The business environment can be described as the sum of all factors over which general management does not have control, at least in the short run.

Business environment consists of the totality of all factors which are external to, and largely beyond the control of individual business firm.

The environment is often described as external to the firm.

There are some factors that may be within the firm but beyond the immediate control of management.

For example:- if attitudes and beliefs of employees are not easily changeable by management (and thus not within the control of management), we can say that those attitudes and beliefs are an environmental factor within the firm.

The environment in which a company does business is often not well understood or studied by managers, especially in smaller and newer firms.

A certain amount of knowledge of markets and competition will come with time and experience, but deliberate study of the environment can give managers a significant strategic advantage over intuition and experience alone.

Environment is complex

Environment is dynamic

Environment is multi faceted

Environment has a far reaching impact

By Philip Thomas :

a) Political conditions

b) Social conditions

c) Economic conditions

d) Legal/regulatory conditions

e) Business conditions

f) Technological conditions

Political conditions Political and legal environment is an

important element particularly in mixed economy like India and affects directly the working of business organization.

The political environment in India can be analyzed in three respect

-- political atmosphere -- government approach towards business -- laws regulating to business

Social conditions The social environment is consists of factors related

to human relationships, and the development forms and functions of such a relationship having a bearing on the business of an organization.

some of the important factors are:1. Demographic characteristics2. Social concerns3. Social attitudes and values4. Family structure and changes5. Role of women in society

Economic conditions The economic environment consists of macro-level

factors related to the means of production and distribution of wealth that have an impact on the business of an organization.

some of the important factors are:1. The economic stages 2. Economic structure 3. Economic planning4. Economic policies5. Economic indices6. Infrastructural factors

Legal/regulatory conditions The regulatory environment consists of factors

relating to planning, promotion, and regulation of economic activities by the government that have an impact on business of an organization.

some of the important factors are: The constitutional framework, directive

principles, fundamental rights, and division of legislative powers between Central and State governments.

Strategies & policies related to distribution and pricing & their control.

Policies related to imports & exports Policies related to licensing, monopolicies,

foreign investment and financing of industries. Policies related to public sector, small scale

industries, development of backward areas, control of environmental pollution & consumer protection.

Business conditions

Business or market conditions consists of factors related to the groups and other organizations that compete with and have an impact on an organization’s markets & business.

Some of the vital factors are:

1. Customer or client factors

2. Product factors

3. Marketing intermediaries factors

4. Competition related factors

Technological conditions

Technological environment is important for business as it consists of those factors related to knowledge applied, and the material and machines used in the production of goods and services that have an impact on the business.