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What is the concept of Business Environment?

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The definition of Business Environment, “The sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but the business still depends upon them as they affect the overall performance and sustainability of the business.”

The forces which constitute the business environment are its suppliers, competitors, consumer groups, media, government94, customers, economic conditions, market conditions, investors, technologies, trends, and multiple other institutions working externally of a business constitute its business environment. These forces influence the business even though they are outside the business boundaries.

Business Environment presents threats as well as opportunities for any business. A good business manager not only identifies and evaluates the environment but also reacts to these external forces.

A business can be established, but to successfully sustain a business, the business needs resources like finance89, for which it has to depend on financial institutions. Acceptance195 of social norms, for which it has to depend on society. Proper market conditions, for which it has to depend on the market. The sale of products/services, for which it has to depend on the customers. The labour, for which it has to depend on society.

Then there are natural resources and raw material, for which it has to depend on Nature. Also, the legal support of the government, for which it has to depend on the government. There are many factors and dimensions that affect Business Environment180. These factors are many different components of a single concept called Business Environment.

Sayantika ChatterjeeTop Contributor
I am a literature student from University of Calcutta and came here to contribute.

If we go by simple terms, business environment is the atmosphere or the dynamics amongst which we work or without. We often hear people saying, " the business environment of that company is great" or "I am so tired of our company's business environment". It generally means all the factors that affect the ongoing of a company or business, like social, political or technological, media, government, etc. For instance, any new government economic policy might have been introduced which affected the salary system of the company or the changing trends of the youth might force the company to introduce new styles. 

No business can work in isolation and everything is interlinked. The dynamic change in the business environment can open doors to many opportunities, and the task is to grab them as soon as possible. 

One needs to be alert all the time to detect the upcoming threats that might affect the company. As I said, everything is interlinked. So if there is a degradation of economy on one hand, it will automatically have its effect on the company. 

Resources are everywhere and you need to decide in what way you are going to extract them with efficiency. The company head need to have a solid plan to order to gain as much resources as possible. 

The world is changing all the time and hence the business dynamics. So policy formation should be done accordingly which will help in improving the performance of the business.