The survival and success of a business firm depend

on its strength, resources at its command, including

physical resources, financial resources, human
resources, skill and organization and its adaptability
to the environment and the extend to which
environment is favorable to the development of the
organization. The survival and success of a firm,
thus, depend on two sets of factors, viz., the
internal factors the internal environment
and external factors- the external environment.
Hence business environment has three components.

1.Internal environment
2.Micro environment/task environment/operating
environment
3.Macro environment/general environment/remote
environment

I. Internal environment

Conditions, entities, events, and factors within an organization

which influence its activities and choices, particularly
the behavior of the employees. Factors that are frequently
considered part of the internal environment include
the organization's mission statement, leadership styles, and
its organizational culture.
II. Micro environment :

1. Suppliers: supply raw materials and other components

(inputs)
Importance: reliable supply- continuous supply for smooth
functioning

2. Customers:
Different types of customers
i. Industrial customers
ii. Wholesale customers
iii.Retail customers
iv. Government customers
v. Foreign customers
3. Market intermediaries:

i. Middlemen
ii. Physical distribution firms (warehouses &
transport firms)
iii. Financial intermediaries
iv. Marketing service agencies (advertising, media
etc)
4. Competitors:

i. Threat of entry of new firms

ii. The power of buyers
iii. The power of suppliers
iv. The power of substitutes
v. The intensity of rivalry among existing firms
II.Macro environment:

i. Demography :

a) Quantitative Aspects of population

b) Qualitative Aspects of population

ii. Economic environment:

a) Economic conditions: GDP, business cycle

,unemployment, inflation etc.
b) Economic policies: budget, industrial policy, trade
policy, agricultural policy.
c) Economic system: capitalistic, mixed, socialistic.
iv. Political environment:

a) Legislature: different acts

b) Executive : administrators
c) Judiciary : district , high courts ,supreme courts etc

iv. Socio cultural environment:

a) Attitude of people towards health & work

b) Role of family
c) Marriage
d) Religion
e) Education
f) Ethical issues
g) Social responsibilities of business
v. Natural environment:

a) Natural resources
b) Weather and climatic conditions
c) Locational aspects
d) Nearness to port facilities

vi. Technological environment:

a)Nature of technology
b)Scope of innovation
CONCLUSION:

Thus these are the various components of business

which enable the smooth and efficient functioning of a
business