What Is Concept Of Business Environment?


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A business firm is an open system. It gets resources from the environment and
supplies its goods and services to the environment. There are different levels
of environmental forces. Some are close and internal forces whereas others
are external forces. External forces may be related to national level, regional
level or international level. These environmental forces provide opportunities
or threats to the business community. Every business organization tries to
grasp the available opportunities and face the threats that emerge from the
business environment.
Business organizations cannot change the external environment but they just
react. They change their internal business components (internal environment)
to grasp the external opportunities and face the external environmental
threats. It is, therefore, very important to analyze business environment to
survive and to get success for a business in its industry. It is, therefore, a vital
role of managers to analyze business environment so that they could pursue
effective business strategy.
A business firm gets human resources, capital, technology, information,
energy, and raw materials from society. It follows government rules and
regulations, social norms and cultural values, regional treaty and global
alignment, economic rules and tax policies of the government. Thus, a
business organization is a dynamic entity because it operates in a dynamic
business environment.

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