This question for UGC NET Commerce is most important because , first it covers total them of business environment book at post graduate level and second , if you search it on google , you will got 1610000 results on google . Because approximate every finance publisher has written this concept in their site and blog and also this matter is discuss in every net forum . So , please understand these element clearly and I have also upload one docs presentation of element of business environment . So , also watch and understand it .
Main Elements or factors of Business Environment
A – Micro business Environment:
This is also known as internal business environment because business has power to control them. In this environment, factors can be divided with following way.
A supplier provides raw material to business. This is also main factor of business environment because, it affects business very closely. If supplier delay to supply raw material or stop to supply. At this time production of business can be stopped due to not getting raw material. So, for controlling this factor, it is the duty of businessman to make good relation with more than one supplier so that, if one stop or delay at this time, goods can be purchased from other supplier.
Customers are those people or companies which buy goods from our business. Business sells them his finished product. But time to time tastes of customers also change. So, according to the taste of business customers, new products must be supplied by business. That is the formula for living long life of business.
3rd Market Intermediaries
For promoting sale, it is required to ads by different way, so market intermediaries include sales man and middle man.
This environment is under control of business because, if business starts selling with more ads, his selling will surely increase.
Competitors of business also create internal business environment. According to competitors, policies, business changes his policies for winning in competition.
5th Financial Intermediaries
As business grows, it needs more money for his growth; either this money can be gotten by issuing new shares or by borrowing money from financial intermediaries. So, financial intermediaries plays a vital role in business environment. If they provides loan at very low rate, at that time business can get and grow fastly but, if they increase in interest rate, at that time business will not get at this rate and its growth may decrease due to lack of fund.
Macro Business Environment or External Factors of Business Environment:-
1. Economical Environment
Economic environment is main element of business environment. Economy is factor which affects business with following way:-
A) Economic policies
Economic policies related to budget , industrial policy , fiscal policy , export and import policy and business should see what changes are done in these and business has to changes their business policies according to these changes .
B) Economic regulation
Different laws and regulations are at international level and national level . These are all called economic regulation and business has to respect all of these while it is operating business .
2. Natural Environment
Natural environment is also external factor of business . Because , business can not fully control on natural environment . Many points like season , raining , floods , earth quake are natural and happens according to fluctuation in it . These are also main element of business because business has to face all these factors . But some of loss from these factors can be transferred with effective schemes of insurance .
3. Demo – graphic Factors
Size of population and their growth rate includes in demo graphic element and factor of business environment. Increasing trend of population will increase demand of products and support business to produce more products. But if death rate is increasing or demo graphic factor like religion are preventing to use the products of business. At that time business has to change their business or make other plans according to situation.
4. Technological Environment : -
This is fully concerned with changing of technology and its effect on product . Many technical products are fastly changed by coming new technology .At that time business also have to cover new products according to changes in technology .
5. Political Environment
Political environment is composition of three factors which are following
All above factor affects business and business has to make rules and regulation according to Govt. and political rules and regulation.
6. International Environment
International environment includes WTO, IMF, WB, SARC and G20 meetings and their rules and regulations can effect on any type of business. Business has to exist in world market, and then it should understand their effect and take action according to these rules and regulation.
Watch also Presentation for clear the concept :