Meaning of Business Environment
Business environment refers to the surrounding or factors which affect the operations of the business. It refers to the area where the business exists. It consists of several factors which affect the functioning, growth, profitability and even continuation of business.
Factors which constitute business environment are customers, suppliers, competitors, investors, technology, economic conditions, government etc. These all factors affect the success or failure of any business and bring several opportunities, threats and challenges to it. Dimensions of Business Environment are below:
Dimensions of Business Environment
- Economic Environment – Economic condition of the country that affect the management of the Business. It includes- “inflation rates, Interest rates, value of the currency, per capita income and stock market indices”.
- Political Environment – How Business performs under the political conditions of the country. It includes- ” Polices of government, peace the country, attitude towards certain sectors, level of corruption”.
- Technological Environment – It means the advancement of the business in technology. It includes- ” New innovations, improving old equipment, advances in computers etc”.
- Legal Environment -How easy to do the business in terms of legalities. It includes- ” laws passed by the government, Tax system, registration of business, regulation from government etc”.
- Social Environment – Social traditions and culture of the stakeholder. It includes- ” Traditions and culture, social values, social practices etc”.