Business Enviorenment : PMED

Business Environment

It refers to those aspects of surroundings of business enterprise which affect or influence its operations and determine its effectiveness.It is the pattern of all external influences that affect the life of a company and its development. Business environment is the aggregate of all conditions,events and influences that surround and affect a business firm.The Business environment is always changing and uncertain.It is because of this that it is said that business environment is sum of all the factors outside the control of a company.These factors are constantly changing and they carry with them both opportunities and risks or uncertainties which can make or mar the future of business.Success of a business enterprise depends on its alertness and adaptability to changes in the environment.

Constituents or Elements of Business Environment

There are two parts of Business Environment:
(A)Micro-Environment of Business. (B)MacroEnvironment of Business.

(A)Micro-Environment of Business: It includes all those factors in the immediate environment of a business enterprise that affect its ability to serve its customers. Such constituents are :

(1) Philosphy of the Business Enterprise:
The philosphy itself affects the working of the enterprise. Suppose the philosphy of the enterprise is to keep the interest of the customer over and above any thing. In such a case, all major activities of the enterprise will aim at serving the customer as best as possible.

(2) Way of working of the Enterprise:
The functioning of a business enterprise is divided into various functional areas like production,finance,personnel,marketing,etc.All these departments work in unison with each other.

(3) Type of ownership:
Whether the business enterprise is a sole proprietorship or a joint stock company,also affects the working of a business enterprise because each type of ownership has its own advantage an disadvantages.

(4) Competitors:
There are various types of competitors, e.g., desire competitors,generic competitors,brand competitors,etc.,which a business enterprise has to face.Which type of competitors the enterprise has to face also affects its functioning.

(5) Clients/Customers:
A business enterprise may have any or more than one of various types of customers,viz., individuals,households,retailers,wholesellers producer,government bodies,foreign customers,etc..

(6) Suppliers:
Every business enterprise requires a number of inputs. The charecteristics and traits of the supplilers of these inputs determine the working of an enterprise.

(7) Marketing channel:
A business enterprise may be assisted by advertising agencies,middle men like commission agents,marketing research organisations,warehouses,transportation firms,financial organisations,etc.,in the promotion of its sales and distribution of its products.

(8) Public:
Every business enterprise is surrounded by various types of public, viz., general public,customer organizations, local public,government public,financial organisations,internal public,media public.Each of these publics has the potentiality to affect the working of an enterprise.
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(B) Macro-Environment of Business: The constituents of the macro-environment of business are usually uncontrollable and need proper monitoring and adaptation on the part of a business enterprise.They are as follow:

(1) Physical or Ecological Environment:
Business enterprises have exploited natural resources most carelessly and ruthlessly,they have not made the desired contribution towards nature. The environment has been polluted like anything. In case,business enterprise do not discharge their obligations towards ecological environment,not only their working but also their very existence may be threatened.

(2) Demographic Environment:
Such factors include the size,rate of growth,sex composition, age composition,etc.of the population, educational levels, economic stratificatiion of population, caste, religion,language,etc. All these factors have a bearing on the conduct of a business. The heterogeneous population with its varied tastes,preferences, likes and dislikes,temperaments,faiths and beliefs,etc. causes different demand patterns and,therefore,needs different marketing strategies.

(3) Economic Environment:
Economic constituents of environment include: the fisical and monetary policies, industial,agricultural,trade and transport policies,the structure of the economy,the rate of growth of economy,the size of national income and its distribution,availability of capital and capital goods,forces of competition,price level, demand and supply of various goods,etc.

(4) Political and legal Environment:
There is a close relationship between the political-cum-legal environment and legal systems are built on ideologies and values which relates to both economic and social goals. For instance,in communist countries there is a centrally planned economic system. The government may enact legislation to regulate the conduct of business. Then,political stability plays a very important role in the development of business in a particular State or Country.

(5)Socio-Cultural Environment:
In India, customs, traditons, social attitudes and values have moulded the attitude and beliefs of the people which have their ramifications on business.

(6)Technological Enviroment:
It may include innovations, revolution,break-through,inventions,etc.and influence the ways of doing things that a business enterprise may design, produce and distribute. Technology has advanceed like anything and business is making efforts to adapt itself to it and take full advantage of it. If it cannot,it cannot survive.

(7)International Environment: It is concerned with foreign policy, defence policy, foreign exchange policy, international treaties,internationl trade agreements,foreign economic recession; protection policy in foreign countries, etc. For example,the Great Depression in the United States caused shock-waves in a number of other countries.