Introduction:

For any establishment to run constantly, many factors influence its functions and decide the
future of business. The factors may be internal like company’s mission & vision, its policies
and procedures, working conditions etc. External factors includes market supply and demand,
demographic conditions, invent of new technology, level of competition, laws made by the
government etc. All these factors together constitute the Business Environment.

Business Environment:

Business environment is a complex term. Let us break this into “business” and “environment”
for better understanding. Business – it can be defined as an establishment which trades its
products or provide services in exchange for money in order to earn profits. And coming to
Environment – the atmosphere or surroundings present around a person or an entity etc,. So
Business Environment in short can be defined as the surroundings in which a company
operates.

Defining Business Environment:

This term can be defined in the following manner: “The sum total of all individuals,
institutions and other forces outside the control of a business enterprise but the functioning
depends on these uncontrollable factors which affect the performance and ultimately the
sustainability of business.”

Characteristics of Business Environment:

 Helps to identify prevailing market trends

 Helps to cope with changes
 Helps in understanding market demands
 Helps to optimize the usage of resources
 Helps to identify opportunities and threats

So understanding business environment plays a major role in the sustenance of any business
and helps to keep it going.
Factors affecting business environment:

The factors which affect business environment consist of both internal and external factors.
Some of them are listed hereunder –

 Economic
 Social
 Political
 Demographic
 Legal
 Technological
 Competition
 Consumer groups
 Latest trends etc,.

Effect of business environment in the context of start up:

As we discussed earlier, the sustenance and performance of any business is dependent on

factors that surround a business i.e. business environment. These factors are beyond the
control of the entrepreneur but have their impact on its functioning. Now let us know about
various environmental factors and its effect on our business and the idea of expansion.

Economic conditions: as we are in the thought of expanding our areas of operation, we need
to do extensive research about the economic conditions. Understanding the financial
conditions of other businesses, the percentage of amount which they are willing to spend on
promotion are some economic aspects from clients’ point of view. And on our part, we have
to find new ways to minimize our costs and maximize profits. If there is a chance of getting
huge business, the managing partner would think about buying machinery required for our
works.

Social conditions:

We should provide services of brand promotion by taking due care the clients’ psychological,
religious, cultural and creative interests but should find better ways to persuade them for
making necessary changes in promotional activity.

Political conditions:

Every person has his/her own political interests and favoritism. We should respect their
political views and opinions and plan the brand or political promotion accordingly.
Legal conditions:

No one is exceptional before law. So the activities we do should comply with the law and
also with the rules & regulations laid by the state and central government. Proper tax filing,
maintaining firm registration (renewal), following labour laws are some of the examples of
impact of legal factors on our existing business.

Scope & Importance of Business Environment:

 Business environment is dynamic

 It is a global phenomenon
 Every entrepreneur should be attentive towards the business environment and should
adapt to the changing environment
 Productivity of any business depends on the environment in which it is functioning
 These factors, as we know that are beyond our control, thorough understanding is the
essence of success of a business.
 A

Project Report

On

Expansion of existing business

NIMBUS SOLUTIONS

Beside Hamsa Honda Showroom, Shantipuram, Near Gurudwara Jn., Visakhapatnam

Ph: 0891 272 1537

 Topic: dimensions of business environment & its impact on the firm

 Subject: Entrepreneurship

 Faculty: Mr. Madhu (entrepreneurship, visual merchandising)

 Name of the student: Prardhana Gumma

 Regd No: 20170506

 Class: PGDM II Year, 3rd Semester

 Name of the Institution: Centre for Management & Technology

Alwardas group of institutions,
P.M Palem, Visakhapatnam - 530041
Website: www.cmtvizag.com