BUSINESS ENVIRONMENT

o Business Environment
implies the combination of
all individuals, firms,
forces and factors which
may or may not be under
the control of the
business organization, and
has a direct or indirect
impact on its survival,
growth, performance and
profitability.
 Salient Features of Business
Environment
 Dynamic
 Multi-Faceted
 Far reaching Impact
 Relativity
 Complex
 Uncertain
 Inter-Relatedness
Components of Business Environment

Business
Environment

External Internal
Environment Environment

Micro Macro
Environment Environment
 Internal
Environment

 Internal Environment is the environment that

contains those factors which affects the business
enterprise directly.

 These factors can be controlled by the firm, as well

as the firm can modify so as to be in sync with the
overall business environment.
 Internal
Environment

Value
System
Physical
Vision,
Resources and
Mission and
Technical
Objectives
Capabilities
Business
Organization

Human Organizational
Resources Structure

Corporate
Culture
 External environment
 External environment refers to the environment which can
affect the business enterprise directly, as it contains those
elements which are not under the control of the business. It
contains:
 *Micro Environment: Those factors which fall under the
immediate periphery of the business enterprise are covered
under the micro environment.
 *Macro Environment: Those factors which are outside the
control of the business and can directly affects its
functioning, efficiency, strategies, performance and
profitability.
 External Invironment

Suppliers

Media Costumers

Micro
Environment
Stakeholders Inter
Mediaries

Employees Competitors
 External environment
Political and
Legal
Environment

Global Economic
Environment Environment

Macro
Environment

Technological Socio-cultural
Environment Environment

Physical
Environment
 Internal External

S WO T
Strengths Weaknesses Opportunities
Elements in a
Threats

Characteristics Characteristics Elements in the

company’s
of a business of a business external external
that give it that put it at a environment that environment
advantages disadvantage allow it to that could
over it relative to its formulate and endanger the
implement business, or its
competitors competitors
strategies to competitive
improve advantage(s)
performance
 P E S T
Political Economic Social Technological

• Government • Increasing inflation • Younger consumers are • Comparing to

incentives of up to open to new technologies
rate • internal
75% of citizens need to
US$10,000 for private • Increasing labor cost travel an average of up to
purchase of new • The city’s economic 35 km on weekdays.
combustion
battery electric outlook is healthy • Consumers prefer a lower engines, electric
vehicles or plug-in according to the key maintenance cost
vehicles are more
hybrids • Environmental protection
economic indicators is a key consideration to environmental
• Government goal to
• Stable foreign most consumers
raise the annual • Most consumers found the
friendly.
currency exchange
production capacity to
rate government subsidies • Slow charging
2,500,000 plug-in
hybrid by the end of • September is the •
very attractive
To recharge vehicles at
• Battery range is a
2020 traditional peak home or workspace is concern
• Road space Rationing season of impractical to most people
due to the residential
• Lack charging
scheme (New energy automobile stations
design
vehicles exempted) • Rapidly increasing • Most drivers regard new
• Vehicle quota system lithium-ion battery energy vehicle technology
that inhibits the price as unsafe and immature
purchasing of new • Serious traffic jam de
conventional autos. motivates people’s desired
to buy new vehicles