Business environment is the sum total of all the factors external to the business firm and that greatly influences their functioning. It covers factors and forces like customers, competitors, suppliers, government, and the social, cultural, political, technological and legal conditions. An example of a part of a business environment is how well customer’s expectations are met. One way to make sense of the business/industry environment is to consider it in terms of three distinct layers. These are known as the internal environment, the sector/industry environment and the macro environment. It includes specific forces such as investors, customers, competitors and suppliers. Non-human or general forces like Social, Legal, Technological, Political, etc. Business environment brings both threats and opportunities to a business. Hence, understanding of environment helps the management in future planning and decision making. For example, competition increases with the entry of new firms in the market. The presentation gives better understanding on the topic.

Anjali Krishna SS

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