Significance Of Business Environment

1.1 Objectives:

After going through the chapter, you will be capable of:

i. Understanding Business Environment concept. ii. Significance of Business Environment. iii. Defining the nature and scope of Business Environment. iv. Environmental INTERNAL & EXTERNAL factors affecting business.

v. Describing the complexity of ‘external environment’ which functions the business. vi. Understanding business’ response to environmental factors that changes to function successfully. vii. Also, how business try to influence environment.

1.2 Introduction

The term ‘environment’ has its origin from a French word “Environia” meaning by ‘to surround’ in which organisms live. Environment refers to both inorganic and organic factors which constitute environment.

These factors and forces are: - customers, competitors, government, the social, political, legal and technological factors and so forth. Some of the factors or forces have direct influence over the business while others may affect the business indirectly. Business environment meaning can be referred as the atmosphere, which has a straight or non-direct bearing on the working of company. It can also be defined as all the external factors which are beyond the control of human power and affect the decision making function of the organization. Thus, environment refers to the immediate surroundings of a thing and exercising a straight pressure on it. Our environment refers to that diverse thing which affects life or actions. The word ‘Environment’ has been defined by various authors and some definitions are as

1.4 Nature of Business Environment:

The character of Business Environment can on the whole and better explained by the following approaches:

(i) System Approach: Unusual, organization in which produces goods or provide services for the satisfying the wants of a system, by adopting numerous inputs, for instance, raw material, capital, labour etc. from the surrounding environment.

(ii) Social Responsibility Approach: Under this approach organization shall accomplish its accountability towards different grouping of the social order such as consumers, stockholders, employees, government etc.

(iii) Creative Approach: As per the creative approach, company may face the challenges and avail the opportunities at times and gives shape to the environment. The business brings on changes in the general public by giving priority to the needs of the different groups exist in environment (consumer, suppliers, stockholders