Environmental Factors in Business Essay examples

5023 Words Jun 14th, 2012 21 Pages
Business Environment
BBA 1st year – 2012-13


Business environment includes the ‘climate’ or set of conditions: economic, social, political or institutional which have a direct or indirect bearing on the functioning of business It signifies external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise.


Business environment is the sum total of all factors internal & external to the business firm that greatly influence their functioning It covers factors and forces like customers, competitors, suppliers, government, and the social, cultural, political, technological and legal conditions The changes in business
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Fruitful cooperation between a company and the local public may be established for the mutual benefit.

Macro Environment

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Has close relationship with the economic system and economic policy. In many countries regulations to protect consumer interests have become stronger. Some governments specify certain standards for the products to be marketed in the country; some even prohibit the marketing of certain products. Promotional activities are subject to various types of controls Important economic policies such as industrial policy, policy towards foreign capital and technology, fiscal policy and foreign trade policy are often political decisions.

Macro Environment


Important factors are:
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Economic conditions Economic policies Economic systems Economic condition The nature of the economy, the stage of development of the economy, economic resources, the level of income, the distribution of income and assets, etc. are among the very important determinants of business strategies. Some types or categories of business are favourably affected by government policy, some adversely affected, while it is neutral to some others. E.g.: a restrictive import policy may greatly help the import competing industries, while a liberalisation of the import policy may create difficulties for such industries The scope of the private business depends on the economic system. The freedom of the private enterprise is the greatest

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