THIS NOTE!

    Reply
  13. Sweta says

    August 15, 2023 at 8:40 pm

    Thanks

    Reply
  14. Sonia Edwin says

    September 27, 2023 at 12:30 pm

    This is a very helpful article. It helped me alot. Thank you

    Reply
  15. vinod kumar Nalavadi says

    December 26, 2023 at 10:16 am

    Thanks

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Top Searches

  • Communication Process
  • Planning
  • 7 C’s of Communication
  • Management
  • International Marketing
  • Business Strategy
  • Effective Communication
  • Insurance
  • Strategic Management
  • Selection Process

Trending Now

  • Group
  • Business
  • Accounting
  • Budget
  • Entrepreneurship
  • Journal
  • Leadership
  • Motivation
  • Communication
  • Stress

New Business Terms

  • Corporate Governance
  • Logistics Management
  • Dividend
  • Quorum
  • Corporate Veil
  • Trade Union
  • Warehouse
  • Mistake
  • Ratification
  • Void Agreement

Categories

  • Accounting
  • Banking
  • Business
  • Business Law
  • Business Statistics
  • Economics
  • Finance
  • HR
  • Marketing

Copyright © 2025 · Business Jargons · Contact Us · About Us · Privacy