Definition of business environment by authors. Business Environment: Meaning, Characteristics and Importance 2023-01-04
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The business environment is the sum total of all external and internal factors that influence a company's operations. These factors can be divided into two categories: external and internal. External factors include economic, social, political, technological, legal, and demographic factors, among others. Internal factors include the company's resources, strategies, culture, and organizational structure.
According to George R. Terry, "the business environment comprises all the external and internal factors that affect the business operations and the decision-making process." This definition highlights the fact that the business environment is not static and is constantly changing. Therefore, businesses must adapt to these changes in order to survive and succeed.
Another definition of the business environment is provided by Philip Kotler, who states that it is "the sum total of all factors that influence a business." Kotler's definition emphasizes the fact that the business environment is made up of both internal and external factors, and that these factors can either positively or negatively impact a business.
In conclusion, the business environment is the complex and ever-changing set of factors that influence a company's operations. These factors can be internal or external, and they can either help or hinder a business's ability to achieve its goals. Therefore, it is important for businesses to continuously monitor and adapt to changes in the business environment in order to remain competitive and successful.
Main Components Of Business Environment [ Full Guide ]
For example, clothing fashions change with the season, and there is a current trend towards green construction and organic foods. The basic idea behind this segmentation is to match the needs of specific group of population located in a specific geographical area. The business law of the country is a complex system of regulations and intervention that form the legal environment of the business. Balance of payments and foreign exchange reserve. Transnational corporations have offices in multiple countries, each responsible for a different facet of the organization. Business Environment — Influence on Business Let us understand business environment and its influences on business: Surrounding of any living creature is known as environment such as — friends, family, peers and neighbours. Businesses must understand the changes in the environment and how these changes affect their performance.
Business Environment: Definition, Nature, Importance, and Components
For example, Hero Cycles has defined its business not as bicycle but cheap and sturdy bicycles and offers bicycles that are low- priced, sturdy, and functionally useful rather the ones with X or Y micron layers of paint. The company has included in its portfolio such grocery items as wheat flour, rice, salt, etc. To be successful business has not only to recognize different elements of the environment but also respect, adapt to or have to manage and influence them. For ensuring survival and growth under the circumstances management can do better planning; introduce organisational flexibilities; come out with innovations; resort total joint ventures and merges or follow a policy of systematic adaptation These concepts are explained in the next sub-title i. However, management of the business organization is reÂquired to maintain an effective adjustment for achieving organizations goals and missions.
Social customs and norms of behavior. Stable, honest, efficient and dynamic political system ensures political participation of people, and assures personal security to the citizens. The priority in personnel management has changed vastly. Fair-trade decisions, antitrust laws, tax policies, minimum wage legislation, pollution control policies, pricing policies and many other actions are placed in front of firms with the aim of protecting consumers, employees, the general public, and the environment. The business environment is very dynamic in nature and the survival and success of a business are dependent on its innate strength, ability to adapt to the environment, and the extent to which the BE is favorable to the development of the organization. Apart from this, It can also be defined as a set of conditions — Social, Legal, Economical, Political, or Institutional that are uncontrollable in nature and affects the functioning of the organization.
Business Definition: As Defined by Eminent Authors and Harvard Professors
They should also be easily quantifiable and measurable. It is complicated and continuously changing. Tactical Goals: These goals are generally formulated by the top and middle management. In a theoretical sense, this definition of business is incorrect. The organization environment consists of all the factors that influence the organiÂzation. Similarly, a change in the technology may render the existing products obsolete, as we have seen that the introduction of computer has replaced the typewriters; the colour television has made the black and white television out of fashion.
Keith Davis defines business environment as the aggregate of all conditions, events, and influence that surround and affect it. In 1966, when Azim Premji took over the company from his father, expanded into IT. All the manufacturers of these products have positive impact on the business. Today, you are proudly saying to your friend that you have a 100 gm. Thus, the manager should maintain a close relationship with them. The ever-changing market conditions, ever-rising expectations of consumers, innovations and technological developÂments in production processes require managers to understand the changes at the same pace as the changes take place.
What is Business Environment? Meaning, Definition, Objectives
It forms the most valuable asset of the organisation as success or failure depends on it. Defining customer functions and customer groups provides Blue Print and a reference point for Product-market strategy. Vision provides a clue about the feelings, beliefs, emotions and pictures of manageÂment. A business definition is a clear-cut statement of the business or a set of businesses, the organization engages in presently or wishes to pursue in future. To be successful business has not only recognize different elements of the environment but also respect, adapt to or have to manage and influence them. In the words of Lewis H. Business achieves its objectives by producing and distributing goods and services which can satisfy human wants.
In other words, geographical conditions exert profound influence on the location of the business. Organizational culture: Culture is a set of values, beliefs, norms. It may also be defined as the set of external factors, such as economic factors, social factors, political and legal factors, demographic factors, technical factors etc. Social factors are basically sociological factors related to general society and social relations that affect your business. Attitudes towards different occupations. However, level of interaction may differ from organization to organization and the impact can vary overtime. For example- growth in e-commerce retailing through mobile applications and internet on phones can positively affect online retail websites like Myntra, Flipkart, etc.
It should not be narrow. It is worthwhile to mention that business involves repeated activity and not a single or isolated activity. Demographic factors include age, sex, family size; family life cycle, education, occupation, income, religion, race, and nationality. If they do not do so voluntarily there are mandatory provisions passed by the government. It enables the business to identify the areas for growth and expansion of their activities.
Business Environment: Nature and Significances of Business Environment
It can be said in this world nothing is permanent. Competitors: It refers to organizations that compete for resources with other organizations and provides similar or substitute products and services to the same group of people. Also, the business brings about changes in the society by giving attention to the needs of the people. Take technology how helped cell phone manufacturing companies New product, and improvements in existing products, and providing telecommunication services. This refers to automation, research and development activities, technological awareness, etc. The determinants of economic environment are fiscal policy, monetary policy, industrial policy, physical controls of prices, incomes, the nature of economic system-capitalist, socialist, communist or mixed as in India — the tempo of economic development, the national economic plan, competition and customers.
Therefore, bicycle manufacturing is not really the business definition for the organization from strategic point of view but pinpointing some particular dimensions on which it will compete in the market. Thus, the ability to buy a commodity depends on the a Total income earned out of the employment of the individual b The taxes of the government and c The savings of the individual. Since the business environment is always capable of producing major shocks and surprises, the success of a business enterprise depends on its alertness and adaptability to changes in the environment. Facilitates functional policy implementation. We know that mission is externally focused and, therefore, the business definition cannot be repugnant to its mission statement.
