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In general words we can say business environment is the surroundings in which b

usiness exists.
Whenever any businessman is operating or working then he has to interact with th
e customers, suppliers and he has to perform the transactions within the rules a
nd regulations of the government.
All these persons, institutions and policies form a part of business environment
. Understanding all these factors, persons and institutions carefully is must fo
r every businessman.
The complete awareness and understanding of business environment is known as env
ironment scanning. Environment scanning is conducted to find out the influence o
f different factors and persons on the business transactions.
Environment scanning can be defined as a process by which organisations monitor
their relevant environment to identify opportunities and threats affecting their
business.
No company can survive in market by ignoring the effects of Business Environment
. The efficient management analyses the environment and makes changes in organis
ational policies to integrate its activities with Business Environment. The most
suitable example to prove the impact of Business Environment is the controversi
al case of Pepsi and Coke Company.
Recently a Consumer Organisation (CES) has claimed to find pesticide contents in
the cola drinks of Pepsi and Coke. Although government, health ministry and cou
rt have given clean chit to Pepsi and Coke company but then also both the compan
ies are continuously advertising to prove and convince customers that these drin
ks are safe.
They are doing so because the sale and success of these companies not only depen
d upon internal environment but these depend upon external forces also.
Business Environments provide constraints as well as opportunities for the busin
essman. For example, the regulation such as MRTP Act and wealth restriction put
constraints on the businessman. On the other hand, the liberalisation policies,
import relaxation policies bring opportunities for the businessman.