You are on page 1of 11

Amity Business School

Business Environment
Module II BESM Sunetra Saha

Amity Business School

Definition
Business Environment consist of all those factor that have a bearing on the business. A business environment is the social, technological, economic and political environment in which a business functions. The business environment affects organizational decisions, strategies, processes and performance

Amity Business School

Environmental Forces
Business Environment Task Environment Competitive Forces in the Task Environment Technological Forces Political and Legal Forces

3.2

The General Environment and Environmental Amity Business School Forces Affecting Organizations
The General Environment

Cultural Forces
Political - Legal Forces
Technological Forces
Competitive Forces

Organization

Adapted from Figure 3.1

Amity Business School

Components of Business Environment


Social environment : The social environment is the identical or similar social positions and social roles as a whole that influence the individuals of a group. Technological environment: Technological environment hold new technological innovation, new products, the state of technology, the utilization of technology for maximum inputs and outputs, the obsolescence of technology and the dynamic changes that frequently occur in technologies which enable firms to get a competitive advantage.

Amity Business School

Components(contd.)
Economic environment : The economic environment consists of the Demand dynamics, Supply situation, Pricing factors, Degree of competitiveness, Impact of profitability.
It includes the fiscal policy, monetary policy and the taxation policy, the FDI norms, the investment criterion and financing decisions.

Amity Business School

Components(contd.)
Political environment : The political environment includes Regulatory burden and red tape, Taxes levels of political corruption, Public works services, Labor market regulation, Policy predictability, Property rights, Contract enforcement, Regulations controlling startup and Bankruptcy, competition law,

Amity Business School

FEATURES OF BUSINESS ENVIRONMENT


sum total of all factors external to the business firm and that greatly influence their functioning covers factors and forces like customers, competitors, suppliers, government, and the social, cultural, political, technological and legal conditions dynamic in nature difficult to predict the exact nature of future happenings differs from place to place, region to region and country to country

Amity Business School

IMPORTANCE OF BUSINESS ENVIRONMENT


Determining Opportunities and Threats Giving Direction for Growth Continuous Learning Image Building Meeting Competition Identifying Firms Strength and Weakness

Amity Business School

TYPES OF BUSINESS ENVIRONMENT


Economic environment - includes economic conditions, economic policies and economic system of the country Non-economic environment comprises social, political, legal, technological, demographic and natural environment

Amity Business School

ECONOMIC ENVIRONMENT
Economic Conditions Economic Policies (i) Industrial policy (ii) Fiscal policy (iii) Monetary policy (iv) Foreign investment policy (v) Export Import policy (Exim policy) Economic System