There are several reasons why the business environment is of great importance. The first of these is that if the heads of businesses keep a firm eye on potential economic or technological changes then they can swiftly adapt their business to capitalize on such changes. This can get a business ahead of its competitors, as any business will testify, speed and adaptation are crucial for success.
Another reason the business environment is crucial to the success of a business is that if a company does not successfully predict an upcoming trend or danger such as the recent recession then they will not be able to survive. Banks and independent and private investors which would freely lend to companies can suddenly withdraw existing funds or offers of credit which can lead a business to cut staff or close down all together.